England winning the Euro 2016 soccer championships in France is the biggest single risk to Ladbrokes’ profit this year, chief executive Jim Mullen said.
The British bookie stands to lose £1m (€1.27m) for every game the team wins in the opening half of the tournament, which starts June 10 in Paris, the Scottish CEO said.
“For the first half of the tournament we could be significantly in the red,” Mr 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.”
“If England win the tournament, it will be really, really bad for the firm.”
England will play a maximum of seven games, with Ladbrokes offering odds of 9-1 the team lifts the trophy on July 10.
Ladbrokes lost £6m on March’s Cheltenham horse-racing festival and £3m on Leicester winning the Premier League.
Still, Mr Mullen said the turnaround plan he laid out when he became CEO over a year ago is on track.
The shares have risen about 10% since he started the job.
Mr Mullen was brought in to restore growth at the bookmaker which lost its way in the last decade after being slow to adapt to an online betting revolution.
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.
For Euro 2016, the longest price offered by Ladbrokes on any of the 24 teams is 300-1 for Albania and Northern Ireland.
“For a period of time, it will go away,” said , Mr Mullen.
“Then some mad Scotsman will say let’s put in a 5,000-1 and get the eyes back on us.”
Ladbrokes is ploughing money into marketing and sponsorship to regain customers.
Mr Mullen will also spend as much as £30m to refurbish a chain of more than 2,000 betting shops.
In the Republic, Ladbrokes has 143 shops after emerging from its examinership last year. It has 77 shops in the North.
“We recognise the importance of a retail estate,” said Mr Mullen.
“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 Mr Mullen said gives it an advantage over web-only operators.
By the end of this year, about 10% of its 1m 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, and eclipse William Hill as the largest UK bookmaker.
The deal is being scrutinised by the UK Competition and Markets Authority, with some analysts estimating the regulator may ask for as many as 1,000 shops to be sold.
If the CMA asks for too much, there is a point where it “becomes uneconomical”, he said.
“I don’t think that will happen.”
Bloomberg and Irish Examiner staff
© Irish Examiner Ltd. All rights reserved