Australia’s Richest 250 #78: Bruce Mathieson

Behind Bruce Mathieson’s tough reputation is an astute eye for business and a clear appreciation of his own good fortune. But mention pokies at your own risk

Bruce Mathieson. Picture: Russell Shakespeare.

Billionaire Bruce Mathieson is wearing shorts and sitting with his bare feet up on the table outside his Mermaid Beach mansion on the Gold Coast, looking directly at the surf crashing onto the beach only 50m away. A tough nut with few airs or graces, he has carved out his estimated $1.18 billion fortune from the rough-and-tumble pubs and hotels game, in which he hasn’t been afraid to use his fists as well as colourful language to get his way over more than 40 years.

FULL LIST: Australia’s Richest 250

Having sized up his interviewer over most of a bright and increasingly warm summer morning – as has his bull mastiff cross, Inky – Mathieson has agreed to talk about the ups and downs of his career. It has included scrapes with Alan Bond, fights with critics and what he calls with barely hidden disgust “the establishment”, and pulling himself up from a grindingly poor upbringing in Port Melbourne.

And while he constantly plays down his acumen, Mathieson has at various times owned and run an astounding 926 pubs around Australia since 1975. He is said to be able to size up the value of a hotel just by looking at its place on the map, and can walk in and instantly calculate how much beer it should be selling based on its rough floor space. He knows his industry inside and out and doesn’t need a calculator or balance sheet to prove it.

Yet having his feet up on the outdoor table has little to do with a tough-guy persona. Mathieson had been bitten by his daughter’s cat the previous week and there have been concerns that a subsequent infection may reach the bone in his leg. He has been on medication and needs to constantly have his foot above his heart line.

He is dealing with the issue in what his friends say is his usually self-deprecating and humble way. He is extremely polite and hospitable, engaging and warm, at times uproariously funny and he laughs a lot – mostly at himself. And his language is colourful. Very.

“I’ve been fortunate, haven’t I?” Mathieson says as he looks around, surveying the pristine beach and $40-million mansion behind him. “I want it to be said that I have been fortunate that I got into an industry that I love, and my whole family have been so supportive of what I have done.”

Just be prepared for him to pull no punches when he is asked about poker machines. His blue eyes narrow and suddenly he’s peering with steely intent over his prescription sunglasses. But it is an unavoidable topic. His ALH Group, of which he owns 25 per cent and Woolworths the remainder, is built on the back of the biggest hotel group in the country and tens of thousands of pokies.

They are, as he stresses, legal and heavily regulated. They are also an ongoing lightning rod for controversy over concerns they are addictive and cause problem gambling.

Mathieson’s amazingly successful partnership with Woolworths – last year ALH made a profit of $466 million before tax and interest on revenue of $4.44 billion and paid $162 million in dividends – may come to an end this year.

Simply, Woolies management is sick of copping grief from anti-pokies campaigners such as corporate agitator Stephen Mayne and Tim Costello, the Baptist minister and director of the Alliance for Gambling Reform.

Mathieson has little time for their arguments, though. “What would I have guilt for?” he says. “Why would I have any guilt in running a legal business? Some of the shit that is written is just a disgrace. Put that down. It is untrue.

“The point is this: we are in one of the most restricted and governed industries, and quite rightly so; I don’t go crook at that. You don’t want problem drinkers or anything. What good can that do your business? How far can you restrict people? We know smoking is no good, but people smoke. Same with drinking.

“Gambling is no good if you do it excessively. So where do you draw the line?”

In return, Mayne describes Mathieson as “a ruthless operator who is a classic publican, who is an aggressive, take-no-prisoners kind of guy”, and claims that of the 82 pubs ALH own in Victoria, 79 have pokies. “They choose to do that and they are responsible for 25 per cent of all the pokies losses in the state every year,” Mayne says.

Costello says that his “issue isn’t with Bruce as such” but he does say the billionaire could have chosen a path of slightly less profit, while admitting that what ALH does is “legal, and very lucrative. I more have an issue with the regulators who have become hooked on it and allowed it”.

‘Corbett and Mathieson are an unlikely duo. The former is a quietly spoken committed Christian and the latter is comfortable with being described as unpolished.’

Mathieson’s Woolworths partnership famously stems from a chance meeting with the company’s former boss, Roger Corbett, in a hospitality suite at the 2000 Sydney Olympic Games, after which the combined group made its first foray by buying Queensland hotels. Meanwhile, ALH had been floated on the ASX by Foster’s Group in 2003, only to be taken over by Woolworths and Mathieson a year later and combined with their other interests. Today the group has more than 300 licensed venues and more than 550 retail liquor outlets around Australia.

Not surprisingly, Corbett is a staunch defender of his friend: “Pokies are legal in the community and if the community doesn’t want to have the poker machines or change the rules, that is a government prerogative. You don’t change the rules by leveraging the shareholders or managers of Woolworths, or leveraging people like Bruce. He has an obligation to shareholders to make sure the assets are effectively managed and run.”

Corbett and Mathieson are an unlikely duo. The former is a quietly spoken committed Christian and the latter is comfortable with being described as unpolished. But they’ve since pursued other ventures together, including the ASX-listed Mayne Pharma and the private energy-efficiency company Beovista.

Some of Mathieson’s appearances before Woolworths committees or interactions with directors have become legendary, due to their brevity, and occasionally, their colour. “He is extremely astute,” Corbett says of him. “He has a commercial common sense about him that marks him out. But he has little tolerance for people who are not genuine, [and] if he is provoked with what he considers stupidity or ridiculous behaviour, then well, yes, he can invoke some strongly put extra words to embellish what he is saying.”

A lot of Mathieson’s disdain for people with fancy qualifications and job titles goes back to his tough upbringing. He was two when his father died from polio in the Victorian country town of Cobden, and his mother moved the family to Port Melbourne, then a working-class dockside suburb.

