ATR and UK Racing Settle Media Rights Case; Industries Look to Future

31 March 2006

A High Court dispute between Britain's two dedicated horse racing television channels ended last week when At The Races agreed to accept £1 million to settle its complaint against Racing UK. At The Races had actually sought a sum of £55 million from the 30 race courses that now constitute Racing UK after the courses bailed out of the first failed At The Races venture, but the case had not proceeded as At the Races had planned and Racing UK had launched a counter-claim against At The Races for £200 million. Racing UK has dropped its counter-claim as part of the agreement, and there is now expectation that the two companies might eventually cooperate on a project to market British racing to the rest of the world.

The first At The Races venture was a consortium composed of Channel 4, BSkyB and Arena Leisure that signed a £307 million contract with 49 race courses in 2001 with the hopes of revolutionizing the racing and betting industries. In May of 2002 the consortium debuted a television channel that broadcasted races and other content from its tracks and was free-to-view for subscribers of BSkyB.

The sole source of income in the At The Races' business model was to have been new interactive television technology that allowed viewers to bet with the Tote on races through their remote controls. Betting via interactive television turned out to be somewhat slow and unreliable at first, however, and although punters certainly embraced the vast array of racing At The Races provided, they opted to generally place their bets with Internet-based bookmakers and betting exchanges like Betfair.

Revenue figures were so lackluster that gross profit margin fell below 20 percent for 90 straight days in early 2004. A clause in the initial At The Races agreement had called for a re-negotiation of the plan if such a thing were to occur, so on March 30, 2004 At The Races pulled its broadcasts off the air.

BSkyB took the opportunity to withdraw from the consortium, and half of the racecourses withdrew to form a separate media rights company called Racing UK, which initially launched as a free-to-view channel in June of 2004 but moved to a subscription-based model charging £20 per month in October 2004.

The other half of the racecourses renegotiated business terms and eventually relaunched At the Races.

The recently settled high court case was an attempt by At The Races to regain a portion of the £307 million that it had already paid the race courses that left the conglomerate to join Racing UK.

"The case wasn't going according to plan," said Arena Leisure CEO Mark Elliott to The Guardian this week, "and a settlement was the best thing."

Moving On

Today both At The Races and Racing UK are pleased with their business models. At The Races remains free-to-view and now has multiple betting partners, including Littlewoods BetDirect, Betfair, BoyleSports, Ladbrokes and William Hill. The company also provides video feeds of its races to domestic and international clients who display the feed on the Internet, on 3G mobile networks, and in betting shops.

Meanwhile Racing UK has close to 38,000 customers who pay £20 per month, and only about 15 percent of those customers do not renew their subscriptions in any given month. Earlier this month Racing UK premiered its second channel, Racing World, which displays video of American races and gives British audiences the ability to bet on 12 American courses through a broadband betting site. The company has also entered into a venture with The Racing Post to launch Website, which provides live streams of 4,000 races a year and the ability to wager with five bookmakers for £15 per month or £1 per race. Racing UK is also involved in a 3G phone service.

"Horseracing started in the 17th century, but it could not have been better designed for the broadband and mobile market," said Racing UK's executive chairman Simon Bazelgette to The Guardian earlier this month. "Races lasting 90 seconds are perfect to watch on a phone. For two to three years we will make more from call charges than betting, but within about five years betting will take over."

Bazelgette also told The Guardian he believed Racing World could be a precursor to a single global platform that would be co-owned by racecourses in the UK, US and South Africa and promote racing around the world. He also speculated that his company's utilization of its media rights could serve as a model for other sports, particularly Olympic games.

He stated, "I passionately believe sports should get more involved in the exploitation of their rights. It is inevitable over time."

Bradley Vallerius

Articles by Bradley P. Vallerius, JD manages For the Bettor Good, a comprehensive resource for information related to Internet gaming policy in the U.S. federal and state governments. For the Bettor Good provides official government documents, jurisdiction updates, policy analysis, and many other helpful research materials. Bradley has been researching and writing about the business and law of internet gaming since 2003. His work has covered all aspects of the industry, including technology, finance, advertising, taxation, poker, betting exchanges, and laws and regulations around the world.

Bradley Vallerius Website