Buy, fix, sell: What Blackstone’s planning for Crown

Private equity giant Blackstone is expected to cut costs, shift focus from international high rollers and hive-off Crown Resorts’ property assets when it gets the keys to its three Australian casinos.

The New York-based Blackstone is set to buy the James Packer-backed Crown after the ASX-listed casino said on Monday it would recommend shareholders accept its $8.9 billion offer. The deal also needs approval from regulators in NSW, Victoria and Western Australia.

Blackstone has not revealed how it intends to turn around the beleaguered Crown, which in the past two years has come close to losing its Sydney and Melbourne casino licences over probity concerns and been battered by the COVID-19 pandemic.

But the world’s largest alternative asset manager – with $US881 billion ($1.2 trillion) in assets under management across private equity, real estate, debt and infrastructure – has considerable experience buying, overhauling and selling casinos across Las Vegas, Europe and Latin America.

Casino industry analyst Ben Lee, who runs the consultancy IGamiX, said Blackstone first step would be to parachute in a team of American executives and start cutting costs. “They’ve got no interest in running casinos long term,” Mr Lee said. “So they will slash and burn, they will cut costs and make it very lean, fix it up, and then sell it off.”

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Blackstone bought the Cosmopolitan casino and hotel on the Las Vegas Strip in 2014 for $US1.8 billion, spent about $US500 million sprucing it up and then sold it for $US5.65 billion in September last year.

Blackstone owns two other hotels in Nevada’s famed Sin City – the MGM Grand and Mandalay Bay (bought for $US4.6 billion in 2020) and the Bellagio (bought for $US4.25 billion in 2019) – as well as Spanish gambling outfit Cirsa, which has 147 casinos globally, mostly in Latin America.

Blackstone also has a track record of turning around hotels and hospitality businesses: it owned Hilton Worldwide for 11 years before selling it in 2018 at a $US14 billion profit – triple its initial investment. Last year the firm bought a controlling stake in UK domestic holiday market leader Bourne Leisure, US hotel operator Extended Stays, and a portfolio of eight Japanese hotels.