Racing: The Friday interview: Dermot Desmond: Im global and you could say I reside on the internet. I think about Betdaq every morning when I get up, and every night when I go to bed - it means that much; The Friday interview Jim Cremin talks to publicity -shy Dermot Desmond, the racehorse owner who admits to little interest in the sport but is passionate about the betting exchange he founded.
DERMOT DESMOND is a fabulously rich, urbane and courteous man with one loathing in life - journalists. So it came as a surprise about a month ago when he let it be known he would consider an interview.
Surprise understates it. He thinks journalists are lazy, manipulative and write to a pre-conceived agenda. ``You don't understand business, don't do the research, never admit mistakes and want to create controversy,'' he grumbles. Ouch.
Then again, Desmond has an agenda of his own. He owns Betdaq. In fact, it would be fair to say he loves Betdaq - a company that is a distant second to betting exchange market-leader Betfair.
He had been persuaded that it was time to break his own cardinal rule, talk to the wretched press and start building improved awareness.
A couple of weeks later, and my mobile rings. It is Desmond; he says he has a slot available in three days' time - ``could you be at London City Airport for an 8.30am flight to Dublin?'' This is tempting because it means he will probably talk to me, uninterrupted, throughout the journey.
You would expect a PR assistant to be arranging these details, but since Desmond doesn't do PR, he doesn't need anyone like that. His opulent lifestyle becomes clearer when, after my agreeing and saying I'd arrive to check in at 7.30am, he explains that isn't necessary.
``It's a private jet, be there ten minutes beforehand.'' And not only does he own the jet, the entire airport is his, too. Seated in facing soft-leather armchairs and sipping tea served in a china cup as his plane takes off, this is as far removed from flying economy as staying in a T ravelodge is from Desmond's Sandy Lane Hotel in Barbados.
But a few minutes into the flight, you feel that if he could have escaped - or more likely, have me parachuted out - it would be far more preferable than continuing.
He particularly hates discussing his wealth, partly for fear of being seen as boastful, but mainly because he believes it to be nobody's business except his own.
He glares at one of his aides when I ask him about the 34 golf clubs of which he is a member.
``That sounds excessive,'' he admits sullenly, then turns it into a joke about the number of clubs in a bag - probably a regular defence mechanism.
Golf is his escape, and his favourite clubs include Sunningdale and Portmarnock. A nine handicapper, he says: ``It's my primary recreational love.''
He agrees he is not really interested in horseracing, although he won an Irish National with Commanche Court and has eight horses, with Ted Walsh, Charlie Swan and Edward O'Grady.
He gives the impression it is something he feels he should be doing, as his close friends J P McManus and John Magnier enjoy the sport so much.
GIVENDesmond seems to have as many houses around the world as he has golf clubs, just where is home? ``I'm global, and as to where I reside, I suppose you could say I reside on the internet,'' he says. ``I have offices in many different places, but where do I hang my hat? Dublin.'' That's where his wife Pat and four children live.
The Irish capital is also home to 140 Betdaq staff, and there's another 28 in London - including a good number famously poached from Betfair.
It's halfway through the flight and Desmond finally begins talking about Betdaq, intending to prove to anyone interested that he and his venture are there for the long haul. There seems an element of Sheikh Mohammed about him - the same pride and determination, and, of course, the money!
He is frustrated Betdaq is not where Betfair is today. ``My idea for it was born out of stockbroking and currency trading,'' he says. The potential seemed obvious.''
But, with frankness, he says the technology should have been better, and that it was both too sophisticated and inflexible.
However, he adds: ``All that has been resolved - our site is good and the business model works. Punters love it. It is the future.''
For such an obviously busy man, it is telling when he admits: ``I think about Betdaq every morning when I get up, and every night when I go to bed . . . yes, it means that much.''
He accepts Betfair has the brand leadership, but his plan is to make Betdaq an `own' or `white label'. He points to the recent deal in which Channel 4 Racing now has its own exchange.
``We are the outsourcing exchange company for C4, and we also have others abroad, including one with casino-on-net [888.com], and are talking to UK bookmakers as well.''
Desmond is particularly encouraged about that, and also a Far East relationship he has developed with Larry Yung's CITIC P acific conglomerate, in which the Chinese government is a major shareholder, and involves a Macau-based betting exchange.
This is a joint venture, which trades through abex88.com - standing for Asian betting exchange; 88 is a lucky number for the Chinese.
He says: ``Betdaq is a global betting technology business and that is what we are providing, our technology on a partnership basis with people who have the brands and the local expertise.
``What we want to offer is total support, give speedy access to and improve our existing liquidity, but also allow partner companies, if they wish it, complete control over their own client lists. We're not trying to take on the gambling giants, but allow them a tool to facilitate a cost-effective offering of their own working exchange to their clients.''
Desmond says Betdaq already has many high-rolling punters, especially from the Far East on football, and an advantage is having Pat Flanagan, who used to head up Ladbrokes' secretive Gibraltar operation, as his MD for Asia Pacific.
There is plenty of informed opinion close to hand, with Desmond also in partnership with Justin Carthy of Chronicle Bookmakers, an aggressive Irish bookmaking firm with racecourse pitches.
ALTHOUGHBetfair has moved away from seeding its own markets - and it seems likely that practice will be restricted under planned gambling legislation - Desmond says Betdaq has created a separate company, Exchange Trading Strategies, to trade markets whose aim will not be in making money, but in kickstarting trading while avoiding any financial conflict.
``In any case, there is ample reassurance for punters, '' he says. ``We put up a $10 million bond right at the start, long before anyone started getting worried about Sporting Options.''
