FYI Jackson “ I’m not sure what the benefit is [for Fox] in exercising it at any point up to the day before it expires,” he said, adding that it will be an illiquid stake, as shares in FanDuel are not publicly traded. “ |
 Fox's option compounds at 5% a year. That means in 2030 price tag will be ~6 billion. FanDuel might be worth 50-100bn by then.
I'm not an accountant so I don't know which one is better. If Jackson is correct that it's illiquid asset, I think then your only option is to take cash flows asap since you can't sell your equity. (and on that note if Fox bought in early, they would have had to take their share of early losses for FanDuel. so makes sense to start buying in now when business is profitable)
Here's the full transcript from that conference:
Michael Ng: I wanted to ask about sports betting. FOX has an 18.6% option to acquire – sorry, an option to acquire 18.6% of FanDuel. And obviously, there's been a history with FOX Bet and things like that. And it feels like a feature that could be really additive to a video product. Could you just talk about how you're evaluating and assessing the opportunity in sports betting?
Lachlan Murdoch: We're still tremendous believers in sports betting. We think it's growing into a great business. It also drives engagement with sports, engagement with whether it's football or Major League Baseball or any of the sports that we proudly broadcast. So, we like it both from a television point of view and also, obviously, as an opportunity to further engage with our viewers.
I think Goldman Sachs has valued FanDuel as a sort of standalone business at $35 billion, which imputes a value of our option at about $2.2 billion. But this is an option that expires in 2030. So, we have six years to exercise that option, but we will exercise it. We're not going to leave $2 billion on the table. We think that, by the way, that option grows with value over the next six years.
And so, we've begun the process with state regulators around licensing. To fully monetize the option, we need to be licensed as a gaming operator, even with only 18.6%. And so, we've started that process with state regulators to begin the gaming licensing approvals. |
Well you can think of it in 2 ways:
Fox can wait and every year they get an even bigger equity discount, but they miss out on that years profits. But they have to get licensed so they can't wait forever. Flutter is projecting 2027 US EBITDA of 2.7bn (pre-Missouri), so that's 446m potential profits for Fox with 18.6% equity share.
It is true that if you compare DraftKings vs FanDuel, FanDuel can't keep all of its profits, so there's a discount to the company. Regardless of that, FanDuel can probably outperform DK and make up for it.
And for sure with 2bn on the line, you can spend a hundred mil or two on lawyers.
Ultimately it comes down to how Fox can improve FanDuel's performance as minority owner. |
Thanks for raising this important point Lappuliisa. The Fox situation is an annoying wrinkle as hard to analyse (with my limited skillset anyway). I often wonder whether the sellside analysts are factoring it into their models when they set their price targets (and what assumptions they are making). I simply have no idea how likely Fox are to be able to execute although I guess with a £2bn ish upside they will likely find a way. |
This explains it, an article from 13th September 2024:
Fox Corporation CEO Lachlan Murdoch (pictured) announced that the media conglomerate is proceeding with its intention to activate an 18.6% stake option in FanDuel.
According to Sportico, Murdoch valued Flutter-owned FanDuel at approximately $35bn during his appearance at the Goldman Sachs Communacopia and Technology Conference on Tuesday (10 September).
This valuation implies that Fox’s potential share would be worth around $6.5bn on the open market, compared to the $4.3bn Fox expects to pay to activate the stake initially acquired through its investment in The Stars Group (TSG).
One potential challenge for Fox is obtaining the necessary gaming operator licences.
Murdoch assured that the company is actively engaging with state legislators to address this issue, stating: “We’re not going to leave $2bn on the table.”
---
It is nice to see that they're planning to exercise that option early and that we don't have to deal with this Fox Option BS much longer.
Fox minority stake would have to imply some form of media deal between Fox and Flutter. Fox also owns 2.4% of Flutter shares. |
I noted that during the conference call Jackson was quite skeptical about Fox exercising their option. He told the analyst to "ask the shareholders of Fox". He noted that Fox would have to get licensed and get shareholder approval, and that they won't have a way out of the deal once they exercise it.
I wonder how many gambling licenses Fox would need, one for every state?
I think so, because gambling regulation is left to the states to decide.
