Star Entertainment has announced the departure of its chief executive, Steve McCann, who leaves with $16 million in pay and bonuses just 17 months after joining the casino operator. This decision comes as the company faces a potential financial collapse due to an impending hefty fine.
The departure of McCann, a former world series poker player, was anticipated following a significant investment by US casino operator Bally’s Corporation and pokies billionaire Bruce Mathieson. Earlier this year, they injected $300 million into Star Entertainment to stabilize the company, gaining control last month.
Financial Challenges and Strategic Shifts
Star Entertainment is bracing for a substantial fine from Austrac for money-laundering breaches, which could reach $300 million. This looming penalty threatens the financial stability of the casino operator. In a statement to the ASX, McCann expressed optimism about the strategic investment by Bally’s Corporation and Investment Holdings Pty Ltd, describing it as an opportunity for the company to pursue recovery and growth.
“The strategic investment by Bally’s Corporation and Investment Holdings Pty Ltd provides an opportunity for The Star to move in a new direction and pursue a pathway to recovery and future growth,” McCann stated.
Despite his departure, McCann will remain available to assist Star Entertainment with government and regulatory issues until July. Bruce Mathieson Jnr, who will lead the search for a new CEO as executive chairman, expressed gratitude for McCann’s leadership during a challenging period.
Leadership Transition and Ownership Changes
Mathieson’s Investment Holdings and Bally’s now own a combined 61 percent of Star Entertainment. McCann was brought in last year after the company purged its executive team due to a loss of confidence from the NSW regulator over anti-money laundering and counterterrorism failings revealed in 2021.
McCann’s compensation package at Star included a $2.5 million annual salary, a $2.5 million sign-on bonus, a $2.5 million retention bonus, $2.5 million in short-term incentives for both years, and performance rights worth $1 million, which vested last month.
A High-Stakes Career
McCann’s tenure at Star was not his first high-stakes role in the casino industry. Previously, he was involved with Crown Resorts, where he helped stabilize the company after it lost its casino licenses due to its own regulatory issues concerning money laundering. He departed Crown with $9 million in salary and bonuses when the company was sold to private equity firm Blackstone for $8.9 billion.
“It has been intense. I am looking forward to a break,” McCann remarked following his departure from Crown, though he joined Star less than two years later.
Future Prospects and Industry Implications
The departure of Steve McCann and the financial challenges facing Star Entertainment highlight the ongoing turbulence in the Australian casino industry. The significant investment by Bally’s and Mathieson’s entities signals a potential shift in strategy and governance, aiming to steer the company towards stability and growth.
As the search for a new CEO begins, industry experts will be watching closely to see how Star Entertainment navigates its regulatory and financial hurdles. The outcome of Austrac’s investigation and the subsequent fine will be pivotal in determining the company’s future.
Moving forward, stakeholders will be keenly observing how the new leadership will address these challenges and leverage the strategic investments to rebuild trust and ensure compliance with regulatory standards.
