Over the years we’ve followed the ebb and flow of the retail industry’s biggest players. There’s been a number of purchases and sales, but this latest move from Gala is possibly one of the biggest we’ve seen here. In one fell swoop Gala has sold its entire portfolio of high-street bingo halls. That’s 130 halls with more than 1.1 million members, a snip at £241m.
The halls were bought by the Caledonia investment group, whom also own stakes in other leisure industry businesses such as Park Holidays. The full details of the sale are here so we won’t go into detail on the background of the story, but look at some of the potential implications and speculate on potential issues.
Interestingly, the online arm of the business has not been sold. With Caledonia looking to expand the retail space into online, as the report says – to “encourage people to interact with the retail bingo offering with smartphones and iPads”. So what exactly does that mean, people interacting with live bingo sessions at clubs as opposed to a separate online experience? I can see some traction and possibilities there, but is it really such a big money spinner as to make you not try to secure the online Gala Bingo brand as well? I suspect not.
And of the online Gala Bingo, what will happen when the clubs are under separate ownership, will they maintain ties to the club events as they currently do? Once again I suspect not, in fact, if I was Caledonia, there’s a way they could effectively steal the a big chunk of the userbase of Gala Bingo’s online offering for themselves, circumventing the need to actually own GalaBingo.com and all its associated assets.
How so? Well, if Caledonia chose to, they could rebrand and rename their retail clubs, then direct retail club members to a new online service for what ever the renamed Gala Bingo retail clubs are called. With the shrinking profitability of the retail sector, it could be a sure fire way of making profit from the current Gala Bingo online offering without actually owning that arm of the business. At the very least, it could hurt Gala online by at least diluting the player base with this hypothetical new brand taking its place.
And what of the halls themselves? Hopefully we won’t see any more closures, but I suspect there may be some down the line. My understanding is that Gala have traditionally had higher financing costs for their halls than rivals Mecca. Where Mecca owned the bulk of their halls from the cinema days, Gala were either leasing or buying up properties and as a result have had to service a larger debt with relation to their halls. I’m sure Caledonia will be taking a long hard look at which ones are on the borderline and may take action. I really hope not, especially for the staff’s sake, but I think there may be a few casualties.
On the plus side though, Caledonia might be able to bring some fresh new ideas to the table, and develop a retail bingo offering that moves Gala on from its frankly unadventurous offering. With links to holiday parks there could potentially be the opportunity to expand bingo away from the retail hall into other avenues, either under the Gala Bingo brand or a new one of Caledonia’s choosing.
There’s a lot of speculation here on my part, and I would like to stress that these are my thoughts on the sale rather than an actual statement of fact. With Gala looking to merge with Ladbrokes, there’s a whole lot of interesting stuff set to happen the next couple of years. This sale will have some major implications and practical challenges, which we will continues to watch with interest.
Despite people trying to write off the still buoyant retail sector, it continues to deliver the majority of the UK’s bingo players with their platform for the game, despite what online bingo and its pundits might want you to believe. I think Caledonia’s willingness to invest in Gala Bingo just goes to prove there’s still a lot of life left in retail bingo.