Kenny Alexander was of the old school, when gambling was a buccaneering business. Before he became the chief executive of a small company called GVC in March 2007, he’d once toyed with becoming a professional poker player.
His first major GVC gamble was on Sportingbet, an online gambling platform. Its US operations were facing legal problems, but he knew the company well: he’d previously been its European managing director. In 2011, GVC and William Hill launched a joint bid. For £530mn, William Hill acquired Sportingbet’s Australian and Spanish businesses, and GVC took the rest. The next big deal was Bwin, which cost £1.1bn. To manage the merger, Shay Segev was brought in as chief operating officer, and from then on Alexander would come up with the ideas; Segev, with his deep understanding of IT, would put them into practice.
When the acquisition was completed in February 2016, the directors thought it only right to reward the top team with “substantial” share options subject to performance conditions driven almost entirely by the share price. Failure would have rendered the options valueless, but far from failing, the merger proved to be a financial success. The senior executives received a double whammy: not only did their options vest in full, but the soaring GVC share price delivered a windfall gain. Talk about high pay. In 2016, Alexander received a total of £18mn. In 2017, another £18mn. A year later, this went up to £19mn.
Lee Feldman, described in the annual report as the “non-executive chairman” of the GVC board, and therefore not an employee, had also been granted options. He was an American and they did that sort of thing in the US, but this went against UK corporate governance guidelines. He received £9mn in 2016 and £10mn in 2017. The remuneration committee argued that he’d been closely involved in executing the acquisitions and in implementing the strategy. An executive chairman then, rather than non-executive? In which case, why had Alexander been paid so much? What really matters, the committee said, is that we retain our key people, but don’t worry, they won’t be paid so much in the future. Governance was clearly not GVC’s strong point.
In 2019, following the hefty £3.6bn acquisition of Ladbrokes Coral, Alexander received a relatively modest £5.2mn. By then, Feldman had resigned, but not before another governance controversy: in March 2019, just two weeks before he announced his departure, Feldman had sold £6mn of shares and Alexander had sold £13.7mn, purportedly “to satisfy an institutional buyer”. Investors wanted to know whether they were both about to leave, and the GVC share price fell by a fifth. Far from it, Alexander assured them: “I’m here for the long term. At the very least, I have a current plan that will take three plus years to accomplish.”
He lasted nowhere near that long. In June 2020, Alexander too suddenly announced his retirement. He was 51. Apparently, he’d been suffering from chronic back pain, and wanted to spend more time with his family and racehorses – his last winner had been at the notorious Cheltenham races in March that many thought should have been cancelled due to how rapidly Covid-19 was spreading. The pandemic forced GVC’s betting shops to close, and all corporate deals were off. Segev stepped seamlessly into Alexander’s shoes.
Just days later, a tax probe was announced. Non-state gambling was illegal in Turkey, but the old GVC had got around that with its online business. At one time, this had generated a quarter of its revenues. Then, in 2017, these Turkish operations had been given away for free. Later, allegations of bribery at those operations would emerge dating back to 2011. Last year, the Gambling Commission stepped in to effectively end Alexander and Feldman's bid to install themselves at 888 (888), but clawing back the millions they received through pay at GVC is another matter.
Beginning again
It was time for a fresh start. Governance was tightened. Segev said that he was looking to make e-sports acquisitions and at diversifying into other forms of interactive entertainment. The name GVC was dropped, and the group was to be a “technology-enabled entertainment business” with a new corporate identity. It was to be called Entain (ENT). The focus would be on regulated markets, with expansion mainly in the US where, soon after sports betting had become legal there a couple of years before, he’d helped set up BetMGM, a 50/50 joint venture with the casino company MGM Resorts International (US:MGM). Competition was fierce, but the plan was for Entain to gain an edge through increasing its investment in technology. This would also include the development of sophisticated programmes to prevent problem gambling.
In November 2020, when Segev laid out this new strategy, Entain seemed to be at the top of its game. But that past cavalier approach to governance would come back to haunt it.
The next month, MGM Resorts offered to buy Entain for £8.1bn, but the two boards failed to agree on a price. In the middle of the negotiations, Segev resigned. He’d been Entain’s chief executive for just seven months.
