What do James Packer and Russell Crowe have in common? Before this week probably not much. However Packer has seized on an opportunity to get one over on rival gaming operator Echo Entertainment’s (ASX: EGP) Star Casino by taking over as a key sponsor of Crowe’s much loved NRL team, the South Sydney Rabbitohs.
The three-year deal is reported to be worth $1 million a year from 2014 in return for the prime front-of-jersey position for Packer’s Crown (ASX: CWN), a position previously occupied by Star.
Crown is also a key sponsor of the Melbourne Storm, but the new association with South Sydney publically increases the company’s involvement with the city and community where Packer is aiming to invest up to $1 billion into a new 60-story casino hotel and resort. The winning design, unveiled yesterday, is to be submitted to an independent committee who will assess if it will grant a second gaming licence to Crown, or take up a competing proposal by Echo to reinvigorate its Star Casino in return for an extension of its monopoly position.
The grand proposal would include Sydney’s first six-star hotel and an invitation-only VIP area targeting wealthy Asian high-rollers, especially out of China. Packer, who owns 50% of Crown said at the unveiling that the curvature of the proposed building was in keeping with the flow of the Sydney Harbour and would create another icon for the city.
In addition to the Sydney development, Crown is reported to be considering a US$350 million investment in a new casino in Sri Lanka. ‘Crown Colombo’ could comprise an integrated resort, which usually take the form of combined hotels, casinos and shopping malls and theatres.
Even if Crown’s Sydney proposal does not get across the line, Packer will still have something to cheer about if the Rabbitohs can take the NRL premiership this year. Souths are currently top of the table with eight wins from nine games and are TABcorp (ASX: TAH) favourites to take home the grand final.
There is something mystical about owning a sports team and the rich have never been shy to take a punt on them as an investment. Even devout value investing icon Warren Buffett owns a stake in a minor league baseball team in his home stat,e the Omaha Storm Chasers. Fans of the NRL who are keen for a piece of the action could consider Brisbane Broncos (ASX: BBL), the only listed sports team on the Australian stock exchange.
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