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Heidi Specter April 16, 2020 3 min read
Star Entertainment and Crown Resorts Cut Executives Pay
Australia’s largest casino operators, The Star Entertainment Group and Crown Resorts, have adopted measures to weather the COVID-19 occasioned lockdown without taking too much of a financial hit.
Crown Resorts and The Star Entertainment Group Updated Securities Filings
Australian casino giants have taken serious pay cuts across their executive staff to help weather the coronavirus pandemic that has forced most operations to wind down, and many staff members to be stood down.
On March 23, the Australian Government ordered casinos to close down to allow the authorities time to slow the spread of COVID-19. Casinos fell under a category known as “non-essential businesses,” along with bars and other entertainment venues.
Responding to the crisis on Thursday, Crown Resorts Ltd and The Star Entertainment Group Ltd issued separate filings to the Australian Securities Exchange, outlining new measures to help the companies pull through the economic morose brought on by the lockdown.
Crown Resorts Reduces Executive Pays
Crown Resorts was forced to “stand down” over 95% of its workforce, out of 11,500 employees, going to a mission-critical number of employees, the company explained. Many companies across the Pacific have done the same in the United States, with nearly all casino workers in places like Las Vegas and Atlantic City furloughed.
To support employees through those difficult times, Crown Resorts has issued an ex gratia payment worth two weeks’ remuneration to employees who have been stood down. Executives have also taken a 20% cut with the measure in place until at least June 30, 2020.
Pushing Down Operating Costs
Crown hopes to use the measures as a way to push down operating costs while the casinos are not conducting any business. The company expects to push down the operating costs to between $12.6 million and $18.95 million, Crown explained in the filing.
This would give it teeth in pushing ahead with the construction of Crown Sydney. Commenting on this project specifically, the operator said that the project should continue as planned and complete by the end of the year notwithstanding any unforeseen delays occasioned by the COVID-19 outbreak.
Even though Crown looks heavily affected, the company is well-poised to absorb the shock from the sudden and full suspension of all economic activity.
This was confirmed recently in a Fitch Ratings Inc report which underlined that Crown Resorts had manageable covenant risk, and available liquidity, making it easy for the company to weather the oncoming few months of drought.
The Star Entertainment Group
With several properties in Australia, and specifically The Star Sydney and The Star Gold Coast and Treasury Brisbane, the Group is another big employer in the country. Following the government-ordered shutdown, The Star Entertainment Group stood down around 8,500 employees, a slightly smaller percentage of its workforce, or around 90% as compared to Crown Resorts.
However, The Star Entertainment Group went further in severing remuneration packages for its chief executive, with the CEO salary taking a steep 40% cut and director fees dropping down by another 50%.
The management staff has agreed to drastic cuts to help the company push through this time of difficulty and further slash operating costs estimated at $6.32 million. The filing to the ASE revealed that the costs were due to non-stood-down essential staff and other fixed costs, as well as security and maintenance.
The Star also received “a full waiver of its gearing and interest cover covenants,” with debtors agreeing to the milder measure in full.
Meanwhile, Tabcorp has appealed to Australians to be “patriotic” and place bets via the TAB betting platform, issuing a special commercial for the purpose.