SkyCity spend up for Adelaide

Adelaide Casino where Sky City is spending A$250m. Photo / Supplied

SkyCity Entertainment Group is going ahead with A$250 million($339 million) of expansion plans in Adelaide, pushing out from its historic building towards the city's riverfront.

The NZX-listed company, with a market capitalisation of $1.9 billion, is suffering with the closure of its Christchurch casino for weeks and although the Adelaide plans are subject to approval, it wants to expand there in a Melbourne Southbank-style venture.

Its bid for the proposed Auckland international convention and exhibition centre is up in the air as executives await government announcements on the tender, which might be revived in next month's Budget. SkyCity's Federal St expansion in Auckland remains uncertain, after getting a rocky ride from city officials.

The company's big convention centre bid on Hobson St is the odds-on favourite, potentially beating four other contenders at Greenlane, the waterfront, the Edge and Quay Park, largely because SkyCity's project is in the CBD. The listed business is seen as having the power, money and capacity to build and it controls the land.

SkyCity was asked to redesign its bid, an indication that it was perhaps more favoured than others which have not announced any calls for fine-tuning proposals.

SkyCity has also released details of its huge Adelaide upgrade, its largest capital expenditure programme in the growing South Australian state capital which it has assessed as one of its biggest growth opportunities.

Chief executive Nigel Morrison and chairman Rod McGeoch said Adelaide Casino would be extended on its current site towards the Torrens River, featuring new and expanded gaming facilities including private gaming areas, dedicated parking and new bars, restaurants and entertainment areas.

"Just look at Melbourne's Southbank - an industrial wasteland was transformed by the development of the casino and was quickly followed by a convention centre and exhibition centre," Morrison said.

At the end of February, the South Australian Government appointed a design team to undertake the master planning for the Riverbank Precinct on the northern side of the river.

The riverbank is one of Adelaide's most important precincts, home to the South Australian Parliament, the Festival Centre, the casino and the Adelaide Convention Centre.

In connecting to the Riverbank Precinct, officials hope the city's northern edge will become a revitalised public zone.

Adelaide is a big money-spinner for SkyCity, declared in the interim report to December 31, 2010, as a major contributor to the wider group.

But SkyCity has clashed with the Government, calling South Australia the most restrictive on gaming in the country. More than 80 per cent of new machine games on the market are barred from South Australia, and SkyCity says Adelaide risks losing out to other states.

"The constraints result in millions leaking to Victoria and New South Wales. We're keen to continue to work with the South Australian Government to enhance interstate and international tourism appeal of our casino, " Morrison said.

The state needed to relax regulations, "in line with the nation, to allow credit card-style machines in VIP gaming areas for [wealthy clients], some of them locals flown to interstate casinos rather than Adelaide."

Ghostly casino biggest non-show in quake city
The poker machines are quiet, the lights are down and the gaming tables empty.

Welcome to the casino without gamblers: Christchurch Casino, one of the city's biggest employers with more than 500 staff, has been shut for more than a month with no immediate prospect of reopening.

Unions say members are increasingly worried about job losses. About 538 people are being paid until Tuesday at a cost of about $400,000 a week. But workers say they have heard nothing definite about continued employment and want to know.

The communications manager for SkyCity Entertainment Group, Scott Campbell, said the building was downgraded from a red to a yellow sticker last month.

"The engineers say there doesn't appear to be any substantive damage to the building but some repair work will be needed before opening. Christchurch is still uncertain - no timeframe for reopening at this stage and this depends more on the surrounding buildings than ours."

The casino's website says it is shut "till further notice".

Visitors inside during February told the Herald of extensive wall and ceiling cracks, widespread damage to fixtures and fittings and floors scattered with debris. After being shut for 38 days the interior had a strange, ghostly atmosphere, one visitor said, but power had stayed on most of the time.

SkyCity owns half the business.

Chief executive Nigel Morrison wrote in the recent half-year report of the aftershocks but said insurance was full.

"Due to the devastating earthquake on February 22, the trading outlook for Christchurch Casino remains uncertain at this time," Morrison said. "[It has] comprehensive material damage and business interruption insurance in place."

Adelaide Casino
In Adelaide Railway Station building.

Opened 1985.

SkyCity bought it in 2000.

990 gaming machines.

90 gaming tables.

Adelaide's 10th-largest employer.

Spread over three floors.

Has 1100 staff.

About A$14m net profit.

Source: Adelaide Casino