Two of Australia’s largest casino operators have laid off a majority of their employees and cut executive salaries in measures that will help them weather the current Covid-19 storm.
The casino resorts of Crown Resorts and the Star Entertainment Group closed March 23, and will remain closed until further notice.
In an April 16 filing to the Australian Securities Exchange, Crown Resorts said it had been “forced to substantially reduce its workforce through a series of stand-downs” that affected “approximately 95 percent or over” of the group’s 11,500 employees. “Only employees in business-critical functions remain actively working,” stated the firm.
Crown Resorts has casino resorts in Melbourne, Victoria and Perth, Western Australia and is developing a third at Barangaroo in Sydney, New South Wales. Crown’s chief executive and other senior executives have taken a 20 percent salary cut until June 30, 2020, a measure that also applied to the group’s chairman and non-executive directors.
According to GGRAsia, the company said that while its gaming and other non-essential business activities remain suspended, the group expects the staff-related measures it has taken will help reduce its underlying operating cash costs to between AUD20 million (US$12.6 million) and AUD30 million per month.
Crown Resorts also said it was able to secure over AUD1 billion in additional debt facilities, including funds to “support the continuation of the construction of Crown Sydney”.
“Crown intends to continue construction of the Crown Sydney project as planned,” and in the absence of “any further delays arising from the impact of Covid-19, remains on track for completion of the Crown Sydney Hotel Resort by the end of the year,” stated the company.
Fitch Ratings Inc said in a report earlier this month that Crown Resorts had enough “headroom to absorb the effect of the government shutdown of casinos” in Australia.
In its own Thursday filing, market rival The Star said the gaming pause in Australia would “continue to have a material impact” on the firm’s business.
The Star Entertainment runs The Star Sydney in New South Wales; it also runs The Star Gold Coast and Treasury Brisbane, both in the state of Queensland.
The company had said previously that it had stood down circa 8,500 employees, representing more than 90 percent of the group’s workforce. It added that for the remainder of fiscal-year 2020, non-executive director fees have been reduced by 50 percent, with the CEO’s salary reduced by 40 percent in the same period.
“Other senior executives have also agreed to reductions,” said the company. “These reductions will remain under review depending on the period of shutdown,” it added.
From April 2020 until the restrictions start to lift, The Star’s monthly operating expenses are estimated to be about AUD10 million, according to the filing. These comprise payments to employees who are not stood down, asset security, technology and other fixed costs, it added.
The Star said also it was able to secure AUD200 million in an additional debt facility, as well as an agreement from all its debt providers for “a full waiver of its gearing and interest cover covenants” at the next covenant testing date of June 30, 2020. The company said additionally that it would reduce capital expenditure for this and the next fiscal year.
Restaurants and clubs in the Australian Capital Territory (ACT) can get extra coronavirus aid if they give up some of their poker machines. The funds–$15,000 for each surrendered machine—must earmarked for payroll and other employee assistance during the Covid-19 pandemic.
“The government will provide further support to community clubs and Casino Canberra to enable them to keep staff employed as they adjust to the physical distancing measures,” said ACT Chief Minister Andrew Barr. “Measures include providing gaming machine licensees with the opportunity to access a payment of $15,000 per authorization if they voluntarily surrender gaming machine authorizations.”
The proposal is currently limited to 250 machines, according to CDC Gaming Reports. The plan also includes a waiver or refund of gaming machine taxes.
ACT has long been committed to reducing the number of pokies in the territory to 4,000. When it comes to gambling, Australians are among the world’s biggest losers; they spent more than $12.5 billion on poker machines in clubs and pubs alone in 2017-18.
Rebecca Vassarotti, an ACT Greens candidate, said the package offers “a realistic pathway for ACT clubs to rebuild their businesses in a way that divests from a revenue base built on the back of harm caused to individuals, families and communities. This should be explored as a mechanism for local venues to totally divest from operating poker machines.”
Tim Costello, of the Alliance for Gambling Reform, said the buyback plan “provides an important opportunity to build long-term resilience in its community by reducing gambling harm.”
“Imagine if all the other states and territories made similar moves,” he added. “In data released this week in New South Wales, it was revealed that on average every single poker machine in a pub raked in $117,000 for its private owners. That’s an astounding amount of money being drained out of local communities and lining the pockets of a wealthy few.”
