James Packer on Mariah Carey, Hollywood, China and Gretel
Scarred by a dispute with sister Gretel, huge debts and his breakup with Mariah, James Packer is ready to face the world again.
James Packer takes a deep draw of his menthol cigarette and for a few moments stares out the window at the lush polo field he calls the “Field of Dreams”. He’s crouched forward on the edge of a cream couch in the main living room of Ellerstina, his salubrious polo ranch an hour’s drive out of Buenos Aires, Argentina.
This couch has been his refuge for much of the past year, with iPad and iPhone on hand. A giant television screen hangs on the wall, often tuned to either CNN or Rupert Murdoch’s Fox News. It also carries a full suite of Foxtel pay-TV programs from his former homeland. To the left of the TV in a grand floor-to-ceiling bookcase sits a photo of his late father Kerry with the founder of Ellerstina, Argentine polo legend Gonzalo Pieres. Alongside are photos of Packer’s children — Indigo, Jackson and Emmanuelle — including one with their mother, his former wife Erica. In the corner of the room stand two stunning models: one of his new multimillion-dollar luxury boat, which is still under construction; the other, the $2.4 billion Crown Sydney casino hotel, due to open in 2021.
Packer is dressed in a T-shirt and jeans, his eyes slightly bloodshot. He is clearly nervous, his hands occasionally shaking as he speaks slowly, finally eyeing me through the puffs of smoke. For now, the peace of Ellerstina, named after his family’s NSW polo property, Ellerston, provides a sanctuary for Packer, who has just turned 50. “This is my place, I feel safe and secure here. It is very pretty,” he responds when I ask why he has chosen to hide from the world here in these darkest of times. Ellerstina, with its lonely tree-lined lanes, locked gates and armed security guards, is a world away from the bustling eastern suburbs of Sydney, the glass gambling palaces of Macau and the bright lights of Hollywood, where he rubbed shoulders with the likes of Martin Scorsese, Robert De Niro, Leonardo DiCaprio and Brad Pitt. And where he fell in love with singer Mariah Carey.
He has taken refuge here from the turmoil of the past few years, which pushed him to the brink and almost beyond. “Two years ago I was terrified. I had $2.3 billion of debt at CPH [Consolidated Press Holdings, his private company], over $3 billion of debt at Crown, I’d just appointed Rob [Rankin as chairman of Crown], Macau was falling over and [sister] Gretel was on my doorstep,” Packer barks, lighting another cigarette and swigging a mouthful of Gatorade, his new staple drink (he says he hasn’t touched alcohol for three months). “Then, a year later, I’ve got China falling apart, the Australian casino businesses missing budgets by big amounts, I’ve got Mariah breaking up with me and I’m thinking, ‘F..k!’”
In this interview with The Weekend Australian Magazine he reveals for the first time the financial and psychological scars of the debt crisis he faced after borrowing big in response to his sister’s requests to crystallise some of the wealth she was left in their late father’s estate and head off a potential court battle. At the same time the sharemarket-listed Crown Resorts, of which he owns nearly half, was dealing with the consequences of its own debt binge to fund a bunch of new casino projects and a Macau gaming market where demand had collapsed.
Packer had stepped off the Crown board days before the resolution with his sister in the lead-up to Christmas 2015 and had installed at the company’s helm Robert Rankin, a highly regarded former global head of corporate finance for Deutsche Bank. By then Packer’s romance with Carey was in full swing and critics say he was enjoying a playboy life in Hollywood. He and Carey spent that Christmas together in Aspen and were engaged a month later.
Fast forward 18 months and their marriage is off, Packer is back on the Crown board and, after a string of asset sales and bumper dividends from Crown, his private company is close to being debt-free. Crown has also slashed its debt eightfold.
“I am getting more and more comfortable with having a much more simple life,” Packer says. The billionaire has given up on his dreams to be a global gaming magnate and a Hollywood A-lister. He acknowledges he’s lost friends, put on weight and, for the past year, become a recluse.
