JAMES Packer has walked away from the Crown Resorts boardroom...

JAMES Packer has walked away from the Crown Resorts boardroom and into its engine-room.

Actually, engine rooms, plural, as there are three: the Australian core, the China future in and out of Macau, and back to the “where it — mass market casinos, that is — all began” future in Las Vegas.
He of course has never been “out” of those engine rooms. Like any hands-on owner-entrepreneur — and there really aren’t any other sort — he’s always been where the action is, and usually “making it”.
What might seem an odd and certainly unusual move — to resign as a director of Crown, the central and most public company in the Packer empire, and as he said in his formal statement yesterday, where the overwhelming majority of his personal wealth is located — isn’t actually that surprising and says nothing about his ambitions to privatise it.
The key move, the key signal of where he was going to go in a personal sense, was his decision in August to step down as chairman of Crown, to be replaced by Rob Rankin who is the CEO of the Packer’s private family company, Consolidated Press Holdings.
There were two things about that move: first what was said and second what was implied.




First, it was said quite explicitly then, it was all about moving from boardroom to engine-room.
“Crown remains my number one business priority and passion .. Crown has a pipeline of resorts globally and this is where the majority of my time will be spent,” Packer said in August.
The implication was that when an owner-entrepreneur steps away from the chair, except in semiretirement, he or she was hardly likely to then stay in the boardroom as an “ordinary director”.
Now such an “implication” wasn’t that clear, because the statement in August said that was in fact precisely what he would do; that he would become a “senior Executive Director”.
On one level he’s now simply decided that he can just be a, actually the, senior executive, full stop; that he doesn’t need to also be a director.
And why would he be? He’s cutting out the “middleman”, so to speak; the unusual bit is that the “middleman” is himself. And of course, as I noted at the start, normally owner-entrepreneurs want to keep all the corporate reins in their hands.
Apart from the direct example of his own father, the late Kerry, the two great examples of this in Australian corporate history are Rupert Murdoch at News Corp (owner of this paper)/ Fox and Frank Lowy at Westfield.
The (James) Packer differentiation is partly a mix of the man and the nature of Crown. Unlike a Murdoch or a Lowy, he doesn’t have to be in the boardroom or the corporate management suite, more or less 365 days a year.
The “action” — both in terms of the company’s strategic dynamic and critical leadership and decision-making — is out there at the development end. In Melbourne, at Barangaroo in Sydney, and the ‘big one,’ on a number of levels, in Las Vegas.
Making Barangaroo “work” is critical to both his projection and his self-satisfaction in his hometown. It was his bold idea, both in breaking the Star monopoly and in execution as the best of its type in the world.
Getting “Las Vegas right” — critically, the second time around — is in some ways more important. Blowing a big chunk of the $4.5 billion cheque for Nine in trying to break into the US, before finding Ho, Macau and a China future, almost ‘broke’ Packer as well. It certainly drove him to his lowest ebb.
Staying co-chairman — with Ho of Melco is a no-brainer. You don’t send theconsiglieri — or, in more polite corporate terms — a proxy to represent you with such a partner. He’s got his hand on the lever; yours has to be right there with his.

Getting those casinos — or resorts, to use the more touchy-feely 21st century label — up, running and singing is also, very simply, what interests Packer. And as he is “the owner” he gets to do what interests him.
Staying a, mere, director of the central publicly listed company — as “man-in-the-middle” between him as owner-shareholder and him as the working executive at the actual developments — is quite simply pointless.
As the owner — more strictly, majority-controlling shareholder — he can make his position very clear to the board. Given that the chairman is the CEO of his private company, it’s a good bet that chairman and shareholder will be mostly of one mind.
At the sharp end, or ends, plural, he could also be pretty confident that what he wants to do will win managerial and board endorsement.
This brings us to his proposal — at this stage, more a wish — to find a partner, similarly to what he did with the Nine Network in 2006, to buy out all the other shareholders and take it private.
There are two drivers of that ambition. As explained last week, Crown shares are arguably considerably undervalued when you add up the — even just the market — value of its 34.3 per cent stake in Melco, the Macau-based joint venture with Lawrence Ho and the value of the Australian casinos.
Making a takeover to move from his existing 53 per cent stake to 100 per cent just on his own would be a step, way too far. He needs a partner; they could share the upside; and he keeps control.
This feeds into the second driver. Crown is embarked on something like $5 billion of projects in Melbourne, Sydney and Las Vegas — “luckily” it didn’t get to add Brisbane. It needs more equity.
Packer could probably sustain his share of, say, an extra $1 billion of fresh equity. But even so, he would then be really betting the (personal) bank on the casino.
Better to share the punt and the upside; and even get to take some money out of the casino, with some form of replay of what was done in 2006.
He leaves the board. But “the buck” certainly doesn’t “stop there”.