Bookies and tracks’ media rights skirmish just the start of a racing war

Boycotts, strikes and direct action in general have proved to be embarrassingly ineffectual as a way for owners and trainers to protest about prize money levels, and on the face of it at least, last week’s attempt by bookmakers Paddy Power and SkyBet to scrub an evening meeting at Bath from their websites went much the same way.

On Tuesday evening, the pair announced that their customers would not be able to bet on the six-race card at Bath, which is owned by Arena Racing Company (Arc) the following day. According to Flutter Entertainment, the parent company of both firms, this “commercial decision” had been taken “reluctantly”, and “due to the increase in costs associated with certain aspects of our horse racing proposition”.

Related: A racing certainty? What a Labour government would mean for the sport

Less than 24 hours – and one stiff letter from Arc’s solicitor – later, however, the barricades were hastily un-erected and punters were able to bet on the meeting, albeit only at the starting price returned after the race. “We’re pleased that sense has prevailed and Flutter has responded positively to our solicitor’s letter of late Tuesday night,” Martin Cruddace, Arc’s chief executive, said in a statement, and for the moment at least, that seemed to be that.

As a rule, however, multibillion-dollar global businesses with a listing on the New York Stock Exchange do not wake up one morning and suddenly decide to breach – or threaten to breach – a major commercial contract. Instead, last week’s brief spat may have been the first, apparently inconsequential, skirmish in a much more significant and yet hidden engagement between some of racing’s major power blocs – a struggle that will unfold, almost entirely out of sight, over the months ahead.

Money, inevitably, is at the root of it all, and to be precise, the annual nine-figure media rights payments from online bookmakers direct to racecourses, in return for being able to stream live action to punters.

But there is also a wider issue at play involving transparency over income streams, which has become a key focus of racing’s administrators and the Thoroughbred Group – which represents owners, trainers, jockeys and stable staff – alike.

Once, in what feels like the dark ages but was in fact only about a quarter of a century ago, racing’s income from betting was all about the Levy, the statutory payment from off-course bookmakers to the sport which is administered by the Levy Board.

Negotiations over the target amount would sometimes go on for months, and occasionally end in a deadlock into which an irritated government minister with better things to do would be forced to intervene. But once it was resolved, the headline number – racing’s expected Levy income for the next 12 months – was there for all to see.

Over the last 10 or 15 years, though, the Levy – which is assessed as a percentage of an operator’s gross profits on racing – has been overtaken by media rights payments from online operators direct to racecourses. The extent to which these payments now outstrip the Levy remains unclear – for reasons of commercial confidentiality – but Flutter claimed last week that total media rights payments are now “more than double” the Levy, which came in last year at around £105m.

It is an impossible claim to verify, but there is clearly a vast, and undetermined, river of cash flowing into the tracks, and no way for the Thoroughbred Group’s members to calculate what proportion is being diverted in their direction via prize money.

And there is, if you can bear it, a further complication. Commercial confidentiality or not, well-sourced rumours have been doing the rounds for years that Cruddace secured a much bigger slice of online turnover for Arc tracks and other parties in their media rights contract – most notably Ascot and Newbury – than its main rival, Racecourse Media Group (RMG), which is built around the Jockey Club’s 15 tracks. Unlike the Levy, payments are based on turnover, not gross profits, and there are suggestions that Cruddace hammered out a deal for more than twice the percentage that is going to RMG.

Against this background, Flutter’s brief flirtation with direct action last week could be seen as an opening gambit ahead of the renegotiation of the media rights contract, which is believed to run until 2027. The betting giant will be keen to push Arc’s percentage much closer to the RMG level, while also trying to head off any attempt by RMG to bump up its own slice to something at least adjacent to Arc’s.

This leaves Cruddace effectively fighting on two fronts as he tries to maintain the secrecy over Arc’s media rights income. He is undoubtedly one of the sharpest and smartest cookies in the racing jar, but even he may struggle to hold the line for ever.