Betfred pips SIP in race for Tote

Bookmaker Betfred has gone the distance in this long-running auction, paying £265m for the Government betting chain.

by Dave Waller
Last Updated: 03 Jun 2011
Despite being a firm favourite in the City, Betfred wasn’t ahead in this one until right at the post. But the going has finally turned good for the country's fourth-biggest bookmaker, with the Department of Culture, Media and Sport (DCMS) declaring it the winner in the race for the Tote – which the Government has been trying to offload for 14 years.

The Tote, or the Horserace Totalisator Board to give it its full name, was set up by an Act of Parlaiment in 1928 to provide a safe alternative to illegal off-course gambling and send betting revenues back to the racing industry. It now runs 517 high-street shops and has the monopoly to run pool betting online and at 60 racecourses round the country.

This latest chapter has certainly had all the drama of the Grand National. The Coalition announced its intentions to flog the Tote during June's Budget, and 18 bidders entered the traps in November. Around a dozen were still going strong in the New Year. By the final furlong it was down to Betfred and Sports Investments Partners, a consortium led by British Airways chairman Martin Broughton. The latter was said to be the favourite among the racing industry – not least said some critics because its members were being waved the carrot of guaranteed seats on the new board. But Betfred offered a contractual agreement to cap the number of job losses, and a bid that it claimed was worth £45m more to the industry over the next seven years than SIP’s.

We can imagine the Government will be pleased to finally consign this saga to the knackers yard. It’s certainly taken a while. A consortium of racetrack owners met its target of £400m in 2007, but it was declined because it was backed by private equity. Another offered £320m in 2008 but was rejected as being too low. These are different times and Betfred can be happy to have got it at a relative snip. Half of the £265m will go to the racing industry and racing charities, and the taxpayer’s 50% haul will total £90m. Betfred also offered a contractual agreement to cap the number of job losses.

The deal is set to be signed by the end of the day, but is it a good buy? It looks it. Turnover fell by 5.5% to £2.8bn last year, but operating profits improved 13% on a year earlier to £25.2m - enabling the Tote to increase its contribution to racing by 8.8% to £11.3 million. And as a regular on MT’s Top 100 Entrepreneurs list, company founder Fred Done tends to know a safe bet when he sees one…

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