Former Rank Group CEO Henry Birch Eyed for Entain Job

Online gambling giant Entain is considering the appointment of the ex-CEO of Britain’s biggest land-based casino group as a replacement for previous boss Jette Nygaard-Andersen, who resigned late last year.

Entain, Henry Birch, Dan Taylor, Rank Group
Henry Birch, above, addressing the Retail Week Live conference while CEO of the Very Group. He is believed to be one of a few names being considered by Entain for permanent CEO. The successful candidate may have to lead the company through a transformational chapter in its history. (Image: Retail Week)

Until 2018, Henry Birch was the head of the Rank Group, which owns the Grosvenor Casino chain, as well as the Mecca Bingo brand. After leaving Rank, he was CEO of online retail company The Very Group until stepping down in 2022.

Birch is among several top contenders for the job, according to sources who spoke to Sky News. Since Nygaard-Andersen’s departure, Entain has been led by interim CEO Rob Wood.

Private Equity Circling

The board is looking for someone to steady the ship after a few turbulent years for the company, which owns Ladbrokes, half of BetMGM, and numerous other international gambling brands. The new CEO may also be required to lead Entain through a partial or full acquisition.

Activist investors, including Eminence Capital founder Ricky Sandler, have built an increasingly prominent position in the company and have expressed frustration with its recent performance.

In March, Entain announced it was looking to offload several of its overseas brands so it can refocus on its core operations. The inference is that activists believe a leaner Entain would be in a better position to be sold or broken up.

Private equity giants Apollo Global Management and CVC Capital are rumored to be among those circling, and could be interested in acquiring some of its bigger brands should an extensive asset sale materialize, according to The Times of London.

Stock Slump

In 2021, Entain received takeover bids from DraftKings and MGM, its joint venture partner in BetMGM. Both proposals valued the group at a significantly higher price than its current market cap.

The company’s stock has halved in the last year, leaving it with a market capitalization of just under £5 billion ($6.2 billion). Some activists blame a series of questionable acquisitions for the slump. Under Nygaard-Andersen, Entain spent around $2 billion on largely misfiring regional-market brands, and the Danish executive’s resignation came amid rumors of “internal unrest.”

In addition to Birch, Dan Taylor, chief executive of Flutter Entertainment’s international operations, is also in the mix for the role. That’s according to Sky News sources, who added that a formal announcement on the appointment could be weeks or even months away.

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MGM Will Be Held to Host City Agreement in Possible Springfield Casino Sale, Say Officials

Nearly two months ago, reports surfaced that MGM Resorts International (NYSE: MGM) is mulling the sale of its regional casinos in Ohio and Springfield, Mass. Officials in the Massachusetts city said they intend to hold the gaming company to the terms of the host city agreement should a transaction materialize.

Chang Goo Yoon, physical therapist, casinos
MGM Springfield. City officials said the gaming company must abide by the host city accord if it opts to sell the casino. (Image: Boston Globe)

In March, it was reported that MGM could be evaluating the sale of MGM Springfield and MGM Northfield, a racino near Cleveland. MGM Springfield opened in August 2018 as the first traditional casino in Massachusetts. That venue, which generated $278 million in sales in 2023, hasn’t lived up to the operator’s expectations.

In a recent interview with Western Mass News, Springfield City Council President Michael Fenton, who also chairs the casino oversight committee, said MGM cannot unilaterally decide to leave the city.

I don’t think the public should be concerned because we have safeguards at the city and state level to make sure there’s no unilateral movement by MGM,” Fenton told the media outlet. “MGM doesn’t have the right to decide to move out on their own.”

The Massachusetts venue cost the operator $960 million to build. MGM sold the real estate assets to MGM Growth Properties (MGP) for $400 million in 2021. VICI Properties (NYSE: VICI) acquired MGP for $17.2 billion that same year, gaining control of the property assets of MGM Northfield Park and the Springfield casino, among other MGM venues.

How MGM Can Do Right by Springfield

While MGM has acknowledged that the Massachusetts and Ohio casinos haven’t lived up to expectations, it hasn’t publicly confirmed it’s shopping those venues. The topic wasn’t addressed on the operator’s first-quarter earnings conference call earlier this month.

The obvious avenue through which MGM can assuage Springfield’s concerns about a possible sale of the casino is to line up a buyer from the gaming industry, which would be likely assuming the operator is looking to sell. That’s also important because the property is zoned to be a gaming venue.

