Paddy Power Betfair boss’s departure means all bets are off

There is no positive spin on the news that Breon Corcoran is leaving the helm at Paddy Power Betfair. That's the view of David Holohan, chief investment officer at stockbrokers Merrion Capital.

Corcoran has been the group’s chief executive since a merger of the two betting businesses created it early last year. Before that he had the same role at Betfair, a position he took in 2012 after rising through Paddy Power over a decade to become its chief operating officer.

“It’s certainly bad,” Holohan says. “Breon had a phenomenally good track record at both Paddy Power and Betfair.”

One of the key attractions of the merger for investors was that Corcoran would take the top job, Holohan adds.

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Investors seemed to agree. By early Monday afternoon, Paddy Power Betfair’s stock was down 5.87 per cent in London, where it has its main listing, to 7,455 pence sterling. Its fall in Dublin, where the company is headquartered, was even steeper, at 6.72 per cent to €82.09.

Corcoran had been with the old Paddy Power since 2001, the year it floated. He joined as head of non-retail and was one of the chief architects of its move from traditional bookie shop chain to a digital betting business.

Its transition was quicker and more successful than those of British behemoths Ladbrokes and William Hill. Paddy Power rapidly outgrew its roots and began competing on a multinational stage. He was seen as instrumental in that.

Corcoran joined Betfair when its shares were languishing well below their £13 launch price and the company was returning disappointing results.

Three years later, just before it and Paddy Power announced their proposed merger, Betfair reported that second quarter earnings were up 19 per cent at £41 million.

“He is a pioneer of online sports betting; he is very well thought of within the industry,” Holohan observes. Other analysts echo some of his views.

Bad timing

In a note issued on Monday, another Dublin broker, Davy, says that the timing of the announcement that he is stepping down was less than ideal.

Analysts David Jennings and Joseph Quinn point out that Paddy Power Betfair is still integrating the two businesses, although this is much nearer the end than the beginning. It also faces the risk of regulatory changes in key markets.

In Australia, where it is the biggest player, various states are pondering increasing betting taxes. In a similar vein, in the Republic, the authorities are weighing a possible doubling of the 1 per cent levy on gambling turnover and taking an even higher share of betting exchange profits, which would hit Betfair.

Nevertheless, Gavin Kelleher at Goodbody argues that investors should be reassured by news that the board has a lined up a successor, independent director Peter Jackson, recently appointed chief executive of payments processor Worldpay UK.

It is not known when Jackson will take over. Both he and Corcoran have long notice periods, but US group Vantive’s bid for Worldpay may prompt the incoming chief executive’s employer to waive this. Market watchers suggest he could be available by the end of the year.

As a board member, Jackson is obviously familiar with Paddy Power Betfair’s operations. Holohan agrees that the 41-year-old Jackson has an impressive CV. “But his background is in banking rather than online gaming,” he says.

If yesterday is an indication, investors are going to take some convincing that the change is good news for Paddy Power Betfair.