A similar scenario occurred after the infamous 2001 collapse of One.Tel, the telco he backed with Lachlan Murdoch, and after he almost blew up his company by paying too much for the Cannery casino group in the US just before the global financial crisis hit. History has been repeated. The question remains, why? Has Packer again been too trusting of people he calls friends? Did he hire the wrong executives? And has he again failed to see or simply ignored danger?
Early last month, Packer celebrated his 50th birthday at Ellerstina with a few close friends including former Cranbrook school chum Ben Tilley. Packer’s likeable personal trainer, former rugby league player Damien Chapman, was also there and remains by the billionaire’s side today at Ellerstina, as does Tilley. The residential part of the property, which Packer inherited from his father, has been renovated over the past decade to include four luxury guest rooms, a new lounge and dining area and a new pool and spa. It also has an 18-hole golf course. The guest lounge area now includes a virtual reality headset, a 50th birthday present to Packer from Kevin Tsujihara, chairman and CEO of Warner Brothers.
After the terrors of the past two years, Packer was in no mood to party on his big day and there were no speeches. “I have had lots of weddings, lots of parties, lots of birthdays. I will give my next big speech at the Crown Sydney opening. It didn’t feel right to me to have a big party. I had 10 friends here, that was the right number of people. This is where I wanted to be,” he says.
“It has been a tumultuous four or five years for me. I think that turning 50 is like the end of a chapter. There are things that I am excited about, there are things that I regret. On the whole I lead an incredibly fortuitous life, and I remember that 90 per cent of the time. Ten per cent of the time I am probably guilty of forgetting it. And there are lots of things to look forward to in the future.”
But what of the alleged follies of recent years: the whirlwind romance with Carey, the Hollywood parties, his so-called playboy life on the yacht Arctic P (now owned by his sister)? Critics wonder why a billionaire with one of the best mathematical and strategic brains in business pursued such a seemingly frivolous lifestyle. And why he spent 17 months away from the board of the casino business that he loves and that holds most of his wealth. In between there was a strange life in Israel, which for a time became his official place of residence and where he remains caught up in a corruption scandal involving prime minister Benjamin Netanyahu, a matter he refuses to discuss. On other topics, a deeply self-deprecating Packer is prepared to cop the criticism but he will defend himself when he deems it necessary. “I am the furthest thing from a playboy there is,” he snaps. “I don’t think anyone has seen me in a nightclub for 10 years. If I am a playboy, where are all the pictures of pretty girls?”
He is also bemused at suggestions from critics that he continues to lead a “weird” life, in reference to his constant skipping between planes, boats and luxury retreats, far away from the limelight and the country of his birth. “I don’t know what ‘weird’ means. I have had the good fortune to spend time with a lot of interesting people, I have an amazing family,” he says. “It is my biggest regret that I let my marriage to Erica fail. It is what it is and she is doing an incredible job with the kids and we are in a great place. Anyone who says I live a weird life doesn’t know me and hasn’t spent time with me.”
Packer’s six-year marriage to Erica Baxter fell apart in September 2013. It was just after his crowning glory as a businessman, winning the licence to build the Crown Sydney complex at Barangaroo on Sydney Harbour. He reveals he is designing an apartment in the $2.4 billion complex that will be his new home and will mark a permanent return to his homeland when the project is completed in three years’ time.
“Getting the rights to and building Crown Sydney will be my proudest achievement,” he says. “It is the most exciting thing in my business life and in terms of my relationship with Australia. I have made a lot of mistakes, but I don’t think many people could have got Crown Sydney up with bipartisan support on the best site in the city,” he says. “Trying to manage media relationships, especially in a place like Sydney, is really difficult. For the first and only time in my life, we had all the major media outlets — even Fairfax — editorialising in our favour. The reason that occurred is because people accept that we deliver a terrific product.”
