James Packer is looking to launch a Crown casino in Las Vegas with reports the billionaire is going to lodge an expression of interest for The Cosmopolitan.
Crown will lodge an expression of interest for the three-year-old casino and hotel complex, The Australian Financial Review reported today, citing unnamed industry sources.
The Cosmopolitan is loss-making but Crown is said to be willing to pay $2 billion for the 8.7 acre site.
SmartCompany contacted Packer for comment but did not receive a reply prior to publication.
A bid for The Cosmopolitan would not be the Crown chairman’s first foray into the US market. Here are Packer’s biggest gambles.
1. US casino failures
Packer’s involvement in the US market to date hasn’t gone well, with the billionaire making a series of investments in large and unsuccessful projects.
Crown Las Vegas was a proposal for the tallest building on the strip and was to be constructed at a cost of $5 billion, but Crown ended the project after it was deemed not a “commercially viable contract” and recorded a loss of $44 million.
Crown also invested $333 million into the $2.9 million Fontainebleau Las Vegas but lost all this money when the plans were scrapped.
“I lost a bunch of money in America because of the financial crisis,” Packer told Forbes recently.
Forbes estimated this “bunch of money” as losses of $2.6 billion, which is nearly half of Packer’s fortune.
2. Australian casino wins
Looking to repeat the success of Melbourne’s Crown Casino in Sydney, Packer sold out of casino rival Echo Entertainment Group so he could go all in on the $1.5 billion Barangaroo casino. The casino was approved by the NSW government in controversial circumstances.
Packer claims for him, Barangaroo, is about more than just money.
“This is more than economics for our company. I’ve lived in Sydney all my life; this city has been very kind to my family for many, many years and I think this is an opportunity for us,” he said.
“There is no one anywhere who is going to try harder than our company to build something special.”
3. Early internet adopter
Packer cottoned on to the power of the internet at an early stage with strategic stakes in online classified sites Seek and CarSales.
Seek was a particularly canny investment for Packer, who bought 25% of the then-private company for around $33 million in August 2003.
Packer’s Consolidated Media Holdings sold its stake for just over $440 million in 2009, increasing the value of its original investment 13 times over in six years.
4. Selling the family business
Despite Packer’s long family history with Channel Nine, when the time came he was happy to cash out. In 2006, Packer sold off 50% of his media assets to private equity group CVC Asia Pacific for $4.5 billion to create a new company, PBL Media. Then in the following years, Packer sold the remainder of his interests in PBL Media.
Looking back, Packer said the decision to sell had been relatively easy. “I thought the internet was going to make it much tougher for those businesses – that one was probably the right call,’’ he said.
The fallout from the collapse of telecommunications company, One.Tel, continues with a $40 million settlement approved last week. This was one roll of the dice which left Packer light of pocket and dealt a real blow to his reputation.
Packer was a director of One.Tel, which was declared insolvent during May 2001, a collapse which cost PBL $327 million. Packer said he had learned “painful lessons” from the collapse.