Kerry Packer Casino Macau

Mr Packer's companies are also a partner in a casino in Macau which is seen as a stepping stone into China. More recently he has thrown in with the English-based betting exchange operator, Betfair. Billionaire James Packer has revealed his late father, the media mogul Kerry Packer, forged the initial partnership with Macau casino magnate Lawrence Ho which he believes has given Crown Resorts.

James Packer: From Macau's Casinos to Hollywood - 3rd April 2014

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Image: Robert Gallagher for Forbes, Grooming by Karina Moore
Brett Ratner (left) and James Packer

The 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.

Slumped 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 night—but these guys haven’t been partying. They’re jet-lagged after visiting Russell Crowe’s film set in South Australia, watching Chinese tennis star Li Na win the women’s Australian Open in Melbourne and toe-touching in the Philippines to open Asia’s first Nobu restaurant at a new casino resort in Manila.

It sounds like a pleasure cruise from Packer’s earlier life as the polo-playing, jet-setting “Jamie”, son of the late media mogul Kerry Packer. In fact, it’s all business. Li Na is an “ambassador” for Packer’s flagship Crown Casino, which spreads across two city blocks on the banks of Melbourne’s Yarra River. The Manila resort is Packer’s first major casino foray outside of Australia and Macau. And Russell Crowe’s directorial debut, The Water Diviner, is financed by Packer and Ratner’s new Los Angeles-based film company, RatPac Entertainment, a Sinatra-inflected portmanteau of the two men’s surnames.

At 46, Packer is finally emerging from his father’s long shadow to come into his own as Australia’s 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 he’s spending plenty of time on America’s West Coast.

“I 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. I’m just trying to do the best job I can. I’m trying to be the best father I can to my kids. I’m trying to do the best job I can running my business.”

It’s 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 family’s sprawling businesses for several years as his father’s health failed, was in full control. He moved quickly to reshape the Packer empire, selling most of his father’s 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 media’s revenue and profits.

Then 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 billion—roughly half of his fortune—and plenty were lining up to write his business obituary. Those losses included writedowns on investments in Fontainebleau Resorts, Station Casinos and Harrah’s (all in Las Vegas), as well as an ambitious but abandoned plan to build Crown Las Vegas.

Image: Don Arnold / Getty Images (left); Gregg Deguire / Wireimage

Packer models ’13 and ’14: Erica Packer (left); Miranda Kerr

Was he worried that the debacle would destroy three generations of Packer wealth creation? “I don’t want to answer that.” He will, however, share the biggest lesson he learned from that dark period. “Don’t be too leveraged—our balance sheet is now much more conservative than it was in 2008,” he says.

Las Vegas damaged more than Packer’s wallet. If the CVC deal showed he could be on occasion as shrewd as his legendary father, his North American shocker had him scrambling—again—to prove he could fill those huge shoes. Although Kerry Packer, too, had his share of business failures, he built a reputation as Australia’s most powerful and formidable businessman, owning the country’s 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 I’ve had mine,” he gloated publicly.

Packer 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 he’d been to the other side and “there’s 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 Australia’s 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.

James Packer made several great business calls before his father died but failed to shake the public’s perception of him as a bit of a dilettante and playboy. He championed the Packers’ acquisition of Melbourne’s 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 Australia’s 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 Australia’s other media tycoon, Rupert Murdoch, invested heavily in One.Tel, which rapidly grew to become Australia’s fourth-largest telecom, before collapsing spectacularly in 2001 amid poor management, non-competitive pricing and legal issues. Although the Packer family’s $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 debacle—and lash him for it.

Shortly after the One.Tel misery, James Packer’s 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, he’d also invested in casinos in Macau—the special administrative area of China that now generates seven times the gambling revenue of Las Vegas—and this move proved his redemption. Crown put $600 million in Macau; it is currently worth $8 billion.

Image: Warner Bros. / Album / Newscom

RatPac’s first flick, the sci-fi thriller Gravity, has been nominated for 10 Academy Awards, including Best Picture

“I’ve 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 Australia’s top-performing stocks last year, leaping $3 billion in market capitalisation to $11 billion. What has the market excited is Crown’s 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.

That 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.

“As a kid, I saw that dad lost a lot of money in casinos, and I didn’t understand that,” he says. “I thought this must be a great business. At the same time, I saw when I was with him—and I was with him a lot of the time—that 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.”

Does 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. He’s also mindful of his father’s urging to be realistic about business: “You’re never as good on your best day as everyone thinks, and you’re never as bad on your worst day as everyone thinks.”

