When the cat is away, the mice will play – and play they did. Casino mogul James Packer decided just over a year ago to distance himself from Crown Resorts, the multi-billion dollar Australian gambling group he’s dominant share holder of. Perhaps he feels that was a bad casino strategy, electing to return to the board in 2017 following major shake-ups in the company’s vision.
Mr. Packer’s timely return is no coincidence. Hardly a month ago, the board of directors (minus Packer) announced the company would shift it’s focus away from the major gambling meccas of Macau and Las Vegas, instituting an all-but complete withdraw from those regions.
It’s doubtful that the casino tycoon’s return signifies a reversal of that migratory position. What does seem certain is that he wants to resume a more dominant role in the steering of the Crown Resorts ship, especially during this transitional phase of deep executive shuffling.
According to a recent statement from Crown Resorts, the new regime will see current Board Chairman Robert Rankin stepping down from his position. effective February 1. His sizable shoes will be filled by John Alexander, a long-time lieutenant of Mr. Packer.
Rankin won’t disappear altogether, though. His seat on the board is still secure, albeit a somewhat less influential one with reduced public exposure.
Crown Backpedals on Macau, Las Vegas
On December 15, an update to the firm’s trading status revealed that Crown was ditching a long-term plan to gain a foothold in the Las Vegas casino market. The Alon casino project was first announced in mid-2015, and would have seen the company investing $2 billion in a hotel casino. Instead, Crown elected to peddle that investment, arguing that Crown’s presence would have little impact in Nevada.
The decision to pull out of Macau was much more transparent. Crown chose to sell off about half of its 27.4% shares in Melco Crown to Packer’s long-serving Hong Kong business partner, Lawrence Ho (son of fellow casino mogul, Stanley Ho).
The value of the Macau casino market has fallen dramatically in the last few years, following China’s crackdown on gambling corruption. Having 18 of the company’s Australian national employees detained for extensive questioning in a criminal investigation did nothing to polish the situation.
Rankin explained the company’s apparent impulsivity to stake holders last moth, defining it as a necessary casino strategy for long-term amelioration.
“This transaction will enable investors and analysts to more easily evaluate the financial and operating performance of the company’s high quality core Australian assets,” he said.
Crown Enters New Casino Strategy in 2017
According to some analysts, the company’s evacuation of Macau and Las Vegas has entirely altered the company’s future plans, calling for a brand new casino strategy as they move forward.
“There was the privatization plan,” said investment strategist Mathan Somasundaram of Baillieu Holst. He explained that the firm’s plan was “all about a global growth play.” However, with Crown taking a step backwards from expansion, Somasundaram believes “that is completely out of the picture now.”