Come in spinner: McCann’s new lucrative gig the talk of the town

There was more than a hint of jealousy in comments made about Steve McCann’s Star Entertainment appointment, following his lucrative Crown Resorts stint.

New Star Entertainment Group chief executive Steve McCann.

There was more than a hint of jealousy going around corporate Australia on Wednesday when the news was confirmed former Lendlease and Crown Resorts chief executive, Steve McCann, would be the next chief executive of the beleaguered Star casino group.

Having negotiated a multimillion-dollar pay packet when the chips were down to take over James Packer’s Crown in May 2021 when it was under attack on all fronts — walking away with almost $10m for 17 months’ work — it looks like the champion poker player has pulled off another big win.

He is now being called on by once-proud Crown rival Star Entertainment, which operates casinos in Sydney, Brisbane and the Gold Coast, to take on another multimillion deal.

McCann is set to join Star on July 8 with an annual salary of $2.5m — a staggering amount for a company with a market capitalisation of $1.33bn — and his total $10m salary package includes a sign-on bonus of $2.5m.

Comments like being “kissed on the cheek by a rainbow twice” were being made about McCann’s good fortune in his new role following his lucrative stint at Crown.

Eyebrows have also been raised about the legacy of his 12-plus years at the head of Lendlease, now being helmed by successor Tony Lombardo, who is battling hard to turn the company’s fortunes around.

McCann, who loves the races and playing poker, is described as being tough, “ruthlessly intelligent” and highly numerate.

Growing up in a working class Catholic family of seven children in Melbourne, McCann put himself through law school by working with a local bookmaker.

McCann was mooted as the successor to former chief executive Robbie Cooke soon after Cooke resigned in March.

There’s been speculation the time taken between early rumours of his coming appointment back in April and the announcement on Wednesday was due to tough negotiations over his salary package with chair Anne Ward, herself a former director of Crown.

The chips have been well and truly down for a long time for Star and, as she and the Star board well knew, McCann was one of the few people in the country who could step into the job at short notice.

While there are plenty of good executives with experience running casinos around the world, Star needed someone with the probity approvals to step into the job in weeks.

Having a good relationship with the chair of the NSW Independent Casino Commission, Phil Crawford, from the time he ran Crown, will be critical to his new role.

“Mr McCann’s experience in navigating the complexities of remediation will serve The Star well as it prepares for the challenges ahead,” a NICC spokesman said after the announcement.

That is an important statement acknowledging McCann’s experience and giving an indication Star’s NSW casino licence is not about to be stripped from it in the wake of the Bell report.

It is clear Crawford’s relationship with the former leadership team at Star under chief executive Cooke, who resigned in March, and former chair David Foster, was strained to say the least.

Realistically, the only way forward for Star was to have a chief executive who Crawford could deal with.

McCann’s appointment paves the way for the regulator to take in Bell’s recommendations from his report into Star, which are expected to be released at the end of July and allow the company to keep its licence, possibly on a provisional basis, with McCann overseeing new criteria set down by the NICC.

While the jealousy abounded yesterday for McCann’s good fortune, his appointment could pave the way for a long-term solution needed for the troubled Sydney casino business.

The economics of having two rival casino groups in Sydney doesn’t work any more.

The golden days when James Packer knocked on the door of former NSW Premier Barry O’Farrell 12 years ago with an “unsolicited proposal” to put up a second casino in Sydney are but a distant pre-Covid memory.

Those were the days when the Chinese economy was booming, before the austere Xi Jinping took over as China’s president, beginning a decade long crackdown on corruption.

The days when high flying Asian high rollers were headed to Australia on their corporate jets, sometimes looked after by dubious middle men or junket operators, with pockets full of money, are over.

Packer did make good on his promise to build an iconic casino and hotel building in Sydney which would attract some of the city’s wealthiest visitors.

While he was never able to oversee its operation, he did well out of his creation, “forced” to sell out of the business at a much healthier price to US private equity giant Blackstone in a deal finalised in 2022.

In retrospect, given the depressing economic conditions of the casino industry in NSW over the past two years, Packer did the best out of the deal and Blackstone, which has had to shut down gaming floors and lay off staff at Crown over the past year, looks to have overpaid.

The combination of the crackdown in China and the introduction of some of the strictest regulations around gambling in the world in Australia, particularly NSW, as well as the cutback in discretionary spending in the wake of higher interest rates have made it very difficult for Crown or Star to make money in Sydney.

Logically, the best way forward is a merger of the two operations in Sydney.

At some point down the track, once McCann has got his feet under the table, Blackstone could seek to buy out the Sydney assets of Star, allowing it to merge Star’s poker machine licences with its up-market gaming floors.

Or, alternatively, it could buy or merge with Star’s combined NSW and Queensland businesses.

Star’s operations at Queens Wharf in Brisbane, which are set to open in August, have an estimated value of around $3.9bn.

It would be a good deal for Blackstone if it could get hold of Star’s assets in both NSW and Queensland.

McCann did well out of a “change of control” clause in his deal with Crown and could be expected to do well in the event of a deal with Crown in a few years’ time.

A merger between Star and Crown was mooted in May 2021 by former Star managing director Matt Bekier.

The combination, he argued, would create the “BHP of gaming and hospitality,” a powerful Australian casino network which could compete on a global scale.

At the time he believed such a deal would not be blocked by the Australian Competition and Consumer Commission, but it was never tested.

He also arrives in the new job with questions having been raised over his role at Lendlease, given its increasing problems.

His proposed appointment to the board of the Scentre Group, which runs the Westfield shopping centres, was met with strong opposition by some shareholders.

McCann was appointed to the board in November 2022 after leaving Crown and stood for re-election at the group’s annual meeting in April last year.

Shareholder Resolution Capital, led by veteran fund manager Andrew Parsons, strongly opposed his election, describing McCann as an “inappropriate choice for a role in governing” the company.

But, Resolution’s concerns were not accepted by the majority of shareholders who supported McCann’s nomination.

McCann and Star will be eagerly awaiting the recommendations of the report by Adam Bell to the NICC, who last month completed his second inquiry into Star’s suitability to hold a casino licence in Sydney.

Mr Bell is expected to make his recommendation to the NSW Independent Casino Commission (NICC) in July.

Responding to those will be McCann’s first task in his new role.

Star’s beleaguered shareholders are paying top dollar, but will be wishing him well.

Originally published as Come in spinner: McCann’s new lucrative gig the talk of the town