Vanishing From A Screen Near You
On the stroke of midnight, before the 30th of March 2003 the AtTheRaces consortium will no longer provide racing from the three home nations on their channel. The consortium have decided to invoke a 'get out' clause in their contract which cancels their ten-year contract.
This means that viewers of the AtTheRaces channel will no longer be able to see British racing and will only be fed a diet of racing from South Africa and the United States. About the only thing that everyone in racing can agree on is that this is a total mess and a backward step and that something needs to be done.
But, as usual there are numerous groups and bodies involved in the story.
So who is involved?
At the top of the tree is the British Horseracing Board (BHB), chaired by the retiring Peter Savill. The BHB are, effectively, the masters of the racing world. A part of the BHB is the Racecourse Association (RCA) which represents 58 of the racecourses in England, Scotland and Wales.
There are 59 courses in all, the only one not to be represented by the RCA is Towcester, which is chaired by Lord Hesketh, and lies about seventy miles North of London.
Behind the AtTheRaces channel is the Go Racing Consortium; this is composed of Arena Leisure plc, Channel 4's commercial arm, 4Venture, and BSkyB. It is believed that 4Venture overpaid by outbidding against Carlton TV.
The Negotiations
On the 25th June 2001 the law firm, Denton Wilde Sapte, announced that they had helped arrange a £387m deal, for ten years, for the Go Racing consortium to show the pictures from 49 of the UK racecourses. In these negotiations were Go Racing and the RCA who worked on behalf of these particular 49 racecourses.
These 49 racecourses could be divided into two groups; the independents or belonging to one of three bodies. The first of these is the Racecourse Holdings Trust (which owns Newmarket, Cheltenham and Aintree), Arena Leisure (which owns the three all-weather courses) and Northern Racing (who have been taking over a number of courses over the country). 28 of the 49 racecourses are controlled by these three concerns.
Now, the other 10 racecourses were not impressed with the offer on the table and Lord Hesketh described the Go Racing consortium as "economic suicide" and he, along with another nine courses found an alternate media deal which avoided the Go Racing consortium.
GG Media
GG Media is owned by Lord Hesketh (talk about going it alone!) and the private bank, Fleming Family & Partners. They distributed their racing pictures on the Racing Channel, which was owned by the American sports broadcaster TRNI,, along with the racing from Ireland. Sadly, TRNI pulled the plug on the Racing Channel on the 31st of January 2003.
The Broadcasters
Apart from Channel 4 and AtTheRaces there is another broadcaster involved. This is Satellite Information Services (SIS) who own the rights for both the GG-Media, Go Racing and the Irish racing to broadcast them into betting shops.
And somewhere in all of this is BSkyB who along with SIS are taking an interest in the current situation.
Having mentioned SIS it must be stressed that SIS are not responsible for the pictures themselves; the actual camerawork is performed by RaceTech.
RaceTech
RaceTech are responsible for the starting stalls in flat and all-weather racing, they also look after the big Tote screens at the courses, the finish photography, the on-course commentary and, of course, the pictures from the courses. RaceTech then sell the pictures on to the various broadcasters, of which SIS is one of them; others include Channel 4 and the BBC.
RaceTech was taken over by the BHB in 1995 and then ownership was transferred to the RCA in 1998. Their story would stop here if it wasn't for one important factor - money. RaceTech have significant costs and as a part of the Go Racing consortium deal a good part of their fixed operating costs were underwritten by AtTheRaces. If AtTheRaces stops then RaceTech can expect to lose a good deal of money; money which it can ill afford to lose.
So, one of the big dangers is that if AtTheRace ceases then a very important part of the racing fabric could be damaged.
Other Side Effects
In recent days it has been disclosed that the betting exchanges, such as BetFair, won't have pictures into their offices as they don't have an SIS feed. Why don't they? Well, looking at the list of owners of the broadcaster it's not surprising; SIS was set up by the 'Big 4' bookmakers.
It's not a secret to anyone that the bookmakers do not like the exchanges at all; whenever there is a possibility to challenge them in the courts they do so. So, it is hardly surprising that there are no feeds into the offices of the exchanges who now are considering putting people on the courses to gather any relevant information first-hand.
The Tote and their part
The Tote, which is a government-regulated pool bookmaker, plays a central part to all of this. The long term profitability of Attheraces was based on significant turnover from interactive betting into the Tote Pools via the website. The business plan could only be described as optimistic at best. And the deal was that the AtTheRaces gets a percentage of the Tote's profits.
Technical difficulties dogged early attempts to provide a betting facility through the television. Even now it can only be described as slow and cumbersome. Added to the above is the reluctance of the ordinary punter to bet with the Tote because of perceived poor value.
Another problem with the Tote was that the margins were too high. When one placed a bet with a bookmaker one could expect an over-round in the Book to be about nine or ten percent; this would be the bookmaker's margin and everyone was happy with that. However, the Tote took a massive margin from the pool and people were discouraged from using it.
So, in order to attract more punters (and not forgetting that there is the proposed floatation on the way, so anything which attracts more trade is more than welcome) they reduced the margins to something almost approaching an acceptable figure.
Now, this is where the Go Racing consortium realised that their income was being reduced. Because the margins on the Tote was less then before the profits were less.
Now, this could be argued that this was a short-term reaction to the reduction in the Tote's margins but, nonetheless, the Go Racing consortium located the small print within their contract which stipulated that if the Tote's margins fell below 20% for more than three months then the Go Racing consortium could pull out. So, AtTheRaces gave their 90 day notice period that they were going to pull the plug and, so, on midnight after the 29th of March the screens will go blank.
The British Horseracing Board
One of the questions which has been asked of late is what are the BHB doing about this? The AtTheRaces is an important shop window to the sport and as the body responsible for racing in Britain it should be working actively to find some sort of solution.
No-one seems to be know what, if any, action the BHB are doing right now. Perhaps they are busy but to the outsider there is no evidence of this at all.
What happens next?
A couple of things need to be looked at. The first is that the Go Racing consortium will be looking for a good proportion of their £387m back from the racecourses. It is known that some racecourses didn't trust this windfall and so kept it to one side and would be able to repay it; but no-one is saying how many other racecourses are not in a position to repay and what would be the legal position.
This could be muddied by the fact that Arena Leisure are both the supplier and the customer in some cases.
The next question is that are we going to see racing on the television again on a dedicated channel?
The Go Racing consortium is certainly negotiating for a similar package with the 49 racecourses but at a lower cost for them. These negotiations have been made more difficult because the Office of Fair Trading (OFT) have mentioned that the RCA had acted in an anti-competitive manner in negotiating the 2001 contract so that means that Go Racing has to renegotiate with the 21 independent courses and the three sets of owners.
Now, this could be a case of 'divide and conquer' because the 21 independent courses won't have the collective muscle and clout which they had before when they were represented by the RCA.
In the meantime the screens will go blank and if there is a racing channel then it could be AtTheRaces again with or without all of their original investors, or it could be another broadcaster altogether.
There has been talk in the press of SIS teaming up with one of the Go Racing constituents, BSkyB, to make their own channel on a proposed Sky Racing channel which is to start in May and also of a French media company starting to show interest.
Further complications could be added by the rumour that the Racecourse Holdings Trust (whom look after some of the flagship courses) could well start their own channel.
The truth is that, at the end of the day, AtTheRaces paid too much for the TV rights in much the same way that OnDigital overpaid for the rights to the Football League. Once the wildly optimistic forcasts for betting turnover were proved to be wide of the mark, a blackout was the inevitable consequence.