Robert Rankin well-placed to deal Crown Resorts’ cards

Incoming Crown chairman Robert Rankin is bemused by commentary about the transition of bankers into management.

Crown results

Ask Robert Rankin how you go from being an investment banker to chairman of a $10 billion global enterprise controlled by James Packer and the boss of the billionaire’s $5bn private company, and the former Deutsche Bank executive initially gives a wry smile. It quickly gives way to a steely stare.

“I am a bit bemused by commentary about the transition of bankers into management roles,” he says. “Investment bankers come in all shapes and sizes from deal-doing boutique junkies to complex platform managers.

“For the past 10 years I have run large teams and complexes across multiple countries and time­zones,’’ Rankin tells The Weekend Australian after being named the new chairman of Packer’s Crown Resorts.

“Driving strategy, but in particular determining how we allocate capital — both financial and human — are key skills I bring to the roles at (Packer’s private company) Consolidated Press Holdings and Crown. Coupled with governance and process.”

Packer surprised the investment world 15 years ago when he hired respected Macquarie Group banker Peter Yates to run the family’s media and gaming company, Publishing and Broadcasting.

Now history is repeating itself, but Rankin wants to make it plain he is no rainmaking dealmaker plonked by Packer into the big chair in the Crown board room.

At Deutsche he was focused on running a corporate banking and securities business with 25,000 staff spread across 50 countries with a trillion-dollar balance sheet.

Originally based in London with Deutsche, he moved in April 2012 to Hong Kong, where he is now based.

And Packer, who has been looking for the opportunity to step back from the chairman’s role at Crown after spending more time out of Australia in the past year, clearly feels he has finally found the right man to fill his shoes.

Crown director and adver­tising industry legend Harold Mitchell says Rankin has “great experience in dealing with big organisations with major family matters, working in part with the Murdochs, and other important families in Asia’’.

Indeed one friend of Rankin’s quipped that the 51-year-old’s penchant for advising the rich has saddled him with “BDS” — or “billionaire deficit syndrome’’.

It has been a rapid rise for Rankin, who has served a six-month apprenticeship at CPH since his appointment in November, which raised eyebrows. But he hasn’t looked back.

“Many of us change roles and within a few months after you’ve dug deep, you soon know whether you’ve made the right call,” Rankin says. “I am as excited now as I was the day I signed up.’’

Rankin has no operational ­experience in the gaming industry, yet is highly rated by Crown’s foundation chairman Lloyd ­Williams, one of Packer’s most trusted confidants.

“ Rob is an excellent choice — he has had an outstanding business career and shareholders are very fortunate to have obtained an international experienced businessman to lead them forward,’’ Williams says.

Rankin only laughs when confronted with banter in banking circles that he and Packer’s trusted adviser, UBS Australia chief executive Matthew Grounds, will be competing for the attention of their billionaire master.

“I find that observation amusing,’’ says Rankin, a former long-serving UBS executive himself.

It has also been speculated that Grounds was once offered the role Rankin has taken, but politely declined.

“Matthew and I worked together for 16 years. I competed against him for five, and look forward to him remaining a trusted adviser and friend for many years to come,’’ Rankin says.

Grounds, who first introduced Rankin to Packer a decade ago, says the former is “very experienced and has a strong financial discipline background and management capability’’.

“And Rob has strong Asian experience. So the combination of all of those things I’m sure will benefit James and Crown shareholders,’’ Grounds says.

“CPH’s most significant investment is in Crown (it owns a 50.1 per cent stake) so it makes sense for CPH to invest in the depth and capability of Crown by having Rob in this role.’’

Packer asserted on Thursday that CPH had been “subsidising’’ Crown for many years while he refused to take a salary in his role as chairman. The billionaire has looked on with envy at the tens of millions of dollars paid to the likes of the Lowys and Murdochs, who also own big stakes in their ­companies.

In his new role as a senior executive director he is seeking a salary of about $10m a year and another $10m for CPH’s executive team. Just how this goes down with Crown investors remains to be seen.

“I am going to be working just as hard. There aren’t many Australians who have built a truly global business,” Packer tells The Weekend Australian. “I am going to give it my all to be one of the Australians who succeeds in that ambition.’’

Navigating the new remuneration arrangements through the board and shareholders will be one immediate challenge for Rankin. So will be the billions of dollars of capital expenditure pouring into Crown projects in Macau, Sydney and Perth. Billions more will soon pour into Las Vegas and potentially Japan in the coming years.

