It is sometimes said the Roman Empire did not collapse but morphed into the Roman Catholic Church.
Likewise, it’s often claimed the Rum Rebellion never really ended but mutated into Sydney’s vigorous ecology of financial services and property development.
If so, it is entirely appropriate that the two harbour peninsulas framing the financial services centre, north of Town Hall, are marked by monuments to gambling and construction.
Sydney Opera House (SOH) was funded by a national lottery and famously taxed the ingenuity of architects, engineers, builders and financiers.
Recent promotion of the Everest prize for vegetarians rhymed with these gambling roots.
Its dependence on generous corporate sponsorship suggests the SOH also serves to expiate through culture some of the secular sins of chance committed in the city.
Nearing completion at the end of the other peninsular, the Crown complex taxed the logic of planners, credulity of the public, and circumlocution of politicians when first mooted.
It has certainly succeeded in its landmark aspirations – though perhaps not for the reasons originally intended.
As a tall building, the architectural design is graceful, but its semiotics – the meanings associated with its resemblance to a flipped-bird and phallus (see below) – are compelling, though no doubt unintentional.
It is also allegorically apposite to the city’s contested dominance of our financial services sector.
Productivity can be conceived as the extraction of economic surpluses from the application of labour and capital to resources, all within climates of risk.
Financial services tend to distil these relationships to capital exchanges and risk markets, with much reduced proportions of labour and resources.
A casino is perhaps the purest expression of these activities – mere exchange and risk – and therefore a fitting monument for the other apical peninsular of Sydney’s central business district.
Gosh – house loses with the casino!
Against this backdrop, the Crown saga continues.
Tabled in parliament earlier this month, the Bergin inquiry laid the alleged misdeeds of Crown side by side, like photos of a serial killer’s victims.
Somewhat unsurprisingly, it found that Crown was not a suitable person to hold the Barangaroo restricted gaming license.
The gravity of this conclusion is deepened when set against the bend-over-backwards political accommodation of Crown’s original proposal to build the tallest building in Sydney on land it didn’t own, right next door to a social housing precinct in the throes of evisceration by the same government, all in order to house a casino a licence for which it didn’t possess, on the now contradicted grounds of the proponent’s model citizenship, all the while promising to deliver taxation benefits that the Bergin inquiry heard now seem fanciful but would likely have been linked to international organised crime.
Yet the building still sits there, like a kleptocrat’s palace after the coup.
Elizabeth Farrelly made the obvious, strong and reasonable case that when viewed against its less than immaculate conception the project was always a bad $2.2 billion bet, for both Crown and the government, and in consequence “Packer’s Pecker” should be demolished and the site returned to public parkland.
Though some might dismiss the suggestion as overweening schadenfreude, it actually has precedent.
The former Trump Plaza casino in Atlantic City was recently demolished by controlled explosives. One onlooker said, “I got chills…it was exciting.”
Eerily presaging the conditions that could still unfold in Sydney, the building had fallen on hard times after the former president opened another better casino nearby. It seemed that doubling the gaming offer did not result in a doubling of punters.
Acknowledging that demolition would never likely be supported, Farrelly very reasonably suggested that government acquire the building and turn it into social housing, perhaps for those it recently evicted from Millers Point.
This too has precedent.
Purchasing distressed assets is a useful way for government to enlarge the public estate in order to fulfil multiple policy objectives.
Indeed, this government recently considered allocating $500 million to purchase unsold or shovel-ready apartments as part of its post-pandemic economic stimulus package.
Why not do so for Barangaroo? As an asset, it is now emphatically distressed.
Though these options are reasonable they are also unlikely, given the notorious electoral sympathies of the current government and the political capital invested in the casino project by one of its previous premiers.
What might the future hold?
Even before the enquiry was due to hand down its report, the commentariat started to consider its likely conclusions and consequences.
At the start of this year, Hatch and Kruger speculated that the entire project could well become a white elephant.
High-roller gaming was central to the feasibility of a second Sydney casino. Yet even if gaming returns after borders re-open it is now widely accepted that the VIP market will not recover due to the increasing anti-gaming hostility of Chinese authorities.
The negative Bergin recommendations simply add to this economic pain.
It also now appears that the high-roller market was linked to the operation of gambling tourism organisers – junkets – too many of which now seem to be linked to organised crime.
The high-roller market was also central to the state government’s errr “cut” (some $1 billion over 15 years) of these activities.
Though one commentator thought Crown might eventually be allowed to open in Sydney he summed up Crown’s prospects thus, “It leaves them up the creek without a paddle… The only way they even can try to recover their investment [from Barangaroo] is to go aggressively after the local market”, which is currently served by The Star at Darling Harbour.
Success prospects of this approach seem slight if the fate of Trump’s first Atlantic City casino is any guide.
Yet Crown’s problems recently intensified.
