Echo boss joins slugfest with Packer
The only businessmen prepared to get into the ring with James Packer are either, 1) on the verge of retirement, or 2) offshore recruits on temporary assignment.
Echo Entertainment's new chief executive, John Redmond, falls into the latter category. He took aim at Packer on Tuesday in retaliation for the billionaire's left hook last Friday.
So let the game begin.
Echo had little choice given its share price and future profits are under siege from Packer's Crown. Redmond had to steal back some control over public debate and inject something into the Sydney conversation about which of the two casino proposals would be best for NSW tourism.
And it had to be done over the next three weeks while the O'Farrell government and its taskforce headed by David Murray are evaluating the competing bids - Star's expansion and Crown's Barangaroo hotel/casino/apartment development.
Packer has centred his arguments on claims Echo has been secretive about its expansion plans and funding.
In a speech on Tuesday at Sydney Business Chamber, Redmond came out swinging, laying a similar transparency punch. He said the Barangaroo proposal started off as a boutique VIP gaming facility to support a six-star hotel. "Now the hotel is only a small part of the project, which has substantially become a casino.
"The casino tower is on steroids and the podium appears to be over-running the public open space ... The boutique VIP facility is clearly now a significant casino at risk of over-running Barangaroo."
From Echo's study of the Barangaroo designs, it reckoned the podium and several floors of the gaming tower was the space equivalent of two football fields.
"Now let's be clear - I like casinos, but do Sydneysiders really know what they might be signing up for?"
Keeping track of the Barangaroo casino proposal, which he said had transmogrified significantly, "requires a certain mental dexterity due to the continual changes".
Redmond has laid down the gauntlet to the NSW government to be transparent about the process of awarding a new licence or an extension to Echo's existing exclusive licence. He said there was no public transparency about Crown's proposal because it was mislabelled and it kept changing.
Echo also took issue with Packer's tagging Barangaroo as an integrated resort, which Redmond said would normally have several hotels of different qualities, restaurants and bars, concert arenas, theme parks, shopping venues, etc, which is not what Echo believed had been proposed by Packer.
For his part, Packer's recent attack on Echo also locks on the company's financial position and how it plans to pay for the expansion of the Star casino in Sydney and the development of Brisbane.
The assault, which began with a block sale of Crown's 10 per cent of Echo last Thursday, was an opening salvo and if its desired effect was to put pressure on Echo's share price, Packer scored a direct hit.
Echo shares fell 12 per cent on Friday and have moved even lower since. Analysts were said to be concerned about Echo's capital expenditure requirement should it win the right to extend its exclusive licence in Sydney.
The trouble is that both players have put proposals that have a degree of secrecy. Crown's plans have been more fleshed out but they do move around. Echo also will have made promises to the government about the scale of its Sydney expansion, but its proposal remains completely under wraps.
The trick for Echo would be to convince investors it can win the competition without overspending. Redmond said any Echo investments would be made prudently.
After dumping Crown's Echo stake last week, Packer told the media that Echo "was relying on me to pay for their plan ... Let's see how they go paying for it themselves". The attacks from both sides show how much is at stake. Since its upgrade, Echo has already managed to encroach on Crown's VIP market.
For Echo, having to compete with another casino in the same market would play havoc with its earnings.