Still, 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.

“The business in Macau is going amazingly; I’ve 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.

The 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 Packer’s “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 Ratner’s RatPac Entertainment).

“Trust” 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.”

While Packer’s growing casino interests are his main focus—and the reason his fortune is up by nearly $2 billion in two years—it’s clear that RatPac, formed in December 2012, is not just a rich man’s dabble in a glamorous industry. “The casino business and the movie business are similar,” Ratner says. “What you’re selling is an experience. You’re 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.

Now 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 Asia’s growing middle-class thirst for entertainment. Exactly like Packer’s Crown Casino empire.

“The 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 didn’t 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 Pitt’s 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 says.

RatPac’s broader media strategy includes buying one or more TV production companies, creating documentaries with Netflix and publishing Ben Mezrich’s (Bringing Down the House, The Accidental Billionaires) next book. In some ways, it’s a return to Packer’s media-company heritage but with a 21st-century spin. “I don’t think I ever got out of the media business,” he says.

For now, Packer looks to be on a winning streak. If RatPac proves to be another Macau, there’s little doubt he will perhaps surpass his father’s 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 he’s used to placing big bets and sometimes getting stuck with a losing hand. “I’ve made a bunch of mistakes in my life. I’ve had my ups and downs,” he says. “Business is good right now, but now my personal life is a disaster.”

James Packer had big shoes to fill but he had a plan to make himself more successful than his father. Reporter Paul Barry details how James Packer sold his media holdings and invested the money in casinos. We hear from the people who knew James and his father. They describe the affection and the competition between the two and we hear about the high stake deals that made and then lost James Packer a fortune.

Kerry Packer never hid the fact he loved to gamble. Horses or casinos it didn't really matter, he wagered and lost millions. Now his son James Packer is making even bigger bets buying and building casinos.

James Packer made it clear some time ago he didn't see himself as a media mogul. After a disastrous foray into telecommunications and the failure of One-Tel he sold his television and magazine interests and embarked on a strategy that would make him the head of a world-wide gambling empire.

On Four Corners reporter Paul Barry tries to answer some major questions about the personality of James Packer and how the formative years he spent with his father have moulded his decision making and his business strategies. Paul Barry talks to people who saw the relationship first hand.

Kerry Packer Casino Macau Buffet

' James is a brilliant strategist. An absolutely brilliant strategist and the strategy he put in place at PBL, the new media strategy, the gaming strategy- I mean how much money has he made? ' (Peter Yates, Former Managing Director PBL)

People that knew James and his father say the decision by the younger man to invest in One.Tel provides a real insight into the dynamics between the two men. Ultimately James was forced to accept responsibility for his decision to invest in the company that went broke in 2001. New evidence though suggests Kerry Packer was not blameless and let his son take the rap.

Ultimately though One.Tel was just a curtain-raiser for James Packer's next big move. In 2007 he splurged $3 billion on five separate casino projects in the United States. He made those decisions at the top of the market even as the full impact of the global financial crisis was beginning to be felt.

As one expert in the United States sees it this was a terrible mistake...

' How smart was it to buy at this time? A. Well it wasn't smart. I mean it was buying at the peak. '

Within months the investments had imploded. His Fontainbleau Resort is now half built and bankrupt. Another project nearby is an empty lot. Two other casinos he purchased are close to broke and his biggest deal of all has been abandoned at a cost of nearly $500 million.

Why did he make such a bold decision and where was the advice that might have stopped him making such a risky gamble?

' He made a huge mistake. He should have seen the bubble coming. He should have seen the debt crisis ... he didn't. But neither did the, you know the hundreds of advisors being paid enormous amounts of money. ' (Former Packer insider)

What will this mean for James Packer and the fortune he's inherited from his father. Will he back off his plan to create a global gaming empire or must he find a way to fulfil what some see as his destiny. To make more money and be more successful than the man he saw as a legend?

' I don't think he measures himself in any other way other than billions of dollars. ' (Former Packer employee)

'Will the Son Also Rise?' goes to air on Monday 12th October at 8.30 pm on ABC 1. It is repeated on 13th October at 11.35 pm.

* Paul Barry has in the past reported on Kerry Packer for Four Corners. He wrote the book ' The Rise and Rise of Kerry Packer '. He is the author of a new book about James Packer.

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Further Reading

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RELATED NEWS ARTICLES

Packer down $2b in Vegas gamble ABC News 12 October 2009

Kerry Packer was notorious for losing millions of dollars on the gaming tables of the world. But since his father's death in 2005, James Packer has been making far bigger, billion-dollar bets, building and buying casinos around the world. And so far every one has lost. By Paul Barry for Four Corners.

