Leading the way online, expanding globally, and marketing agressively, Patrick Kennedy has turned bookmaker Paddy Power into one of Ireland’s most dynamic and successful companies.
In August Paddy Power announced a pre-tax profit of €68.7mn for the first half of 2012, an increase of 21% on the same period last year. This continued the success from 2011, which was in itself a record breaking year for Paddy Power with total income of €499mn and a pre-tax profit of €121mn. To put that in context pre-tax profit for the financial year 2005 was €31.3mn.
When Kennedy took over as Paddy Power chief executive in January 2006, the share price was hovering around €12 per share whereas at the time of going to print, the stock had climbed to just under €54 per share. This is a testament to the growth that has occurred under his stewardship which has also seen a doubling of staff from 1,500 to 3,000 since 2007.
No bookmaker has taken advantage of the explosion in online gambling in quite the same extent that Paddy Power has. The growth in online revenues and customers continued in the for the first six months of this year with customer acquisition up 50%, active customers up 41% to €1.2mn and net revenue up 41% to €191mn.
Paddy Power has also grabbed the lead in the booming mobile gambling market and has the largest market share in the industry. In the first half of this year net mobile revenue was up a staggering 239% in constant currency to €53mn.
Most impressively the move into online gambling has allowed Kennedy to internationalise the business, partnering or acquiring businesses Canada, the UK, France, Bulgaria and Australia as well as having online operations in over 150 countries.
Under Kennedy’s tenure paddy Power has not being shy about aggressively promoting the brand and has been successful in pulling off some spectacularly successful publicity stunts. At the recent UEFA European Championship Danish striker Nicklas Bendtner was fined €100,000 for displaying the Paddy Power logo on his underpants while celebrating a goal, Paddy Power gained further publicity by stating it would pay the fine. Paddy Power also threatened legal action against London Olympics organisers LOCOG after the organisers complained about a billboard campaign by the bookmaker they said infringed on the Olympic brand. Paddy Power has also had several controversial TV ads banned in the UK including the most complained about ad in the UK in 2010.
In February of this year Patrick Kennedy was interviewed by Business & Finance about the firm’s success and its growth plans, here is some of what he said.
On the new 1% retail tax on bets in bookies and the prospect of it increasing:
“I think there is a realisation that price levels and tax levels do matter and drive consumption. The profitability in the overall Irish retail market in 2011 was roughly €20mn on a turnover of €3bn so that is less than 1% of operating margin. So if the tax is changed from 1% to 2% as some people propose that would wipe out the profitability overnight and it would decimate the industry.”
On taxing betting online:
“One of the big challenges we see is that of the top ten online bookmakers providing services to Irish customers, eight are based overseas so it is really important that whatever is done from a taxation point of view does not penalise the two Irish companies because it will give advantage to eight offshore firms who do not pay tax here.”
Business & Finance, Business Person of the Month
Business & Finance, in association with MERC Partners, has been awarding excellence in business through the ‘Business Person of the Month’ award over the last number of years. These awards seek to recognise noteworthy achievements in business leadership, and particularly those that make a telling contribution to the wider business community in Ireland.