James Packer and Crown locked into divorce which began well before inquiry appearance
After an appearance at the NSW probity inquiry, it’s now finally clear James Packer and the Crown casino group’s relationship is locked into a journey that has only one destination — total and irreversible divorce, writes Terry McCrann.
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James Packer and the Crown casino group are locked into a journey that has only one destination — total and irreversible divorce.
Critically, unlike the “original” long-running (Liz) Taylor-Burton (Richard) celebrity soap opera — the model for so many pairings that have entertained us in the 21st century so far, including Packer’s own brief one with Mariah Carey (and with similar oversized ring) — once divorced there won’t be a “reconciliation’, second marriage and second divorce.
Just as what he did back in 2006 with the “Packer family’s Nine Network” — although always only partially owned, always totally controlled by Packers: grandfather, father and (briefly) son — once Packer sells out of Crown, he’ll never go back.
Packer and Crown were already on that journey well before the NSW probity inquiry got under way and which has just produced three days of excruciatingly painful but punishingly revealing evidence from and about Packer — and in particular, what was very much Packer’s Crown, just like “Packer’s Nine”.
The results of the inquiry will certainly impact, but also impact only, on the terms, timing and process of the divorce; but not on the inevitability of the divorce itself.
After not just Packer’s evidence but the whole weight of what has been exposed through the inquiry about Crown and its relationships with the notorious Chinese high-roller junket operators and the — to say the least — “ambiguities” around Crown and Packer’s links with Hong Kong’s power Ho family, some form of order against Packer’s ownership, influence and control of Crown is inevitable.
This could vary from merely censuring Crown/Packer, through limiting Packer’s ownership of Crown along with limiting or prohibiting any influence over management, running all the way up to ruling that Crown, the company itself, was not a fit and proper (legal) person to hold the NSW licence.
We shall have to see what emerges on the inquiry front.
The big question, though, is whether it will already be, or subsequently be rendered, essentially academic — as Packer sails, or will have already sailed, figuratively and perhaps also literally away from Barangaroo in Sydney Harbour.
It is important to understand the substantive message of the otherwise titillating revelations about Packer’s so-called “threatening emails” to, as we now know, TPG private equity (PE) hotshot and — former? — friend Ben Gray back in 2015.
Back then Packer was embarked on repeating with Crown the spectacular deal — to this day, still one of the most spectacular in terms of execution, enriching, and above all timing we have ever seen — that he did in 2006 with Nine.
By selling Nine into a new vehicle with a PE partner, and loading that vehicle up with debt, Packer was able to walk away with $5bn free and clear and still own 50 per cent of Nine!
Now, that 50 per cent dribbled away to zero as Nine — and free-to-air-TV generally — hit the streaming video wall.
One thing led to another and we ended up with former treasurer Peter Costello as chairman of Nine and a Nine which now includes the (much shrunk) Fairfax print media empire that the Packers — grandfather, father and son — always loathed and supposedly lusted after.
Actually, Kerry and even more James, didn’t lust much at all for Fairfax after Tourang’s bid in the early 1990s was blown up by one Malcolm Turnbull — but “Packer’s going to walk in the door” was a line to turn Fairfax journalist faces white for decades.
They feared they’d get Packer, they got Costello: we’ve lived through some very strange times. To say nothing of how we’ve now got a Liberal Treasurer who’s just given us a $214bn budget deficit.
Anyway, in 2015 Packer aimed to replay his Nine deal on an even grander scale.
It would ride off the back of the newly acquired exclusive Barangaroo high-roller licence and Packer’s casino partnership with Lawrence Ho in the biggest casino market in the world — Macau.
In short, it would ride off the back of Packer’s very real ambition of building Crown into the world’s biggest and most globally diverse casino group — “Crownising” the world like John Elliott aimed to “Fosterise the world” back in the 1980s.
Critically, it would leave Packer in control atop a $9bn group, while also allowing him to repeat the Nine exercise of taking billions free and clear out of the structure.
All of it built, it is critical to remember, on the mammoth and expected continued mammoth growth of Chinese gamblers, from the high-rollers down through the categories to their version of the “grunt punters” that underwrite pokies in Australia, in and out of casinos.
No wonder that he was — how can I put this? — a tad pissed when Gray walked away and pulled the plug on the whole exercise.
That’s when the journey to divorce started. The first but critical step was when he broke up with Ho and walked away from Macau.
A Crown not in the biggest — by the length of the Flemington straight — gaming market in the world, was a Crown that had abandoned any global ambitions and was retreating to its, true still exceptionally lucrative (until the virus), home market.
Then in May last year, he stunned, by agreeing to sell almost half his 45 per cent controlling stake in Crown to Ho.
That was not a move to equal partnership — the Packers do not do shared control; they certainly do not invite it in — but the first concrete step to the divorce.
It was certainly brilliantly if totally unknowingly timed, given the virus was just seven months or so away from flying out of Wuhan, shredding both Chinese high-roller and grunt markets.
It was also, as we now know, incapable of being concluded as the storm over the China links was about to break over Crown and Packer thanks in a large part to the long-time Packer nemesis: the Fairfax papers now joined, in irony of ironies, by the old Packer network Nine itself.
Half the shares he had sold to Ho came back, returning his controlling stake to 37 per cent. But there is no way that Packer himself would or indeed will return, irrespective of the inquiry and irrespective of his mental health.
The only question is the timing and manner of his final departure.
Originally published as James Packer and Crown locked into divorce which began well before inquiry appearance