Recently installed CEO Henry Birch hopes to change the fortunes of the Rank Group and rebuild the bingo brand back to previous highs with a change in image
Henry Birch has had three months now as chief executive of the Rank Group that was founded in 1937 and has, in its time, been a legend in the film and entertainment industries, but now faces a future without the studios and Odeon cinema chain to assist. The leisure group now only retains three businesses and all of those are likely to undergo regulatory and structural changes in the short term, which means Mr Birch has much to do.
The Mecca Bingo, Grosvenor casinos and Enracha (a bingo business in Spain) are all that remain of the Rank Groups massive holdings, although they did manage to keep the gongman logo made so famous at the start of films from J. Arthur Rank, however that still means they employ some 11,000 people in 96 Mecca clubs and 56 Grosvenor casinos, and despite prevalent circumstances they’re upbeat about their future in the marketplace.
The bingo market in which Mecca competes has, frankly, taken a beating in recent years with competition from online gambling sites in the UK and beyond, the rise of the National Lottery and the smoking ban that reduced numbers of patrons and indeed the number of bingo halls from 600 in 2005 across the country to just 400 today. This shrinkage in the market whilst significant may well be about to be reversed as Mr Birch and Mecca seek to change their luck.
As a former bookmaker Mr Birch is well used to assessing risk and spotting opportunities and in this regard he’s already looking at modernization of both facilities and image in an effort to make a night out at the bingo an alternative to what he describes as the “one directional” pub experience enjoyed by so many at present. Whether Mecca can shrug off the image of converted cinemas replete with seventies red velor décor and hoards of old ladies who’d have your arm off for a winning card, is another matter.
Duty Halved By Chancellor
“For the first time in a while everyone is feeling pretty positive in Mecca about the outlook for the business.” Mr Birch said referencing this years national budget, “because of the shot in the arm from the duty reduction. The reduction translates to about 11 or 12 million pounds on an annualized basis.” This injection of hope comes from George Osbourne the chancellor of the exchequer who has halved the duty paid on bingo to just 10% in what many have seen as a cynical move to win back disaffected oldies from the clutches of UKIP.
Rank Group’s New CEO Seeks Change
•Profits down despite duty fall
•New venues may mean new image
•15% online tax big gambling news
This gift from the Treasury puts bingo on what Mr Birch calls a “different footing” and might well herald a resurgence as Mecca passes on some of it to players in the form of bigger prizes, but in the end it might well be the three new Bingo venues it has promised the government it will build on which the future truly rests. Likely to be developed under a different name from Mecca in order to provide a different bingo experience they are hoped to attract a younger crowd away from the pub and internet betting in the UK rather than just another hall of OAPs.
Currently the average spend at a bingo hall is just 18 GBP and only a scant 2 GBP of that is spent on food and drink, an area in which the Rank Group has already made considerable quality-chasing investment, but Birch insists patrons can be delivered a “more rounded experience” that will encourage them to look upon a Bingo hall as a pub with better entertainment and perhaps spend like it is too. With these three new venues “there is the opportunity to put in something new” he says, it remains to be seen if he’s right.
Multi-Channel Approach To Revenues
Of course the group is not solely relying on their ability to change the image of Bingo, that would be foolhardy as they’re not the first to try, and there is an emphasis on multi-channel revenue streaming that is aimed at producing more ways for patrons to spend money within venues and on associated websites online. This would be an extension of the Grosvenor casino loyalty scheme that sees players who spend above a certain amount given credits to play games online in its UK internet casino and would probably include an overhaul of the groups web-presence to stay competitive.
Currently only 10% of Rank’s total revenue is provided by its online interests and that may well take a bit of a hit when Mr Osbourne takes with the other hand and imposes a new 15% tax on online gambling this December, a move already sending waves through the industry, but Rank and Birch are firmly committed to expanding their net sites as a leader for their physical venues. This is an area they feel they have an advantage over the relatively unwelcoming atmosphere of the traditional bookmaker and may well take things a stage further.
In 2013 Rank sold the Blue Square online sports betting company to Betfair for a paltry 5m GBP having paid 65m GBP for the business but 10 years before, and whilst it still offers some sports betting in some of it’s casino venues Birch is still evaluating a more significant return to the sports betting market if he can avoid the “Blue Square scenario”. He admitted, “Would I like it that we had a successful sports-betting business as well? Yes. Would that help us drive some business to our digital casino business? Yes.”
With that 15% tax on online gambling and the cut on duty for Bingo to just 10% this is probably the best opportunity the business is going to get to win back punters and modernize, however this years results may well be worrying Hong Kong investment vehicle Guoco that fronts for Malaysian billionaire Quek Leng Chan and owns 69% of Rank group. The ongoing recessions saw pre-tax profits slide from 42.7m GBP to just 14.4m GBP and those aren’t the sort of falls that are easily regained quickly, even in such advantageous circumstances.