Blackstone boss Jon Gray declares he will rebuild Crown casino to be the ‘best in the world’
The boss of the $1.5 trillion Blackstone is eyeing more opportunities here as he declares tourism will be Australia’s ‘great growth engine’.
The New York-based investment giant that now owns Crown Resorts has declared the casino and hotel operator will be one of the best in the world and is planning a major spending spree across its ageing Melbourne site.
But after years of bruising regulatory run-ins and a full-blown corporate crisis, the global boss of Blackstone, which has nearly $1.5 trillion in funds under management across property, private equity and credit, has conceded it will be a “long journey” to get the casino empire once owned by billionaire James Packer firing again.
“It’s a new day at Crown. That’s what we want to convey to people – We’re committed to operating this business at the highest standard possible,” Blackstone president Jon Gray said in an interview. “And ultimately, we want tourists to come back in a big way”.
He declared tourism will be Australia’s “great growth engines” and was looking to play a role in this.
Mr Gray is in Australia, where he is a lead speaker at the Economic Outlook conference on Friday, presented jointly by Sky News and The Australian.
Mr Gray also flagged he was eyeing Australia for more investment spending beyond Crown, with the giant New York fund sitting on a cache of $US195bn ($292bn) in funds ready to be deployed around the world.
“Our view is quite bullish on Australia,” he said. “There are obviously challenges in the near term, given growth will slow with the higher rates. But this is a market where you have very strong population growth. You’ve got great rule of law, transparency and a lot of knowledge workers.”
It marks the first time the Blackstone boss has spoken at length about last year’s near $9bn acquisition of the casino that had come under stinging criticism following three damning inquiries in as many states.
It follows Crown last week agreeing to pay a whopping $450m fine to financial crimes regulator Austrac after the casino was accused of being asleep at the wheel around money laundering covering billions of dollars and going back years. Any settlement still needs to be approved by the Federal Court.
With major refurbishment of Crown Perth finalised in recent years and the $2.2bn Crown Sydney tower and casino now up and running, Mr Gray said attention would soon turn to upgrading the original Melbourne Southbank complex that opened nearly 30 years ago.
He described the sprawling Melbourne site that was built around the five-star Crown Towers hotel as “truly one of the kind, given its scale”.
“Melbourne is a physical turnaround story. And our objective would be to invest significant capital there and enhance the asset, which we think will be great for the community and great for tourism there as well”.
And after a delayed opening of Sydney through Covid-19 and uncertainty around the fate of the gaming licence under previous owners, Mr Gray said the Barangaroo site was the “jewel in the crown” and now about getting the operations right and attracting visitors.
“We want to be a best in class entertainment company and hotel business. We understand that there was a lot that wasn’t done right. And we’ve got to come in here and operate at the highest standard, the highest standard from a compliance standpoint, but then make them as attractive as possible to customers”.
Mr Gray pointed to Blackstone’s record on the turnaround of bankrupt casino The Cosmopolitan of Las Vegas, which it acquired in 2014 for $US1.7bn. Blackstone pumped hundreds of millions into the newly built resort and comprehensively overhauled management and operations. It recently sold the business for $US5.6bn, in a transaction that carved up the property assets and casino operating business. Blackstone is ultimately expected to follow a similar template with Crown.
“If you went back to that (Cosmopolitan) story, it was a company that had been built, foreclosed on and had a number of staff issues and needed capital to complete it. And we went in, we brought in a lot of capital and hardware, but then software in terms of restaurants and entertainment, a great management team”.
Mr Gray said Blackstone is upbeat over the potential for Crown to play a role in the recovery of international tourism.
“We think these are great tourism assets. And frankly, I think tourism is one of Australia’s great growth engines. Sydney, Melbourne, Perth – these are world-class cities that people want to visit. So isn’t it a good idea to own world-class assets in those cities?”
Mr Gray said during last year’s negotiations for the buyout of Crown, there were several brief interactions with Mr Packer about the looming deal, but on the whole it was handed by his advisers and the Crown board.
“I think given all the dynamics that were involved at the time, James made a conscious choice that he wasn’t going to be actively involved. So it was basically done here on the ground with the team and with the board.”
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