Star Entertainment Group has announced the appointment of former Crown Resorts Chief Executive Officer (CEO) Steve McCann as its new CEO, effective from July 8, pending regulatory approvals. McCann succeeds Robbie Cooke, who vacated the CEO position in March but remained in a consultancy role to assist in the search for his replacement. During the interim, Neale O’Connell, the group’s Chief Financial Officer, took on the role of acting CEO, while Anne Ward, the newly appointed chair, also shouldered additional responsibilities.
McCann’s extensive experience includes nearly three decades in senior-level positions, making him well-suited for his new role at Star. Notably, he served as the CEO and Managing Director of Crown Resorts for 18 months from May 2021 to September 2022. Before his tenure at Crown, McCann spent over 15 years at the real estate development and investment group Lendlease, where he held the position of Group CEO for more than a decade. Earlier in his career, he also held significant leadership roles at ABN AMRO and Bankers Trust.
Upon his appointment, McCann expressed his awareness of the complex challenges facing Star and emphasized his commitment to restoring stakeholder confidence in the business. “I recognize that there are many complex issues and challenges for the company to address,” he said. “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 welcomed McCann’s arrival, highlighting his impressive track record and leadership credentials garnered from his time with Crown and Lendlease. “Given his time with Crown, and previous long-standing leadership at Lendlease, he has the right credentials to lead Star’s remediation programme,” Ward said. “His track record reflects his capability to work collaboratively with multiple stakeholders and lead meaningful transformational change and cultural renewal.” She added, “This experience will be invaluable as we work towards rebuilding trust and expediting the sustainable transformation of Star.”
Star Entertainment has faced several regulatory issues in recent years, and both McCann and Ward acknowledge that significant efforts are required to restore customer confidence. The first major regulatory hurdle was a scathing report by the New South Wales Independent Casino Commission (NICC), led by Adam Bell SC. Following this, Star was declared unsuitable to hold a casino licence in New South Wales in September 2022 after the investigation uncovered numerous failings in anti-money laundering and social responsibility.
The NICC has launched a second inquiry to assess how Star has implemented the recommendations from the first report. This inquiry began in February, and a final report was submitted last month, although the details are yet to be made public. In Queensland, Star faced further regulatory challenges, with the authorities delaying a planned suspension of the company’s licence due to slow compliance progress.
. The group was fined $100.0 million in December 2022 and was given an extended deadline to prove its suitability to hold a licence, which shifted from December 1, 2023, to May 31, 2024, after Star submitted a draft remediation plan.
Adding to Star’s challenges, the company recently announced a projected decline in full-year revenue due to an overall tough financial year. The revenue for the year ending June 30 is expected to be between AU$1.68 billion and AU$1.69 billion, falling from the AU$1.90 billion posted in the previous financial year, marking an 11.1% decrease at the upper end of the range. Star cited persistent “challenging” trading conditions throughout the year and higher operating costs associated with remediation and transformation activities, along with increased investment in risk and control functions.
Consequently, Star is forecasting a decline in adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), estimating it to be between AU$165 million and AU$180 million, with the upper end reflecting a 43.2% year-on-year decrease. The forecast comes just before the end of the fourth quarter, with expectations set low as Star anticipates a revenue drop of 3.3% year-on-year and 4.3% quarter-on-quarter.
Looking towards future strategies, Star is considering asset sales to bolster finances. Among the assets under consideration for sale are the Treasury Casino, hotel, and car park. Discussions around these sales are ongoing, and Star is also contemplating the sale of other non-core assets. Further updates on these potential sales are expected when Star reports its FY24 results later in the year.
In conclusion, Steve McCann’s appointment comes at a critical juncture for Star Entertainment, amid ongoing regulatory scrutiny and financial challenges. Both McCann and Chair Anne Ward have expressed optimism about leading Star through its current difficulties, with a focus on restoring trust and confidence among stakeholders while implementing necessary transformations.
