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Betfred wins auction for Tote with £265m deal | Betfred wins auction for Tote with £265m deal |
(about 2 hours 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, which is paying £265m, said it would look at ways of expoiting the public body's commercial potential. | |
Horse racing will receive £90m from the sale and £90m will go to the taxpayer. | |
Betfred will take over the Tote's monopoly on pool betting at 60 UK racecourses and online, and will rebrand the Tote's 517 High Street outlets under the Betfred name. | |
The new business will remain the country's fourth-biggest chain of betting shops with a new total of 1,350 outlets, behind leaders Ladbroke and William Hill who have more than 2,000 each and third-placed Gala Coral. | The new business will remain the country's fourth-biggest chain of betting shops with a new total of 1,350 outlets, behind leaders Ladbroke and William Hill who have more than 2,000 each and third-placed Gala Coral. |
The sale is subject to consultation with the Tote's employees and is expected to be completed in about four to eight weeks' time. | |
The initial agreement signals the end of a 14-year attempt by governments to privatise the betting group, which employs more than 3,500 staff. | The initial agreement signals the end of a 14-year attempt by governments to privatise the betting group, which employs more than 3,500 staff. |
Betfred has pledged to keep job losses for the next 12 months to less than 150 of the 9,000 headcount for the new combined business. | |
Betfred's main rival in the auction was Sport Investments Partners (SIP), a consortium led by the British Airways chairman Martin Broughton, which was the preferred option of many in the industry. | Betfred's main rival in the auction was Sport Investments Partners (SIP), a consortium led by the British Airways chairman Martin Broughton, which was the preferred option of many in the industry. |
The Culture Secretary, Jeremy Hunt, said: "It was a closely fought contest." | |
Fourth attempt | Fourth attempt |
The £265m sale price is about 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. | 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. | The consortium reformed and made another offer, believed to be about £320m, which was also rejected for not being enough. |
An earlier sale attempt ended in 2006 after the European Commission said that the price was too low and tantamount to state aid. | An earlier sale attempt ended in 2006 after the European Commission said that the price was too low and tantamount to state aid. |
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 bulk of the stake money is paid out to winners. | The bulk of the stake money is paid out to winners. |
Commercial | Commercial |
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." |
Betfred wants to continue using the Tote name at the UK's 60 racecourses. | 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. | 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. | But some are said to be less happy to provide these facilities to a private company. |
Industry commentators gave the deal a guarded welcome. | |
Paul Roy, chairman of the British Horseracing Authority, said the industry would do its best to work with Betfred. | Paul Roy, chairman of the British Horseracing Authority, said the industry would do its best to work with Betfred. |
"Our support for the SIP bid has been well documented and naturally today's announcement was not our preferred outcome," he said. | |
"But we will now work with Betfred and the government to ensure their commitments are delivered upon, both in relation to the Tote and other areas of industry reform." | "But we will now work with Betfred and the government to ensure their commitments are delivered upon, both in relation to the Tote and other areas of industry reform." |
Stephen Atkin, the chief executive of the Racecourse Association, said taking over the Tote would be a difficult task. | |
"Racing's customers, the punters, see it as racing's bookmaker and I think one of the challenges for Betfred - which again is a company that I do respect - is to convince punters, as well as racing, that he's going to run the Tote for the benefit of racing as well as for the benefit of his own business." | |
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. |