Packer scraps his plans for tallest casino in Las Vegas
The Australian billionaire James Packer has scrapped a $5bn
(£2.5bn) plan to build the tallest casino in Las Vegas, blaming its
demise on financial turbulence arising from the global credit crunch.
Packer, who is the second-richest man in
Australia, has been expanding aggressively in the US to build on his Crown
group's existing casinos interests in Melbourne, Perth and Macau. Crown's
project in Las Vegas, unveiled last year, consisted of a 5,000-room hotel on an
11-hectare (27.5-acre) former water park along the glitzy Strip, incorporating
a 324-metre (1,064ft) tower, which would have been the highest building in the
Rowen Craigie, Crown's chief executive, said: "The recent
upheavals in world credit markets has made it increasingly difficult for Crown
and its partners to develop a commercially viable project on what remains an
attractive location on the Las Vegas Strip.
"Accordingly, we took the decision to stop making
further payments to the vendors of the site and concentrate our focus on other
areas of our business."
The development was a joint venture with a
Texan property magnate, Christopher Milam, and with a private equity firm, York
It is a financial blow to Packer, who is the son of
the late media entrepreneur Kerry Packer. His company will take a one-off
charge of A$44m (£21m).
Initially, Crown wanted to construct a
575-metre tower, which would have been one of the highest buildings in the
world, beating Chicago's Sears Tower. But the Federal Aviation Administration
objected on the grounds that it would be an obstacle for planes landing at
The American economic downturn has made it harder for
developers to obtain funding from banks, which have suffered huge write-offs on
bad debts. Earnings in the gaming industry are considered potentially
vulnerable to a recession.
Angus Gluskie, a portfolio manager at
Australia's White Funds Management, which owns a small stake in Crown, said:
"It is indicative of the fact that in part credit markets are difficult at the
moment. It is also indicative of the fact that in a slowing growth environment,
the gaming sector does carry some short-term risk, given its exposure to
Packer's father, who died in 2005, was a
legendary gambler who blew more than $50m in Las Vegas when he became stranded
there after US airspace was shut down following the 2001 terrorist attacks on
the World Trade Centre.