(Bloomberg) Belarussian Soccer Is No Substitute for Sports Fans’ Betting Fix

2020-05-03 01:00:00.0 GMT

By Irene García Pérez and Ruth McGavin
(Bloomberg) -- European sports betting firms are turning to
the lesser-known thrills of Nicaraguan soccer, Ukrainian table
tennis and Chinese baseball in an effort to keep punters’ cash
rolling in.
Denied their usual fodder by the lockdowns--from soccer
action in Spain’s La Liga to the U.K.’s Grand National horse
race--gaming firms are searching for ways to prop up revenue.
The lack of mainstream sport deals an additional blow to
companies that were in some cases already heavily indebted,
having stacked up debt from the leveraged loan and bond markets.
While most sectors of the leisure industry are taking a hit, the
longer-term impact on gaming companies depends on their level of
exposure to in-person betting activities, like casinos.
Codere, for example, a Spanish company which has seen its
gaming halls shuttered across Europe and Latin America, has had
to defer payment of interest on its bonds. While online betting
is only a small part of its business, it’s also had to become
creative with its offerings to keep that revenue stream flowing.
“We have started to actively offer bets on the few sports
that are still active, such as table tennis, hockey, esports,
tennis and football, but all of them in leagues or competitions
with a very low profile, such as the Belarussian or Nicaraguan
football leagues,” a company spokesman wrote via email.
Others in the sector are also suffering. GVC Holdings,
parent company of sports betting firms Ladbrokes Coral Group Plc
and bwin Interactive Entertainment AG, expects an impact on its
core earnings of 50 million pounds ($63 million) per month, it
said in an early-April trading update, half its original
estimate.
“While we have seen modest increases in betting on the few
professional sports still operating, such as Australian horse
racing, the reality is that this doesn’t come near to
compensating for the cancellation of the vast majority of the
sporting calendar,” a GVC spokesman wrote in an emailed
statement.
The sudden halt in sports competitions has also dealt a
blow to other industries.
Audiovisual producer Mediapro, which is the host
broadcaster of Spain’s La Liga, has taken a hit to its business
and was downgraded to six notches below investment grade this
week. It has, though, seen a boom in eGames and eSports, in
which the company is a leader in competition organization and
content distribution, a spokeswoman wrote by email.

Soccer Fix

For investors in companies hit by the sports shutdown, who
have seen the value of their bonds and loans plummet, the hope
is that some European soccer games could start to resume by mid-
June, even if matches are played to empty stadia.
“As things open up again, we think football may come back
slightly earlier, initially behind closed doors, whereas pubs
and clubs will be on the later end,” Tom Ross, a portfolio
manager at Janus Henderson Group Plc, who manages $3.3 billion
of assets said. “People are waiting to gain access to sport
again.”
Funds managed by Janus Henderson hold bonds issued by the
media rights businesses of Inter Milan and AS Roma, according to
data compiled by Bloomberg.
When major sports events return, sports betting companies
are expected to see most of their business come back, according
to Wolfgang Felix, founder of credit opportunities specialist
Sarria. “Betting on horse racing, for instance, has an ardent
following that will go back to bet on-site,” he said.
Companies with a strong on-line presence will also benefit
greatly when competitions resume, especially if the public has
to watch it on the TV or on-line. “If they’re on-line, be sure
they will be getting ads to bet on-line,” he added.
And beyond the immediate impact on gaming and media rights
companies, the resumption of sport could play a role in the
broader recovery, by reconnecting people with their pre-lockdown
selves, according to Martin Horne, head of global public fixed
income at Barings.
“Part of minimizing the damage to the economy is for
consumers’ head space to start to return to normality,” he said.