His new apartment will feature bedrooms for his children, with whom he enjoys a close relationship, as he does with their mother Erica and his first wife Jodhi Meares. “I get on exceptionally well with my two ex-wives,” he says. He recently doubled his stake in Meares’ fashion enterprise, The Upside Corporation, after buying out the 20 per cent holding of his Israeli billionaire businessman and movie producer friend Arnon Milchan, who has also been caught up in the Israel affair in which it is alleged Netanyahu accepted lavish gifts from businessmen including Packer and Milchan.
On two occasions Packer’s children interrupt our interview at Ellerstina with FaceTime calls to his iPad from their home in Los Angeles. “I just want to say what an incredible job Erica is doing bringing them up,” he says. “I always thought she’d be a good mother and she is proving that every day … LA is a really terrific place for them to be. There is a lot of positive energy, a lot of positive affirmation there. And there is not the Packer fishbowl that there would have been in Sydney. They have anonymity there that they don’t have in Sydney. That is really healthy for them.”
In fact, he says his decision to step down from the Crown board in December 2015 was about his kids and not his then blossoming relationship with Carey. “I was attempting to build a business in North America to be closer to my kids,” he says. “The travel was unsustainable.” Packer lived in the LA guesthouse of his friend, actor Warren Beatty, for three years but he has no plans to return to Tinseltown even if his children are there. “It hurts me a lot to be away from them. But I don’t want to be in LA at the moment,” he says bluntly. He talks to his children via FaceTime once or twice a day. “Erica goes out of her way to make sure the kids and I stay close. Until a year ago I made sure the longest I was apart from them was two weeks.”
Erica is due to bring them to Ellerstina for Thanksgiving next month and to the family’s property in Aspen at Christmas. “Aspen is half owned by me and half owned by Erica. I view it as a family house,” Packer says. And in the wake of the Israel corruption investigation, Aspen serves another important purpose: it is listed as Packer’s official residence, according to records recently filed with the Australian Securities Exchange. Tel Aviv had been his official home for the past two years. Hollywood now remains only a memory.
Packer had been introduced to Mariah Carey by Brett Ratner, one of Carey’s closest friends and producer of many of the five-time Grammy winner’s top-rating music videos. After a whirlwind romance he and Carey were set to be married on Bora Bora in French Polynesia on March 1 last year. But it never happened. Packer broke off the engagement in October. Carey reportedly kept her $US10 million engagement ring and was said to have requested a $US50 million settlement.
“The answer is complicated,” Packer says when I ask why he got involved with Carey. “I was at a low point in my personal life. Documenting the negotiations with my sister was taking longer than expected. Brett Ratner put Mariah and me together. She was kind, exciting and fun. Mariah is a woman of substance. She is very bright. But it was a mistake for her and a mistake for me.”
Packer won’t comment on the terms of their pre-nuptial agreement, which was unrelated to the reasons for the split and, according to reports in Hollywood, ran to 37 pages and involved five tranches of payments worth $6 million each. If they separated after five years, Carey was reportedly entitled to $30 million. They have not remained friends. When asked about Packer’s whereabouts earlier this year, she said: “I don’t know where the motherf. ker is.” Packer won’t comment further. Meanwhile, Carey recently announced plans to tour Australia next year, the first time in four years.
Ratner and Packer combined their surnames for the RatPac film production company, launched in late 2012. It became a big name in Hollywood, signing a four-year, $US450 million deal with Warner Bros to fund as many as 75 of the studio’s films. RatPac itself co-financed more than 50 films that picked up 21 Academy Awards and 51 nominations, with hits including The Revenant, Birdman, Creed, American Sniper and Godzilla. But there were also duds, such as Jupiter Ascending, Entourage, Pan, In the Heart of the Sea, Storks and Collateral Beauty. In April, Packer sold his stake to Access Entertainment, a part of British billionaire Len Blavatnik’s Access Industries, following speculation in February — which was vehemently denied at the time — that he wanted out. “I lost $100 million on RatPac,” he flatly volunteers, without flinching, when I ask about the financial returns on the investment. “When the losses hit $100 million, I hit my stop loss.”
