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Horse Racing: Deadline extension could be key to Tote sale.

Byline: Andrew Scutts

HOPES of the Tote being sold to a racing industry consortium could hinge on the government agreeing to extend its end-of-August deadline for the consortium to submit an offer, writes Andrew Scutts.

The value put on the Tote by Price-water house Coopers, the accountancy firm appointed by the government to determine its worth, and the means at the disposal of the consortium - comprising Racecourse Holdings Trust, Northern Racing, Arena Leisure and up to 40 individual investors mobilised by the Racehorse Owners' Association - does not yet match up.

A report in yesterday's Sunday Telegraph claimed that pounds 400 million is the minimum the government is seeking from the racing consortium, but it is understood that it may be prepared to accept less, as the Labour Party made a manifesto pledge to sell the Tote to racing to aid its future funding requirements.

In addition to arguing summer holidays pose a logistical difficulty in putting together a proposal by the end of the month, the racing consortium could lobby the government for more time by seeking clarification about whether the PricewaterhouseCoopers valuation includes the Tote's existing debt or pension fund liabilities.

Yet even if the deadline is extended, time is ticking away for the consortium to submit an offer the government deems viable.

Chris Spencer-Phillips, heading the ROA's Tote Initiative Project, claimed in last month's Thoroughbred Owner & Breeder magazine that pledges from "30 major investors with an interest in racing" had been secured, and that the ROA was "well on the way" to meeting its pounds 40m-pounds 50m target to acquire a stake in the Tote for these investors, alongside the racecourse groups.

However, adding all the financial pledges together still leaves the consortium shy of the reported pounds 400m valuation.

The government has tried to persuade the European Commission that a subsidised sale would not contravene state aid rules, but the argument was rejected.

A spokesperson for the Department of Culture, Media & Sport confirmed to the Sunday Telegraph: "We're in discussion with the racing consortium about the sale of the Tote at market value."

Should racing fail to come up with sufficient funds, the government would put the Tote up for auction, in which case many private equity houses and gambling groups could be interested, including the Gala Coral Group.

Given the number of betting shops each of the big three bookmakers own, Coral could yet come to racing's rescue by purchasing the Tote's 540 shops and 'gifting' the pool-betting side of the operation to the racing industry.

Britain's two largest bookmakers, Lad-brokes and William Hill, would be unlikely to buy the Tote's shops because of competition law but, with 1,403 shops, Coral have scope to add to their chain.
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Title Annotation:Sports
Publication:The Racing Post (London, England)
Date:Aug 14, 2006
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