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Betfred wins auction for Tote with £265m deal | Betfred wins auction for Tote with £265m deal |
(40 minutes later) | |
UK-based bookmaker Betfred has been chosen to buy the Tote after an auction process that began in November. | UK-based bookmaker Betfred has been chosen to buy the Tote after an auction process that began in November. |
Betfred, the country's fourth-biggest bookmaker, will pay £265m for the business. | Betfred, the country's fourth-biggest bookmaker, will pay £265m for the business. |
The sale is subject to consultation with the Tote's employees and is expected to be completed in about four to eight week' time. | The sale is subject to consultation with the Tote's employees and is expected to be completed in about four to eight week' time. |
The Tote has 517 High Street shops and the monopoly to run pool betting online and at 60 UK racecourses. | The Tote has 517 High Street shops and the monopoly to run pool betting online and at 60 UK racecourses. |
The sale agreement signals the end of a 14-year attempt by governments to privatise the betting group, which employs more than 3,500 staff. | The sale agreement signals the end of a 14-year attempt by governments to privatise the betting group, which employs more than 3,500 staff. |
Betfred's main rival in the auction was Sport Investments Partners (SIP), a consortium led by the British Airways chairman Martin Broughton. | Betfred's main rival in the auction was Sport Investments Partners (SIP), a consortium led by the British Airways chairman Martin Broughton. |
The Culture Secretary, Jeremy Hunt said: "It was a closely fought contest. | The Culture Secretary, Jeremy Hunt said: "It was a closely fought contest. |
"Of the £265m in the headline price only just over £90m will end up being paid to the Treasury." | "Of the £265m in the headline price only just over £90m will end up being paid to the Treasury." |
That sale price is around a third lower than the £400m first offered by a consortium of racecourse owners in 2007. | |
That was turned down by the then-Labour government because it was backed by private equity. | |
The consortium reformed and made another offer, believed to be about £320m, which was also rejected for not being enough. | |
Another previous sale attempt ended in 2006 after the European Commission said that the price was too low and tantamount to state aid. | |
'Good deal' | 'Good deal' |
As part of the deal, Betfred will keep exclusive control of the pool betting system on UK racecourses for seven years. | As part of the deal, Betfred will keep exclusive control of the pool betting system on UK racecourses for seven years. |
In return, it has committed to paying the racing industry £11m to March 2012, with payments of £9m a year for the next six years of the licence. | In return, it has committed to paying the racing industry £11m to March 2012, with payments of £9m a year for the next six years of the licence. |
Pool betting differs from that offered by other bookmakers. | Pool betting differs from that offered by other bookmakers. |
The Tote takes a percentage of stake money placed. Of this percentage, some is used to cover the Tote's expenses while the rest goes to the racing industry. | The Tote takes a percentage of stake money placed. Of this percentage, some is used to cover the Tote's expenses while the rest goes to the racing industry. |
The rest of the stake money is paid out to winners. | The rest of the stake money is paid out to winners. |
Betfred's executive chairman, Fred Done, said in a statement: "Buying the Tote has been an ambition for years, so I am absolutely delighted. | Betfred's executive chairman, Fred Done, said in a statement: "Buying the Tote has been an ambition for years, so I am absolutely delighted. |
"The Tote is an opportunity I just could not miss. Over the coming months I will develop the Tote's relationship with the sport into a highly successful commercial partnership." | "The Tote is an opportunity I just could not miss. Over the coming months I will develop the Tote's relationship with the sport into a highly successful commercial partnership." |
The Tote's 517 UK shops will be re-branded Betfred, giving the new business a total of 1,350 betting shops in the UK, compared with leaders Ladbroke and William Hill who have more than 2,000 each and Gala Coral's 1,600. | |
Betfred wants to continue using the Tote name at the UK's 60 racecourses. | |
Track owners have traditionally supplied marketing, accommodation and sponsorship to the Tote. | |
But some are said to be less happy to provide these facilities to a private company. | |
The gambling and racing minister, John Penrose, said the government had "bent over backwards to deliver a good deal for racing". | The gambling and racing minister, John Penrose, said the government had "bent over backwards to deliver a good deal for racing". |
He added: "Most people can't understand why, in the modern world, the government should be even part owner of a bookie. So we pledged last year to end years of dithering and resolve the future of the Tote, and today we have done just that." | He added: "Most people can't understand why, in the modern world, the government should be even part owner of a bookie. So we pledged last year to end years of dithering and resolve the future of the Tote, and today we have done just that." |
The Tote was set up 83 years ago by Winston Churchill to provide a safe haven for punters, as it was controlled by the state and beyond the reach of illegal bookmakers. | The Tote was set up 83 years ago by Winston Churchill to provide a safe haven for punters, as it was controlled by the state and beyond the reach of illegal bookmakers. |