He was off to the curiously named DAZN (supposedly pronounced 'Da Zone'), a global online sports streaming and entertainment platform ultimately owned by Sir Len Blavatnik, an anglicised Ukrainian-born oligarch. Why Segev? DAZN wanted the very qualities that Entain and MGM so badly needed: his “vast technology and operations experience” and “impressive track record in digital transformation”. The pay? Undisclosed. Barry Gibson, who chairs Entain, simply said: “We cannot match the rewards that he has been promised.” Once again, a publicly listed company had been unable to compete with freewheeling private equity because of the difference in governance, transparency and media scrutiny.
Gibson drafted in Jette Nygaard-Andersen as chief executive. It was a big ask. She’d been a non-executive director at Entain for only a year, and although she’d “over 20 years’ experience in media and entertainment” including chairing a Danish gaming company, she’d never managed a gambling group before. To back her up, Entain’s chief financial officer was made her deputy, with responsibility for the group’s retail operations and its M&A activities.
The next phase
Covid-19 lockdowns hampered early meetings. Nygaard-Andersen’s new strategy looked much like Segev’s, but with an extra focus on interactive entertainment and the customer experience. Her enthusiasm and effort couldn’t be doubted, particularly her passion for encouraging more women into Stem (science, technology, engineering and maths) careers, but if anything, she tried to do too much. During her first year, Entain’s technology team tripled in size to 3,000. Almost a third of the new recruits were women. She was adept at publicity, particularly about Entain’s sparkling growth prospects. She agreed a sponsorship deal with McLaren Racing and took to issuing inspirational leadership posts urging people to embrace change as she overhauled the group culture. Then, in October 2021, came an unwelcome £18.4bn cash-and-shares offer from DraftKings (US:DKNG), the main competitor of BetMGM, Entain’s joint US venture.
The bid pushed up the share price to over £22, but once it had been rebuffed, the shares began to slide. Not long before Nygaard-Andersen resigned in December 2023, the price had dipped below £8. Governance reared its head again. Did Entain directors have the right skills? In January, an activist investor, Ricky Sandler (of Eminence Capital) got on board as a non-executive. Entain says that others will join him. The 11 bolt-on acquisitions made during Nygaard-Andersen’s tenure at costs of over £2bn had drawn particular criticism. Some Sandler had supported; others he’d dismissed as “empire building”: funding them “with highly undervalued equity” had destroyed shareholder value. One (Unikrn, an esports business) had been bought in October 2021, relaunched in December 2022, then scaled back in October 2023. At about the same time as Sandler was appointed, Entain’s group director of M&A resigned.
Gibson praised Nygaard-Andersen for resolving the probe into the legacy Turkish-facing business. He said that it had dogged her whole tenure and been threatening the future of the group. She had settled for a fine of £585mn, payment of £10mn costs and a charitable donation of £20mn, together with a deferred prosecution agreement that obliged the group to withdraw from unregulated markets. Gibson said her “overhaul of the business model, strategy and culture of the group in recent years has been vital”.
Insiders, though, took a different view. She had failed to understand the business, they said, and had disrupted a stable organisation with a disruptive culture of constant change. One complained about experienced people leaving because of her “endless re-orgs” to be replaced by an “inept bunch of PowerPoint merchants”. A familiar clash, it seems, whereby external recruits think they know better than the existing staff, only to end up taking far longer to get things done. On her watch, corporate costs had doubled, not helped by the use of private jets. Another described the strategy and M&A team as a “combination of inexperience and low levels of competence, coupled with inexplicably large egos”. A third blamed the heavy-handed attitude of Entain's centralised services team for the poor integration of some acquisitions.
All those issues are now for Stella David to sort out. She was a non-executive director, and has temporarily stepped into the breach as an interim chief executive. She has to juggle costs while restoring Entain’s competitive edge, as well as providing more investment for BetMGM if it’s to reach its target of 25 per cent market share in 2026. A few months ago, Sandler was all for selling this joint venture. What’s the plan now?
So, David’s permanent replacement won’t be short of challenges The role demands a special sort of person. Taking on Entain will be a gamble, but at heart, isn’t that what the group has always been about?
