Amaya Trimming 'Dozens' of Staff2 years ago
Amaya Gaming has announced it is trimming its staff numbers by “dozens” and moving some staff out of London to more tax-friendly surroundings like the Isle of Man. But the announcement, in addition to recent changes within the company, has led to speculation in the poker world that Amaya could be suffering problems. Amaya have quickly reassured the media and their shareholders that this is not the case.
Whenever jobs are lost it is, of course, extremely stressful for those involved, even if some of the staff find other work elsewhere and suffer no actual loss in income. For us commentators on the outside, this also raises the question of whether this announcement masks the first knockings of real problems for Amaya. If Amaya got into trouble and PokerStars –the current global leader in online poker by a vast margin, in terms of player pools and revenue– was seen to be struggling despite their size and success, this would paint a very grave picture indeed for the future of online poker. If nothing else, the poker world is sensitive to sudden shocks given its recent history.
But are we overreacting? We know that Pokerstars and Full Tilt recently merged and, at the time, this was stressful and caused uncertainty for their players while the challenges of integrating the player pools and the software were dealt with. It was announced, at the time, that the merger would be done in stages, and it was always going to be the case that Amaya took on staff that were doing similar jobs. There would naturally be some “wastage” in terms of voluntary redundancies or retirements, and some people would be offered roles elsewhere in the global set-up. Amaya stress that the new announcements, which must be made public due to Amaya’s status as a globally traded company, are just the latest step in the corporate journey they continue to tread as the company continues with its restructure plans.
So that’s the corporate line. Now let’s hypothesise, which is always the fun part! Heath Cram, their Director of Sports Business Development & Operations left the company after 10 years service. It was reported this was in no way associated with the restructuring but it does deliver a further corporate blow to the company that has already had to appoint an interim CEO after David Baazov went on gardening leave when he was accused of financial insider trading, a serious criminal charge if found guilty. Baazov himself denies any wrongdoing. With Cram being closely linked with BetStars, the sports betting arm of PokerStars, this could mean uncertainty for the sports betting wing of the business, although there is no suggestion of it struggling at the moment.
Without getting too political, we must also note the politics currently in play in the UK. You will have heard all about the recent referendum that led to the UK voting to leave the European Union, a process which will probably be complete at the beginning of 2019. The referendum result hit the pound hard, and for global companies, this led to a change in their bottom line revenue simply based on the value of currency.
The shareholders of Amaya don’t care if the company makes £1 or £1 billion providing their share value increases. OK, not exactly, but you get my point that Amaya must continue to grow as a corporate entity in order to deliver ongoing dividends and growth to its shareholders. Despite Amaya’s huge size and dominance in the market, this in itself is not sufficient to be classed as a success on an ongoing basis, as crazy as that sounds. Going back to the upheaval of a CEO in peril, job losses, and a poker revenue drop of 11% in the last period, the perception of a problem can be a self-fulfilling corporate prophecy, leading to problems caused by the fear of problems. It’s all very complicated and fickle, which is why the markets fluctuate so much.
There is also a growing political flavour in the UK for a crackdown on corporate greed. The big story of the week has been SirPhilip Green’s actions as owner of BHS, which has collapsed with a pension pot black hole of £570 million, despite “distributions” (remember that Full Tilt?) to Sir Philip and his family of many hundreds of millions of pounds. Green then sold the company for £1. Green is currently at war with MPs, threatening to sue one MP, Labour’s Frank Field, for libel after a select committee report was extremely critical of his operational management.
There is no link between BHS and Amaya (thankfully) but with Brexit, a new Prime Minister and the current hot political potato of big business, the UK is currently a financially turbulent place with which to do business. Despite this, we continue to have a flourishing poker playing market and I believe this means the future is anything but bleak for Amaya. They are solvent, successful, and market leaders in their field which is a good starting point. We all know their competitors would trade with them in a heartbeat, despite any problems they may be suffering or might suffer in the future.
There may be a very logical explanation for the restructuring. Amaya no longer have a need for a dual brand strategy now that their Full Tilt player pool have been migrated into their PokerStars platform. They can now concentrate on a single brand strategy to deliver the targets their investors demand. For the geo-political reasons I covered above, it might be even more timely for them to migrate some workers out of the UK. It could be a win-win for them and I think they are just fine. I guess we can all keep watch of the Amaya share price to see if the markets agree with me.
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