James Packer‘s had enough of the U.S. casino market. While not definitively ruling out a return to the American gaming industry, the minority owner of Cannery Casino Resorts makes it clear that he’s neither the stomach nor the lucre for pursuing further stateside ventures. At least, not in the foreseeable future. Ironically, had Packer waited until casino stocks and bonds were in the toilet, and debt was being sold at huge markdowns, he could have positioned himself to be a major player in this country. Instead, he blew chunks of the fortune father Kerry Packer left him on an incoherent investment strategy. It saw Crown Ltd. purchasing bits and pieces of Harrah’s Entertainment, Station Casinos and Cannery when all were at sky-high value.
A betting man would have put his money on an inevitable downturn and then waited. (Since Packer wanted to be in both Station and Cannery, why didn’t he make a clean sweep of the Las Vegas locals market and purchase some Boyd Gaming stock while he was at it?) A Pennsylvania racino here, a Crown-branded Vegas Strip “failsino” there, a couple of locals joints, plus some hedged bets everywhere else … not one scatter-armed dart-throw found its target.
But there’s a happy ending. Packer learned from his bruising brush with the unfamiliar American market. (Certain U.S. casino speculators, by contrast, continue to blunder about like Mr. Magoo.) And, sticking to his knitting — i.e., Macao and Australia — has been good for business, with Melco Crown Entertainment continuing to gobble up market share on China‘s doorstep.
So we needn’t ask, “Why is that man smiling?” If I’d survived a financial near-death experience, I’d be feeling chipper, too.
Speaking of Station, business is going great guns at Station-managed Gun Lake Casino, up in Michigan. “Capacity” business is not only having a spillover effect in the surrounding area; it’s also sparked a 29% hiring increase at the casino itself. Well done.
As for bunglers, the ghost of Colony Capital continues to haunt Resorts Atlantic City (left) in the form of an unpaid power bill. One doesn’t know if new owner Dennis Gomes is actually liable for Colony’s fecklessness but, given the way Colony was blowing off its obligations in re Resorts, this fiscal time bomb shouldn’t come as a complete surprise. On a happier note, $2.4 billion Revel is hiring — in a big way. Thanks to renewed support from Wall Street (and a little help from Gov. Chris Christie [R] and the New Jersey Legislature), the on-again/off-again project is definitely “on.” This is great news for unemployed former Atlantic City casino workers, not to mention a firm incentive for existing casinos to keep their employees from jumping ship.
In April of 2007 Mr. Packer also invested $250 million dollars to acquire a 19.6% stake in the $2.9 billion dollar Fontainebleau. That obviously did not turn out so well either.
I’d forgotten that, Paul! Thanks for the reminder. That may have been the first sign of how badly things were going for F’bleau when it sold Packer a fifth of the equity at a drastic markdown. Since he later went in on (wannabe) rival “Crown Las Vegas” right next door, it deepens the incoherence of his casino-investment scheme. It was a case of “throw enough garbage” or in this case, money “against a wall and something will stick.” But nothing did. The man was singularly unlucky in his North American casino investments.