Finance Finance News James Packer misses out on eight-figure payday as Crown scraps dividend

James Packer misses out on eight-figure payday as Crown scraps dividend

Crown's profits crashed 80 per cent as a result of the pandemic. Photo: The New Daily
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Crown Resorts is relying on small-time punters to climb out of the coronavirus hole after lockdowns and travel bans slashed annual profits by more than $400 million.

Crown told shareholders on Wednesday that its annual profit over the 2019-20 financial year fell 80.2 per cent to $79.5 million.

Given the uncertainty around reopening Crown Melbourne, the group also revealed it would axe its final-year dividend of 30 cents a share – meaning major shareholder James Packer will miss out on a $75 million payday.

The results show casino closures cost the group $79.7 million in extra costs and lost revenue – with annual revenue down $881 million to $2.3 billion, a fall of 28 per cent.

“If you look across the business, you see that revenues were down about 25 per cent, which translates to the last quarter closure for the year, so it’s about where it was last year,” said Monash University gambling studies professor Charles Livingstone.

The results would have been much worse had government not intervened.

Crown received a total of $111.3 million in JobKeeper payments – $43.4 million of which subsidised payrolls and $67.9 million of which went directly to stood-down workers.  

As for the future, it is looking very different to Crown’s past.

While the group has built a high-profile business on winning over mainly Asian high-roller gamblers, it is the everyday punter who is coming to the company’s rescue as restrictions ease outside Melbourne.

CEO Ken Barton told an analyst and media briefing that so far this financial year Crown’s Perth casino has come back with a vengeance, with gaming floor revenue jumping 18 per cent ahead of where it was at the same time last year.

“The non-premium tables have been much stronger than the premium tables and the [gaming] machine revenue has been very strong,” Mr Barton said.

“It may be pent-up demand from people having to sit at home,” he said.

An analyst who declined to be named said taxpayers could be indirectly funding part of that uptick.

He told The New Daily “there has been a jump in wagering that could mean people are spending stimulus cash”.

But the high rollers will still be missed.

Although Mr Barton said there had been a boost to non-premium tables as local punters played cards and games, the absence of high rollers is hurting the table business, due to the amount they usually bet.

For example, in Perth, the tables part of the business is down 24 per cent on the same time last year.

Pocket pokies

The company’s three casinos in Melbourne, Perth and the UK all lost business during the pandemic, but there was one bright spot.

Digital gambling saw pre-tax earnings jump 30.9 per cent to $25.3 million.

Although that is a relatively small amount for Crown, it shows its reach is spreading outside the casinos and into the community.

The digital business consists of Betfair – an online betting exchange that allows people to make bets against each other while Crown takes a fee.

“It’s basically an online bookie,” Professor Livingstone said.

Digital also includes an 85 per cent stake in DGN Games, a social and mobile games operation that allows people to play poker machines remotely.

It’s a social casino that they seem to be pushing hard,” Professor Livingstone said.

“When you sign up, you get a lot of free credits, and when they run out, you buy more for maybe $20 or so,” Professor Livingstone said.

“When they are used up, you buy again – you can win credits but the way it is set up you lose more than you win.”

“Similar businesses have done well in the US,” he said.

Barangaroo build

Barangaroo is due to open in December. Photo: AAP

Meanwhile, Crown is spending big on its new Sydney property at Barangaroo, which is due to be opened in December this year.

Crown spent $537 million on the project last financial year and is budgeting for another $593 million this year.

Net debt for Crown more than doubled to $891.5 million during the year, which is largely driven by the Barangaroo development costs.

Credit rating agency Moody’s Investors Services said it could see significant downside risk for Crown, “as the severity and duration of the pandemic are still uncertain”.

“Crown Melbourne, which generates around 70 per cent of the group’s EBITDA, has remained closed since March 2020,” it said.