Crown leaving the Alon casino project is the second time James Packer has dropped a Las Vegas Strip.
When Crown Resorts backed out of the proposed Alon Las Vegas casino and resort earlier this month, many were concerned whether the resort would be built. Developers of Alon Las Vegas have said they plan to continue with the project, though.
Andrew Pascal, the CEO and co-chair of Alon, said the move by Crown Resorts did not surprise him, given the recent shakeup at the top of Crown’s corporate structure. Mr. Pascal told the Las Vegas Review-Journal, “I wouldn’t say it was a surprise. It was a little bit abrupt, but we had a fair amount of discussion in and among the owners and the partners around how things have been progressing over the better part of the last six months.”
Alon Seeks New Investors
Mr. Pascal, a former Wynn Resorts executive, said the Alon Las Vegas development company would take several months to find new partners. He voiced optimism that new investors could be found, stating that the south Las Vegas niche showed a lot of signs of growth.
The head of the Alon Las Vegas Casino project said, “The challenge is purely the ambitious nature of the project. Crown was providing a substantial amount of reliant equity capital and now we have to go find somebody else.”
Crown Wanted More Control
The CEO of Alon Las Vegas said Crown Resorts was not turned off by the project itself, but might have wanted more influence in the project.
Andrew Pascal added, “The project is still viable, it’s very compelling, it provides compelling returns and I would say in some cases, it might open up and create new opportunities where there were prospective investors that we talked to in the past that were potentially looking to come into the project but because they couldn’t come in in a more meaningful way, they elected not to.”
Crown Resorts in 2017
Given Crown’s current issues, the decision is no surprise. Crown Resorts is Australia’s largest casino company. Its largest shareholder is flamboyant billionaire, James Packer, who recently returned to head the company after a 2-year hiatus. When he returned, James Packer said he wanted to refocus Crown on the Australian gaming market.
To lighten its international portfolio, Crown Resorts sold half of its 29% share in Melco Crown, a casino operator in the Macau gaming market. Melco Crown owns City of Dreams, Altira Casino, and Studio City in Macau, so it was a rather huge divestment.
Fontainebleau Las Vegas Bankruptcy
Some had hoped Crown would maintain its investment in the Alon Las Vegas project. James Packer has made no secret his desire to enter the Las Vegas market over the year. When the Global Recession hit in 2008-2009, Packer was involved with the ill-fated $2.9 billion Fontainebleau Las Vegas resort.
James Packer’s American Dreams
James Packer has cultivated his American contacts over the past few years, partying with Hollywood elite. After Packer partnered with director Brett Ratner (X-Men: The Last Stand, Rush Hour) on RatPac Studios, the two began to host parties for celebrities.
It was there that James Packer met Mariah Carey, who became his fiance. Around the time the two of them began dating, Packer resigned as CEO of Crown Resorts. Several months later, he resigned from the board, despite owning 48% of Crown shares. A few months later, Packer and Carey were engaged.
Packer’s Triumphant Return to Crown
Last year, the two called off the marriage. Not long after, James Packer made his return to Crown Resorts’ board. By that time, Crown was embroiled in a scandal in China, a bad idea for a Macau casino operator. The marketing division for Crown’s China operations was busted for illegal advertisements — essentially making ads for Chinese customers which marketed a casino, instead of the city the casino is located. Eighteen people associated with Crown China were arrested, including 3 Crown marketing executives.
Under those circumstances, Crown Resorts decided to refocus on Australian casinos. With new laws coming into effect in Australia, the path is cleared for domestic operations. With the Macau casino market facing a 26-month decline, it was time to pull back from that investment. Thus, pulling out of the Alon Las Vegas project made sense for Crown.