He stresses it was a “serious business”, not simply an ego-driven folly. “It was a business with [now US Treasury Secretary] Steven Mnuchin, Warner Brothers, China Media Capital and Brett Ratner,” he declares. “I was trying to find something to do in LA, which is where my kids are, so that was part of it.”
So what of his relationship with Ratner, his good friend, party mate and matchmaker with Carey? There is a pause before Packer answers, carefully. “My disappointment … is there were three sides to the business: the Warner Brothers slate that we broke even on, the stuff we did in China that we broke even on, and the films [Ratner] picked that we lost money on. His job was to pick films and to help us raise further capital.” It sounds like code for a nasty falling out. But Packer goes on: “If I was going to deal with getting out of Macau, the last thing I needed was to be in RatPac, which was losing money. People going around saying I was doing this to party … [it’s] unfair and not what [Warner Bros CEO] Kevin Tsujihara or Steve Mnuchin would say. Brett is a force of nature. Our relationship is OK. Let’s just say I did more for Brett than he did for me. But it was amicable with Brett in the end.”
Packer stresses RatPac had a good relationship with Warner Bros, who “were and continue to be very supportive of RatPac”. His view is backed by Tsujihara, who says Packer “has been a partner and a friend to Warner Bros and to me since we signed our deal with RatPac back in 2013”, adding: “James was an active valued partner and I continue to discuss strategic ideas with him. Working with companies like RatPac has allowed us to expand our production activities, while managing our risk, and we share the upside and downside of these films with our partners. For everyone’s sake, I wish they all worked. But during James’s association with Warner Bros, RatPac invested in a number of marquee titles, including Gravity, American Sniper, Batman v Superman, Suicide Squad, Sully and many others. He was a great partner, and we miss him.”
At the end of the day, Packer is a pragmatist. “I gave it a shot and it didn’t work,” he says. “I wish it did work but it didn’t. I cut my losses and it has been a couple of years of cutting my losses.”
Packer made other attempts to build a business in the US. He had long held ambitions for a successful Las Vegas project and in 2014 Crown bought land on the Las Vegas strip next to a casino owned by casino magnate Steve Wynn. The plan was to develop the $2.5 billion Alon Las Vegas project. Crown had partnered with former Wynn Las Vegas president Andrew Pascal, with backing from private equity firm Oaktree, to develop the 1100-room resort. But challenges in financing slowed the planning and Crown revealed last December it was axing the project.
Says Packer: “I wanted to have a business in either LA or in Vegas so I could be close to my kids. The business I tried to make work in LA was RatPac and I lost $100 million. In Vegas I should have owned Cosmo [the Cosmopolitan casino and hotel], it was a great deal, but unfortunately we didn’t do that deal and bought the land next to Wynn instead.”
For the first time publicly, Packer is talking about what he describes as an “incredible opportunity” in 2014. “People can talk about the ham-fisted ways we went into North America before the GFC but in 2014 we had an opportunity to buy Cosmo for $US1.5 billion,” he says of an exclusive option offer on the property from the then co-CEO of Deutsche Bank, Anshu Jain. “My advisers and management talked me out of it,” he says bluntly. “And if we had done that and paid for it by selling Macau shares that were then valued at $40, we would have had a more than $2 billion value increase for Crown shareholders. We would be in front in America rather than being down $1.7 billion [after the disastrous Cannery deal].”
To explain the maths, Packer says he wanted to pay for the Cosmo investment by selling a parcel of 40 million shares in Melco Crown — a joint venture with casino operator Lawrence Ho in Macau — while they were trading at almost $40 when Macau was at its peak. Instead he sold them last year for $18 per share. And since 2014 the value of the Cosmopolitan has soared. “In simple terms we would have got $US780 million more for selling 40 million Melco Crown shares roughly 20 dollars higher, and the asset has gone up conservatively $US750 million as well,” he says.
