‘On its knees’: The Star to cut jobs, sell assets following $1.7 billion loss

Star Entertainment Group’s boss, Steve McCann, has flagged hundreds of job cuts and the sale of assets such as hotels in Sydney, Brisbane and the Gold Coast as part of a complicated cost-saving plan following a $1.69 billion loss for the 12 months to June 30.

The ailing casino operator finally delivered its full-year results on Thursday, after McCann snagged a last-ditch $200 million loan to abate the lethal combination of low foot traffic and higher operating costs, which plunged it into the red for a fifth consecutive year.

The Star has finally secured a lifeline after failing to issue its financial results for almost a month.Credit: Edwina Pickles

“The competitive environment has changed dramatically with the combination of tighter regulations. I think it’s important to emphasise the objective here is to eliminate financial crime and reduce problem gambling,” McCann said.

“This business has clearly been on its knees. It’s a tough environment to achieve change when people are worried about their future. We’ve got to reset the culture.”

Star has been thrown into financial turmoil in recent months after a regulator’s probe found it was unsuitable to hold a casino licence. Its shares were suspended from trading last month because it failed to issue its 2024 financial results within the corporate reporting period.

McCann confirmed the group will cut 350 roles, freeze salary increases and reduce its spending on consultants to reach a $100 million cost savings target. The company did not say where the affected jobs are based.

McCann also said the group was committed to selling assets, which may include hotels in Sydney, the Gold Coast and its Treasury Brisbane assets.

The results filed with the ASX show The Star’s revenue dropped 10 per cent over the year to $1.7 billion in the 12 months to June 30, while earnings before interest, tax, depreciation and amortisation fell 45 per cent to $175 million. Revenue from its premium gaming floors fell by close to 30 per cent on the year prior as high-rollers continue to avoid its casinos. The loss was predominantly driven by a $1.4 billion write-down of the value of its assets, with $819 million on its Brisbane properties including its new flagship, Queen’s Wharf Brisbane.

The Star confirmed on Wednesday it had received commitments from lenders to issue a new loan of up to $200 million across two tranches, the first of which is expected to be drawn from next month to quell a cost blowout at its newest casino precinct in Brisbane that is at the heart of its financial distress.

The emergency loan puts an end to extensive discussions between McCann, lenders, investors and state governments after a torrid period that brought the group to the brink of insolvency.

The group said revenue across Star Sydney’s gaming floor has dropped 10 per cent since the introduction of carded play in its VIP gaming floor last month. The NSW government has already staggered the rollout of mandatory carded play until October next year to give the embattled business time to get its systems in order, but McCann conceded the early signs look bleak.

The Star’s pubs and clubs competitors operate 98 per cent of the state’s poker machines and are still able to accept cash.

“There is a possibility for a further impact,” said McCann. “We’ve run a range of scenarios in our modelling, and we have sought to put ourselves in a position where our liquidity can cover those scenarios. One of those scenarios is that it gets worse given we’re only in the first phase of it.”

The Star’s new loan comes with strict conditions, requiring the company to come up with an additional $150 million – which could mean selling off one of its properties – and a long-term strategy.

The Queensland government had been considering issuing $60 million in tax relief to the struggling business, while NSW has already delayed tax increases until the end of this decade.

But the negotiations between Queensland and The Star seem to have broken down. On Thursday, Queensland Premier Steven Miles slammed the group’s leadership and said discussions had stalled over McCann’s refusal to waive executive bonuses.

“There will be no consideration of any kind of arrangement while their executives insist on paying themselves performance bonuses,” Miles said. “And we’re unlikely to reach one. Frankly, I find it astounding.”

Adam Bell, SC, was commissioned by the NSW casino regulator to launch a second probe into The Star following concerns it had not adequately committed to cultural reform since it was exposed for extensive anti-money laundering and counter-terrorism failings in 2021.

The Star is due to write to the regulator by Friday with reasons it should be able to continue operating following the inquiry.

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