According to new analysis from Forsyth Barr, SkyCity Entertainment should consider selling its Adelaide casino, advice which comes after it was revealed that the Australian casino giant generated an estimated AU$420 million in cumulative cash losses over 25 years.
The New Zealand investment firm’s analysts Paul Laxton Koraua and Andy Bowley said SkyCity could come out as a stronger business without the Adelaide operation – and that’s important as that specific property is already going through a “strategic review”.
According to their analysis, SkyCity has invested around AU$730 million in the project since they purchased it from the South Australian Government for AU$180 million. That investment also includes around AU$200 million in regulatory costs.
Forsyth Barr estimates SkyCity Adelaide has generated only about AU$315 million in cumulative cash earnings, so you can quickly see how bad the picture begins to look for SkyCity.
The proposal comes less than two weeks after SkyCity confirmed that a formal strategic review of its Adelaide business will begin during the first half of FY27.
SkyCity’s latest financial results also included a AU$43 million write-down of the Adelaide casino’s accounting value, and there are numerous reasons for this. Firstly, its Building a Better Business compliance programme is running behind schedule, and they’re still struggling to roll-out the mandatory carded play changes to all of their land-based casinos.
Now, they’re also up against a AU$21 million regulatory penalty – which is to be paid in three installments over two years, thanks to an agreement with South Australia’s Commissioner for Liquor and Gambling.
If SkyCity follows Forsyth Barr’s advice, they could, according to the investment firm, “materially improve” their balance sheet.
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