Desmond accepts Betdaq, which takes markedly lower commission than Betfair, is not profitable yet and has cost him a fortune - but believes the medium-term prospects are encouraging.
He is particularly excited about the increasing sophistication of mobile phones. Arguing that the world will go wireless, and that fixed-line operators are dinosaurs, he says: ``This is the untapped market for exchanges and where potential `white label' partners will be interested. They will want to offer brand loyalty across all mediums, and not allow punters to desert to Betfair.''
Desmond admires what Betfair has achieved, but there remains a difference in tone from the market leader, which has gone down a total transparency route - an admirable, if also pragmatic, riposte to critics of exchanges.
Betfair won plaudits for leading the way in agreeing memorandums of understanding with sporting bodies and regulators. Betdaq has come across as more cautious, which has led to criticism that it was seeking a commercial advantage.
Desmond says that all his people have done is to insist on highlighting the privacy of clients. He explains: ``It's a matter of ensuring natural justice for everybody and I don't believe in allowing people to root around in accounts without good reason.
``Certain criteria have to be achieved before we will release names and addresses - betting exchanges have aided transparency, but there is a duty of client confidentiality, and the Data P rotection Act.
``Like Betfair, we have a good relationship with the Jockey Club, and Rob Hartnett [MD Betdaq UK] has worked hard to ensure the right balance is struck.''
Desmond has surrounded himself with top people, including Brian O'Sullivan, Betdaq CEO, and directors such as David Vivash, Tony McCabe and Flanagan.
``Our technology is now particularly flexible, especially in terms of future development,'' he says. ``I have employed quality staff who I trust - I prefer to think of them working with me, rather than for me - and we have arrangements for racecourse bookmakers that involve us offering a new system as a sort of bookmakers' co-op that encourages them to trade independently with either Betfair or Betdaq.''
DESMONDis an imposing man, and an inspirational but demanding leader.
His entire strategy is founded on taking the minority view: he believes that the majority generally get it wrong, so if you work hard enough, you can get an edge.
He is working hard, too, on trying to get Celtic, where he is a principal shareholder, into the P remiership.
I suggest he's just trying to grab some of the Sky TV income - and, unexpectedly, he grins.
``Yes, you are right. We want our share, but we do have a real value, too. Why do so many testimonials involve Celtic? It's because we're the second biggest club in the UK, Rangers are the fifth. That market share alone dictates both clubs should be in the Premiership, and it will happen.''
I ask him about racing's TV relationship and income, and he says racing needs to try to measure what it gets from the arrangement.
``Take C4,'' he suggests, ``they market and publicise racing expertly, but you cannot compare racing with football and the payments it gets. That's a global sport and brand. It's hard to see Uttoxeter in Shanghai.'' It seemed a polite way of saying racing should better acknowledge the TV exposure it receives.
As the plane turns towards Dublin Airport, Desmond visibly sighs with relief. Almost over! We chat about his other interests. He is proud to be chairman of Respect, set up by the Daughters of Charity of St Vincent de Paul to develop services to people with a mental and physical handicap.
Desmond talks with compassion about brain-damaged children born to drug addicts.
When it comes to hobbies, if you discount Betdaq, golf towers above everything, but he loves an eclectic mixture of art - he buys for pleasure rather than investment - and is a true Celtic fan. ``It was founded by Irish immigrants, it's a club I supported as a kid, but we don't throw money at the players,'' he says. ``My task is to ensure its success without having a big daddy.''
P reparing to land, I ask him about the Rock Of Gibraltar dispute. Being a Manchester United shareholder means he knew all the parties well and was able to arbitrate a solution.
He says: ``I think you can put that all down to a misunderstanding.'' He smiles and gives the tantalising impression there is a lot more to be said - but he is not going to reveal anything else to a journalist. He has had to swallow some extremely bitter medicine, just talking to one for an hour.
That alone is a measure of how important Betdaq is to him; Betfair, and others, would be wise not to underestimate his commitment.
DERMOT DESMOND, 54, was born near Macroom, County Cork. He made his fortune in moneybroking and through timely investing, particularly in and out of technology.
A senior director of Celtic, with a 20 per cent shareholding, and also a Manchester United shareholder, he is chairman and sole owner of the secretive International Investment & Underwriting Ltd (IIU), which he founded in 1995. It specialises in equity investments - with 40 or so in various companies - plus underwriting, fund management and capital markets trading. It is based in the International Financial Services Centre in Dublin - the 1987 establishment which was his brainchild and of which he is particularly proud. It has revitalised the once intimidating Dublin docks area, in a similar way Canary Wharf has revived east London.
Betdaq, and Daon, his biometric company that leads the way in security areas such as iris recognition, are also based there. They are housed in a former warehouse where his father was once a Customs and Excise officer. As well as owning London City Airport, he is also a partner in the Sandy Lane Hotel Barbados with John Magnier and JP McManus.
According to a recent football rich list, he is in third place and worth pounds 850m - more than Mohamed Al-Fayed, David Beckham, Martin Edwards, Freddie Shepherd, Sir Jack Hayward and Sir Alex Ferguson put together!
He is behind only Roman Abramovich (Chelsea) and Joe Lewis (Spurs and Rangers).
Soc cer magnate with a knack for making t imely investment s
Dermot Desmond relaxes with a game of golf, ``his primary recreational love''. With a handicap of nine, he finds the sport an escape and is a member of 34 clubs
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|Publication:||The Racing Post (London, England)|
|Date:||Jan 7, 2005|
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