Paddy Power’s parent company stands to lose up to £110m as a result of coronavirus pandemic

Sports Staff
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Paddy Power Betfair parent Flutter Entertainment would take a £90-£110m pound hit to full-year earnings if coronavirus sports fixture restrictions remain in place until the end of August, but horse racing continues without spectators.

If horse racing is cancelled in Australia, Britain and Ireland and its shops are closed, the gambling group estimated that this would incrementally reduce group earnings before interest, tax, depreciation and amortisation (EBITDA) by around 30 million pounds per month.

Shares in the company fell 15% at the open.

The Dublin-based group’s EBITDA in 2019, excluding its investment in the United States, was £426m. It said on Monday that prior to a raft of sporting cancellations, trading so far this year had been running ahead of expectations.

Major sports events cancelled or suspended due to the virus include elite soccer competitions such as the English Premier League and Champions League, as well as golf’s first major of the year, the Masters, all big events for bookmakers.

Exceptions include some Australian sports – where Flutter operates under the Sportsbet brand – and British, Australian and Irish horse racing. Britain’s annual Cheltenham racing festival – a major event for Paddy Power Betfair – went ahead without restrictions last year.

Flutter, which agreed in October to buy Poker Stars operator Stars Group Inc (TSG) TSGI.TO in a $6 billion share deal set to create the world’s largest online betting and gambling company by revenue, generated around 78% of its revenues through bets placed on global sporting events last week.

Flutter said in its profit warning that it retained a strong balance sheet with a net debt to EBITDA ratio of 0.7 times at the end of 2019, well below its covenant level of 3.5 times earnings and that it will continue to explore ways to mitigate the impact of cancellations.

“The challenge currently facing our business and the industry more widely is unprecedented in modern times,” Flutter Chief Executive Peter Jackson said in a statement.

“While our near-term profitability will be impacted by the essential measures being taken globally, the board will remain focused on protecting shareholder value and managing the business through these turbulent times.” Reuters

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