Packer: From Macau's Casinos to Hollywood - 3rd April
Robert Gallagher for Forbes, Grooming by Karina Moore
Brett Ratner (left) and James Packer
legendary Kerry Packer lost a big chunk of his fortune
at America's gambling tables. His son, James, has
hit the jackpot by owning the casinos. Now he's rolling
the dice on Hollywood.
in white oversize chairs in an enormous suite at the
Hotel Bel-Air in Los Angeles, Australian casino billionaire
James Packer and Hollywood movie director Brett Ratner
are exhausted. They look like two hungover frat boys
after a hard nightbut these guys havent
been partying. Theyre jet-lagged after visiting
Russell Crowes film set in South Australia,
watching Chinese tennis star Li Na win the womens
Australian Open in Melbourne and toe-touching in the
Philippines to open Asias first Nobu restaurant
at a new casino resort in Manila.
sounds like a pleasure cruise from Packers earlier
life as the polo-playing, jet-setting Jamie,
son of the late media mogul Kerry Packer. In fact,
its all business. Li Na is an ambassador
for Packers flagship Crown Casino, which spreads
across two city blocks on the banks of Melbournes
Yarra River. The Manila resort is Packers first
major casino foray outside of Australia and Macau.
And Russell Crowes directorial debut, The Water
Diviner, is financed by Packer and Ratners new
Los Angeles-based film company, RatPac Entertainment,
a Sinatra-inflected portmanteau of the two mens
46, Packer is finally emerging from his fathers
long shadow to come into his own as Australias
second-richest person, with an estimated fortune of
$6.5 billion. Sure, there are remnants of the flashy
playboy lifestyle, including supermodel girlfriend
Miranda Kerr, whose three-year marriage to English
actor Orlando Bloom ended in October. (Packer split
from his second wife, pop singer and model Erica Packer,
née Baxter, in September, just weeks after
the family moved into their Sydney mansion following
a reported $35 million renovation.) By and large,
however, Packer is increasingly regarded as a serious
and successful businessman in his own right. He also
has three children, aged 18 months to 5 years, who
now live with Erica in Los Angeles, so hes spending
plenty of time on Americas West Coast.
had a marriage breakdown last year, he says,
after giving daughter Indigo, 5, a big snuggle before
she trots of with her nanny to bed. The last
thing I think I am is perfect. Im just trying
to do the best job I can. Im trying to be the
best father I can to my kids. Im trying to do
the best job I can running my business.
been a bumpy ride. When Kerry Packer died in 2005
at age 68, his only son inherited a $5 billion fortune,
mainly tied up in Australian magazines and television.
At age 38, James Packer, who had been caretaking the
familys sprawling businesses for several years
as his fathers health failed, was in full control.
He moved quickly to reshape the Packer empire, selling
most of his fathers beloved media properties
to Hong Kong-based private equity firm CVC Asia Pacific
for $4 billion in two deals across 2006 and 2007.
The timing was perfect: He got out just as the internet
began decimating traditional medias revenue
he almost blew it. Packer plowed a big chunk of the
cash from the CVC deal into casinos in Las Vegas,
Pennsylvania and Canada, just before the global credit
crunch. I lost a bunch of money in America because
of the financial crisis, he says. Estimates
of his losses go as high as $2.6 billionroughly
half of his fortuneand plenty were lining up
to write his business obituary. Those losses included
writedowns on investments in Fontainebleau Resorts,
Station Casinos and Harrahs (all in Las Vegas),
as well as an ambitious but abandoned plan to build
Crown Las Vegas.
Don Arnold / Getty Images (left); Gregg Deguire /
models 13 and 14: Erica Packer (left);
Was he worried that the debacle would destroy three
generations of Packer wealth creation? I dont
want to answer that. He will, however, share
the biggest lesson he learned from that dark period.
Dont be too leveragedour balance
sheet is now much more conservative than it was in
2008, he says.
