james packer loosing 6000 a minute

http://www.news.com.au/story/0,27574,24586360-5007146,00.html

JAMES Packer is depressed. He's put on weight and is smoking again. Or that's the buzz.
It seems he is obsessed with the amount of money he has lost. And why wouldn't he be? In the last 12 months, he has lost his top spot as Australia's richest man and has waved goodbye to more than half his $6.2 billion fortune.

James's shares in three key businesses - casinos, media and financial services - have lost $3.5 billion in value in the last year. On top of that, he has dropped another couple of hundred million dollars on sundry other shareholdings (see graphic).

Sitting in front of his computer, watching the markets fall, Mr Packer has been bleeding wealth at the rate of $6000 a minute, $360,000 an hour, or $8.6 million a day. And that's just the average.

Some days - and most days, recently - it has been far worse than that. On Tuesday, for example, he lost $100 million by mid-morning, despite telling Crown shareholders at the annual general meeting in Melbourne that the Australian casinos were doing well.

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No sympathy, he is like anyone else who takes risks, tough luck, beside he ain't half the man his father was and I can see this only getting worse for him.

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Norm And it's not just the money. Last week, James was forced to walk away from the Packer media empire that three previous generations of his family had built up over 80 years. Up at the Packers' Hunter Valley property, Ellerston, his father must have been turning in his grave.

Kerry Packer would never have abandoned his magazines and Channel 9 in this way. Nor would he have got himself in the sort of financial strife that James is now facing. But more of that in a moment.

Of course, the markets may recover. And James is not the only billionaire to be caught in this financial tsunami. The man who dislodged him as Australia's richest man, Andrew "Twiggy" Forrest, has also been swamped. He quipped recently to a friend that he had lost $9 billion in 60 days. Then laughed.

But James is suffering because he takes money so seriously. His motto has always been: "He who dies with the most toys, wins".

For James, money is a measure of his self-worth and a scorecard of his success. His self-esteem is the net present value of his assets, says one old friend.

Like Kerry before him, James is driven by a desire to match his father, to beat him or, at the very least, to earn his respect. Although his upbringing was never brutal in the way Kerry's was, he was starved of praise - and desperate to receive it.

And his father certainly wouldn't be praising him now. Instead, he'd be saying: "I told you so" - and not for the first time. Kerry Packer was an arch-pessimist, a super-bear, a man who constantly feared the world was going to end. This time, he would have been proved spectacularly right. And he would be sitting on the sidelines with a pile of cash, waiting to snap up the biggest bargains in a century.

James, on the other hand, is looking at his losses and wondering how much worse it can get. He has always been a believer and an optimist and has always been prepared to spend money. He was impatient with his father's refusal to take risks - except at the racetrack and casino - and with his father's lack of ambition.

By comparison with Kerry, he has always thought big in business. He has always had a vision. He has always been ready to dream and to take on the world. It's what got him into trouble with One.Tel, where the Packers lost around $400 million. And it is what has got him into trouble on this occasion, too.

The good news (for him) is that he and his shareholders collected $4.5 billion when he got rid of most of the Packer media empire in October 2006 - when he had the foresight (and good fortune) to find a private equity firm that wanted to buy it. Kerry might not have done that. The bad news is that he has gambled most of the cash in his casino business and is now wondering how much he will get back.

Put simply, James made several billion-dollar bets in Las Vegas and Macau at the very top of the market and none of them is now looking good. As a consequence, the value of his flagship company, Crown Limited, has fallen by almost two-thirds in a year, from $15 a share to $6.30 earlier last week.

In Las Vegas, for example, Crown bought stakes in several US casino operators - Harrah's, Fontainebleau and Station - and has had to write down its investments by $181 million. There could easily be more pain to come. Fontainebleau is building a huge new casino at the north end of The Strip, at a time when Vegas visitor numbers are down and casino revenues are falling, for only the second time in 38 years. They have now dropped for eight months on the trot -- the worst ever.

Crown has also lost $45 million on its plan to build Crown Las Vegas, just next to the Fontainebleau, in what was to be the world's tallest building. That project was scaled down, then canned, because no bank would fund it.

Next up, Packer's company is going to fork out $US1.7 billion in cash for Cannery Casinos, which owns three suburban casinos in Las Vegas and another racetrack casino in Pennsylvania. All are excellent properties that undoubtedly have a future, but Packer agreed to pay top dollar for them in December 2007 - before the market went pear-shaped.

The purchase will still go ahead in 2009 - if Packer gets the nod from the Nevada Gaming Commission.

Meanwhile, the Las Vegas real estate market looks like Hurricane Katrina just hit it. The city is suffering from a surge of foreclosures and a 30 per cent fall in house prices, making it the worst city in the entire US. Unemployment has also risen, to more than seven per cent.

Then there is the push into Macau, the Portuguese colony that's now part of China. James's Crown has a joint venture there with Lawrence Ho's Melco. And the stakes are even higher than Las Vegas because even more money is at risk.

Packer came much later into the Macau market than most of his competitors, paid an absolute fortune ($US900 million) for the licence and suffered a shocking start with his first casino, Crown Macau, which was built well away from the main gaming area. It was "a six-star resort in a three-star location", one gaming analyst noted. Designed for the mass market, it failed to attract punters and had to be reconfigured for high rollers. When I visited there for The Sunday Telegraph in June 2007, it was almost empty.

Sixteen months later, it is still struggling to make a profit (after paying its interest bill) and is facing hard times ahead because China has cut back on visa numbers. As a result, Macau visitor numbers and revenue are falling, for the first time since the market was opened up in 2003.

If the financial crisis now hits China, the restrictions may tighten. Or some of those millionaire punters may go bust.

James's only comfort is that he is faring better than stockholders in Melco-Crown (quoted on the NASDAQ in New York), who have seen their shares lose 85 per cent of their value in the last 20 months, falling from above $US20 at their peak to around $US3 last week.

A year ago, casino operators saw Macau as a sure-fire bet to make money, a gamble where no-one would lose. Now, no-one is so confident. Shares in Packer's biggest rival in Macau, Las Vegas Sands, were trading last week at less than 1/20th of their 2007 peak. So James is not the only one who is suffering.

But the real crunch is yet to come. Packer and Ho's next project is a far bigger Macau casino, called the City Of Dreams. Due to open in the middle of 2009, it is financed with $US1.75 billion of bank loans, from the ANZ Bank and UBS, among others. Its total cost will be more than $US2 billion.

Put bluntly, the City Of Dreams needs to be a big success. Or Macau could turn out to be James's worst nightmare.

Even when he was at school, James was familiar with the old saying, "shirtsleeves to shirtsleeves, in three generations", which sums up how family fortunes can be lost by those who inherit them. James is from the fourth generation of rich Packers, but he has always been acutely aware of the weight on his shoulders. And, as this crisis grinds on, that burden must be feeling heavier than ever.

James's great-grandfather, Robert Clyde Packer, made his first million after he found 10 bob at a racecourse, put it on a horse and won enough for his passage from Hobart to Sydney.

James has not had such good luck. He inherited the Packer empire on the eve of the worst financial crisis since the Great Depression, which has already destroyed some of the world's biggest banks and has sent others scurrying to governments for help.

My bet is that he's not going to lose the lot, but that the pain and the worry is not yet over.

So, think of him as you contemplate your vanishing super. It's always a comfort to know there's someone worse off than you.