“His mother used to clean a wealthy person’s house in Hawthorn and would walk with the family there and back every day,” says one of Mathieson’s friends. “But in all that time the owner never ever offered her a lift back or anything. So that is the core reason why Bruce doesn’t like the establishment. It all goes back to that.”

Mathieson describes his Port Melbourne upbringing as “wonderful years”. Like many other boys, he would procure goods such as American or British cigarettes that came off the ships at the wharf and on-sell them for profit. He could also make a few bob getting mussels off the pier, boiling them in a copper pot and selling them to drinkers in the local pubs. “There was always a way to pick up a few bob and that’s why I didn’t go to school much,” he says.

At 13, Mathieson became a toolmaker’s apprentice for a Mr Bainbridge – “he was a bloke who until the day he died I called mister” – who helped straighten him out. To a degree, anyway. Mathieson would at one stage be kicked out of night school for punching a teacher.

Later he would go into business himself, and by specialising in plastics he built up a strong engineering company called Zim Plastic Mouldings. In 1966 he married his wife Jill and the pair have been together ever since, though her parents did not think her suitor would amount to much. He ended up operating three factories making steel cabinets, swivel chairs and other office products, and supplied a South Australian company called Namco.

In 1975, he decided to visit that business and drove his family to Adelaide over a few days for a quick holiday. Fatefully, he tried to book a room at motels in Bordertown, only to be continually knocked back because he had small children in tow, before he eventually found a room for the night.

“So we were lying in bed and I said to Jill, ‘Geez these places must be good – they’re all full; I should buy one’. Jill said ‘Bruce, you’d never be any good in a motel but you’d be great in a hotel.’”

On arriving back in Victoria, Mathieson bought the Macedon Family Hotel to the west of Melbourne but soon decided he preferred a pub in the city. He purchased the Armadale Hotel in that suburb’s High Street and turned it into what he claims was the biggest entertainment pub in Australia.

“We put in a disco,” he says. “It cost me $6000! We paid bands $180 per night. I remember John Farnham and [his manager] Glenn Wheatley after a year said they wanted $450. So I said as long as my bum pointed to the ground I’ll never pay $450. But we had some wonderful bands through.”

‘Mathieson would eventually have to sell his substantial portfolio and pay out the banks, even though the business was profitable and worth plenty.’

Mathieson kept buying up pubs. He and Jill would drive around on a Sunday looking at property, a pursuit that would become a passion, and sizing up what could work as an investment. Mathieson offered money for sites that weren’t necessarily up for sale but would find a way to strike a bargain and “make my money upon entry”.

By the middle of the heady 1980s, he even had a joint venture to sell bottled water. But the partnership broke up and while he was in town at a meeting to settle terms, he saw Bond Corporation executive Peter Beckwith. Perth entrepreneur Alan Bond had by then bought brewer Castlemaine Tooheys and Mathieson spied an opportunity to get control of its portfolio of hundreds of pubs.

“So I followed [Beckwith] into the toilet and said ‘I would like to talk to you about buying all your hotels’. By the next week I was on a plane to Perth and I ended up with 369 pubs for $323 million. It was one of the biggest property deals in those days. It was 1986.”

Mathieson would hold 25 per cent of what was known as the Austotel Trust, but Bond would strike trouble and a dispute with banks would last for several years. Mathieson would eventually have to sell his substantial portfolio and pay out the banks, even though the business was profitable and worth plenty. Some estimates have it worth up to $10 billion today, and while he is not crying poor, Mathieson says he learnt lessons about being careful with partnerships and about having too much debt.

“I came out with cash and that was about it. I just started operating again. Half of those pubs I own again now; I knew how to operate them already, I guess. Of the 148 pubs I had in Queensland back then I’d own 100 again now. That’s why when I say I’ve owned 926 pubs, some I’ve owned more than once.”

By 2000 Mathieson was operating 35 pubs in Victoria, and then came the Woolworths deal. But he and the supermarket giant could be headed for a separation this year. He may be stung, but he is sanguine about the situation, in public at least.

“Together we have built a wonderful business,” he says. “We have been complete opposites, and a lot of time that works. This has been one of those times, and I don’t think anyone could say it hasn’t been a great success.”

Whatever is destined to happen to ALH, though, Mathieson and his family will remain in the pub game, with Bruce Jnr now running ALH. He says pubs will never go out of fashion, and if they do they have development potential given they usually sit on prime sites. But for the most part pubs are still excellent investments, and having the scale means Mathieson has a recession-proof business given Australians love to eat, drink and gamble.

“Licences are getting harder and harder to get, so that underpins a lot of the value you are talking about,” he says. “I don’t know many other businesses that do that. If you have the properties you have great locations too.”

And poker machines? “They are critical. It is a package deal. You have to invest in a business that runs seven days a week, 24 hours a day. You want to be paid as much when you’re sleeping as when you’re awake. You’re always trying to eliminate risk, so the more you can limit that the better off you are.”

Otherwise, Mathieson says he continues to pursue deals for pubs or other property – he has moved house dozens of times, and owns commercial buildings and large tracts of lands in Victoria and on the Gold Coast – and enjoys “the challenge and the art” of a deal. He says while 90 per cent of transactions he looks at won’t come off, he always considers them, “because the day you don’t is the day you miss out”.

“If you have good value and good facilities, people will come,” he says. “I love them more today than I have ever loved before. It’s a disease thing, I guess. You either love it or you hate it, and I love it. I love property; it is my thing.

“It’s like a bloke collecting stamps or cars. I think the bloke upstairs doesn’t make any more of this,” he says, pointing at the ground and surrounding land. “Will it be worth more money in 100 years? I think it will be.”

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