GVC expects £25m earnings decline from racing suspension

17 March 2020

Ladbrokes Coral and bwin.party operator GVC Holdings has estimated that the suspension of all horse racing in the UK until the end of April will lead to an earnings decline of £20m (€21.9m/$24.1m) to £25m, on top of yesterday’s (16 March) reduced earnings guidance.

Yesterday, GVC revealed that its earnings before interest, tax, deprecation and amortisation (EBITDA) for the current year could be reduced by £130m-£150m due to widespread sporting suspensions across the globe from the outbreak of the novel coronavirus disease (Covid-19), with a further EBITDA loss of between £45m and £50m per month if its UK retail betting shops were forced to close.

However, this figure was based on the assumption that only major horse racing meets such as Aintree and Royal Ascot would be cancelled, while the rest of the season would take place without spectators.

Although the British Horseracing Association said yesterday that all races would occur behind closed doors, it announced today that all horse racing in Great Britain will be suspended until the end of April.

The suspension will come into effect from tomorrow (18 March), with meetings behind closed doors at Wetherby and Taunton to go ahead today as scheduled.

“This is a national emergency the like of which most of us have never seen before,” BHA chief executive Nick Rust said. “We’re a sport that is proud of its connection to rural communities and to the local businesses that support our industry.”

GVC said it continues to retain a “strong balance sheet,” including accessible cash of £260m, despite the reduced earnings guidances.

Earlier today, the Betting and Gaming Council (BGC) urged the UK Chancellor to provide emergency help to save thousands of jobs across the gambling industry after fresh concerns were raised over the impact of the pandemic on the sector.

Having consulted its members on the impact of the restrictions, the BGC said the immediate priority for emergency assistance is with employment costs. As such, the BGC has urged the Chancellor to allow additional time to pay on Pay As You Earn (PAYE) and National Insurance Contributions (NIC) liabilities.

GVC's share price has falled more than 15% from closing yesterday to the time of writing, after falling more than 20% yesterday in a tumultous day for stock markets.

In unrelated news, a GVC spokesperson also confirmed to iGaming Business that it has put a "low double-digit" number of jobs in the finance and payment processing sectors of its Gibraltar office out for consultation, as it plans to make an as-yet undetermined number of redundancies.

The decision is part of a "planned integration process" following the operator's acquisition of Ladbrokes Coral in 2018 and is not connected to the impact of Covid-19.

"We expect to redeploy the vast majority of those affected within the business and expect the ultimate number of redundancies to be minimal," the spokesperson said.