But since the 1980s, the Gold Coast business community has fought hard to restore its somewhat tarnished reputation. A few years ago, mentioning the words "white shoes” on the Gold Coast was enough to get you a dirty look and a sharp dressing down. The explosive growth of listed companies such as MFS, City Pacific and Billabong had made the Gold Coast a legitimate business hub.
But just as the white shoe jibes were fading from memory, a series of corporate collapses – including MFS, Asset Loans Group and a string of property projects – have rocked the Coast again.
The credit crunch has not been kind to the city’s entrepreneurs, many of whom used debt to fund the expansion of their empires over the last five years. The losses are mounting.
Michael King and Phil Adams
The co-founders of MFS Group started the rot when their financial services, property and tourism group collapsed in a screaming heap earlier this year. King and Adams started out as lawyers in a Gold Coast firm before expanding into funds management.
In 2007, the pair’s wealth peaked at $370 million, but the credit crunch exposed the company’s debt-fuelled business strategy and the company unravelled in a matter of weeks. Both men could face legal action as a result of the collapse.
The founder of City Pacific resigned in early November after pressure from unitholders and institutional shareholders made his position untenable. It was an ugly ending for Sullivan, who steered the company from a float at $1.10 in 2001 to a peak of $5.39 in October 2006. His fortune, which included a 30 per cent stake in City Pacific, reached a high of $339 million in 2007. Today, that City Pacific stake is worth just $5 million.
Palmer made his first fortune selling Gold Coast property before retiring in the early 1980s at the age of 29. His comeback as an iron ore billionaire has been spectacular and the Gold Coast has been a big beneficiary, with Palmer stumping up $5 million for a licence to get a Gold Coast team in A-League soccer competition.
Palmer was valued at $1.5 billion by BRW in May, and it is difficult to judge how much he has lost since then because of the private nature of his empire. However, the value of his stake in Australasian Resources Holdings has fallen from $496 million to around $94 million.
Merchant is the founder of surfwear giant Billabong, which has been one of the best-performing Gold Coast companies in the last decade. Since the start of the year, the company’s shares are down 34 per cent, shaving $156 million of the value of Merchant’s stake, which is down to $303 million.
Soheil and Sahba Abedian
Father and son team Soheil and Sahba Abedian are the largest shareholders in Gold Coast property developer Sunland Group. James Packer also owns a large stake. At the start of the year, the Abedians' shares were worth $231 million, but the shares are down more than 75 per cent and the duo’s stock is now worth just $55 million.
Eddy divided his time between Brisbane and the Gold Coast, but his attitude was pure Surfers Paradise. Eddy’s fortune peaked at $325 million; now all he has left is a few property assets. Given his ex-wife Le Neve is suing Eddy for $44 million, he’ll be lucky to hold on to that.
Fomer AFL footballer Tony Smith sold his tourism business to MFS in 2006 and owned a large stake in the business. After MFS collapsed, Smith was forced to sell parts of his portfolio of prestige property, including a double block on the richest street on the Gold Coast, Hedges Avenue. While he reportedly received a whopping $30 million for the property, most agents said it was worth $50-70 million.
Things look pretty ugly on the Gold Coast right now. The mayor is predicting unemployment will rise to 8 per cent in the region and the locals are referring to the abandoned building projects as "bomb sites”. Given the region’s huge dependency on property, financial services and tourism, it could be some time before the Coast’s economy gets back on track.
Not that you can dent the sunny optimism of the region’s entrepreneurs. As Soheil Abedian told investors at Sunland’s recent AGM: "The decline has come much faster, so the recovery will come much faster.”