The Star Entertainment Group teeters amid uncertainty with Hong Kong partners, Austrac
Hong Kong companies, lenders and a Federal Government agency hold all the aces as the future of embattled Star Entertainment Group – and its 9000 staff – remains dicey. Read what is at stake
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The boss of embattled casino giant Star Entertainment Group is pleading for more “time and support” to reset the company, saying “it’s complicated” but he is confident it can recover.
Hong Kong companies, lenders and a Federal Government agency hold the aces as the future of the embattled group – and its 9000 staff – remains on edge.
Some analysts put the odds at 50-50 of the listed company a falling into administration within a month if it can’t find new cash.
The company’s shares have slumped since it warned it had burnt through more than $100m in cash in three months.
It’s facing pressure from lenders, anger from shareholders, ambiguity from governments and increased gambling regulations which are drastically increasing costs.
Meanwhile, the spectre of a fine from Austrac looms, with an unknown date or amount.
Recent fines from the regulator include $67m to SkyCity in 2024 and $450m to Crown in 2023. It slugged Westpac $1.3bn in 2020.
The Star made a financial provision of $399.5m in 2024 – which it hoped would cover the Austrac fine as well as a suite of other fines, underpaid taxes, ASIC proceedings, a looming class action, consultant costs and legal fees.
Whether it will be enough remains to be seen.
While Star CEO Steve McCann believes the group can return to profitability, he is realistic about the enormity of the turnaround task.
“For Star as a corporate entity to get through this, and for shareholders’ and creditors’ interests to be fully protected, and for our employees to have the job security they’re after, requires a meeting of minds of a significant range of stakeholders – it’s complicated,” he said.
“So we need to have those stakeholders come together to deliver an outcome if we want to succeed.”
The Star is targeting $100m annualised savings by the end March 31, with a culling of head office functions and separation of individual properties the centrepiece of a major restructure.
The same date is set for a resolution, one way or another, on its Queensland licence.
“In the corporate restructure, the vast majority of frontline jobs, we are seeking to retain,” Mr McCann said.
“We believe we can do that well and take out costs without the company needing to go through administration to achieve that.
“What Star is asking for is time to reset the business.”
The uncertainty is already making itself felt among staff and suppliers.
“Clearly we’re in difficult times at the moment and it’s very challenging for people to see beyond the immediate issues,” Mr McCann said.
“Suppliers, employees, a range of stakeholders are assessing the business on how the business is performing today, rather than the capability of the business in the longer term and we’re looking to reassure all of our stakeholders that we can navigate through this with the appropriate time and support.”
What’s at stake at The Star
Staff
The Star employed almost 9000 people, including 3000 on the Gold Coast at its Broadbeach island precinct and another 3000 at Queen’s Wharf in Brisbane.
While most are paid on permanent part-time or full-time arrangements, around 22 per cent of the workforce is employed on a casual basis, meaning they could go without leave or redundancy entitlements in the event of an administration.
Federal Minister Murray Watt has said staff may be temporarily saved by a government wage safety net should the casino behemoth go bust.
The workforce has already suffered through major cuts – in 2019 20 per cent of its salaried staff were let go.
In 2022, the group apologised to an unknown number of staff who had been underpaid millions of dollars.
Suppliers
It isn’t just direct staff who rely on The Star for their livelihoods.
To keep The Star’s restaurants, bars and residential developments ticking over, it has a breathtaking suite of contracts and purchase agreements with small and medium businesses.
Millions of dollars are paid out each month to companies who supply food, drinks, entertainment, maintenance, legal advice, consultancy and construction services to The Star. More than 300 Australian companies provide it with food and beverages - with 100,000 punnets of strawberries and 80 tonnes of watermelons bought from Qld farmers every year.
Assets
A “significant and rapid deterioration in operating conditions” has seen The Star’s assets take multi billion-dollar impairments over the past two years – with the valuation of the Gold Coast assets diving $274m last financial year, with Brisbane falling $819m and Sydney $337.1m.
The total 2023-24 hit of $1.43bn followed impairments of $2.17bn the previous year.
On the Gold Coast, those assets include the longstanding casino – topped by nightclub-restaurant Nineteen – and three hotels – The Star Grand, The Darling and Dorsett Gold Coast.
But they aren’t the only holdings on Broadbeach Island, which is owned by the company and has bespoke 40-year-old state legislation that enables it to bypass the regular development approval process.
The Star’s residential towers – part of its $2.3bn State-approved Gold Coast masterplan – have swiftly risen on the site.
A $400m, 65-storey tower, known as Epsilon – the second on the site – topped out last year and is to include a 202-room, five-star Andaz hotel and 437 residential units, all of which have already been sold.
Once the tower is complete, The Star Gold Coast will host 2000 hotel rooms and apartments.
Two more towers planned for the site were put on ice in 2023.
The masterplan is being delivered by Star Entertainment Group, which owns 33 per cent, with its consortium partners Chow Tai Fook Enterprises and Far East Consortium.
It's the same partnership behind Queen’s Wharf in Brisbane, where The Star is attempting a $1.5bn refinance, due by December this year.
If that fails, its partners are likely to take full ownership of that development.
The casino licence for Queen’s Wharf is legally held by the partnership’s company Destination Brisbane Consortium Integrated Resort Operations.
The Star Gold Coast has been a financial linchpin for Star over the best part of a decade, with the Glitter Strip revenue frequently propping up losses at both Treasury Brisbane and The Star Sydney.
The Star sold the Sheraton Grand Mirage Gold Coast for $192m in November 2023.
It sold the leasehold interest in the Treasury Casino Building to Griffith University for $67.5 million last year and reportedly attempted to offload the old Treasury Hotel building and adjacent underground car park in Brisbane’s CBD in a $100m that did not go ahead late in 2024.
According to its latest annual report The Group continues to “review the potential sale of other non-core assets”.
Last March, rich-lister publican Bruce Mathieson scotched speculation his family wanted to buy The Star casinos in Sydney and the Gold Coast, describing the idea as “far fetched”.
Taxpayers
The NSW and Queensland governments earn more than $200m a year in gambling taxes from The Star – more in financially healthier times.
Smaller amounts are also earned in other fees like the Queensland Government’s annual Casino Supervision Levy – with Star liable for around $19.3m in 2024-25.
Governments also earn revenue from The Star’s operations via payroll and other taxes, liquor licences and casino staff licensing fees.
Both NSW and Queensland Premiers have ruled out upfront financial assistance for the Star while vowing to ensure job security for staff.
But if The Star goes into administration, governments may be called upon – along with lenders – to fund the administrators’ work if they want to prevent it being shut down and sold off.
Charities and major events
The Star manages the Gold Coast Convention and Exhibition Centre on behalf of the Queensland Government.
It is a partner of the Aussie Athlete Fund and Currumbin Wildlife Hospital and of donations platform GIVIT, which provides various disaster relief and charity initiatives.
The Star Gold Coast is the venue for numerous major fundraising events, including the Perry Cross Spinal Research Foundation Gala Ball; Serving our People Gala Ball; Gold Coast Mayoress Charity Ball and more.
Through its community grants program, The Star has also provided funding for Small Steps 4 Hannah; Gold Coast Hospital Foundation; Motor Neurone Disease Association of Queensland; Rosie’s Youth Mission; Kelly Wilkinson Foundation; Gold Coast Academy of Sport; Queensland Music and more.
Star Gold Coast has been a longstanding sponsor for the Gold Coast Bulletin’s Future Gold Coast and Women of the Year by Harvey Norman events, both annual campaigns.
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