The last blows have been traded between the two challengers for the Tote and it’s likely to come down to points to see who’ll prevail. A deadline of 7pm yesterday evening was set so that the two bidders, Sports Investment Partners (SIP) and Betfred, could make any last minute changes. It’s thought that a decision could come as early as this afternoon.
What of those changes then! According to Sky News, Sir Martin Broughton’s SIP bid changed its offer to give the Treasury £2m up front to satisfy European state aid rules and it reportedly increased their bid by “substantially more” than that. Betfred only made subtle changes. If other reports are to be believed, SIP has plenty more reason to be worried ahead of the decision.
There is a widely held thought that the consortium has the backing of many of those who matter. It didn’t stop the Racecourse Association (RCA) putting the boot in. Sky News obtained a copy of an email sent by RCA chairman Ian Barlow, suggesting that SIP’s commitment to give 10% of the business to racing was a load of gobbledygook. The full email read as follows:
“I am circulating this latest update on the Tote to the members of the RCA Board not in our Tote negotiating team to ensure that everyone is up to speed on the latest twist in this saga. Martin Broughton phoned me yesterday to explain his revised bid and rationale which, as Nigel explains below, is being driven by the Government’s lawyers.
Under the revised SIP bid, Racing would not have any direct economic interest in the Tote although, given that the whole point of backing SIP has been to preserve the Tote as an independent business and therefore we would have no plans to realise our stake we had not factored in a potential sale of our stake nor any dividend stream in our valuations. However, I regard the voting interest and, of course, the right to appoint two directors as fundamental if we are to continue to support SIP.
Under SIP there is no guarantee that the £4.5m p.a. plus any dividends on the Racing Trust stake would find their way back to Racing in aggregate let alone, if it did so, that the current distribution of that aggregate would flow similarly to individual racecourses. It would almost certainly be different to present patterns. Finally SIP has not undertaken to absorb any VAT cost of making the £7m p.a. contractual.
On the other hand Betfred has underwritten nothing beyond the current year and his withdrawal of an enhanced offer over the previous weekend illustrated the nature of decision making at Betfred that we would have to work with.
It remains the case that each bid takes money out of racecourses (and Racing) and imposes a commercial partner not of our choice. Which makes the development of our own betting business, which Richard Fitzgerald is working on, even more important as a basis for negotiation and/or partnership with the successful bidder.
I would appreciate any comments on the latest revision to the SIP proposal. We have no similar update on whether Betfred will amend their offer.”
SIP did make a statement this morning that read, “Our proposal remains that we will give a 10% stake in the Tote and two seats on the Board to the racing industry.” It just goes to show that there’s still a long way to go before the decision is announced tomorrow and another delay wouldn’t be a big surprise.