The Victorian state government has announced a royal commission into the operation of Crown in Melbourne and a similarly empowered Western Australian inquiry will examine Crown’s Perth Casino.
Both are unavoidable, really, as the misdeeds documented in the Bergin inquiry actually occurred in Melbourne and Perth.
Though tougher controls are the more likely outcome of these later inquiries, with diminished profitability a likely consequence, Crown’s ongoing ownership of its existing businesses cannot be assumed.
Rather than enduring the pain of endless inquiries and only then extracting profit from more meagre gambling gruel, some speculated that Crown might seek to bypass its licensing issues by a simple merger with its competitor, The Star.
They note that Crown has been a willing seller in the past, to a Hong Kong casino operator in a deal that eventually fell through.
But they add, any merger would only proceed if Barangaroo came at a knockdown price, as it didn’t yet possess any form of gaming licence and its longer-term financial promise from VIP gambling has now evaporated.
This opens up an intriguing possibility.
We now know that the VIP gaming market is shrinking and the domestic market not growing much if at all. Two casino licences in Sydney would see them consuming each other’s market, leading to the decline of one (as for Trump’s Plaza) or both.
For its part, government takings, errr gaming tax, would not increase much if at all.
The Star is currently contemplating an expanded facility, with the necessary planning changes now almost locked in. But it must face the disruption of new building works, associated profitability dip, and the need to recover the investment amidst increasingly volatile gaming markets.
What might unfold if The Star were simply to purchase Barangaroo at a knock-down price in a tie-up with Crown and move its now-valuable license there?
There would be no need for The Star to build; its physical position in Sydney would improve; its proximity to wealthy city markets and hotels assured; it would have a longer lease; and it would be at the centre of a brand-new urban precinct with both Circular Quay and Darling Harbour presence.
Sounds like a good bet, no?
This of course leaves open the question of what to do with its existing Darling Harbour assets.
Relocating its casino license would devalue those assets considerably. But that may not unduly worry The Star, as the change-over cost and its end position are the more important figures. These would be calculated from the purchase price of a high quality but distressed asset; the write down value of its existing Darling Harbour improvements; avoiding the project risks and costs of new-build works; and the improved business conditions and exposure at Barangaroo.
Records show that The Star’s 99-year lease has another 75 years to run from its 1997 commencement, with annual payments totalling $120 million for the first 12 years – for the exclusive right to own and operate a casino in New South Wales – after which annual rents drop to $250,000 (about the same as 10 low-cost Sydney apartments).
If placed on the market the State looks like an obvious purchaser.
It already owns the land and would not need to pay for the lease itself, as The Star would be relieved of further payment obligations and the State is the beneficiary.
Clearly, the improvements would come at a cost but not full replacement due to their depreciation over 25 years or so.
Nor would the State have to pay for the value of any potential yield uplift as it has not yet been granted.
But what could the State do with these improvements?
Social housing of course.
It would add to its stock of housing already held in Darling Harbour; it would benefit future social housing by the increased yield it can grant in Darling Harbour; it would benefit too from the new metro station now committed for Pyrmont; it would start to address its shocking shortfall of social housing; it would come at a significantly reduced cost compared to new-build; and it could part-fund the purchase from the sale proceeds of its Millers Point and Rocks holdings.
Now that’s a good bet!
Sadly, the true affinities of this government can be gleaned from its dealings with Barangaroo, Millers Point, and Glebe social housing hitherto.
A version of this events might indeed unfold but if its track record endures, the State would more likely just inflate the site’s development yield and flog it to the highest bidders. It might even use the proceeds to buy more votes in conservative and marginal seats.
Having reviewed the exciting promise yet and glum unlikelihood of these possibilities, we can now finish what we started; contemplating the symbolism of Crown’s Barangaroo.
If the SOH is Sydney’s Superego the Crown is Sydney’s utterly triumphant id.
Though the building is an elegant demonstration of the architect’s craft, its origin, purpose and avid political midwifery hews rather too closely to the wannabe global landmarks so beloved by shady despots of former Soviet republics.
With its iconic aspirations so risibly undercut by shrieking physical symbolism; its “f*** you” scale on land slated for a public park; a huge monument to gambling enthusiastically abetted by the peoples’ representatives; the recent revelations of money-laundering – all these might be met with eye-rolling told-yer-so if served up by some oppressive kleptocracy.
Yet, here it is in Sydney!!!
In contrast to the SOH – a symbol of our collective cultural aspiration – the Crown symbolises Sydney’s current polity; its core values and fundamental aspirations; its preferred cultural gift to humanity; a more accurate visual shorthand for the city than either the Bridge or the Opera House.
It will forever shout, “THIS IS WHO WE REALLY ARE”; the Rum Rebellion reloaded.
Mike Brown has worked in NSW local and state government in planning, urban design, and strategic roles for 15 years. He is also a graduate of the Masters of Urban Policy and Strategy program at the University of NSW.