James Packer’s $5bn Crown coup

By selling Crown at exactly the right time and at a spectacularly high price, James Packer has ‘made’ at least $5bn and possibly as much as $7bn.

James Packer has just ‘made’ at least $5bn and possibly as much as $7bn – by selling Crown at exactly the right time and at a spectacularly high price. Picture: Scott Barbour/Getty Images)

James Packer has just ‘made’ at least $5bn and possibly as much as $7bn – by selling Crown at exactly the right time and at a spectacularly high price.

He sold the casino empire just 18 months ago for $9bn. It’s now worth at most around $4bn. But it could be worth as little as $2bn.

He owned 38 per cent. So, he personally pocketed $3.3bn – for a stake which would now be worth between $800m and $1.5bn.

In doing so, he also ‘made’ somewhere between $3bn and $4.3bn for the other Crown shareholders, over what their shares would be worth today.

Crown was sold to the giant Blackstone investment group, so its shares are of course therefore no longer listed on the ASX.

But a very good guide to Crown’s value can be gleaned from the equally embattled, and listed, competitor Star.

Star’s got a market cap of just $1.5bn. And that’s after just raising $750m of fresh equity.

The - somewhat more valuable - Crown would therefore be worth between $2bn and (a generous) $4bn. As against the $9bn paid just 18 months ago.

What makes this tale especially extraordinary is that this is the second time Packer has sold his major business just as events were conspiring to dramatically slash the business value.

On one level, it’s a ‘Packer family thing’.

One of the great lessons I observed over decades of financial journalism was that if the late Kerry Packer was a seller, it was unwise – most unwise - to be the buyer.

Son James has done it, in spades, and done it not once but twice.

And both times, he did it, by selling to some of the “smartest guys in the proverbial Wall St room”. Who proved to be some of the woodest of wood ducks.

First, back in 2006, selling the Nine FTA-TV Network at a stunning value of $5bn, walking away with $4.5bn of cold cash.

Packer couldn’t wait to get out of TV. Within months of his father’s death on Boxing Day 2005, Packer had inked the deal.

The sale all-but exactly coincided with Apple’s invention of the first iPhone in 2007 – the device, and the consequent streaming, that would utterly shred the value of all traditional media and especially FTA-TV.

Add on the GFC in 2008, and within barely three years, the Nine he’d sold for $5bn wasn’t worth $1bn.

Even today’s Nine, which now includes the old Fairfax print media group and 60 per cent of Domain (worth $1.4bn) is only capitalised at $3bn.

Packer sold Nine to pour the money into building his beloved Crown. That would of course end in tears. In regulatory scandals and Royal Commissions.

And, crucially, the reality that post-Covid the Chinese ‘whales’ – on whom a rather spectacular building on Darling Harbour in Sydney had literally been built - ain’t coming back anytime soon, if ever.

James found his ‘(second) Alan Bond’. Or, Wall St Wood Duck Version 2.0. Blackstone.

Packer sold Nine for $5bn. It’s now worth maybe $500m.

He sold Crown for $9bn. It’s now worth $4bn, absolute tops.