Q.& A. | Ralph J. Topping

17 June 2008

Ralph Topping speaks with the hardened dialect of a weathered, well-aged Scotsman -- vocal tones renowned for playing havoc with North American ears across fickle international telephone wires.

Mr. Topping, 56, rose to the chief executive's post in February 2008, though his career with William Hill, a prominent fixture on the United Kingdom's tradition-imbued betting scene, spans nearly 40 years.

He began as a "Saturday boy" at a William Hill shop around 1970, rising quickly through the ranks to become regional manager for Scotland. Mr. Topping would assume more senior roles, including separate directorships over Internet and retail operations, before joining the company's executive board in May 2007.

Following the June 2007 departure of David Harding, the company's former chief executive, Mr. Topping sat by as names like Ian Penrose of Sportech and Martin Belsham of Blue Square were touted by the British press as possible replacements.

Charles T. Scott, chairman of William Hill, told the London Times in February that the C.E.O. search was a "protracted process," but said of Mr. Topping: "It became more clear as things went on that Ralph's in-depth knowledge of both the industry and the company far outweighed his lack of experience of being a chief executive."

Six months into his tenure, Mr. Topping has taken the challenge of righting the company's struggling Internet operation very public. In separate presentations last week, the new chief met with board members, investors, analysts, and journalists to discuss Matters Online.

However, the challenges facing Mr. Topping are considerable.

The integration of its new betting platform, developed by Orbis Technology Ltd. of London, which he said is running to budget and plan. The issue of liquidity on the CryptoLogic network, on which William Hill resides via an exclusive agreement that concludes in January 2009. The issue of rebuilding its United Kingdom online market share. And finally, the issue of building its online market share in Continental Europe.

Mr. Topping addressed these matters and more in a telephone interview with Interactive Gaming News on Tuesday.

    Q: We've followed very closely the Next Generation-to-Orbis transition. Is the company still on target for a November 2008 rollout?

    A: Yes, we are. We've said we're going to be ready with Orbis on Nov. 26, 2008.

    Q: Bringing last week's presentation to analysts and journalists evinces a measure of transparency not often seen by the Internet gambling industry. What motivated you to do that?

    A: I'm conscious of the fact that William Hill trades at a discount to its principal rival, Ladbrokes. I think part of the way the company is viewed is that we are not quite shy, but we only come out once or twice a year and tell people how the business has traded rather than talk about what we're doing in the business.

    I wanted to change that perception; we've nothing to hide. The company's been around for 75 years, and by the time you get to 75, you should have a wee bit more confidence about telling people what you're doing -- I can understand if you're only 10 years old or something.

    "I've got a lot of ambitious young men working with me, young ladies as well, and we think we can be certainly one of the top four sports books in Europe within the next three to four years, easily, and that we can grow our Internet gaming side of things substantially in that period."
    -Ralph Topping

    I find it quite strange that we haven't done that. There's a lot happening in our business at any point in time, and I'm happy to have regular updates for the marketplace. We'll probably do our international business before the end of the year and let people know about where we are with that, how it's trading, how we're doing, and whatever else.

    Q: How does the company plan to go about increasing its online market share in what's perceived as a saturated European market?

    A: Well, I think that I would dispute that it's saturated. Most of the companies trading in that marketplace still show growth. It'd be fair to say that William Hill, because of the Next Generation issues, has not grown for the last two or three years. We believe that we're not getting our market share in the U.K., and there's always the question of Europe. Most of our business comes from the U.K., so we're going to be turning our eyes toward Europe.

    Q: Can you break down for me the company's current market share across its targeted territories? How strong is the company's brand on the Continent?

    A: Well, I can tell you straight away that 90 percent of our business comes from the U.K., so it's high eighties, and 10 percent -- 12 percent -- from overseas. So, it's a big marketplace for us to target.

    The brand itself is recognized to an extent in Europe. If you walked down a high street in Madrid and asked, "Do you know William Hill?", they would say "Yeah, of course we do." But the brand has a lot going for it. It goes back to 75 years; it goes back to trust and integrity, and all that lies behind the brand.

    We've seen it transfer into different products that we want to target toward different geographies. The first geographical area would be the major, major countries in Europe.

    Q: Switching gears a bit, is liquidity on the CryptoLogic network a problem for the company right now?

    A: I've talked with Brian Hadfield, who's the chief executive. Brian's a Scotsman, same as myself, and I think he's an honest guy, and he's a hardworking guy.

    One thing we have is CryptoLogic and William Hill have a longstanding commercial relationship that dates back about seven or eight years. Brian and I are committed to working together on the William Hill-Orbis platform integration, but also on resolving this liquidity issue -- it actually lies with CryptoLogic to resolve it. We speak on a regular basis, and we'll continue cooperatively and collaboratively together on this.