The deal would also have put Packer in a far more robust financial position to deal with the most significant factor underpinning the stresses of the past two years: paying out his sister at a time when his empire could least afford it.
Just before Christmas 2015, a decade after the death of their father, the siblings finalised the terms of a split of the fortune provided for in Kerry’s multibillion-dollar will, administered by businessmen David Gonski and Lloyd Williams. The confidential framework was negotiated over 12 months and was initially agreed and then recut with the assistance of Matthew Grounds (head of UBS in Australia) for James, and Will Vicars (principal of Caledonia Investments) for Gretel. The then Consolidated Press Holdings CEO and Crown chairman Robert Rankin was also involved. Packer confirms that at times the talks were not pleasant. “Stages of the negotiation with Gretel were difficult, but a framework for future resolution was achieved,’’ he says. “But [by year’s end] I expect to be close to debt free at CPH, which has been my main intent for some time.’’ I ask how he and Gretel get on now. “We have not spent a lot of time together,’’ he says. “She is getting on with her life and I am doing the same.”
None of those involved in the at times acrimonious discussions would comment on the details, but it is understood both sides believed the other was at fault on different occasions. At times Packer allegedly did not respond to letters from Gretel’s lawyers and was aggressive towards her and her advisers. But he also at times believed his sister was being unreasonable and claimed she had “strung out’’ the negotiations to put more pressure on him. It is believed Packer also paid hundreds of millions of dollars earlier than the time frame that was initially agreed.
While he won’t comment on the terms of the deal, which is said to be worth about $1.25 billion, he does reveal for the first time how much he borrowed. “My sister and I agreed a framework. Including that agreement, CPH’s debt got up to $2.3 billion. [It was $1.5 billion when his father died in 2005.]
“I have never handled debt well. After the GFC I swore ‘never again, never again’. Yet at the end of 2015 I found myself with 50 per cent more debt than we had during the GFC. Crown’s debt was over $3 billion and forecast to get to $5-6 billion. We had not said no to a new project in Vegas, but we had to build a new Melbourne tower and Crown Sydney. There was no obvious way out of it so it was very stressful.
“From two years ago, the mantra became ‘asset sales, asset sales’ … and today CPH’s debt is around $100 million. And Crown’s balance sheet is in the best shape it has ever been. [Its debt has fallen from $3.2 billion to $400 million.] And I have managed to keep the controlling shareholding in Crown, which was what was most important to me. At this stage in my life, I don’t want anything other than my Crown shareholding. I am not looking to make investments outside of Crown.”
Some analysts who follow Crown believe Packer’s revelations could raise fresh questions about the governance of the gaming company and whether the Melco sales were driven by the stresses in his private firm. Why did a Crown board boasting directors the calibre of former Qantas chief executive Geoff Dixon, advertising legend Harold Mitchell, Macquarie investment banking whiz Ben Brazil, former AFL chief executive Andrew Demetriou and former Howard government cabinet minister Helen Coonan decide to sell Crown’s most valuable growth asset in the Chinese gaming mecca of Macau when it was at rock bottom?
Theo Maas, a partner at Arnhem Investment Management, last year lamented that Macau was one of the prime reasons his firm held Crown shares. Crown made six times its money over 12 years in Macau. But since it sold out to its partner, Lawrence Ho — son of Macau gaming magnate Stanley Ho — Melco Crown shares have risen more than 30 per cent. Ho, with whom it has been suggested Packer fell out, is laughing all the way to the bank.
Packer stresses he was not on the board so had no role in its decisions, even if the sceptics might say otherwise. He also notes that all shareholders enjoyed the benefits of extra dividend payments made by the company from the sale proceeds, and that Crown now has the financial capability to finance its development pipeline. He insists there has been no falling out with Ho. “We made over $3.5 billion with Lawrence. And he has made money from the shares he bought from us. Lawrence Ho has never done anything but behave incredibly honourably and generously to me.”
