Firm runs up £140m loss for half-year
FanDuel seeking further finance amid ongoing losses
Nigel Eccles: co-founder of games company (photo by Terry Murden)
Fantasy sports company FanDuel racked up a loss of $185.6 million (£140m) as revenue fell below expectations and it fought costly battles in the US courts.
The company, which was launched in Edinburgh but is now headquartered in New York, was embroiled in legal proceedings in a number of states which claimed the business breached gambling laws.
The legal issues have now been largely resolved but the company has continued to run up huge bills and an update to the late-filed accounts for the half year to December 2015 show that it needed to raise additional finance.
It had $19.5m in cash on the balance sheet at the end of August this year and despite the injection of $26.4 million last month “this will not fully bridge the potential funding gap”.
The accounts state: “If the group is unable to obtain additional financing or the group is unable to generate sufficient cash flow from operations, the directors intend to take additional steps to improve its liquidity position through further reducing expenditures.
“However, these uncertainties represent a material uncertainty that casts significant doubt on the group’s ability to continue as a going concern, and therefore its ability to realise its assets and discharge its liabilities in the normal course of business.”
Total fees came in at $64.4m for the six-month period, compared to $87.7m in the 18 months previously.
This was a record revenue figure for any six-month period in the company’s history. However, administrative expenses rose significantly to $336m.
The accounts state that the company continued to incur losses in 2016 and in the year to date, “though on a smaller scale than 2015.”
FanDuel now operates in 40 of the 50 US states, against 45 and because of the higher than expected losses the company made 60 staff redundant in October 2016 at a cost of $1.5m and cut expenses. The group funded 2016 losses via a $20m loan and security agreement and $62.5m through the issue of convertible notes.
The highest paid director, likely to be chief executive Nigel Eccles, was paid $144,000 including pension contributions for the half-year period.
Fanduel was launched in 2009 by Mr Eccles, his wife Lesley, and their friends Tom Griffiths, Rob Jones and Chris Stafford.
Mrs Eccles is no longer on the board which was restructured following the sale of equity to a number of private equity investors, including KKR and Shamrock Holdings. This also curtailed the voting rights of the original shareholders.
The accounts note that proposed merger with DraftKings, unveiled in November 2016, was terminated by mutual agreement in July this year.
The number of active players on the platform increased to 2.2m in the half year from 1.25m in the previous 18 months.
The 2016 accounts are now also overdue. The company has stated it will be “profitable this quarter and certainly in 2018.”