Betting Shop Media Fees
By Warwick Bartlett
In 2007 the average Independent betting shop was paying Satellite Information Services (SIS) about £17,566 a year for text services and horse racing pictures. Turf TV came along for most bookmakers in January 2008 after Coral signed an agreement over the Christmas period in 2007.
Today the average betting shop is paying £21,334 to SIS who are covering half of the racetracks they used to in 2007 and a further £8,406 a year to Turf TV who cover the remaining tracks. In all, bookmakers are paying £29,740 for a product that has gone from representing 80% of revenue 20 years ago to about 35% of gross win.
Media costs over the six years have increased by 70% at a time when inflation has been 12%.
In the year to March 2012 SIS reported a profit of £25.3 million and Turf TV’s owners Amalgamated Racing’s holding company Timeweave plc reported a profit of £7.1million.
The last twice the Minister has done so he has made reference to the cost of media to bookmakers but has maintained that it is too early to say whether this is having an effect but that he would consider it again in the future.
On the plus side it is good for future planning.
But is it commercially right or fair that bookmakers have to pay so much for a product that is in decline? Is it right that the Levy Board is not able to adjust its own expenditure to meet income?
Ralph Topping, William Hill’s Chief Executive, said in the Racing Post that whoever takes over his position in four or five years may have to consider whether live coverage of pictures in betting shops is worthwhile.
There is a certain irony to the statement because William Hill negotiated a new contract with Turf TV ahead of the due date.
Topping also mooted the idea that a charge on horse racing bets should be considered in the future to cover the cost of the product.
The world today is very different from what it was then. It is so much more competitive. For price fixing to work the industry would have to come together and agree to do it and that would be in breach of competition law. It is not going to happen.
What will happen is betting shops will continue to trade on lower margins and become ever more dependent on slot machines.
The splurge of openings on the High Street smacks of a bubble and a correction will be due in time. At that point both SIS and Turf TV will realise that current charges linked to inflation are not sustainable.