Packer still shakes his head about the issue thatrocked his company more than any other event in its history: the detaining of 18 of its staff in China last October. They included Crown’s head of international VIP business, Jason O’Connor. Many still wonder why Crown allowed its staff to ignore warnings from the Chinese Government about a crackdown on foreign casinos marketing their properties directly to its citizens on the mainland, which led to the arrests.
In his first expansive comments on the affair, he chooses his words carefully, knowing there are class actions pending against Crown. “It did rock my world … Reading in every newspaper around the world that Crown was a bad corporate citizen shook me to the core. Because I had put in so much effort over so many years to ensure Crown was a good corporate citizen. And it wasn’t just James Packer being attacked, all of a sudden Crown was being attacked and that was putting the people who were in jail at risk,” he says. “Two of the most successful Australian businesses on the ground in China I had a role in — Melco Crown and Zhaopin [an online jobs company]. I had advocated China, believed in China, I had gone and been involved in businesses in China.
“I definitely feel let down,” Packer says. “I wasn’t on the board at the time but it is pretty clear Crown should not have been put in the position it found itself.”
It is notable that Crown’s two most senior executives, chairman Robert Rankin and CEO Rowen Craigie, stepped down only months after the arrests. They were replaced by Packer’s long-time confidant John Alexander, who is now doing both roles as Crown executive chairman. Alexander and Guy Jalland — the new CEO of CPH and a Crown director — have also been cutting a swath through the cost bases of both companies.
Despite being based in Argentina, Packer says he is back on top of the numbers at Crown. “I check them every day. I am on the phone to my executives each day. I am very involved in terms of the quality of what Crown is.”
He still has strong supporters. Andrew Bassat, chief executive of the online employment business Seek, which was long supported by Packer, says that despite the problems of recent years his friend has “a great track record” overall. “He is one of the few leading Australian businessmen prepared to take on tough challenges and big risks, which of course comes with the occasional failure,” Bassat says. “And there should be much more focus than there has been on his achievements, including being one of the few old-media guys to get out in a timely fashion, and his vision and courage. He was really hugely helpful to me and Seek in getting us to lift our sights and be more aggressive and we could not have asked for a more supportive or honourable partner.” Perpetual’s head of equities, Paul Skamvougeras, who used to work for Packer, also remains a believer. “James has consistently created long-term value for Crown shareholders,” he says.
Even if Packer himself sometimes doesn’t believe it. In his darkest days, he considered dumping Crown altogether to cut his debt. “I am coming to the end of a chapter,” he says. “It has been a clean-up, debt-reduction chapter. A dealing-with-my-obligations-to-my-sister chapter. The end of this year is really when that will all be done.
“My next chapter is Crown Sydney, which is going to a very big deal. But it is three and a half years away. I need to work out what to do with myself for that period [beyond being a Crown director].” One goal, he says, is to get fit again. He had gastric band surgery in 2012 and dropped 35kg but has put it back on in the past year.
Despite the mistakes, he remains at ease with how he has managed his larger-than-life father’s legacy. “I’m really at ease with my Dad. If he came back today I’m sure there would be things where he would say, ‘How could you have been so stupid!’ But he would have struggled to sell the media business — and of all the things that have happened, that was the most important,” he says.
Packer is referring to arguably his greatest deal, selling the Nine Network and ACP magazines to a private equity fund before traditional media went into decline. It also allowed him to focus on Crown and get into Macau. “We sold for $5 billion and TCN9 and GTV9 and ACP wouldn’t be worth much more than $1 billion today,” he says. “In all probability my dad would have done better than me. But we will never know.”
James Douglas Packer will always resent the public interest in his life. But after another period of despair, introspection and reclusion, the billionaire is getting closer to facing the world once more. His investors and supporters will now be hoping that history does not repeat itself. “I have always been shy. I have never liked the publicity — I get more publicity than anyone and have for 20 years. Most of it is negative. And you get gun-shy of getting hit,” he says.
“But I reckon I have done a better job than many. Not perfect, but not the worst.”
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