At the same time Packer’s biggest bet of all — that the Macau gaming market would continue to be powered by the unrelenting growth of the Chinese economy — has become a losing hand for the moment as the government’s crackdown has crippled the gaming province.

Crown’s profits fell 41 per cent last year, dragged down by a slump in earnings at its 34 per cent-owned Asian gaming joint venture Melco Crown. But Rankin has every confidence that Melco’s 60 per cent-owned $3.2bn Studio City casino resort, due to open in October, will be a winner, and that the worst is over for Macau.

“The year-on-year comparisons for Macau get easier from here on,” Rankin says.

“We would expect the year-on-year numbers to mathematically become less demanding over the coming year.’’

He is also unfazed about China’s moves to devalue its currency by 3 per cent after a run of poor economic data, which could make it more expensive for Chinese to travel abroad to Crown’s casinos.

“The Australian dollar has depreciated far more significantly than the renminbi over the past 18 months and it has fallen in line over the past few days so Australia’s short-term attractiveness as a tourism market has not changed,’’ he says. “If anything it has got better against the US.’’

Then there is Packer’s Las Vegas strip dream. Some are pitching Crown’s multi-billion-dollar Alon Vegas project as Packer’s assault on casino magnate Steve Wynn.

Crown is partnering with former Wynn Las Vegas president Andrew Pascal for Alon and has been poaching executives from Wynn. But Rankin, who used to do work for Wynn and sat in the same row as Packer and Wynn at the Floyd Mayweather v Manny Pacquiao fight in May, says there is no animosity. ‘‘James has a very respectful relationship with Steve as a true industry legend and friend,’’ Rankin says.

He says a presence for Crown in Las Vegas is a missing piece for the company.

“It is very challenging to envisage the circumstances you can build one of the world’s great entertainment and gaming brands without a credible and exciting presence in Vegas,” he says. “We are very excited about the Vegas opportunity but will be prudent and conservative about how it is financed from the get-go.’’

The ghosts of Packer’s past losses in America still haunt the billionaire. Even Rankin knows about dealing with a problem child in Vegas — Deutsche took over the loss-making Cosmopolitan property after its developer defaulted on a loan and took a big haircut on its eventual sale.

It is understood Deutsche and Credit Suisse have been appointed by Crown to arrange fin­ancing for the Alon project. Rankin won’t comment on this, but notes that the project has a “very equity incentivised management team that has skin in the game’’.

Then there are Packer’s pipe dreams of Japan and Sri Lanka. Sri Lanka is dead. Japan, for the moment, seems to be on life support. But Rankin says the latter remains an opportunity for Melco Crown. He was in Japan in July and will return there before the end of the year.

While Crown will now be a core focus of Rankin’s, he has already made his mark at CPH. In March, Packer ended his family’s 43-year association with Snowy Mountains ski resort Perisher Blue, selling it to the US-based Vail Resorts for almost $180m.

CPH’s Pretty Girl Fashion Group could go the same way as Perisher despite posting its best result in more than a decade last year. Its liabilities continue to exceed its assets.

CPH also has a small holding in the Ten Network and a passive 25 per cent interest in fund management business Ellerston Capital, now owned by its staff and run by former Packer lieutenant Ashok Jacob.

“We like our Ellerston investment and over time continue to see financial services and asset management as an area which we would look to grow substantially,’’ Rankin says, without giving away any hints as to its plans.

CPH’s international growth investments are its stakes in US property website Zillow, Asian online job marketplace Zhaopin and RatPac Entertainment, a Hollywood film development and production finance company.

Packer wants CPH’s focus under Rankin to be on investments in the technology sector in Israel and elsewhere with a focus on cyber security, data storage and online gaming. “CPH has one core capital-intensive business in integrated resorts,” Rankin says.

“It also has a core competency developed through James in digital media, particularly in the transition from traditional media to digital.’’

Packer, who now divides his time between Israeli and the US, is keen to do more with Paul Bassat’s Square Peg in the Israeli and global tech scene. He will also do more with Hollywood film producer and good friend Arnon Milchan and has bought a stake in Milchan’s Israeli security company, Blue Sky International.

“In some areas we will be happy to make a direct investment or do a partnership with people like Square Peg,” Rankin says. “But selectively we are very open to building and operating businesses in this space. And in this space we are adopting a capital light strategy.

“James really wants to focus on continuing to build out Crown as a global brand and developing a couple of key online technology related businesses within CPH.’’