Tabcorp Holdings, the $7 billion gambling juggernaut of Australia, is reeling due to the current COVID-19 pandemic. Not only has the value of their business taken a major hit, but it’s also resulted in a major shakeup regarding internal leadership.

Prior Success

If you’ve done any punting in Australia, then the name Tabcorp should be familiar. They’re the leading gambling entertainment group in the nation, and they’ve been operating for over 25 years.

The Lott is their most successful endeavor, and its brands include Golden Casket, Tatts, NSW Lotteries, and SA Lotteries. They sell products in over 3,700 outlets across Australia, and 2018 saw sales of 472 million tickets.

In short, Tabcorp is the major supplier of services for gambling-starved Aussies. COVID-19, however, doesn’t seem to give a damn.

Significant Losses

Earlier this week, the company delivered the bad news to the market. Gross profits for the year are expected to be between $990 and $1 billion, which is down from $1.124 billion in 2019. Meanwhile, net profits will be in the range of $267 million to $273 million, a drop of at least 31% from 2019’s $396 million.

According to the company, the following reasons are primarily responsible for the downturn:

  • Government measures to curb the spread of COVID-19.
  • Uncertainty about how long the pandemic will remain.
  • Suspension of various sports leagues.
  • Accelerated retail contraction.
  • Closure of various sports venues.

According to Tabcorp CEO David Attenborough, “We are facing into a challenging and uncertain environment, and the current operating conditions and those expected into the future are relevant factors in assessing the value of the goodwill in those businesses at this time.”

David Attenborough, CEO of Tabcorp Holdings

He added, “We remain confident in the strength and resilience of Tabcorp’s diversified portfolio of assets and are pleased that integration is now substantially complete. We are focused on supporting our people and partners during these challenging times, while ensuring Tabcorp emerges strongly post COVID-19.”

Changing of the Guard

To further complicate matters, Tabcorp is undergoing a major shakeup at the top of their organization. First, Chairwoman Paula Dwyer announced her retirement from the board at the end of the year. Then came an announcement that CEO David Attenborough would retire from his role in early 2021.

According to Attenborough, “The combination with Tatts is now largely complete and, as such, now is the right time to start the process to appoint the next CEO who can work with the board and management team to take the company forward. Until then, I am totally committed to steering Tabcorp through the COVID-19 pandemic and ensuring that our businesses are best positioned for the future.”

The departure of Ms. Dwyer was expected, but the retirement of Mr. Attenborough took many by surprise. He served as CEO for almost a decade, and the exodus of two high-ranking figures was viewed as more than a little unusual.

Investor Unrest

It turns out, however, that there’s more to the story. Dwyer and Attenborough didn’t leave of their own accord. Instead, they were pushed out the door by dissatisfied investors.

Earlier this month, an assembly of powerful investors co-signed a letter to the board of directors. It expressed disappointment with the current state of leadership and demanded a change. More specifically, the letter asked that both Dwyer and Attenborough retire from their current roles.

Signees included Investors Mutual, Pendal Group, and Perpetual Limited. The last two names are worth $126 billion between them, so their voices carry a lot of weight.

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