Flutter warns of £110m earnings hit from sports suspensions
Flutter Entertainment, the parent company of Paddy Power Betfair and FanDuel, has warned that the cancellation of sports events around the world due to the global Covid-19 pandemic could lead to a £110m (€121.3m/$136.0m) decline in earnings before interest, tax, depreciation and amortisation (EBITDA).
A host of major sports contests have suspended play in an effort to help combat the spread of novel coronavirus, including football’s English Premier League and Uefa Champions League and Europa League, as well as the National Basketball Association and National Hockey League in North America.
Flutter said the postponement of matches will “obviously have a material impact on the revenue and earnings of the group”, noting that approximately 78% of its total revenue in 2019 was generated by betting on sports events.
The operator said while the precise earnings impact is difficult as it is unclear how long the restrictions will be in place, with some events, including a number of sports in Australia, continuing behind closed doors, it has given an estimate based on a scenario where events are suspended until the end of August.
Should this be the case, and the restrictions also mean the postponement of the 2020 Uefa European Championships football tournament, EBITDA for the group would be reduced by between £90m and £110m.
However, this estimate assumes that its UK and Irish shops would remain open, as well as that horse racing fixtures would continue to run behind closed doors in the UK, Ireland and Australia.
Should racing be cancelled across the three regions and its UK and Irish shops be closed, this would incrementally reduce group EBITDA by approximately £30m per month.
“The challenge currently facing our business and the industry more widely is unprecedented in modern times,” Flutter’s chief executive Peter Jackson said. “Our focus, first and foremost, is on protecting the welfare of our employees and our customers and we will leave nothing to chance in this regard.
“While our near-term profitability will be impacted by the essential measures being taken globally, the board will remain focused on protecting shareholder value and managing the business through these turbulent times.”
Flutter noted that prior to the announcement of the suspension of sports events, the business had been trading ahead of expectations in the first quarter of 2020, with the group boosted by good customer momentum and favourable sports results.