Vegas damaged more than Packers wallet. If the
CVC deal showed he could be on occasion as shrewd
as his legendary father, his North American shocker
had him scramblingagainto prove he could
fill those huge shoes. Although Kerry Packer, too,
had his share of business failures, he built a reputation
as Australias most powerful and formidable businessman,
owning the countrys leading television network
and its biggest stable of magazines. He was most famous
for selling his television network to fellow Australian
entrepreneur Alan Bond for $700 million in 1987 and
then buying it back for just $240 million three years
later. You only get one Bond in your lifetime,
and Ive had mine, he gloated publicly.
père was an old-style media baron with the
domineering personality to match: A sometimes ruthless,
foulmouthed bully who could also be charming, generous
and funny. Every staff member received a generous
Christmas basket, but those who displeased him also
got the Packer treatment, an expletive-laden
verbal dressing-down. The Australian public loved
him for his sports-loving, one-of-the-boys persona
and his laconic one-liners. When his heart stopped
for several minutes in 1990, he told reporters that
hed been to the other side and theres
f---ing nothing there. He then donated around
$2 million to have defibrillators fitted into New
South Wales ambulances, which came to be known as
Packer Whackers. By the time Kerry Packer
died, he was Australias richest person, having
built an estimated $100 million media business, which
he inherited at age 37 from his father, Sir Frank,
into a dominant broadcasting and publishing empire
worth $5 billion.
Packer made several great business calls before his
father died but failed to shake the publics
perception of him as a bit of a dilettante and playboy.
He championed the Packers acquisition of Melbournes
Crown Casino in 1998, which became the foundation
stone for their post-media fortune. He was ahead of
most in betting on the rise of the internet, setting
up Australias first major online news portal
in 1998 and investing early in online car-sales and
job-seeking sites. All three netted his family big
profits. But these well-timed deals drew far less
publicity than his biggest business flop (before Las
Vegas), a disastrous foray into telecommunications.
He and his good friend Lachlan Murdoch, son of Australias
other media tycoon, Rupert Murdoch, invested heavily
in One.Tel, which rapidly grew to become Australias
fourth-largest telecom, before collapsing spectacularly
in 2001 amid poor management, non-competitive pricing
and legal issues. Although the Packer familys
$170 million haircut on One.Tel was a fraction of
the Las Vegas loss, it probably hurt Packer more,
since his famously abrasive father was still around
to see the debacleand lash him for it.
after the One.Tel misery, James Packers first
marriage, to Australian swimsuit model Jodhi Meares,
ended, and a depressed Packer fed the spotlight, flirting
briefly with Scientology through his friendship with
actor Tom Cruise. Seven years later, the Las Vegas
near-death experience was another confidence-sapper.
Luckily for Packer, though, hed also invested
in casinos in Macauthe special administrative
area of China that now generates seven times the gambling
revenue of Las Vegasand this move proved his
redemption. Crown put $600 million in Macau; it is
currently worth $8 billion.
Warner Bros. / Album / Newscom
first flick, the sci-fi thriller Gravity, has been
nominated for 10 Academy Awards, including Best Picture
Ive now got more of my money in China
than anywhere else, more probably than in Australia,
he says. His private company, Consolidated Press Holdings,
owns a fraction over 50 percent of Crown Resorts,
one of Australias top-performing stocks last
year, leaping $3 billion in market capitalisation
to $11 billion. What has the market excited is Crowns
33.7 percent stake in Melco Crown Entertainment, a
joint venture run by Lawrence Ho, the son of Macau
casino tycoon Stanley Ho. It is Melco that has taken
Packer into Macau, where the pair are opening a third
casino in mid-2015, and also into the Philippines,
where City of Dreams Manila opens later this year.
Japan, too, is on the agenda if casinos are legalised
before the 2020 Tokyo Olympic Games. Outside of the
Melco joint venture, Crown owns casinos in Melbourne,
Perth and London, and has approvals for huge casino
resorts in Sydney and Colombo, Sri Lanka.
Packer has hit the jackpot as the house
is a twist on his heritage. Kerry Packer was a renowned
whale, punting millions at blackjack, poker and baccarat
tables around the world. He famously once said, Toss
you for it, to a Texas millionaire at a Las
Vegas casino who was boasting about his wealth.
a kid, I saw that dad lost a lot of money in casinos,
and I didnt understand that, he says.
I thought this must be a great business. At
the same time, I saw when I was with himand
I was with him a lot of the timethat this was
a really cool business, and it was fun and glamorous.
