In a significant management shakeup at Star Entertainment Group, the Australian gambling giant has announced the appointment of its new Chief Executive Officer, David McCann. The seasoned executive, who boasts a robust 28-year career, will officially take over the reins on July 8, pending regulatory approval. His arrival comes at a crucial juncture for the company, which has been grappling with a series of regulatory and financial challenges.
McCann steps into the shoes of Robbie Cooke, who vacated the CEO position in March. Although Cooke exited the role, he remained accessible in a consultancy capacity as Star scoured the market for a suitable successor. In the meantime, Neale O’Connell, the Interim Group Chief Financial Officer, has been doubling up as Acting CEO. Additionally, newly appointed Chair Anne Ward has stepped up, assuming extra responsibilities during the transition period.
David McCann is no stranger to high-stakes leadership roles. His most pertinent experience for his new role at Star comes from his tenure as CEO and Managing Director of Crown Resorts between May 2021 and September 2022. Before his time at Crown, McCann accumulated over 15 years of experience at Lendlease, a real estate development and investment conglomerate, including more than a decade as its Group CEO. His impressive resume also includes senior leadership roles at ABN AMRO and Bankers Trust.
Upon his appointment, McCann spoke about the critical period Star is navigating. “I recognize that there are many complex issues and challenges for the company to address,” he admitted. “I am committed to working with the board and the various stakeholders to help drive change, restore confidence, and achieve a sustainable resolution.”
Chair Anne Ward expressed optimism regarding McCann’s appointment, underscoring his exemplary qualifications for the job. “Given his time with Crown, and previous long-standing leadership at Lendlease, he has the right credentials to lead Star’s remediation program,” Ward stated. “His track record reflects his capability to work collaboratively with multiple stakeholders and lead meaningful transformational change and cultural renewal. This experience will be invaluable as we work towards rebuilding trust and expediting the sustainable transformation of Star.”
Star Entertainment Group has certainly faced turbulent times, particularly concerning its regulatory standing. Both McCann and Ward are acutely aware of the extensive efforts needed to regain customer trust and stabilize the organization’s footing.
One of the most pressing issues confronting the company is an impending second inquiry from the New South Wales Independent Casino Commission (NICC). This new probe will be led by Adam Bell SC, the same figure who managed the initial investigation. The focus of this latest inquiry will be on how effectively Star has implemented the recommendations from the first investigation. The company was declared unsuitable to hold a casino license in New South Wales in September 2022 after the initial inquiry exposed numerous anti-money laundering and social responsibility failures.
. Although the second inquiry commenced in February and its final report was submitted last month, details remain under wraps.
In Queensland, the company has also faced regulatory hurdles. The state’s authorities announced a delay in a planned suspension of Star’s casino license, initially slated for December 2023. This follows a December 2022 penalty in which Star was fined $100 million and warned its license could be suspended without sufficient proof of suitability. The deadline for proving compliance has now been shifted twice, with the latest extension pushing the date to May 31, 2024. Authorities are waiting for the findings from the second Bell Inquiry to make a final decision.
Financially, the past year has been challenging for Star Entertainment Group. The company forecasts a decline in full-year revenue for the fiscal year ending June 30. Revenue is projected to fall to between AU$1.68 billion and AU$1.69 billion, representing an 11.1% drop from the AU$1.90 billion posted in FY23. This downturn is attributed to what Star describes as “challenging” trading conditions, significantly exacerbated by increased operational costs stemming from remediation and transformation activities, as well as bolstered resourcing in risk and control functions.
Adjusted EBITDA is also anticipated to decline substantially, expected to be between AU$165 million and AU$180 million, marking a sharp 43.2% year-on-year decrease at the upper end. Expectations for the final quarter of the fiscal year are similarly low, with revenue projected to decline by 3.3% year-on-year and 4.3% quarter-on-quarter.
Looking forward, Star is considering various strategies, including potential asset sales, to stabilize its financial situation. Assets under consideration for sale include the Treasury casino, hotel, and car park. Talks are already in progress, and further updates are expected when the company announces its FY24 results later in the year.
As McCann prepares to take on his new role, the focus will be on navigating these multifaceted challenges, restoring confidence, and steering Star towards a more sustainable future.
