Crown boss says leasing casinos an option if licences are lost

Crown Resorts’ new chief executive Steve McCann says leasing out the group’s casinos is one option he will consider to salvage shareholders’ investments if the James Packer-backed group is stripped of its gambling licences.

The former Lendlease boss said in an interview on Friday there had been “a lot of inbound inquiry” from potential partners and buyers interested in Crown, and that all options would be on the table if royal commissions in Victoria and WA find it unfit to run its Melbourne and Perth casinos.

Crown’s new CEO says there was “a lot of inbound inquiry” from potential partners and buyers. Credit:Will Willitts

The licence for Crown’s new Sydney casino is already suspended after a NSW inquiry confirmed in February reports by this masthead that Crown had enabled money laundering at its other properties and had been infiltrated by organised crime syndicates.

“Clearly we have to anticipate a range of scenarios and be flexible enough to respond to the scenarios that are presented,” said Mr McCann, while declining to speculate about what he thought the likely outcome would be.

Crown has already become a takeover target this year. It rejected an $8.4 billion takeover bid from private equity outfit Blackstone in May. And its Sydney rival, The Star, also lobbed a $12 billion merger proposal in May but has since withdrawn the offer, citing uncertainty about the future of Crown’s licences.

Crown Resorts CEO Steve McCann giving evidence to Victoria’s royal commission into the casino giant on July 6, 2021.Credit:

Mr McCann, who was appointed Crown CEO in June but is still awaiting approval from gambling regulators, said there was broader interest in Crown’s assets. But the company’s focus was on retaining its licences and reforming the business, and only then would it look at structural options.

“There’s been a lot of inbound inquiry on a range of structures - some of them are public already,” he said.

Investors and analysts have turned their minds to how much Crown (which has a market value of $6.4 billion, down almost 30 per cent since early May) would be worth if it lost its licences and had to lease out its properties to another operator. Macquarie analysts this week put the figure at $4.8 billion to $5.2 billion, while JP Morgan said it would be worth $5.5 billion.

The so-called “opco-propco” (operating company/property company) model is becoming increasingly common in the global casino industry. The Star, for example, announced last month it would look to sell and lease back its Sydney casino property.

But Mr McCann said Crown would only consider that model if one of Crown’s licences was cancelled and it was not given the opportunity to reform itself to win the licence back.

“That scenario would be sub-optimal for everybody because operating an integrated resort… is better achieved with everything together,” he said. “So it’s not an ideal scenario, but it’s not something we’d rule out if we have to head in that direction.”

Meanwhile, Crown’s incoming chairman, the prominent businessman Ziggy Switkowski, is facing calls to resign from his position as chancellor of Melbourne’s RMIT university over claims his new role at the gambling giant was incompatible with the university’s values.

The National Tertiary Education Union (NTEU), which represents university staff and academics, said on Friday Crown had been “shown time and again to be a socially destructive force”, making it “untenable” that Dr Switkowski stay at the university.

The NTEU says Ziggy Switkowski’s appointment as Crown Resort’s chairman is inconsistent with RMIT’s values. Credit:Attila Csaszar

Dr Switkowski directed questions to RMIT, which said it was a matter for Dr Switkowski and the RMIT council. The council - which is the university’s governing body and is chaired by Dr Switkowski - had not responded to a request for comment before publication.

Crown named Dr Switkowski as its new chairman last week to replace former Howard government minister Helen Coonan. She was serving as both chair and CEO before Mr McCann’s appointment, following an almost complete clean out of directors and senior executives as Crown was engulfed by scandals over the past two years.

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