It is not quite five weeks since the British Horseracing Authority announced the introduction of “authorised betting partner” status for gambling firms that pay a fair return to the sport from offshore betting turnover. Already, the pips are starting to squeak.
The Cheltenham Gold Cup and the Group One Sprint Cup at Haydock are seeking sponsors after BetFred was shown the door by Jockey Club Racecourses because the firm is not an ABP. Betfair, which is an ABP, has replaced 888Sport, which is not, as sponsor of the Tingle Creek Chase at Sandown. In Tuesday’s Racing Post, meanwhile, sources at Ladbrokes and Paddy Power were muttering darkly about their support of the World Hurdle and Paddy Power Gold Cup respectively, under a headline which claimed that “more big bookies are ready to pull plug” on major sponsorship deals.
“The Ladbrokes World Hurdle is a race we’ve been proud to develop over the past decades,” David Williams, a Ladbrokes spokesman, told the Post. “We have a bit of time on our side before a contract needs signing but we’re very clear we want to work with sports who value our sponsorship experience and credentials. There is no shortage of sports with broad appeal for sponsors like us who are eager to work with bookmakers to secure mutual benefits.”
Whether Ladbrokes would actually pull the plug on their sponsorship is debatable. If Cheltenham decline to do business with a non-ABP bookie, then it is the track that is doing the plug-pulling. All the same, for anyone looking in from the outside, this looks like just another squabble between racing and betting to add to all the others – dozens? hundreds? – down the years.
Any civil servant at the Department for Culture, Media and Sport who drew the short straw of working on the next Levy settlement could certainly be forgiven a head-in-hands moment. Racing and betting ultimately want the same thing: vibrant, competitive and compelling racing. So why, half a century after off-course betting was legalised, are they still at each other’s throats?
But this is more than just another squabble. Rather, it is the first significant engagement in a determined effort to secure a sustainable, commercial funding regime for the sport. On the racing side, it is also an impressively united effort at present, with the racecourses adamant that only ABPs will be welcome as sponsors in future.
There is a sense in which every other argument in racing, from the future of the sport on terrestrial TV to the whip rules, revolves around this one, because it is about the long-term security of the sport’s most important revenue stream. Other debates are irrelevant if racing cannot gain its rightful share of the profits from offshore betting, because all the future holds then is a slow, inevitable decline. When, or if, that share is secured, racing will have the firm financial foundations it needs, not just for the next five or 10 years, but 25 or 50.
As ever with sponsorship, a point that needs to be borne in mind as the two sides swap soundbites is that bookmakers do not sponsor races because it makes them feel like better human beings. It is promotional spend, like adverts during Channel 4 Racing or in the Racing Post, or the money spent on boxes to entertain high rollers at the major Festivals. They put the money in because, in the long run, they get even more back.
Bookmakers who do not pay anything to racing from their offshore revenue also enjoy a commercial advantage over those firms that do. The slice of their gross profits that they keep can be spent on marketing, to lure punters away from their competitors, or simply fed into their margins to keep their odds competitive, or fund eye-catching “special offers” – giveaways, in effect, to buy new accounts.
Sponsorship money is a very welcome source of income for racecourses of all sizes. What the ABP initiative seems to understand, though, is the futility of a short-term gain if it undermines the long-term financial viability of racing as a whole. It would be better to run races unsponsored if necessary – though there is a very slim risk of that at a marquee track such as Cheltenham.
Nick Rust, the BHA’s chief executive, is a key figure in the ABP initiative and, thanks to his time as a senior executive at both Coral and Ladbrokes, he has a very shrewd idea about precisely what racing is worth to the major firms. So too, incidentally, does Martin Cruddace, the man in charge of Arena Racing Company (ARC), Britain’s biggest racecourse group in terms of fixtures, who was the acting CEO of the Association of British Bookmakers until earlier this year.
There is also a potential first-mover advantage in this situation that could work to racing’s advantage. As Betfair’s swift acquisition of the Tingle Creek sponsorship showed, ABP status puts a betting firm in a strong position to pick up valuable contracts from its rivals. The first major player to break cover from among the offshore holdouts could be in a position to lock their competition out of some prime sponsorships for years to come. The Paddy Power Gold Cup – which has particular significance as the firm does not have a presence at the Festival – is an obvious example.
It is all part of the process of building up clear positives for ABP status, and quantifiable negatives for bookmakers that refuse to pay their fair share, and despite the talk of plugs being pulled, the racing side seems to be playing its hand quite well at the moment. If Paddy Power and Ladbrokes are prepared to go through with their threats to drop out of major sponsorships, it is a bet that needs to be called.