As for potential buyers for MGM Springfield’s operating rights, names haven’t been floated, but it’s probably fair to rule out Penn Entertainment (NASDAQ: PENN) because it runs  Plainridge Park Casino in Massachusetts.

It’s possible that tribal gaming entities in New England could be interested in MGM Springfield, but for now, that’s just speculation.

Springfield Wants ‘Same Pedigree’ as MGM

Fenton told Western Mass News that should MGM opt to depart Springfield, the city will require that the replacement operator be of the “same pedigree” as MGM. That’s a subjective term, but there are some hard details.

Under the host city agreement, MGM is required to deliver $25 million in annual payments to various groups in the city and book at least 12 acts per year at entertainment venues near the casino. Fenton said a new gaming operator of the Springfield casino would be held to the same standards.

A transaction involving MGM Springfield materializing over the near term is a possibility, but analysts believe gaming industry mergers and acquisitions are currently hamstrung due to high interest rates. That implies prospective suitors that need financing to buy the operating rights to the venue might be put off and eschew bidding, thus dwindling the pool of potential buyers to those that can pay in cash.

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Golden Entertainment Sees Buybacks Preferable to Nevada Acquisitions

Golden Entertainment (NASDAQ: GDEN) dramatically reduced debt while announcing its first-ever quarterly dividend. Such efforts, including share buybacks, could be the casino operator’s preferred avenues for returning capital to shareholders rather than acquiring gaming venues in Nevada.

Golden Entertainment
Golden Entertainment’s Arizona Charlie’s Casino. The operator prefers share buybacks over Nevada acquisitions. (Image: Las Vegas Review-Journal)

Last month, the Strat operator deployed $287 million to redeem outstanding senior notes, slashing its outstanding liabilities and leaving it with about $100 million in cash on hand and access to a $240 million revolving credit facility. That speaks to a strong liquidity position, but it appears unlikely the gaming company will pursue acquisitions in its home state over the near term.

At this time, it’s difficult to find an opportunity to acquire Nevada-based casinos with owned real estate, which would be more accretive than acquiring our own stock, which we intend to do over the remainder of the year with our current repurchase authorization,” said Golden CFO and President Charles Protell on the company’s first-quarter earnings conference call with analysts.

The Las Vegas-based operator has been rumored to potentially be acquisitive, particularly following its $260 million sale of the Rocky Gap Casino Resort in Flintstone, Md. last year. That deal made Golden a Nevada-only gaming company.

Golden Taking Pragmatic Approach to Acquisitions

The current macroeconomic environment, one hindered by persistent inflation and the highest interest rates in two decades, is seen pressuring gaming industry consolidation. Protell acknowledged as much in his remarks to analysts.

“While we continue to review actionable strategic opportunities, the current market environment and macro backdrop has made it less conducive to M&A for us,” he added.

Put simply, if Golden were to borrow capital to finance an acquisition, it’d be doing so at higher interest rates than it would have been subject to a few years ago. Additionally, the operator’s preference for buying gaming venues with owned real estate could be lauded by investors because should Golden strike such a deal, it would avoid taking on a new long-term obligation to a landlord.

To those ends, the number of Las Vegas locals’ casinos that feature owned real estate is high, but the bulk are controlled by Golden rivals Boyd Gaming (NYSE: BYD) and Red Rock Resorts (NASDAQ: RRR), neither of which have signaled they’re looking to sell Sin City properties. Red Rock never sells casinos or land to other gaming companies.

Bottom line: if Golden is looking for Las Vegas acquisitions, the current pickings are slim.

Golden Approach Could Be Validated

Outside of Las Vegas, Golden is the dominant operator in Pahrump and vies with Caesars Entertainment (NASDAQ: CZR) for the same status in Laughlin. That could imply the operator doesn’t need to go shopping in those markets. Additionally, the first-quarter earnings call represents yet another on which the operator didn’t comment on the fate of the Colorado Belle, its shuttered venue in Laughlin.

Golden currently does not own any casino hotels in the Reno/Lake Tahoe market and while some analysts have previously suggested that region makes sense for the operator to consider deals, Golden itself hasn’t said that market is on its radar.

Even without deal-making, the case for Golden stock could be supported by buybacks, debt reduction, and dividends — the three pillars of shareholder yield.

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