President’s blog

By Paul Dixon

Time to find a proper new home for the Tote

January 2010

It is no surprise the Department for Culture, Media and Sport, under whose auspices the sale of the Tote will fall, has sent out a clear message that racing must not repeat the confusion and wrangling that surrounded the industry’s previous attempt to buy the Tote some three years ago.

Not only is the ROA Council fully supportive of this, but it also wants a clear understanding that, if racing is successful in acquiring the Tote this time round, its ultimate owner should be Racing Enterprises Limited. As REL is the only body in racing with a commercial remit that is truly representative of the whole horseracing industry, this is an entirely logical conclusion.

Where else would the Tote sit if acquired by racing? Certainly not within the British Horseracing Authority which has been set up as a governance and regulatory body and therefore has a highly questionable part to play within the commercial side of racing. Certainly not within the Racecourse Association which, as the representative body for racecourses, is acting for only half of the racing industry. And certainly not within any one of the major racecourse groups which could not prevent vested interests coming into play however even-handed they tried to be.

Now here we have to draw an important distinction between how racing goes about purchasing the Tote and under whose control it eventually falls. There are a number of important aspects to this process. Dealing successfully with a government department takes time, know-how and usually works best when, to an extent, relationships are conducted on a personal level. It is also self-evident that raising substantial sums of money on the financial markets requires experience, as does structuring a deal that minimises both risk and interest payments.

Racing is not short of clever and experienced people who between them could make the Tote deal happen. The BHA Chairman, Paul Roy, is an obvious choice to lead this initiative. Paul should be given the support of racing to take on this task on the understanding that the Tote’s eventual owner will be REL, a body made up of horsemen and racecourses in equal shareholding. Any other way is likely to lead to discontent, in-fighting and a complete turnoff for whichever government ends up dealing with it.

The question as to what structure sits below REL as an operating board can be left for another day. Of more immediate importance is defining exactly what racing would be buying. The current thinking is that racing should only really be interested in acquiring the exclusive pool betting licence along with the associated infrastructure and technology. But there are, of course, several possible routes by which this could be achieved and we should rule nothing out at this stage, not even the initial purchase of betting shops if the government insists on selling the whole business as a package.

I continue to hear arguments from the racecourses that their close relationship with the Tote amounts to their having an “investment” in the organisation and this somehow justifies their having a greater part of the action when Tote privatisation eventually occurs. The truth is, of course, that racecourses receive rent from the Tote that collectively amounts to £6m a year and their universal presence at every course and fixture means this is often a “loss leader” for the Tote from which the racecourses alone receive benefit. Leaving that aside, it is the horses that drive betting and the “investment” of those connected with the horses must receive equal recognition.

It is now the co-mingling of international betting pools which holds the key to driving higher Tote revenues. The future lies in international business rather than domestic racecourse business and this is already seeing the Tote’s pool side registering very healthy gains.

This is certainly not intended as a rant against either the racecourses or the Racecourse Association who, in Ian Barlow, have a very clever and much-respected new chairman.

It is, though, a warning to the whole industry that the scourge of factional interests must not be allowed to linger on from what we hoped was a bygone era. It is recognition that British racing is now facing a significant income decline, that the Tote represents one of the few real opportunities for us to reverse this decline and that in REL we have the perfect home for it.

We must now go to Government with this united message.