At around 7.30 this morning, Ladbrokes’ chief executive Richard Glyn will issue his company’s interim results with City analysts anticipating a slump in pre-tax profits to £74 million from last year’s £106.9 million.
Such a pronounced decline could affect forecasts for Ladbrokes’ full-year results and have a direct impact upon the company’s share price, though much of this anticipated bad news is already priced into shares that have lost more than 13% of their value since mid-March.
As recently as April, Ladbrokes shocked the stock market when it issued a profits warning in the wake of a poor run of results at the Cheltenham Festival, a string of cancelled winter race meetings and a new licence duty on fixed odds betting terminals located inside the company’s high street shops.
On top of this, there was no major sporting event this summer which would allow Ladbrokes to recoup their winter’s losses.
Instead, the company has decided to copy arch-rival William Hill and sign an online software and marketing deal with Playtech, the gambling software company which, ironically, Hills bought out of its online venture in a £424 million deal in April.
Playtech has been widely credited with making William Hill’s online offering the industry’s best and while the company, founded by Israeli billionaire Teddy Sagi, is particularly adept at merging gaming-related products with a bookmakers’ regular sportsbook, there is no doubt that it is sport which continues to drive bookmaking profits.
Even events such as the birth of a royal baby present bookies with little more than pin money.
Last week, William Hill reported a 16% rise in profits in its online business, to £80.2 million, a performance underpinned by sporting events.
At the same time, Hills’ chief executive, Ralph Topping, revealed that most punters lost money gambling on the birth of Prince George. “The money was on a girl called Alexandra,” he said. This particular ‘novelty bet’ presented Hills with a £400,000 windfall, whereas the Grand National, won by 66/1 outsider Auroras Encore, contributed a staggering £15 million to the company’s bottom line. Bear in mind that serious punters tend to bet on the flat, not over Aintree’s jumps.
Yet with Ladbrokes no doubt itching for the new Premier League football season to start, there is a concern voiced amongst some quarters in the gaming industry, that perhaps the good times provided by football have gone.
England’s top flight, they argue, is far too predictable and betting margins far too slim, for any bookmaker to generate significant profits from the sport.
Undoubtedly, the relentless concentration of colossal cash resources has made it difficult to consider a prospective Premier League winner other than Chelsea, Manchester City and Manchester United. Indeed, one bookie prices each club at 9/4 to be crowned champions next May. Take the threesome out of the equation and Arsenal are 11/1, followed by Spurs and Liverpool, both quoted at 33/1.
A similarly predictable picture emerges across Europe.
Since 2000, for example, Bayern Munich have claimed the Bundesliga title seven times; Borussia Dortmund three. During the same period, Spain’s La Liga has been won on six occasions by Barcelona and five by Real Madrid. Italy’s Serie A title has been shared primarily by Juventus and Inter Milan over the last 13 years, while in Portugal, Porto have secured nine league crowns since 2000 and in Holland, the two stand-out favourites to win the league this season are Ajax (five wins since 2000) and PSV, who have won it six times.
Only in France, where there have been five different league champions in the last five seasons, does there appear to be any form of serious competition.
Bookies acknowledge this, hence their focus on mobile and in-play betting, platforms which enable the industry to concentrate on offering generally more attractive prices on individual matches rather than shorter-priced odds on prospective league winners.
Moreover, this focus appears wholly justified when we consider two things: the profits William Hill make from one area of their business which may appear old-fashioned in this fast-moving digital age and second, just how popular live football is with what demographic analysts might call its ‘core constituency’.
According to the figures released last week, William Hill currently has a portfolio of 2,400 betting shops, described by Mr Topping as extremely resilient “big old battleships”. The company’s net betting shop revenue rose by an astonishing 11% to £464 million in the first six months of the current financial year, a performance which prompted Mr Topping to suddenly sound a little like Arthur Scargill.
“The amount of cash for working families is less than it was,” he reflected, “but people are determined not to give up what they enjoy. People from Strathclyde, Strathyre and Strathaven do not read poetry books or go to the opera. They like a bet, a pint and a fag.
“It’s time we had more working class people in government – not upper class people who only understand Mayfair, who don’t live in the real world.”
It’s probably reasonable to assume from this that the good folk who shelled out almost half a billion pounds in a William Hill shop at some point over the last six months were not putting £25 each way on the possible Man Booker prize winner, nor mulling over the likely outcome of Strictly Come Dancing. Instead, their particular focus will be on sport – ostensibly horse racing, but mostly football.
Ignore the fact that only three teams, owned primarily by characters with the deepest pockets, can actually win the Premier League, and consider how popular the game remains with spectators.
Average top flight attendances rose by 3.8% last season as four clubs (Arsenal, Liverpool, Manchester United and Spurs) sold out every one of their home games.
Although promoted West Ham, Reading and Southampton had larger grounds and higher attendances than the three relegated sides, even accounting for this, matchday attendances were 1.4% higher – impressive considering the cost of attending a match, particularly during a protracted economic downturn.
In total, Premier League crowds exceeded 13.6 million last season, the highest since 2007-08. Championship attendances too remained remarkably consistent – another 9.8 million fans went to a Championship fixture last term – the five year average is 9.78 million. Across the Football League, attendances exceeded 15 million for the tenth consecutive year.
What emerges from these statistics is a paradoxical sporting picture.
Top-flight football across Europe is clearly becoming more predictable as domestic leagues act merely as feeders to the Champions League and the game’s biggest pot of gold, the quest for which accounts for mind-boggling expenditure by the continent’s richest clubs.
Yet football attendances are rising (though not in France or Italy) and, significantly, for bookmakers at least, the volume of in-play and mobile wagers continues to rise steadily.
This could be one reason why Skybet recently stepped in to sponsor the Football League, a five year deal which prompted the company’s managing director, Richard Flint, to say the arrangement enabled his company to “engage with millions of football fans.
“The strength of our technology…means we’re ideally placed to add to the matchday experience of fans,” added Mr Flint, an entirely logical conclusion when one considers football’s most recent statistical evidence.
