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WILLIAM HILL - SINKING SHIP?

Bookmakers have often been seen has crooks turn into businessmen. We were going to use the word mafia, but maybe the term is a bit harsh for UK bookies. However, if you stop and think about it, the late William Hill was nothing more than a self proclaimed illegal bookmaker. In fact, the Birmingham born Hill started taking bets from local people before moving to London were he operated an illegal gambling den in Jermyn street.  

The William Hill business was found in 1934, and since then it’s changed hands many times. Back in 2016 Rank / 888 had a bid rejected for £3.2bn, at the time of writing the company is capitalised at £2.25 Billion. During the same period the share price dropped from 325 to todays 257.40, and back in july 2013 WMH:LN  peaked at £465.80. In percentage terms, William Hill has seen it’s share price fall by 51.6%. And, to put that in some sort of perspective, the FTSE 250 has grown from 14,815 to 19,960 (+37.7%) during the same period.

This massive decline in the value of the UK based bookmaker can’t all be blamed on devaluation of gaming stock. However, we have to accept increased costs of regulatory requirements have put a strain on profits, and things are likely to get tougher again. With that said, their are a whole host of reasons why William Hill suffered, and many of them are down to poor management decisions. 

How did this company fail to capitalise on its well known brand. Afterall, if a company like Bet365 can see the opportunity, why wouldn’t a giant such has William Hill. This brings me nicely onto an history lesson i remember from my school days. It was about wool merchants failing to see the influence the Jenny wheel (cotton) would have on their business.  In short, many of the wool merchants simply refused to accept this disruptive device, and within a few years they had gone bankrupt. 

William Hill failed to embrace the internet, and by doing so they allowed others to come along and trump them. During the same period, Sports-betting companies established less than 20 years have gone from being worth 100K to a Billion pounds. On the UK domestic market, Paddy Power, BetFred (head shake), and Bet365 have all outperformed Hills!

The board at William Hill have made many costly mistakes including writing off £26m for scrapping their in-house system. Their was also an in+out in Italy costing another £26m, and they sold their Spanish joint venture to Codere for €1 following losses of £11.6m (2008) and £9.3m (2009) on the venture. Back in march of this year the company appointed inexperienced Philip Bowcock has their new CEO, and the ship continued to sink!