Crown Resorts: How one company dominated two big cities

Crown Resorts used the lure of multi-billion dollar projects to dominate the skylines and commercial pulse of the nation’s two big cities.

One day, the full story will be told of how Crown came to dominate the skylines and commercial pulse of the nation’s two most populous cities, Melbourne and Sydney.

It all harks back to 1993, when Jeff Kennett awarded a Victorian casino licence to hometown favourite Crown, whose principals included one of the then premier’s mates, then-Liberal Party federal treasurer Ron Walker, along with developer Lloyd Williams and former Rio Tinto boss Rod Carnegie.

The licence would later be amended a dozen times by Liberal and Labor state governments alike, as the ambition of the project expanded exponentially to become the state’s biggest ­employer.

In 1997, after a temporary casino had opened and Victoria was emerging from a severe recession, Crown splashed out $50m on an opening party for its permanent casino at Southbank, coinciding with the sixth variation of the ­licence.

Some 25 years later, as the James Packer-controlled Crown agrees to an $8.9bn takeover offer from a US private equity group, Kennett recalls hosting the event, saying how proud he was that “so many things came together under Lloyd (Williams)”.

“There are always people who are anti-gambling, and there’s been revelations of money being washed (through Crown) in recent times,” he tells The ­Australian.

“But it’s a great facility and it will be a great facility for the next 20 years.”

The glittering marble and granite gambling temple to emerge from the muddy banks of the Yarra River bore little resemblance to the original design.

It was also clear that the $2.2bn project had swamped Crown’s finances, enabling Kerry Packer to enlist his ASX-listed Publishing and Broadcasting to take control in 1999 through a $1.8bn share swap. While PBL’s intervention brought some welcome financial stability, it wasn’t long before plans were developed to take Crown up the eastern seaboard to the nation’s most international city. Just as with Melbourne, it was Sydney’s turn to be seduced by the prospect of untold riches from a $2.2bn hotel and casino project, this time at the harbourside ­Barangaroo.

Victoria’s enthusiasm for repeated extensions to the scope of the Southbank project was matched by the NSW government’s controversial embrace of Crown’s unsolicited bid for a second state licence, in addition to the one held by Star.

Repeated calls for an open tender process were brushed aside.

Crown Casino at Melbourne’s Southbank. Picture: Getty Images

James Packer, who paid $72m in 2017 for a two-floor spread on the 48th and 49th floors of the Barangaroo tower, often said the project was a “gift to the city” and “the thing that will draw me back (from overseas)”.

But then, in a private email to then-Crown executive chairman John Alexander, which came to light in one of the innumerable regulatory inquiries into the company, Mr Packer expressed a more realistic, unsentimental view.

“Let’s be very clear hitting the numbers is more important to me than Crown Sydney,” the billionaire said.

“If we don’t hit the numbers I won’t be here as a shareholder and Crown Sydney will just be an apartment to me.”

The real surprise would be if anyone had believed at the time that Mr Packer thought dif­ferently.

In fact, if a similar situation arises in the future, history is highly likely to repeat itself.

Mr Kennett says no one could have predicted at Crown’s opening a quarter of a century ago that it would change ownership twice and become the poster child for poor governance and endless investigations by regulators.

“I think it all comes down to greed and the concept of trying to maximise profits in a very competitive world,” he says. “It’s not so much the grind trade that gets you into trouble, although there’s the washing of money by certain undesirables.

“It’s more to do with the whales – the people of great wealth who you have to attract by offering special deals and discounts.”

Crown’s foray into the Chinese market, where the authorities arrested 19 staff for luring mainland citizens overseas to gamble, was a “disaster”.

Multiple inquiries have found that some Crown directors should have acted on warnings that staff were at risk before the arrests.

“Terrible mistakes were made and the outcome could have been substantially worse – people could have been imprisoned for 40 years,” the ex-premier says.

“That was the thing that really hurt me the most.

“Until recently, (Crown) was a board of sycophants and it was a recipe for disaster, doubly so for a public company.”

Kennett says he’s sorry “on a personal basis as opposed to a financial basis” about Mr Packer’s well-documented mental health challenges.

“I think he’ll have enough to live on,” he says.

“He’s reached for the stars and they’ve fallen from the skies to some degree, and I’m worried about his health and welfare.

“But he could have controlled the functioning of Crown better than he did.

“You don’t want people on the board who owe their allegiance to the major shareholder over and above their corporate responsibilities,” he says.

Blackstone, however, would be a very different owner.

Kennett says he has “great confidence” that the new board and management will apply the proper standards.