‘We’ll find unpleasant truths’: US mogul’s Star confession

The casino boss set to take control of Star Entertainment is working on a ‘day one action plan’ to fundamentally change the way the cash-strapped resort operates.

The Star Gold Coast. Picture: Glenn Campbell

The casino mogul who is set to take control of Star Entertainment is working on a “day one action plan” to fundamentally change the way the cash-strapped casino operates once he gets the approvals to take control.

Bally’s chairman Soo Kim also said he is prepared to take control of Brisbane’s sprawling Queen’s Wharf project if necessary, noting even though a sale is underway, Star has a history of transactions falling through.

Bally’s chairman Soo Kim. Picture: Getty Images

The comments were made during a video interview with Macau-based Inside Asian Gaming overnight. During the video interview, Kim is walking through Los Angeles airport, and had been in Las Vegas when he signed a $300m rescue deal with Star this week.

Under the deal, Gold Coast-based pubs operator Bruce Mathieson will fund $100m of the Bally’s bid. Combined, the pair will emerge with a 56 per cent controlling stake in the struggling Star. The bailout, revealed by The Australian’s DataRoom column on Monday, effectively values Star at $540m. At its peak, it was worth nearly $4bn.

“Obviously, we’re prepared to manage all the assets as one group,” Kim told Inside Asian Gaming.

If the Brisbane sale to Star’s Hong Kong partners completes, he is prepared to focus on the two casinos which remain under the Star umbrella — Sydney and the Gold Coast — as well as the hotels. Significantly, he says he has no plans to take Star private.

Bally’s chairman Kim Soo says he is prepared to take control of the Brisbane casino, which has already been slated for sale. Picture: Glenn Campbell

Kim’s Standard General controls Bally’s which in turn owns nearly 20 mid-sized casinos across the United States.

It has recently opened a casino in Chicago and is planning to build a $US1bn-plus resort-style complex on the former Chicago Tribune printing site.

Kim says there’s a period of regulatory and shareholder approvals to get through, then once that is done he’s looking to get involved in the “fun stuff” of turning around the business.

This is “to really help change the way this asset is managed and hopefully allow it to achieve the operational performance that we know it can”.

However, he admitted he’s preparing to find some “unpleasant truths” about the way Star has been run in recent times.

He says the first injection of cash $100m which goes to Star today will give it enough liquidity to trade through the approvals period. This should take up to 90 days, although Kim is hopeful of moving faster.

Bally’s chairman Soo Kim

He’s going to use this period “to try to understand the business and come up with what we think is essentially a day one action plan when we come into the office”.

Kim has left the door open for sweeping management changes, noting it has not been managed well and noted much of the operations has been run by special manager Nick Weeks, who has been installed by state-based regulators.

“There are no casinos of this kind of scale and size that operate as zero margin. So we’re going to have to get to the bottom of that,” Kim told IAG in the broadcast.

“So we have sort of a very much an overarching, top-down view as to what kind of performance we expect here. Again, we need to see how it all adds up in real life, because … I’m sure we’re going to find some unpleasant truths.

“But, we see an amazing feature, fantastic assets in an even more fantastic market setting. And there’s no reason why these assets can’t sing with the right level of attention and care”.

Originally published as ‘We’ll find unpleasant truths’: US mogul’s Star confession