Former Crown Resorts Executive Chairman and still largest shareholder James Packer says the company’s AU$2.2 billion Crown Sydney project was never intended to rely on the use of junkets with locals gaming planned to comprise around two-thirds of annual EBITDA.
Fronting for a third consecutive day a NSW Independent Liquor and Gaming Authority inquiry into Crown’s suitability to hold a casino license, Packer rejected claims by counsel assisting Naomi Sharp that the company had wanted to bring Macau’s junket model to Australian shores.
Instead, he said the international VIP component, “was about a third of the budgeted component of Crown Sydney. So it was two-thirds local VIP, hotel, food and beverage, and one-third international VIP across the board.
“You’ve got to remember that, effectively, Crown Sydney has a tables license which allows it to have unlimited tables, which can be played by people in Sydney as long as they join and they have minimum bet thresholds.
“That was always forecast to be the majority of the VIP profit as opposed to the profit coming in from inbound tourism. So VIP covers both traditional VIP and it covers the table games segment of Crown Sydney.”
Asked if Crown Sydney’s operating model depended “in no small extent upon relationships with junkets,” Packer replied, “No, I disagree with that, because the percentage profit that the junket business would be in Australia was always going to be very minimal compared to the mass side of the business.
“There are budgets that I’m sure you could get access to which my recollection show that the international VIP was only about a third of the EBITDA of Crown Sydney. “
Packer added that he had only hoped to take a small share of Macau’s VIP market
“The Macau VIP market was so huge; if we could have got a fraction or if we can get a fraction, that would move the needle in Australia,” he said.
Thursday’s proceedings focused largely on Packer’s discussions with key Asian junket operators in recent years and whether he had personally cultivated relationships with junkets alleged to have links to organized crime – suggestions the 53-year-old billionaire denied.
He did, however, admit there were changes needed to the Crown Resorts board moving forward, and to provisions offered to shareholders, after the inquiry revealed a pattern of confidential company information being regularly forwarded to Packer, who currently holds a 36% stake.
He also confirmed he has no plans to return to the Crown board in the future.
“I think there certainly shouldn’t be major shareholder provisions going forward,” he said. “I think that the Crown board has a lot to think about in terms of who the right people are for the right jobs. I think caps on shareholdings may be something that you (Commissioner Patricia Bergin) will think about.
“I think this has been a terribly painful and terribly shocking experience for the board, as it has been for me. I won’t be going on the board again. I think the board will be more independent than it was in the past.”