I had always taken it for granted that Fox would exercise their option eventually. |
Thank you the white house for all the info. |
Potential takeover at Wynn. Up 10pc as an activist has just taken a 10pc stake with a view to prob bid. All helps |
Buybacks start today. Not enough per day to make much difference but useful fir giving some bigger players an exit route that avoids a 1000p drop of thrown onto a bad day at the market |
I just know there will be a note coming acknowledging my misgivings over New York’s October NFL results were, if anything, understated!! |
Overall a blip in the 50 year scheme of things and market has noted this. Good to see the scuttling and this may put off some others. This would have led to 10 options to punters falling to 2 as all others unprofitable and those 2 could have widened odds available screwing the punters and/or turnover dropping and revenue actually falling. Far too many individuals in the US not understanding the business but still having or trying to have a say (see also Texas) Why not allowed for whole pop & over 18 (or 21) like England/RoW remains beyond me. |
Great price action on the Strong results and esp good to see all regions strong after Aus having 4 of 6 quarters of decline and now showing signs of life. Re the call re Q4 results already worse than the Q3 was good. My view is that after 4 good weeks of NFL up to end Sept/Q someone decided to give say 100m of bonuses to punters that would be in play and come back to the balance sheet in Q4. 250m ahead of forecast would be just fine, 350m not needed. Unfortunately weeks 5 & 6 were the strongest of the season and punters loaded up with freebies had double the impact in week 5 and treble in week 6. Or similar. Could not have been worse timing. I get these offers sometimes and with the banks money more longshots may be selected. This time they can in. |
I always liked that word... scuttled
Today, more than ever heh |
Louisiana bill to hike sports gambling taxes is scuttled hxxps://lailluminator.com/2024/11/13/louisiana-bill-to-hike-sports-gambling-taxes-is-scuttled/ |
Having had time to review them in more detail this was a great set of results and I’m sure we are all enjoying the surge in the share price. Shame about the early Q4 NFL results more than wiping out the favourable Q3 ones at FD but we know that is going to happen sometimes and, as noted on here, Flutter has sufficient scale for it not to create too much pain. Onwards and upwards. |
wealthoracle.co.uk/detailed-result-full/FLTR/971 |
FLTR – Flutter Entertainment
4*
Flutter Entertainment posted an excellent set of Q3 numbers after yesterday’s US close, the share price has kicked on 4%+ this morning and is at new record highs. Average monthly players (AMP) were up 16% to 12,920,000, revenue was up 27% to $3,248m, adjusted EBITDA was up 74% to $450m, statutory net loss shrank to $114m, a $148m year-over-year improvement on the prior year, driven by the strong revenue growth. In terms of segments US growth...
...from WealthOracle
wealthoracle.co.uk/detailed-result-full/BAB/970 |
Flutter,firing on all cylinders. |
Flutter US revenue YTD 4.2b, DK 3.4b
Flutter US adjusted EBITDA YTD 344m, DK 92m.
I'm doubting DK 950m adjusted ebitda 2025 guidance. |
Probably not too important but did anyone understand the negative cash flow position compared to same quarter last year due to settling derivative/hedging transactions? The figure seemed massive and I wondered if they had dropped a ball. |
Regarding the share repurchase program of up to $5bn.
"The first tranche of the program will launch on November 14, 2024 on the New York Stock Exchange. We intend to repurchase up to $350m of ordinary shares through the end of Q1 2025. A further announcement will be made in due course." |
Yeah, Blackhorse should be filtered. He generally pumps his own stocks on many other stockchats.. as you can see if you look through his profile.
Revenue +6% over expectations was really nice to see as a continuing trend.
(In q2'24 they beat estimates by 6.10% [E:3.4B -> Reported: 3.61B]
"Flutter Entertainment FLUT reported Q3 adjusted earnings late Tuesday of $0.43 per diluted share, swinging from a loss of $0.10 a year earlier.
*Analysts polled by Capital IQ expected $0.23. "
"Flutter Entertainment has raised its full-year 2024 guidance, expecting Group revenue to grow by 22% year-over-year and Adjusted EBITDA to increase by 35%."
So, on both fronts- They crushed this quarter.
Well done Flutter
PostMarket update:
As of right now (14:17UTC-8)
Flut = $258.36 (+10.19) +4.11% |
Had him filtered a long time. But flutter performing nicely again |
I will assume you’re not serious Blackhorse. |
Yes hopefully all gambling stock will rise ! I think within next few years EVOK could be like FLTR type market value |
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