Echo reshuffles leaders but still no full house
With the threat of James Packer looming large, Echo Entertainment has done well to secure a chief with experience and who is ready for an immediate start. But it now finds the board line-up lacking.
As a non-executive director of Echo and a former president and chief executive of MGM Grand Resorts he does bring both deep overseas experience of managing casinos and entertainment complexes and familiarity with Echo’s own operations.
More importantly, given that Echo has both James Packer and the Malaysian-controlled Genting group on its register and the potentially threatening Packer proposal for a new six-star hotel and VIP gaming facility within Sydney’s new Barangaroo development, Redmond can take up the post almost immediately.
As an Echo director he has already been through a probity process whereas any external candidate could have had to wait for as much as six months before they could take any active part in Echo’s management.
Given the presence of Packer and Genting and the threat posed by the Packer Barangaroo concept now working its way through the NSW state government processes that kind of hiatus could have left Echo extremely vulnerable.
Redmond does appear to tick chairman John O’Neill’s boxes in a way that Mullins apparently didn’t, despite his relatively successful overseeing of the massive redevelopment of The Star complex. He has regulatory and finance experience as well as his senior executive roles at Caesers Entertainment and MGM Grand. O’Neill apparently didn’t think Mullins’ strength was in the financial issues or the interface with investors and the market.
Interestingly, Redmond, as a non-executive director, is also believed to have given Mullins a thumbs down as part of the process O’Neill initiated that led to the decision to replace the chief executive and ultimately to Redmond gaining the job.
While the appointment solves the most pressing problem confronting Echo it creates a new one. O’Neill – having lost Echo’s original chairman John Story during the initial assault from Packer and with another foundation director, Brett Paton, having resigned after Mullins’ tenure was truncated – has appointed two new directors to what is a small board.
Former Business Council chief executive (and now corporate headhunter) Katie Lahey and former senior Macquarie banker Richard Sheppard will join the board once they have gone through the probity process. With Redmond’s changed status, however, Echo will have no non-executives with any meaningful gaming knowledge or experience. Story and Paton had been directors of Tabcorp before Echo was spun out of that group.
O’Neill apparently is looking for two more directors, including one with gaming industry experience and preferably with some experience of the Asian market that is becoming so important to the Australian industry, and another with a property development background. The former will be more difficult to find that the latter.
With Echo already having had a few stumbles as it has tried to ratchet up its VIP gaming business, and the threat posed by Packer’s VIP gambling plans for Sydney, there is an obvious need for a deep understanding of the Asian high-roller market within the non-executive directors’ ranks while Echo’s counter to Packer – that it could build its own six-star facility in Sydney – would appear to require some development expertise.
The $2.5 billion public-private partnership the NSW government awarded to Lend Lease this week to develop an entertainment complex, convention centre, hotel and apartment complex within the Darling Harbour precinct that is The Star’s backyard has provided something of a fillip for Echo – anything that builds activity and traffic through the precinct ought to be a positive for its complex.
The more immediate issue, however, is how to respond to Packer’s Crown Sydney proposal as well as whatever might develop on its register if Packer and Genting are cleared to increase their stakes while lifting the performance of Echo’s generally under-performing casino business as the redevelopment nears its end.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free