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Sky Bet sold - What next? |
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by Images_of_Money |
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Sports fans and punters alike won't
notice this for a while to come but, earlier in December, Sky sold their
controlling interest in Sky Bet in a deal valuing the business at £800
million. Punters and TV addicts alike will be none the wiser because, as part
of the deal,
the buyers, private equity firm CVC Capital, have signed an
agreement which allows them to retain the Sky branding.
CVC have
acquired 80 per cent of the business for an initial £600 million with
media giant Sky retaining a 20% stake as well as a seat on the
board.
Sky's move is eye-catching, as far as the gambling industry is
concerned, in that it bucks the current trend. Global gaming revenues are
buoyant on the back of the rapid take up of smartphone gaming and the potential
of rapidly developing markets - particularly in Asia and the Far East. On the
face of it, Sky are giving up a seriously lucrative asset.
Seen from the
perspective of Sky's core business, however, the move is more readily
explained. The convergence of digital technologies - internet, TV, and
telephony - as illustrated by
BT's move into sports broadcasting - is forcing Sky to focus
its attention on developing what is known as "quad-play" packages (integrated
pay TV, broadband, mobile and landline). In sum, Sky's foray into the betting
arena looks like a punt that has only partially paid out.
It is
understood that the company will use the cash to pay down debts as a precursor
to any more progressive moves.
Sky Bet was formed in 2001 and its
branded offerings extended to casino gaming operations, Sky Vegas, Sky Casino,
Sky Poker and Sky Bingo in addition to its core sports betting
operation.
The inevitable question that arises is what CVC have in mind
for such a prominent - not to say pricey - brand.
For example, at the
time of writing, SkyBet's branding dominates the industry overview
website BritishBookmakers.co.uk. It would
be unusual for venture capitalists to retain ownership and management of the
brand for a sustained period - that simply isn't in the nature of the
beast.
However, the fact that they had previously made serious moves
towards acquiring the Betfair gambling group for a notional £1 billion
points to a serious and committed commitment to the gaming industry.
Sky
announced as part of the publicity surrounding the sale that the current
management and workforce would remain in place in their Leeds base.
It
is too early to tell what the full implications of the deal might be, although
in the short term there are a number of contractual obligations to which the
brand is pre-committed. Not least of those is the sponsorship package relating
to the Football League. In accord with the original agreement that will run
until the end of the 2015/16 season.
Rob Lucas, Managing Partner of CVC,
said: "The partnership between CVC and Sky will provide a strong platform to
support SkyBet's ongoing success at this exciting point in its development."
.What that means for Sky Bet's clients and competitors remains to be
seen.
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