4th of July 2012 Author: Glo Wood
Betfair will pay British Racing 10.75% of all revenues on the sport from its UK customers
Betfair's announcement about inking a five-year GBP 40 million commercial deal with British Racing has come under the spotlight in the wake of recent news that this company is to clash before the UK courts with its major competitor William Hill plc following the latter's bid to get Betfair contribute to the Horse Racing Levy.
British Racing comprising British Horseracing Authority (BHA), the Racecourse Association and the Horsemen's Group signed the deal with the bookmaker perceived by the wider public as a landmark agreement.
As per the agreement, Betfair will pay British Racing 10.75% of all revenues on the sport from its UK customers plus substantial guaranteed minimum payments.
British Racing undertook commitments in relation to these minimum payments that ensure an annual minimum number of fixtures, at the same time Betfair's betting data will be used for constructing a fixture list to ensure optimised British Racing's attractiveness as a betting product for punters, the racing industry and betting operators.
"This deal is a genuinely historic moment. For the first time, British Racing and Betfair have proved it is possible for us to work together on a truly commercial basis. Of course it has not been easy but the end result completely justifies all the hard work. We hope that this marks a new era and call on other betting operators to adopt similar agreements to help ensure a strong, healthy and vibrant horseracing industry in this country,' said Martin Cruddace, chief legal and regulatory officer at Betfair.
Paul Bittar, chief executive of the British Horseracing Authority, led Racing's negotiations together with Simon Bazalgette, group chief executive of The Jockey Club.
"We are delighted that we have been able to reach an agreement with Betfair, one which represents a landmark for both the racing and betting industries. It brings many benefits, including substantial and increased guaranteed funding as well as importantly providing certainty for the sport in relation to Betfair's contribution. We hope that similar arrangements with other betting operators will follow,' Bittar said adding also that:
"This agreement has required a high degree of co-operation both within Racing, with all the major organisations closely involved in negotiations, and of course with Betfair, who have shown great commitment in their intent to be a constructive commercial partner with our sport.'
In the end, Bittar concluded "We firmly believe both in the value of British Racing as a product and the need to work closely with the betting industry for our mutual benefit. Government has committed to bringing forward proposals to address the long-standing and damaging flaws in our current funding mechanism. We continue to engage fully in this process, but in parallel British Racing also seeks long-term commercial deals such as this to assist in the transition to a wholly commercial future."
John Penrose MP, Minister for Tourism and Heritage at the Department for Culture, Media and Sport also commented in favour of the whole deal.
"The Government has always believed there should be a commercial relationship between British Racing and betting operators and I pay tribute to all parties for bringing about this deal. Betfair's willingness to be the first operator to do a deal is impressive and admirable, as is the commitment of Paul Roy and Paul Bittar's team at the British Horseracing Authority, without whom the deal would not have been possible. I hope others will follow swiftly in their wake," Penrose said.
Betfair's current annual voluntary Horserace Betting Levy payments will be replaced by this five-year agreement to take effect from the 51st Levy Scheme covering 2012-13.
Betfair's upfront Levy payments of GBP 6.5 million for 2012-13 will be offset against payments due as per the new commercial agreement.
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