Bookmaker beating the odds during downturn
From humble beginnings with a solitary shop in Armagh, the high street bookies has grown into one of the largest independent operators in the UK and the Republic. By Peter Flanagan
Published 17/11/2011 | 05:00
THE victims of the economic slump have been fairly well documented at this stage. One day after the next we have heard about a business that seemed to be making money hand over fist for years that has now gone bust or had to make drastic cuts to staff.
In this climate it would be easy to think that every employer in the country has battened down the hatches and is just hoping the storm will pass before their roof is ripped off.
In truth, most businesses probably are doing this but some aren't. One of those continuing to grow is Boylesports.
Set up by Armagh native John Boyle with a single shop in 1982, the bookmaker has mushroomed to the biggest privately owned gambling business in the Republic with 176 shops employing over 1,100 people and a substantial online operation.
This year has seen it post huge growth, hoovering up part of Ivan Yates's Celtic Bookmakers chain when it hit trouble in January and this month agreeing to buy William Hill's 15 remaining stores in Ireland.
In contrast to most people in the betting industry, Mr Boyle did not grow up a horseracing fan. For him, it was the dogs that got him into the business.
"If you offered me the chance to go to the Kentucky Derby or Cheltenham on the one hand, or a trip to a greyhound event on the other, I'd pick the greyhounds," he says.
"The game is in my blood. My father trained them and the owner he trained for was a millionaire who had a chain of betting shops. When I was 14 I saw the house he lived in and I remember coming back with the idea that I wanted to be a millionaire."
Mr Boyle's father opened a shop in 1976 and the son followed suit in 1982, opening in Markethill in Armagh where he lived at the time.
"I'd worked in my dad's shop at weekends and had been involved in the dogs so I had learnt the business and I understood betting, and when the shop became available in Markethill, I jumped at it."
Running one shop in a village is one thing, running the huge operation Boylesports is now is quite a different matter. The business has exploded in the last decade.
It was 1989 by the time Mr Boyle opened his second shop, and first in the South, and by 1995 he had 13 shops. As recently as 2002 the business only had 37 shops -- a substantial number to be sure but a far cry from the 176 today. What happened?
"If you're asking did I always plan to have a business this size, or was there a 10-year development plan to grow the group, the answer is no.
"To be honest, as the opportunities arose, they were too good to turn down."
Grasping the opportunities when they arise or being lucky is a recurring theme in Mr Boyle's story, the way he tells it. He paid £2,500 for the shop in Drogheda in 1989. He was in profit by the end of the first week.
Opportunity or luck only tells so much of the story, however. Mr Boyle clearly has a sharp business mind. The size of his office off the trading floor in his Dundalk headquarters -- tiny by normal chief executive standards -- could be a metaphor for the lean operation he runs.
He also understands that the bigger you are, the better your chances of survival -- especially in this economy.
"Every shop I have can stand up on its own two feet. The business overall isn't supporting one loss-making sector.
"I can understand why the people with only one or two shops are finding it tough, but we've been able to build our cash reserves and the business supports itself. The cash for the Hills' business (about €1.5m) came out of our own reserves so we've a lot of freedom in that regard.
"When we bought the 17 Celtic shops, we bought the 17 best performing branches. When William Hill bought into Ireland it had 50 shops and has since cut back to 15, so these are the best shops in the portfolio and they are available at low prices.
"In my mind, I've no option but to buy them because there's no risk here. You're betting certainty and anyone in this business knows that doesn't happen too often."
Cornering the retail betting market is one thing but when the future of betting is online, then retail will only go so far. With online revenue now worth around 25pc of the firm's revenue and growing, Mr Boyle is acutely aware of this.
"The trend online is in every business but in our case, the online user has a completely different profile to the person in the shop.
"The shop is almost a social club. People come in, catch up with their mates and they might place a bet or two.
"Online, people want to put a bet on and that's it. The online gambler might never have been in a shop, and has no desire to ever be in one."
The move online has also caused problems for the Government. Bets made in a shop are subject to a 1pc tax, but online is tax free. The Government wants to tax online betting as well. While Boyle accepts the industry has to pay its way, he warns against unnecessarily penalising the indigenous sector.
"We are in favour of the tax. The industry has to contribute and we are quite happy with that. My concern is that an Irish-based business like us would be taxed, but an offshore operator working out of Gibraltar would be tax free.
"If that was the case then we would have to look very closely at relocating because we can't work with that kind of competitive disadvantage. Nobody can," he says.
"I'd prefer to see some sort of licensing system where, if a company wants to operate in Ireland, it must pay a fee to the Government in return for a licence to operate here, no matter where they are based. That would be more equitable I think."
Boyle says there are no further acquisitions in the pipeline -- "this year has been our biggest ever and we want to settle things down for a while now" -- but the group is looking to expand to Asia and is pursuing licences in Macau, Manilla and Hong Kong.
With expansion like that it would be easy to think Boylesports has been immune to the recession. When it comes to retail rents though, the group has had the same problems any number of retailers have had.
While Boyle says a number of the company's landlords have agreed to negotiate, others haven't taken his call.
"In many cases we're paying 2006 rents with 2011 levels of business. We have to be clear with some that we can't continue in the current situation and we'll move next door if we get a better deal. It's just the way things are."
Boyle is nearly the last of the big, independent and private bookmakers in the UK and Ireland. Most of his competitors are public companies. It seems going public would be an obvious thing to do.
He isn't keen on the idea, however.
"To be honest I quite like not having anyone tell me what to do. If I got into a situation where I thought we needed to spend €20,000 on a shop and my board wouldn't let me, I think I'd struggle with that.
"I'd never say never but I like the freedom I have at the moment and being private means we can move quickly if we see an opportunity."
Boylesports is a partner of the FAI, and the chief executive happily admits to "taking a hiding" on the result of the Estonia playoff; he's already looking forward to the European Championship next year.
"That will be our biggest football tournament for sure. We were hammered after the first leg of the play-off but it will be worth it in the long run".
It's almost unusual to hear an Irish company looking forward to "the long run" these days.
It's fair to day Boyle's gamble has paid big dividends so far.