Flutter boss questions Fox’s rush to trigger FanDuel option

Shares in Flutter Entertainment soared 6.8 per cent in London to a record high, leaving the company with a market value of £36.6 billion (€44 billion) as the gambling giant raised its full-year earnings target slightly.
It now sees its adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) rising by about 35 per cent — following on from a 45 per cent surge last year and 27 per cent growth in 2022.
Investors have got used in recent times, however, to the group’s bottom line being unduly influenced by the movements in the fair value of an option that Rupert Murdoch’s Fox Corporation has to buy an 18.6 per cent stake in the jewel in Flutter’s stable of brands: the fast-growing FanDuel sports betting unit. The option runs until the end of 2030.
Flutter’s third quarter was no exception, with the company recording a $121 million fair value accounting loss on the liability of the option, which allows Fox to buy the stake at a steep discount to its market value. That helped push Flutter into a $114 million net loss for the period.
One way to do away with the noise from the quarterly adjustments would be for Murdoch’s son, Fox chief executive Lachlan Murdoch, to get on with exercising the option, as he signalled he is keen to do in September.
Murdoch reckons Fox is more than $2 billion in the money on the option — with the stake said to be worth about $6.5 billion and Fox only obliged to pay $4.3 billion for it, albeit rising at an annual rate of 5 per cent.
“We’re not going to leave $2 billion on the table,” Murdoch said.
However, Flutter chief executive Peter Jackson questioned the logic behind Murdoch’s thinking when asked about the matter by The Irish Times on Wednesday.
“I’m not sure what the benefit is [for Fox] in exercising it at any point up to the day before it expires,” he said, adding that it will be an illiquid stake, as shares in FanDuel are not publicly traded. Fox also needs to secure a US gaming licence before making a move, “which isn’t straightforward”, he noted.