New management share $30m
FanDuel founders left empty-handed in parachute deal
Nigel and Lesley Eccles: co-founders are launching new ventures (pic: Terry Murden)
The five founders in fantasy games company FanDuel have been left with nothing from the sale of the company while the managers who replaced them are sharing a $30.3 million pay-off.
Documents seen by Daily Business show that the management team brought in by KKR and Shamrock to replace the founders will receive generous golden parachute payments.
CEO Matt King, Chief Technical Officer Robin Spira, Chief Legal Officer Christian Genetski, Chief Financial Officer Andy Giancamilli, EVP of Corporate Strategy David VanEgmond and Chief Marketing Officer Mike Raffensperger share the spoils while Nigel and Lesley Eccles, Rob Jones, Tom Griffiths and Chris Stafford, as well as a number of early Scottish investors, get nothing. Mr King gets the biggest payout – $11.3m.
The document reveals that the company was sold to the US business of Paddy Power Betfair (PPB) for $465m, but this fell short of the enterprise value of $559m which was owed to preference shareholders. Therefore, no part of the consideration will be payable to FanDuel’s ordinary shareholders.
TSE Holdings, a subsidiary of PPB, now owns 60% of the company, with the remaining stock held by FanDuel stockholders in FD Holdings.
One investor described the legal settlement as “an American stitch up” while another, Kevin Dorren, tweeted: “A transaction valuing FanDuel at $465m is something to celebrate unless you are an employee or early investor!”
FanDuel was founded in Edinburgh in July 2009 and grew rapidly in the US fantasy sports industry with players regularly winning six-figure prizes. But the company became embroiled in costly legal battle with a number of states over the legality of the games. A planned merger with big rival DraftKings collapsed and the business was put up for sale.
The documents seen by Daily Business show that talks with Paddy Power Betfair began in December last year.
FanDuel’s accounts showed it made a loss in its last financial year although Nigel Eccles, one of the founders, told Daily Business in April that it made a profit in the fourth quarter.
It still employs substantial numbers in Edinburgh and Glasgow and it remains unclear what plans the new combined business has for these outstations.