Job cuts as Crown seeks to bankroll Sydney resort
Sources close to Crown said redundancies were on the way for administration, marketing and back-office staff. It is believed the job losses are triggered by a desire to cut costs at the James Packer-chaired company, which reported "mixed" results for its Melbourne and Perth complexes during 2012.
Crown spokesman Gary O'Neill said the company "continually reviews its activities" and these "reviews may lead to some positions being abolished and some new positions being created".
"While these reviews are still ongoing, any reduction in positions is currently expected to be less than 50, which represents less than 0.8 per cent of Crown's employees in Melbourne. Total employment at Crown Melbourne has been steadily increasing - for example, it increased last year by more than 200 persons and over the past five years has increased by more than 1000 persons."
Crown's Melbourne and Perth resorts employed more than 14,400 people in 2012, including 8800 in Melbourne, its annual report said.
Crown Melbourne brought in $1.84 billion of the company's $2.73 billion revenue last year.
Crown chief executive Rowen Craigie said that during 2012 the company "saw reasonable revenue growth at both properties, although in some areas this was offset by higher operating costs".
"At Crown Melbourne, in particular, we saw a softening of activity in some segments of main-floor gaming and non-gaming operations in the second half of the year, as well as the effects on operating margins of disruption due to refurbishments."
Last week, Crown sold at a loss its 10 per cent stake in rival casino operator Echo Entertainment Group, which has an exclusive casino licence for Sydney.
Mr Packer is now expected to focus his efforts on building a $1 billion-plus, six-star hotel resort in Sydney's Barangaroo precinct, comprising gaming rooms for high rollers, a hotel resort and apartments. Crown says the project will create more than 2000 jobs.
But Deutsche Bank analysts Mark Wilson and Daniel Pi said last week they did not believe Crown would make an economic return on the ambitious project, as the anticipated capex has increased to $1.2 billion to $1.5 billion, notwithstanding that the costs could be defrayed by the sale of 80 apartments.
"At a capital cost of $550 million, we estimate that Crown will have to generate $23 billion in VIP turnover, which is what [rival] Star is currently rolling and would require an increase in the Australian market of 30 per cent," the analysts said.
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Crown has confirmed redundancies are planned for administration, marketing and back‑office staff as part of a company review. The reductions are currently expected to be less than 50 positions, representing under 0.8% of Crown’s Melbourne workforce.
Crown says it “continually reviews its activities” to manage costs. The job reviews come as the company reported mixed results for its Melbourne and Perth properties in 2012, with higher operating costs and some softening in activity prompting cost control measures.
According to Crown’s 2012 annual report, its Melbourne and Perth resorts employed more than 14,400 people in total, including about 8,800 staff in Melbourne.
Crown Melbourne is a major revenue driver: it generated $1.84 billion of Crown’s $2.73 billion total revenue in the reported year.
Crown sold its 10% stake in Echo Entertainment at a loss. Echo holds the exclusive casino licence for Sydney, and following the sale Crown (and James Packer) are expected to focus on building their own six‑star hotel and casino resort in Sydney’s Barangaroo precinct.
Crown plans a $1 billion‑plus, six‑star hotel resort at Barangaroo featuring gaming rooms for high rollers, a hotel resort and apartments. Crown says the project would create more than 2,000 jobs.
Deutsche Bank analysts Mark Wilson and Daniel Pi have expressed scepticism that Crown would make an economic return. They said anticipated capital expenditure estimates have increased to about $1.2 billion–$1.5 billion, although some costs might be offset by selling 80 apartments. The analysts also noted that, at a lower capital cost assumption of $550 million, Crown would still need very large VIP turnover (they estimated about $23 billion) to justify the investment.
Crown said it saw reasonable revenue growth at both properties in 2012 but higher operating costs offset some gains. At Crown Melbourne specifically there was a softening of activity in some main‑floor gaming and non‑gaming segments in the second half of the year, plus margin impacts from disruption due to refurbishments.
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