Op/Ed: Time Will Tell If Flutter Veto Is Actually A Good Thing For Racing

At the time, one doesn't know if a minor skirmish will turn out to have been the opening salvo in a protracted war or merely a here-today-gone-tomorrow storm in a tea-cup. Regarding British racing's latest contretemps, we can only guess what will follow; but it is likely that the unexpected decision by Flutter (the parent company of several major bookmaking firms including Paddy Power and Sky Bet) not to take bets on Wednesday's meeting at Bath is merely the start of a major shake-up of the sport's finances.

Flutter's decision ended up being reversed before racing started following contact from lawyers representing Bath's owner Arena Racing Company (ARC) so that the betting firms eventually accepted bets on the races at SP, albeit without offering their own prices.

Formerly, the main source of funding for British racing came from a levy paid by bookmakers via the Levy Board, calculated initially as a percentage of turnover and more recently as a percentage of profits. This levy remains but nowadays is dwarfed by the media rights payments which betting firms (and others) pay for showing the films of the races, the copyright of which is (contentiously) held by the racecourses rather than by those whose horses appear in the films.

There are two intermediaries who fill gap the between the racecourses and the betting firms. These arrange the deals with the bookmakers and collect the money, which they hand over to the racecourses minus whatever commission they pay for themselves. The figures are closely guarded but estimates of how much is paid per race go up as high as £35,000, although obviously the sum received by the racecourses is lower than the total paid by the betting industry.

In recent years, two major gripes have developed. One is held by those who provide the runners in the races, ie owners, trainers, jockeys and stable staff, who justifiably feel that too small a percentage of what the racecourses receive is allocated to prize-money. The other is held by the bookmakers, who feel that the deals which they have agreed are being constantly undermined by the dilution of the product for which they are paying. In other words, the pressure (which largely comes from racecourses) for ever more race-meetings and races, allied to a continued under-investment in prize-money, has led to an ongoing situation of more races containing smaller fields, which in turn means that the pictures which they are buying are becoming less and less useful to them. In short, the product is being diluted but the price paid for it remains the same.

On Tuesday, Flutter decided that its firms were likely to do so little business on the Bath races that it couldn't justify paying the fixed price for the pictures of the races, so it would not buy them and would not take bets on the races. ARC's lawyers intervened to point out that Flutter was contractually obligated to buy the pictures so the decision ended up being reversed, but that does not change the overall situation. The contract will in time come up for renegotiation and renewal, and Flutter's dissatisfaction remains.

What does this mean for the sport in the future? The obvious answer might be that it is bad news because it is likely to lead to reduced media rights payments which might in turn translate to reduced prize-money. However, that might not necessarily be the case.

Earlier this year, irritated by repeated calls from racing professionals for some transparency over the racecourses' use of their income from media rights payments, ARC boss Martin Cruddace, seemingly frustrated at what he saw as outsiders sticking their noses into his business and telling him how to run it, vented his frustration by saying that “the fixation on media rights is economically illiterate”. That comment has not aged well because it is now apparent that media rights payments are a major concern not only among racing professionals but also among those who pay the money, ie Flutter and the other betting organisations. It is said that he who pays the piper calls the tunes, so Cruddace will not be able to keep brushing queries aside and media rights' details will not be able to be kept out of sight and out of mind indefinitely.

On Wednesday, a spokesman for Flutter stated, in answer to questions from the Racing Post, that “we (Flutter) will continue to seek innovative ways to understand how our significant investment can have the greatest impact on growing UK racing over the longer term.

“The industry needs to have a conversation about media rights given total payments from operators stand at more than double the horserace betting levy – and there is little transparency over how much of that funding flows back into this great sport.”

'Horsemen' have been concerned for a long time that too many racecourses appear to have been favouring short-term profit over investment in the sport (via prize-money as well as other ways of promoting racing's long-term health) to ensure that the 'racing product' remains appealing.So far, racecourses have been able to shrug any queries aside. Now that a major payer of media rights money has come out and echoed these concerns, the matter can no longer remain unaddressed indefinitely. That may turn out to be good news for racing. Only time will tell.