Tabcorp shakes up leadership team after losses
An Australian gambling giant is changing up its management after announcement $1 billion has been written down.
The Brisbane Times reports the $7.2 billion group is yet to reveal who will replace outgoing executive general manager for wagering Andy Wright, after announcing his departure on July 24, a day after Tabcorp said its chief executive David Attenborough would retire in the first half of 2021 and chairman Paula Dwyer would leave at the end of December.
The management overhaul came after a group of major investors pushed for change amid Tabcorp’s performance, particularly in its wagering business, since its $11 billion merger with Tatts in 2016.
Tabcorp’s managing director Adam Rytenskild said in a note to racing industry partners that it was the right time to make changes to his division’s leadership team given it was at a “pivotal point.”
“Community expectations for the way we operate continue to grow,” he said.
“It is critical that our business providers a strong, sustainable and efficient base to meet these demands.”
Tabcorp said it would write down the goodwill value of the betting division by one third, or at least $1 billion, in recognition of the impact of COVID-19 on its operations and the competition it faces from online bookmakers such as Sportsbet, Ladbrokes and Beteasy.
Future of TAB shops in question
Before the pandemic, about 45 per cent of the company’s wagering turnover came through its network of 400 TAB betting shops and 4000 pubs and clubs with TAB terminals.
The coronavirus pandemic has forced these venues to close at various points, while wagering was affected more broadly by the suspension of major sporting leagues.
Tabcorp said the write down reflected “the possible acceleration of retail contraction and uncertainty regarding any longer-term impacts” due to the pandemic and a shift to an even more “digital centric” market.
The group flagged its earnings before interest depreciation and amortisation for the full year would be $990 million to $1 billion, about four per cent ahead of the market consensus.
Tabcorp will report its full-year earnings on August 19.
Macquarie analyst David Fabris said it was not clear whether this was a result of the business performing better than expected or if it was boosted by government support such as JobKeeper or rental relief.
“We have ongoing concerns relating to the structural challenges within wagering and media, in particular the acceleration of digital transference given retail customers,” Mr Fabris said in a note to clients.
Citi analyst Bryan Raymond said the $1 billion write-down was ‘not a surprise” given the wagering division’s recent performance and outlook.
He said he did not expect Tabcorp’s retail business to recover to pre-pandemic levels due to COVID-19 causing an “accelerated structural shift” towards online betting.
Late last month Tabcorp said it had completed the integration of TAB with Tatt’s UBET wagering brand which was dominant across Queensland, South Australia, Tasmania and the Northern Territory.
Tabcorp has promised that merging the two brands will deliver $100 million in synergies this year and $145 million in 2021.
But investors have been disappointed by the cost of combining the two brands blowing out by $40 million, or 40 per cent.
Tabcorp CEO to retire next year
Gambling operator Tabcorp has announced David Attenborough will retire from his roles as chief executive and managing director in the first half of 2021.
European Gaming reported in July that Tabcorp will embark on a global search for a new chief executive officer after Mr Attenborough announced his retirement.
The search comes as the company announced that board member Steven Gregg would succeed chairman Paula Dwyer as the company’s chairman when she retires from the board at the end of the year.
“The combination with Tatts is now largely complete and, as such, now is the right time to start the process to appoint the next CEO who can work with the board and management team to take the company forward,” Mr Attenborough said.
“Until then, I am totally committed to steering Tabcorp through the COVID-19 pandemic and ensuring that our businesses are best positioned for the future,” he added.
Tabcorp, which merged with Tatts in 2017 in an $11 billion deal, announced the changes to the Australian Securities Exchange last Thursday.
“With the integration of Tatts nearing completion, the time is now right for a new chairman to lead the Tabcorp board into the future.
“The appointment of Steven Gregg will provide continuity of leadership and an orderly transition as the company identifies and transitions to a new management and chief executive officer,” Mr Dwyer said.
“I look forward to working with my board colleagues and executive team to realise the opportunities Tabcorp has following the Tabcorp-Tatts combination: to drive shareholder returns and the continued trust of our customers, business partner, employees, governments and the broader community,” Mr Gregg said.