As I got older, I realised that he knew what he was
doing. He was prepared to spend some of the money
that he made to make himself feel better by giving
himself an adrenaline rush.
Some of the happiest
times I ever saw my dad was times when I was with
him in the casinos and he had a good night.
he wish his father were still around to see his current
successes? But then he would have also seen
me in 2008, Packer counters, presumably grateful
not to have had to face paternal wrath over Las Vegas.
Hes also mindful of his fathers urging
to be realistic about business: Youre
never as good on your best day as everyone thinks,
and youre never as bad on your worst day as
Packer concedes that with Macau he has hit the jackpot.
Melco Crown, one of six companies with a Macau casino
licence, has roughly 14 percent of the market.
business in Macau is going amazingly; Ive been
very lucky that it has been more successful than I
would have thought possible, he says, attributing
much of that success to the work of Melco Crown co-chairman
(with Packer) and chief executive Lawrence Ho.
pair joined forces in 2004, bonding over a shared
background of powerful billionaire fathers. Our
fathers [were] legendary businessmen, Ho says.
In a certain way, they inspired us and also
motivated us to do things even better and bigger.
More important, though, for Ho is Packers 100
percent trust and faith in him, even through
tough times. They faced a baptism of fire when their
first project, the upmarket but poorly located Crown
Macau (now renamed Altira), got off to a slow start
in 2007. Then their second Macau venture, the $2.4
billion City of Dreams, opened in 2009. Unlike the
Las Vegas gamble, however, Macau came good, with City
of Dreams focusing on the mass market. Melco Crown
also holds a 60 percent stake in a third Macau casino
project, the $2 billion Studio City on the Cotai Strip,
due to open in mid-2015 with a movies theme (and with
obvious potential tie-ins to Packer and Brett Ratners
is a word that Ratner also uses to describe his relationship
with Packer. I know he predominantly bets on
the person, says Ratner, who directed the Rush
Hour film series and X-Men 3: The Last Stand. His
belief in Lawrence Ho and, of course, myself gives
his businesses the confidence to excel.
Packers growing casino interests are his main
focusand the reason his fortune is up by nearly
$2 billion in two yearsits clear that
RatPac, formed in December 2012, is not just a rich
mans dabble in a glamorous industry. The
casino business and the movie business are similar,
Ratner says. What youre selling is an
experience. Youre selling adrenaline.
In September, RatPac closed a $450 million deal with
Warner Bros to co-finance up to 75 films over four
years. If things go well, Ratner says, the financing
could top $1 billion. Their first film Gravity has
been a huge hit.
RatPac is moving beyond the movie business into TV,
book publishing and documentaries, and especially
into China and India. The ultimate aim? A global brand
focussed on Asias growing middle-class thirst
for entertainment. Exactly like Packers Crown
thing that was at the centre of our thinking all along
is the rise of China, says Packer. I think
ten years from now a bunch of studios will say, Why
didnt we do more in China?? Outside
of the Warner deal, RatPac closed a three-year deal
in December to help pay production costs on movies
made by Brad Pitts Plan B Entertainment and
will finance films by Cameron Crowe, Warren Beatty,
David Fincher and Roman Polanski. It is also producing
a Horrible Bosses sequel and Hong Kong Phooey, starring
Eddie Murphy. The point is, we are ambitious
enough, whether foolish or smart, to want to participate
in the development of our own content, Packer
broader media strategy includes buying one or more
TV production companies, creating documentaries with
Netflix and publishing Ben Mezrichs (Bringing
Down the House, The Accidental Billionaires) next
book. In some ways, its a return to Packers
media-company heritage but with a 21st-century spin.
I dont think I ever got out of the media
business, he says.
now, Packer looks to be on a winning streak. If RatPac
proves to be another Macau, theres little doubt
he will perhaps surpass his fathers achievements.
He also has high hopes for his other US play, a 9.35
percent stake in real estate portal Zillow, bought
for $250 million. And clinching approval last November
for a controversial $2 billion casino resort in hometown
Sydney was a defining moment for the new
Packer, giving him the chance to make his own mark
on the city his father once dominated. But hes
used to placing big bets and sometimes getting stuck
with a losing hand. Ive made a bunch of
mistakes in my life. Ive had my ups and downs,
he says. Business is good right now, but now
my personal life is a disaster.