Has the worldwide credit crisis hit James Packer’s gaming and gambling business, Crown?

It has already forced Packer partner Lachie Murdoch to hunt for finance for his side of the $3.3 billion joint bid for Consolidated Media, the other half of Packer’s old PBL Empire. Now there are question marks over Crown.

There was a story this week in The Australian quoting a broker’s report which said Packer’s Macau casino was making money off the back of expensive high roller junkets. It didn’t mention whether these were profits after paying expenses, but indicated that patronage in the high roller rooms had picked up.

There was no further work by the broker on whether this was cutting business at the high roller rooms of Crown’s two Australian casinos –Crown in Melbourne and Burswood in Perth. But something is having an impact on Packer and Crown, and it is making the country’s second richest businessman a little gun shy.

In the SMH this morning, Michael West reported that the ambitious expansion plans in Las Vegas seem to have hit an obstacle. The obstacle being that the site of Packer’s resort project, dubbed Las Vegas Towers, has been put up for sale.

Crikey reported earlier this month that Packer and developer partner Christopher Milam had not settled on the 27 acre site as originally planned last year but were continuing progress payments. Under the agreement they had to settle by June 30.

Now it’s on the market and that spokesman says a “strategic review” of all Crown’s assets is underway. That’s the most interesting part of the West story. That strategic review hasn’t been revealed to the market, as you would have thought such an important announcement should be.

Why would Packer and Crown kick off a strategic review of assets so soon after Crown was split out of the old PBL business last November? After all, Packer and Crown International CEO, Rowen Craigie, plus the board, are the same people who signed off on the Crown accounts for December 31 and in the split. And they are the same people who took Crown into the deals in the US, Macau, Canada and the UK, so surely the Crown assets were all reviewed prior to the split and found to be satisfactory.

Crown shares were trading at $11.10 this morning, down 8 cents. They hit a low of $9.87 earlier this month on fears about its debt.

Now the site in Las Vegas is on the market. Are the grandiose plans for a $US5 billion casino, hotel and retail development between Packer and Milam also dead?

Las Vegas and Nevada generally are the home of the subprime crisis in the US: the collapse has hit the city and state harder than any other part of the US; gaming revenues fell in January for the first time in five years.

Is James Packer being forced to pull his horns in?

Peter Fray

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Peter Fray
Editor-in-chief of Crikey