Industry reaction to James Henderson's departure

Today’s announcement of James Henderson’s departure at William Hill was clearly of little shock to the online gambling sector.

His long career at William Hill was predominantly focused on the retail side of the business and, like many predicted at the time of his appointment as CEO, it was online which ultimately proved his undoing. The operator issued a profit warning for its digital business earlier this year, while the firm’s most recent financial results showed Q1 revenues were down 11% year-on-year.

And speaking to the Financial Times, William Hill chairman, Gareth Davis, made no secret as to why Henderson had left the firm. “We have to face up to the fact that online hasn’t performed how we wished,” he said. “James is a good operator and is a realist. He realised that the business has very high expectations with online given its historic growth and how it has slipped in recent times.”

The hunt for Henderson’s successor is well underway and speculation within the online gambling sector is rife as to who his replacement is. EGR spoke to a number of industry experts this morning to get their take on today’s events and who should take over the reins at William Hill.

Peter Marcus, consultant and former William Hill Online COO

“It was always going to be a tough challenge for James as Ralph Topping was a tough act to follow. In some ways James was unlucky as so much has changed in the industry in such a short space of time with regards to M&A and regulatory upheaval. William Hill always needed new blood, particularly with what is happening with the Online division. That is where the problems are as they’ve always been good at retail and will probably get even better once Ladbrokes and Coral have got rid of some of their shops. Hills needs a new direction and Crispin Nieboer, who I’ve heard is doing some good things, definitely needs strategic guidance at the top of the company.”

Paul Leyland, partner at Regulus Partners and former corporate development director at William Hill

“The two-year tenure will be seen in marked contrast to Topping’s seven-year run of almost continuous successes; marked by a combination of bad luck, legacy issues and a lack of the kind of grip needed to manage a still transitioning business.

William Hill now faces a difficult choice: appoint another internal candidate, though a recent wave of departures suggests that succession planning was not a priority; find talent from within the industry, which experience has shown to be a relatively narrow pool; or, bring in a CEO from outside the industry and risk that the ‘bedding down’ phase can be handled and supported by the senior management team. None of these choices are simple or risk free, highlighting the extent of the problem of leadership in the sector – a problem that boards (chairmen especially) should be giving much more active consideration to.

William Hill is a pivotal player across a number of key markets – UK retail, regulated online, Australia, US betting, the future of NYX. In our view, the new CEO should be a very strong stakeholder manager, especially governments and regulators, and – crucially – a delegator, rather than another ‘operator’ (from a much simpler age) who will likely be deluged by the scale of the task. The new CEO will also have the difficult job of modernising a now-bruised culture grown used to success without always fully understanding how that success, and therefore subsequent failures, came about. That said, the brand, positioning and underlying operations management of the business are very strong, providing an excellent platform for growth for the right management team.”

Mark Blandford, partner at Burlywood Capital

“In essence, I’m not surprised. Hills have under-performed the opportunity and have lost some good people including Andy Lee whose digital experience and investment banking background would make him an ideal candidate to replace Henderson. In other words the growth and thus sex appeal to shareholders will come from digital and with the sector ripe for further consolidation he’s capable of participating in M&A activity.”

Industry consultant, speaking off the record

“The problem is that a lot of very talented people have been leaving and it’s very chaotic internally. There’s no one there that can make a decision – they’re all too busy running around trying to keep the business solid. They’ve got a lot of problems that are peculiar to them like the technological issues around reality checks. Richard Flint is an obvious candidate but he’s so locked into his contract at Sky Bet, and CVC are planning to list the company in the next two years, so it’s unlikely he’d go. Andy McIver isn’t locked into anything and if Intertain doesn’t relocate to London he’d be available.

Simon French, analyst at Cenkos Securities

“We are not surprised by news of Mr Henderson’s departure given the operational and financial underperformance in recent quarters. This has been accompanied by a multitude of management changes which appear to have destabilised rather than steadied the ship. Shareholders will be reassured by confirmation that trading remains in line with the previous guidance but we suspect this in part reflects strong results from Euro 2016. We expect a successor with industry experience to be appointed with Henry Birch and Patrick Kennedy likely to be considered.”

Steve Donoughue, gambling consultant

“Henderson’s departure should be taken by the Board of William Hill as an opportunity to seek a new style of CEO. Henderson was not a clone of Ralph Topping but there were definite traces of Ralph about him. Both men had their merits but will unfortunately be remembered for their mistakes and William Hill’s employees and shareholders deserve better. With the industry consolidating and getting ever more competitive and with regulatory risks mounting a new broom is needed at the top, and maybe a few rungs down. William Hill has depended on its old guard for too long to fight a future war, it needs fresh blood willing to fight and most of all, it needs to be a happier place to work.”

City analyst, talking off the record

“The only surprise is that it’s taken so long for him to go as Hills has been scouring the market for a replacement for the past couple of months. That said, slightly strange they decided to get rid of him without a successor in place and Philip Bowcock having relatively little gaming experience.”