    But one thing you can't get away from is that when you look at the height of poker players at peak times across the major sites, it's clear that the larger operators -- I would include Playtech's iPoker Network -- continue to take share at the expense of the smaller sites and networks. So, CryptoLogic have highlighted that they intend to increase poker liquidity; they've gone out to marketplace and said that.

    But whether they are going to do that by aggregating the smaller networks and operators remains to be seen. It'll be in the execution that the interest of William Hill will come. We're keen for them to do something, but I think from the CryptoLogic side, no formal agreements have been reached as of yet.

    So, watch the space and wait and see, but it's something that naturally concerns us.

    Q: When does the company's agreement with CryptoLogic expire?

    A: The exclusivity on it expires in January, but we're committed to CryptoLogic until the following year. So, CryptoLogic will still feature as a part of our offering.

    I would stress, Chris, that we've had eight good years together and we've got a problem at the moment, but we're confident in Hadfield and his team.

    Q: During the Next Generation-to-Orbis transition -- during the years when William Hill stagnated in the online space -- what lessons have you taken away from this experience?

    A: When I became chief operations officer -- or some other weird title at that time -- it was clear to me, when I was asked to review, that there were a couple of questions I had to ask myself.

    Not only around the execution, but philosophically, would having wholly-owned software for our betting systems, would that give us problems going forward?

    I think the answer to that would be, from my perspective, yes, because we're not a technology company, we're not a technology specialist. And if we're going to keep an in-house system, not only would it be costly to maintain, but the rest for us would be substandard from an operational perspective and a competitive perspective.

    So, from my particular point of view, where we were going in terms of our trading at that time, and where we might end up by following the Next-Gen route, made it quite an easy recommendation for myself to abort the program. Thankfully, the board bought into it.

    Q: From the operational perspective, what challenges face operators like William Hill who have a long history in the land-based market but are looking to get into, and compete in, the online market?

    A: There's a number of things. We should have a perspective on this.

    It's only two years ago since we were 6 percent ahead of our nearest rival in terms of our gross wins, and 48 percent ahead in profitability. So, we did embrace the Internet very early on, way back in '97 or '98, we were very, very strong and put a lot of energy and resources into it.

    At that time, Chris, we brought people in from South Africa, from Australia, and from New Zealand, in fact, who came and worked on that part of our business, because we recognized that people from the "traditional business" -- we'll want to call it -- weren't quite the category of person we wanted.

    Now, we made the mistake -- I think a big mistake -- in bringing some more of those people into the business when Next Gen took over our lives, and we've got a bit of a challenge to get back on track there over the next nine months. But we've brought in people from outside the business, from our competitors.

    I'm spending about 60 percent of my time interviewing at the moment because you need that talent, you need that talent in marketing -- it's an entirely different skill set on the Internet as opposed to retail business. You also need a very, very strong focus on business development, which, in a mature business like our retail estate, then it's, I wouldn't say it's predictable -- but it's fairly predictable.

    So, running two businesses. Well, I've said the traditional business will be run by traditional bricks-and-mortar operators, and the new business -- the younger business -- is going to be run by people who have worked in this space and are specialists.

    So, that's a challenge for us and a challenge for the organization. You look at the reward systems, and you say, "Hold on a minute. How do you pay guys in a growing business as opposed to people who are in a mature business?" It certainly gives our H.R. department plenty to think about.

    A big challenge for us is also operating in the U.K., because we're a massive taxpayer in the U.K. We pay something like £270 million, I've calculated, annually, from all sources. That includes national insurance for staff. So, from William Hill, we collect about £270 million for the government.

    So, we've got a watchful eye on the government at any point in time, because we're heavily regulated. That's a good thing, in a lot ways, but we've got to keep our eye on the government as far as taxation is concerned.

    Q: Has the company set forth any goals for the interactive division? I know that at last week's presentation, no revenue forecast was given.

    A: One thing an old business like ours is guilty of is not having ambition -- having a perspective of the annual budget and looking at the year ahead, rather than looking further than that.

    Coming back to the Internet side of things, we've had a long discussion with the team, and many of what you guys in the States would call "beer busts." We talk often about where would like to take the business.

    I've got a lot of ambitious young men working with me, young ladies as well, and we think we can be certainly one of the top four sports books in Europe within the next three to four years, easily, and that we can grow our Internet gaming side of things substantially in that period.

    Now, I haven't given a target to the market, because I said to them I would much prefer to have a target at the end of the year, illustrating where I thought we would be going in terms of the contribution of the Internet business to William Hill's overall profit.

    So, at the minute, it's something like 20 percent, and it's where we would like to take it over the course of that three or four years, and how much of that -- where it would sit in proportion to the existing business.

Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.