British Racing rejects Coral offer after ABP row

carlleaverThe British Horseracing Authority has dismissed Coral’s offer for a flat 7.5% of its online and retail horseracing profits, labelling it an an “unrealistic realistic starting point” on the grounds that it would generate less for the sport than existing arrangements.

The latest clash between racing and the bookmakers has been caused by the introduction of the Authorised Betting Partner Scheme (ABP) – an attempt by racing to get online bookmakers to pay what it deems as a fair price for the horseracing product, otherwise they will not be allowed to sponsor the sport.

However given that horseracing won’t say what a fair price is and bookmakers, who have been paying increased premiums for media rights over the last five years, are not impressed at what is perceived as another attempt to squeeze them for money. This is on top of the statutory Levy Scheme, which currently compels betting shops to pay 10.75% on its British Horseracing business to the sport, however online business is exempt.

The Government has said it will introduce a Horserace Betting Right to deal with the issue in this Parliament, and British Racing has brought in ABP to try bring the matter to a head.

Carl Leaver, Chief Executive for Coral, sent an open letter to the Racing Post saying it would “happily” pay 7.5% of its total profits from betting on racing, whilst referring to the new scheme as draconian and a blunt tool to try and extract more funding from bookmakers. He argued that it was unreasonable in light of the increased cost of taking bets on racing, which he said, for Coral, had gone from £33m to £48m in seven years, largely due to a doubling of media rights payments.

7.5% is a halfway house between the 10.75% of betting shop profits that Coral currently pays through the levy and the 5% of online profits which it offered to pay during negotiations in October.

Nick Rust, Chief Executive of the British Horseracing Authority, replied: “Far from being draconian, ABP is a voluntary policy, and we hope that all betting operators who see value in British racing agree to come on board. Racing’s door remains wide open to everyone who wishes to come and talk to us directly. We remain firmly of the view that this issue will be best resolved through private rather than public discussion.”

Unfortunately for British Racing, Ladbrokes have waded in to defend their high street rival (and future merger partner). A spokesman for Ladbrokes said: “We believe the Coral letter presents the arguments very neatly and reiterates some of the points we have been making in recent weeks. It highlights how costs have escalated and recognises the commercial reality of today rather than the perceived injustices of the past.”

Ladbrokes is also in danger of losing its position as a sponsor at the Cheltenham Festival, if it does not achieve ABP status by March. Once again the stand off around funding of horseracing by bookmakers has become an exercise in brinkmanship, with racing ready to risk large amounts of sponsorship monies in order to force bookies to delve deeper into their pockets.

The bookmakers blinked first last time around, when Coral took an offer from the breakway LBO channel Turf TV, owned by racing, forcing the rest of the industry to follow suit. This allowed the media rights model to flourish and become an important income stream for racing from bookmakers. Not that racing seems keen to mention that in the argument over Levy payments.

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