Fears Blackstone Will Liquidate Crown Resorts Assets
![Reports and history suggests Blackstone Group will liquidate the assets of Crown Resorts after its $8.9 billion takeover completes.](https://www.internetpokies.org/app/uploads/2022/06/0x0-1-1.jpg)
The $8.9 billion acquisition of Crown Resorts by investment group Blackstone has not yet completed but there should be nothing that stops it. Some people consider the takeover a new lease of life for Crown. However, it is likely Blackstone has other plans for the under-fire hotel and casino group. History suggests Blackstone will liquidate Crown’s Australian assets as it looks to turn another huge profit.
Crown’s board of directors and later its shareholders approved Blackstone’s takeover. They see new owners as a way to draw a line under the past few years of negativity that has resulted in Crown’s previously good name dragged through the mud. Blackstone is the world’s largest alternative asset manager with $1.2 trillion in assets. It has money to burn if it wants to revamp Crown. However, minor investment following a plan to liquidate assets is more likely.
Ben Lee of consultancy firm IGamiX spoke to the Sydney Morning Herald. According to Lee, Blackstone has no plans to run a casino. Indeed, quite the opposite is true.
“They’ve got no interest in running casinos long term. So they will slash and burn, they will cut costs and mike it very lean, fix it up, and then sell it off.”
Will Blackstone Liquidate Crown Resorts?
Blackstone has not stated its intentions for Crown Resorts. The company is infamous for keeping its cards close to its chest. However, this is not Blackstone’s first casino or hotel rodeo. History suggests Blackstone will liquidate Crown Resorts at some point in the future.
It bought Cosmopolitan on the Las Vegas Strip for US$1.74 billion in 2014. It slashed the wage bill, spent US$500 million renovating the property, then sold it for US$5.65 billion in September 2021. That is the order of business for Blackstone: purchase, fix, liquidate.
Blackstone did the exact same with Hilton Worldwide. It owned the company for 11 years before selling it for a US$14 billion profit in 2018. It owns eight Japanese hotels, US hotel operator Extended Stay, and the UK domestic holiday market leader Bourne Leisure. All these companies follow the same path.
Crown makes huge profits under normal operating conditions. One only needs look at the company’s pre-COVID financial document to see that. However, COVID-19, combined with Crown’s recent legal issues, plus China clamping down on gambling, the lucrative foreign VIP trade is non-existent. Furthermore, it may never return.
Crown Melbourne, Crown Perth, and Crown Sydney are in key locations. It makes sense to liquidate them if Blackstone is not interested in being a casino operator. Minor investment in Melbourne and Perth makes them a viable business opportunity for someone else.
Crown Sydney Set For Casino Opening
The casino at Crown’s Sydney property in Barangaroo is set to open if reports in the Australian press are accurate. Media outlet ABC reported Crown is close to working out a deal with regulators to open its Sydney casino.
Crown Sydney opened to the public in December 2020 after the company spent $2.2 billion on its construction. However, its casino never opened and remains closed to this day. The Bergin Report deemed Crown unsuitable to hold a gambling license in New South Wales. The report stated major cultural changes were needed for the NSW government to reconsider its ruling.
Indeed, this is what has happened over the past year. The Crown Board of Directors is unrecognisable from the time of the report, with almost everyone replaced with new executives. Majority shareholder James Packer no longer has any input into the group’s day-to-day running. Then there is the imminent Blackstone takeover. The ducks are almost aligned in a row, which suggests NSW may allow Crown to open.
There may not be a Sydney casino for long if Blackstone does liquidate Crown’s assets, although someone else would likely buy and then operate it. Time will tell.