by Stephen Dwyer
You have to feel sorry for Ivan Yates. Elected a TD at just 21, he served in the Dáil for 21 years.During his tenure he was minister for Agriculture and dealt with the BSE crisis. When he was 28, Yates, along with his wife, Deirdre Boyd, established Celtic Bookmakers.
From the time Celtic opened their first bookmakers premises at Tramore in 1987, the business would expand rapidly. At its peak, 300 staff would work between 60 shops. Now it owes €6 million to AIB, €200,000 to the Revenue Commissioners and the Yates faces financial ruin.
Of the €6 million debt owed to AIB, €5.1m is backed by a personal guarantee in Yates's name. If this debt is not repaid, all of Yates's assets, including the family farm at Enniscorthy and a house he built for his 78 year old mother are liable to be sold. AIB may even be able to take his €49,000 a year ministerial pension. It is a harsh reality but one that he has taken on the chin.
A current snapshot of Celtic shows that the business operates 47 shops in Ireland. Celtic made a loss of €1.5 million in the year to July 2010.
How is this case you might ask?
As with a lot of businesses, during the heady days of the Celtic Tiger, Yates expanded too fast. He bought out rival bookies at top-dollar prices at the height of the boom (he paid €5m for 10 shops in 2006). Many of these deals included “upward only” rental agreements. Exacerbating the situation, Celtic was hit with both massive cuts in consumer spending and the increase in popularity of online
gambling over the past few years.
Celtic was trying to compete in a shrinking market. The major firms of Paddy Power and Ladbrokes have the advantage of an online presence. Yates admitted that he could not develop an online presence and thus lost valuable market share.
Restrictively, the costs of setting up an online betting operation are very high, advertising and maintenance are also astronomical and this may have acted as a disincentive to set up such a service. Since 2007, revenue at Celtic has fallen by 50%, the smaller firms are exposed and at risk. William Hill are closing 20 shops in Ireland, adding to the 150 betting shops have been forced into closure over the past two years.
Like a lot of us, he thought that the growth would have continued. He over-stretched, he took a gamble, he lost and now he must pay the price.
By ways of comparison, Paddy Power was established a year after Celtic. Unlike the sole-trading Celtic, Paddy Power was a triumvirate of three bookmakers that joined together in 1988. Paddy Power now operates 212 shops in Ireland (including 3 shops at race courses) and 107 shops in the UK. Their business model was very different to Celtic and particularly evident after the emergence of the Internet. The onset of internet and betting exchanges have revolutionised the betting industry
and those that do not adapt risk being left behind.
To his credit, the former minister has provided employment for over twenty years and attempted to turn the business around. About 30 firms went bust in Ireland every week last year but Celtic Bookmakers may yet be saved. Boylesports has emerged as a possible bidder for some of the Celtic shops and perhaps jobs may yet be saved.
Admirably, amidst the walls of debt, Yates has stood up and said said that he takes full personal responsibility for the business' failure and can't blame anyone or anything else. His very words are “Let’s face up to this, deal with and get on with it”
Keen your chin up Ivan Yates. Fall seven times, stand up eight.
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