Ladbrokes got rid of digital director Richard Ames over the weekend ahead of what are expected to be a disappointing set of results on Thursday. The Sunday Telegraph broke the news that Ames was to be let go after “insiders” reported that morale has fallen to an all-time low and there’s almost no hope of them “devising a winning strategy” that can oust rival William Hill. These same insiders think that Ames’ head being put on the block is to deflect the blame away from chief executive Richard Glynn and he is the last of those to work under former chief executive Chris Bell to depart. Nick Rust will take over the role.
They followed this with news that their new website, slated to start operating fairly soon, has now been delayed until the end of the year and it certainly looks like this could have something to do with Ames’ downfall. The new technology strategy, part of Project Galvanize, has been beset by problems and follows a period in which their share price and other parts of the business had been performing rather well. Failed mergers were followed by the Lads embarking on deals with smaller firms and a partnership with Microgaming for casino and games has worked particularly well.
Their latest deal of this ilk could involve “deepening” ties with Irish sports betting exchange Betdaq, owned by Dermot Desmond. According to the Sunday Independent the improvements in technology mean that further developments with Betdaq would be “useful”. It would also give them a leg up on William Hill, as their main competitor doesn’t offer an exchange product.
All of the doom surrounding the Lads meant Panmure Gordon analyst Simon French predicted digital profits for the full year will be the lowest in eight years at £36 million, stating that their online operations have “continued to lag dramatically”.
“If you look at the size of the online market, it has grown fourfold and yet Ladbrokes’ digital profits will be the lowest this year than they have been since 2004,” he said. “The digital division of Ladbrokes has become a definitive issue for the business and management.”
James Hollins, analyst at Investec, added to this by saying there’s “an increasing weight for him (Glynn) to pull something out of the hat”. This was before David Jennings, analyst at Davy, reiterated just how hard “the moving target” they are lagging behind will be to reel in and that it “is not an easy race to win”.
If the results are as disappointing as first thought then shareholders are likely to want more answers than simply the firing of Ames and it will leave many asking the following: is this the beginning of the end for Project Galvanize?