Tabcorp Holdings is an Australian gambling giant, valued at $7 billion. Despite its size, the business has taken a massive hit as a result of the COVID-19 pandemic, sparking an organizational shake-up.
Happier times
Tabcorp is involved in almost all the punting that happens in Australia. With over 25 years in the business, the company is the dominant force in Australia’s gambling entertainment industry.
The Lott is their flagship operation and includes the brands Golden Casket, Tatts, NSW Lotteries, and SA Lotteries. Their products sell from over 3700 outlets across the country. In 2018 alone, the company saw sales of over 472 million tickets.
A sharp decline
The company recently revealed that its gross profits for the year are projected at $990 and $1 billion, down from $1.124 billion in 2019. Net profits will likely be between $267 million to $273 million, a reduction of about 31% from 2019’s $396 million.
The reasons for the downturn, as listed by the company were the economic impact of government measures to curb the spread of COVID-19, uncertainty regarding the longevity of the pandemic, the suspension of various sports leagues, contraction of the retail sector and the shuttering of sports venues.
Tabcorp CEO David Attenborough said, “We are facing into a challenging and uncertain environment, and the current operating conditions and those expected into the future are relevant factors in assessing the value of the goodwill in those businesses at this time. We remain confident in the strength and resilience of Tabcorp’s diversified portfolio of assets and are pleased that integration is now substantially complete. We are focused on supporting our people and partners during these challenging times while ensuring Tabcorp emerges strongly post COVID-19.”
Changes at the top
Beyond its market misfortunes, Tabcorp is in the midst of a corporate shakeup. Chairwoman Paula Dwyer has announced her retirement from the board at the end of 2020 and CEO David Attenborough intends to retire from his role in early 2021.
Attenborough commented, “The combination with Tatts is now largely complete and, as such, now is the right time to start the process to appoint the next CEO who can work with the board and management team to take the company forward. Until then, I am totally committed to steering Tabcorp through the COVID-19 pandemic and ensuring that our businesses are best positioned for the future.”
Ms. Dwyer’s departure was expected, unlike Mr. Attenborough’s retirement announcement which surprised many. His stint as CEO spans almost a decade. The loss of two prominent leaders in such a short space of time has struck many as unusual.
Spooked investors
Speculation that there may have been more to the story turned out to be true as it was revealed that Dwyer and Attenborough were compelled to leave their respective roles due to displeased investors.
An alliance of powerful investors had co-penned a letter to the company’s board, expressing dissatisfaction with the top leadership and demanding that the positions be vacated and re-filled. The letter specified both Dwyer and Attenborough’s retirement as demands.
The letter’s signees included Mutual, Pendal Group, and Perpetual Limited. Between them, the last two organizations hold a combined value of $126 billion, so it makes sense that their voices would be heard.
