England Glory Would Be Oddsmakers’ Nightmare: Ladbrokes CEOby
Bookmaker stands to lose 1 million pounds a game on England
Mullen ‘very clear’ on acceptable remedies for Coral merger
England winning the Euro 2016 soccer championships in France is the biggest single risk to Ladbrokes Plc’s profit this year, Chief Executive Officer Jim Mullen said.
The British bookmaker stands to lose 1 million pounds ($1.4 million) for every game the team wins in the opening half of the tournament, which starts June 10 in Paris, the Scottish CEO said in an interview at Bloomberg’s London office Friday.
“For the first half of the tournament we could be significantly in the red,” Mullen said. “Then in the second half, when it comes down to the big eight teams, it gets tougher, and that’s when I try to get my money back. But it’s extremely nerve-racking.”
England will play a maximum of seven games at the tournament, with Ladbrokes offering odds of 9-1 that the team lifts the trophy on July 10. Such an outcome would provide a further slice of misfortune for Ladbrokes, which lost 6 million pounds on March’s Cheltenham horse racing festival and 3 million pounds on Leicester City winning English soccer’s Premier League. Still, Mullen said the turnaround plan he laid out when he became CEO just over a year ago is on track.
No More 5,000-1
The shares have risen about 10 percent since he started the job, and were down 0.8 percent in early London trading Monday.
Like other bookmakers, Ladbrokes offered 5,000-1 on Leicester at the start of the season. Those sort of odds aren’t likely to be seen again, at least in the short term, Mullen said.
“For a period of time, it will go away,” he said. “Then some mad Scotsman will say let’s put in a 5,000-1 and get the eyes back on us.”
For Euro 2016, the longest price offered by Ladbrokes on any of the 24 teams is 300-1 for Albania and Northern Ireland.
Mullen was brought in to restore growth to one of Britain’s oldest and best-known bookmakers, which lost its way in the last decade after being slow to adapt to an online betting revolution. Under his leadership, Ladbrokes is plowing money into marketing and sponsorship to regain customers. He will also spend as much as 30 million pounds to refurbish a chain of more than 2,000 betting shops, which he says are crucial to his plans.
“We recognize the importance of a retail estate,” said Mullen, who has a masters degree in software engineering and started his career as a programmer. “Some people, particularly in London, think retail bookmaking is dead. It isn’t.”
Ladbrokes is seeking to cross-sell online betting to its shop customers, which Mullen said gives it an advantage over Web-only operators. By the end of this year, about 10 percent of its 1 million regular shop visitors will also be active digital customers who bet more often, the CEO said.
Ladbrokes plans to double down on betting shops by merging with rival Coral Group, a transaction that would see the combined company eclipse William Hill Plc as the largest U.K. bookmaker. The deal is being scrutinized by the U.K. Competition and Markets Authority, with some analysts estimating the regulator may ask for as many as 1,000 shops to be sold. The CMA is due to publish its provisional findings this month, and may do so later this week, the Sunday Times reported.
Mullen said he’s “very clear” on what potential remedies he would consider to be acceptable.
If the CMA asks for too much, there is a point where it “becomes uneconomical,” he said. “I don’t think that will happen.”
A more pressing concern next month will be the England team’s progress in France.
“If England win the tournament, it will be really, really bad for the firm,” the CEO said.