New CEO McCann not interested in fire sale for embattled Star Entertainment Group

Newly appointed Star Entertainment Group CEO and Managing Director Steve McCann says he won’t be looking to repeat his recent Crown Resorts tenure by seeking a quick sale of the company, instead calling for patience to rebuild Star’s culture and reputation.

Speaking with the Australian Financial Review some two weeks after his appointment to the embattled casino operator, McCann also outlined his intention to build a better relationship with the NSW Independent Casino Commission (NICC) in the wake of recent revelations that the regulator’s relationship with former Star executives Robbie Cooke and David Foster had broken down.

Much has been made of McCann’s role at Star, given that his previous appointment as CEO of rival Crown Resorts resulted in a US$8.9 billion sale to US private equity giant Blackstone after just a year in the hot seat. This time, he told AFR, time and patience is required to work on fixing Star’s culture and repair relationships given that its casino license in NSW and Queensland remain up in the air.

“We don’t have a ready-made M&A transaction on the table,” he said. “No doubt there are a lot of people looking at Star and thinking, ‘Is there a play here?’ I don’t think we can afford to get too distracted on that at the moment.

“I think there is a solution, there is always a solution, but it is not going to happen overnight.”

Among McCann’s top priorities is what he calls “stakeholder realignment” by which he hopes to have staff, regulators, joint venture partners and shareholders all on the same – a task he says will depend on having the right people in place.

But “we need the time to recruit the right people. There is no point just putting bodies there to fill seats,” he said. “I’m going to stick with the right mindset. The right people need the opportunity, and we need the support of stakeholders, financial support and patience to get it right.”

McCann, however, seems positive that Star can grow, even if he must first play the waiting game to see what awaits in Adam Bell’s report, due by the end of the month, into The Star Sydney’s suitability following a second damaging inquiry earlier this year.

“There’s a lot to be achieved,” he said. “We’re on track, I think, in terms of the relationship reset [with regulators] and progress on remediation.

“We can realign the priorities. I think we can get some early runs on the board.”

As for Star’s recent financial projections, which have taken a battering due to an absence of international high-rollers and substantially higher costs linked to remediation efforts, McCann told AFR that the days of relying on gaming to prop up the business may well be over for now.

“Gaming has always been seen to be the high-margin, glorious part of the business. It’s the exciting part. Food and beverage and hotels have been a feeder,” he said.

“Every casino imagined in the world was designed with that in mind, and with the highest proportion of revenue and profit coming from gaming. That hasn’t completely flipped, but it shifted dramatically, certainly in Australia.

“There is a reset required there, the revenue base for gaming has been materially impacted, and will take a long time to get back to anywhere near where it was, if it gets back to that.”