Paddy Power Betfair is once again facing leadership turmoil after Chief Financial Officer Alex Gersh handed in his resignation.
This comes a few months after the surprise departure of Chief Executive Breon Corcoran.
The company was forced to announce and counter-rumors made by the Sunday Times on 4 March, as the paper suggested Gersh would be stepping down for personal reasons. The company confirmed on its corporate channel that Gersh does indeed plan to stand down after six years at the firm once a replacement has been found. Paddy Power Betfair has already appointed a recruitment agency to find a successor.
Known as a pivotal figure on the board, Gersh was credited with helping turn around the decline of the company post-2011 into a “profitable beast”.
He told financial auditing business publication Financial Director how Betfair had to streamline costs – to the tune of 700 redundancies, saving £30m. At the time, the company had been labelled one of the worst-performing major tech flotations. Having worked in restructuring before, Gersh was therefore surprised when the move did not hinder company morale, but instead upped performance as “people realized that they mattered and that they had a direct line to me, Breon or Mark Brooker”.
He joined Betfair Plc in 2012 from digital payment services provider NDS Cisco, and was instrumental in 2015’s £5.5bn merger with Paddy Power, creating a lead in online gambling for the FTSE.
Gersh will stay in the £1m-a-year role until a successor is found.
Just seven months ago it was the turn of Chief Executive Corcoran to shock the betting world when he resigned in August. It was Corcoran who was credited with allowing both himself and Gersh to secure management positions in the new company.
Corcoran was vital in asking the government to review the use of Fixed Odds Betting Terminals (FOBTs), often found in their own stores. Writing to Tracey Crouch, the Parliamentary Under-Secretary of State for Sport and Civil Society, he proposed the government should limit stakes to £10 or less.
In the letter Corcoran stated that the company had “become increasingly concerned that it may fail to address the widespread unease of many stakeholders, causing the current uncertainty to persist”.
He advised that the issue had become so “toxic” that it required significant action, reducing the maximum wager to just £10 or less.
As Paddy Power Betfair operates more than 600 retail betting shops, it does means that an increase in regulation could hit the company. However, Corcoran said that lower stakes could be beneficial for the company as profits declined.
Tough tests ahead
Now the job lies with new Chief Executive Peter Jackson, who only grasped the helm in January. Tackling the government’s review of FOBTs and finding a replacement for Gersh will be a tough test for the new leader of the betting group.
With one of his first actions involving a restructuring of the firm’s senior executive team to maximize shareholder returns and focus on international growth opportunities, he will no doubt be hoping for a fresh start once Gersh’s replacement is announced.