'We bothh adt o bury the hatchet and ber ealistic tod oa deal' The day after announcing a landmark deal for the sport, BHA chief executive Paul Bittar and Betfair chief legal officer Martin Cruddace sat down and spoke to Howard Wright.
Given previous relationships., what odds would you have given six months ago about this deal being struck? Martin Cruddace (Betfair chief legal officer): I would have been a backer at about 100-1. Paul Bittar (BHA chief executive): I would have optimistically been the same, but I would have capped my bet. Six months ago I'd have liked to think we could have started a relationship but maybe not have got to this stage. How did the deal come about? Cruddace: Ultimately, we both have the same aim, taking into account we are very dependent on a vibrant and strong British horseracing product, which is in both our interests. Negotiations between the Association of British Bookmakers and racing stalled soon after the budget, and I sensed an opportunity that the 100-1 chance might just be do-able. So, with incredibly strong support from the gambling minister John Penrose, I sat down for the first meeting with Paul and Simon Bazalgette. We achieved a deal in the space of less than four weeks. The judicial review [brought by the BHA and William Hill] gave us a hard and fast deadline. It would not have been practical to continue negotiations if you were having a ding-dong in court. Ultimately we're businessmen and previous acrimony should not get in the way of a deal that's good for both sides.
Bittar: Simon and I were given the remit to discuss on behalf of racing by an internal group comprising the three major racecourse groups, the RCA, the Horsemen's Group and the BHA, which we use to discuss with government on the post-levy environment. Betfair were already making contributions, so we pulled together a package from a voluntary basis to a contractual one.
Did comments in the Betfair ad of February 26 about the BHA's tie-up with Hills and confidence in Paul Roy have an impact on discussions? Who buried the bigger hatchet? Cruddace: Settlement of the litigation has removed any threat that we would pursue the BHA for costs. I don't rein back from the frustration I had, but the great thing is there is no threat to prize-money as a result of the settlement. I still believe the litigation was not a great decision by the BHA, but that's history, and there are absolutely zero grudges, which is why I've referred to the maturity the BHA chairman has shown.
Bittar: I'm a bit of a pragmatist. From our perspective it was unfortunate at the time, but the chairman has always sought to put British racing on a more secure financial footing. Selling the deal to the BHA board wasn't straightforward but they understood that part of the package was stepping out of the judicial review process. You've got to be thick-skinned in this game. We both had to bury the hatchet and be realistic about what both sides could bring to the table to do a deal. The big ticks for racing are it provides a forerunner for moving into a commercial partnership with betting operators; it's an uplift on what we're currently getting from Betfair; it moves it from a voluntary contribution to a contractual sphere, and it places commitment on racing to work with the betting industry to provide the best possible betting product. The deal is important for the messages it sends about the way racing is going to do business in terms of commercial relationships. How will the money be paid? Bittar: Through the Levy Board. There's no guarantee about it going to prize-money but I think you'll see a very strong focus from the Levy Board in this direction.
Is this the first step in negotiating next year's levy scheme, which has to be completed by the end of October? Bittar: This establishes the first plank in the 52nd levy scheme [2013-14], which is now locked away. Cruddace: Clearly there has to be the statutory process, but negotiations can continue knowing there will be a guaranteed sum from Betfair. In effect we have settled our part of the scheme starting next April. I'll be inviting the Bookmakers' Committee to propose a scheme that says any payments made under a commercial deal are offset against those made under a levy scheme.
Will the longer-term replacement of the levy be affected, and could the deal have an impact on proposed point-of-consumption taxation and licensing of offshore bookmakers? Bittar: This deal does reflect what the government has been calling for in terms of a levy replacement, with a genuine relationship between racing and betting, although it needs to be underpinned, which is where government has a role.
Cruddace: The issues are separate but legislation will come in at the same time, so there will be point-of-consumption tax but not levy. Instead, as a condition of their licence betting operators will have to have done a deal with racing. A chain of events needs to occur but the most important step is the first one, and we believe our deal is that first step.
How will the deal affect the 2013 fixture list? Bittar: This is a product supply agreement that relates to minimum payments. If racing is innovative with its race programme and use of horse population, the targets are not that onerous. I'm not expecting next year's fixture list to look very different to this year's. The demand for fixtures is consumer driven, by the betting industry, racecourses and the media, whereas the demand for the race programme, which comes from the horsemen, sits under the fixture list. Sometimes people confuse the two and automatically assume there are too many fixtures.
Cruddace: We are not seeking any influence over the fixture list other than sharing data and being a constructive partner, but for us to meet the minimum payments we've put in the contract there has to be a certain number of fixtures, and the agreement reflects that.
CHANGING ATTITUDES THE BHA/Betfair deal is a remarkable turnaround from the situation which existed in advance of the judicial review hearing over exchange users and whether they should pay levy, with Betfair taking out a full-page advertisement in the February 26 edition of the Racing Post. Here's how Martin Cruddace of Betfair concluded his open letter to owners and trainers ...
It is important that owners [of which I am one], trainers and others within the sport are aware that the BHA, the sport's regulator, is in this unholy alliance with William Hill that will cost the industry over pounds 3m in possible prize money at a time when we all know prize money levels are under severe pressure.
It may well be that William Hill can easily pay these sickeningly large legal fees as it avoids its responsibility to the sport by refusing to pay a penny in Levy from the tens of millions in profit it makes from its online business, but the Levy Board (who have no choice but to defend the action) and the BHA cannot. In our view, it is a disgrace for the BHA to hide beneath the apron of the Company that owns Britain's largest non-Levy paying bookmaker in this way.
No doubt Racing's representatives on the BHA Board continue to believe the Chairman of the BHA knows what he is doing. It is our view that time will demonstrate the Board's confidence in its Chairman, at least in respect of this matter, to be misplaced.
I am more than happy to publicly debate any issue and the litigation with the BHA at a place and time of its choosing.
Thank you for your kind attention.
Yours Martin Cruddace Chief legal and regulatory affairs officer, Betfair
All smiles: Martin Cruddace (left) with Paul Bittar yesterday