Packer's pain over lost billions SMH 9 October 2009

James Packer's retreat from public life this year is a sign of the deep emotional impact of losing part of the great wealth he inherited from his late father, Kerry, says a new book on one of Australia's most powerful businessmen.

Hard men reign in Packer's dream city SMH 22 September 2009

If James Packer, and his partner Lawrence Ho, have the model right...then his $3 billion make-or-break play at the City of Dreams will redeem his name after several catastrophic bets. China's booming economy is taking care of the rest.

Packer's Macau investment takes another hit The Australian 8 August 2009

James Packer's dream to be a world-class casino operator have hit another snag, with his Macau investment reporting falling revenues, more capital expenditure and a worse than expected second-quarter loss of $US78.5 million ($93.8m).

Why James Packer attracts so much publicity The Australian 7 March 2009

Anyone who knows James Douglas Packer knows he does not like being written about in the media, which is ironic considering that very industry created his family's fortune.

James Packer sells up family fortune The Sunday Telegraph 18 January 2009

James Packer is liquidating his billionaire lifestyle as ongoing financial problems continue to hammer his personal fortune.

James Packer is losing $6000 a minute The Courier Mail 2 November 2008

James Packer is depressed. He's put on weight and is smoking again. He's obsessed with the money he's losing. Or that's the buzz.

See ya, Tom: Packer quits Cruise's church SMH 10 May 2008

The Church of Scientology has lost its grip on James Packer. The billionaire's closest friends have revealed that he has quietly distanced himself from Scientology, labelled a cult by some former members, as it faces international controversy about its anti-psychiatry stance.

Packer loses punt on UK supercasino SMH 31 January 2007

The northern city of Manchester unexpectedly won the fight to host Britain's first Las Vegas-style supercasino on Tuesday, beating off challengers including James Packer's UK joint venture which backed a bid by the city of Cardiff.

Chip off the old block The Age 31 December 2005

In a rare and revealing interview in the 1970s, Kerry Packer opened up to Terry Lane on growing up with a legendary father, and his influence on his own children.

Apprentice emerges to become master of an empire The Age 29 December 2005

James will now take control of Australia's biggest media company and people across an empire of financial services, gaming, pastoral, chemical and communications sectors are waiting to see what he will tell them to do.

VIDEO and AUDIO ONLINE

Kerry let James Packer take the fall on One.Tel AM 12 October 2009

When the phone company One.Tel collapsed in May 2001 businessman, James Packer personally took the blame... the collapse of the company came as no surprise to his father, Kerry Packer. Audio

Media tycoons engage in battle for control 7.30 Report 21 September 2009

The Australian business sector is alive with anxious speculation following repeated share market raids by television magnate Kerry Stokes on the media company dominated by his rival James Packer. Packer in turn has moved to shore-up his hold on the company; many observers believe this tussle between the two tycoons could reshape Australia's media landscape. Video

Kerry Stokes forces way into Packer boardroom AM 11 September 2009

Media owner Kerry Stokes has had a victory in his bid for a slice of Australian pay television by forcing his way into the boardroom of arch rival James Packer. Audio

Packer v Stokes RN Saturday Extra 29 August 2009

Huge money and huge egos...always a potent mix and fascinating to observe when a real tussle with real winners and losers is in the spotlight... a fascinating tale of past slights and present profitability - all against a backdrop of a rapidly changing television landscape. Audio

James Packer defends raid by Kerry Stokes AM 27 August 2009

A battle between two of Australia's billionaires is hotting up with James Packer defending a raid on his media assets from his fierce rival Kerry Stokes. Audio

Kerry Packer Casino Macau Casino

Crown posts billion dollar full-year loss Lateline Business 27 August 2009

James Packer's Crown Limited has reported a full-year loss of close to $1.5 billion because of write-downs on US investments. Chief executive Rowen Craigie says the global financial crisis has had a major adverse impact on the North American casino industry, and analysts are suggesting Crown might exit the market altogether. Video

James Packer finds more cash at SEEK Lateline Business 26 August 2009

James Packer's Consolidated Media has sold its stake in the online job agency SEEK for just under $500 million. In the process, the company has been turned into a pure pay TV play and earned valuable cash to fend off a challenge from Kerry Stokes. Video

Kerry Packer Casino Macau Entertainment

Media companies struggling in tough times 7.30 Report 18 May 2009

A health check of Australia's major commercial media companies suggests things are not well for just about all of them. Video

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