Go Racing defeated by media rights turf wars

The deal that was meant to bring money, glory and razzmatazz to British horseracing is left in a shambles

Horseracing, the sport of kings, has been reduced to an unseemly squabble over the value of its media rights after the 11th-hour collapse of a deal that promised to transform its profile and riches.

At 6am yesterday, the sport's governing body in this country, the British Horseracing Board (BHB), and Go Racing, which had offered £307m for the media rights to racing, abandoned talks that had gone on through the night without agreement.

Arena Leisure, a member of Go Racing, has raised £85m from a rights issue to support its part of the consortium and will have to return the money if the plans could not be salvaged in a final attempt last night. However, Go Racing, which includes Channel 4 and BSkyB, was privately admitting that the deal, two years in the making, was "dead in the water".

Even Ian Penrose, the chief executive of Arena, admitted: "This deal will collapse unless there is a substantial shift.... We were a willing buyer but you need a willing seller."

After an acrimonious initial battle for the rights with Carlton Communications, Go Racing was chosen in November by the Racecourse Association, which represents the country's 59 horse racing tracks, as preferred bidder for a 10-year deal to cover the media rights to British racing. This contract was supposed to do for British horseracing what BSkyB had already done for this country's football. It was meant to bring money, glory and razzmatazz to the stuffy old world of the race track. Go Racing planned to set up a 24-hour dedicated interactive racing television channel, available via satellite or cable, and Channel 4 would support the venture through terrestrial broadcasting.

That vision now lies buried in a heap of recriminations, as the sport appears incapable of providing the united front necessary to negotiate a commercial deal. The process was even hit by allegations of corruption after Richard Johnston, managing director of a subsidiary of the Jockey Club ­ owner of several major courses ­ was found to have "inappropriately" raised with Carlton the possibility of a payment to his organisation in return for advice on bidding.

The problem with the process of selling the rights was a basic one. While the racecourses owned the rights to pictures of the races, they did not own the rights to racecard data. The courses' trade body, the RCA, was able to sell picture rights to Go Racing. But the pre-race data ­ the form of runners and riders ­ is owned by the BHB.

Crucially, the BHB was excluded from the main media rights talks between the RCA and Go Racing, which reached an agreement last month. The data was seen as very much a secondary issue, a formality, to be dealt with after the question of the pictures. Having secured the agreement of the courses, only in the last few weeks did attention turn to the data issue.

The RCA, led by chairman Keith Brown, always maintained it could deliver the data, an important aspect of the sport, but it became apparent it was in a turf war with the BHB. The £307m that Go Racing had offered as a minimum over 10 years was supposed to be divided between the courses and the BHB and the latter demanded an unexpectedly high price for the data. Eventually, Go Racing had to negotiate directly with the BHB for the data but these talks, which ended yesterday, were also doomed.

The BHB, led by chairman Peter Savill, felt aggrieved at being left out of the earlier substantive media negotiations. The BHB wanted to call the shots, insiders said, and resented being presented with an agreement to rubber stamp the deal.

The BHB has maintained that it was madness not to negotiate the picture and data rights together and that the sport was giving away potentially lucrative use of racing data and pictures on new technology, such as third generation mobile phones to Go Racing.

Mr Savill said yesterday: "We have got to get together and see how we can package these rights. Racing has got to identify the different rights packages it has.... That is what the industry has failed to do so far."

The BHB refused to agree to licence the data for as long as 10 years and Go Racing was forced, over this last weekend, to accept a revised five-year term for the rights. The remaining sticking point, according to the BHB, was a value for new technology, including "visual data" that could be used for producing animated representations of races. The BHB wanted money over and above the £307m on offer for new technology rights.

Christopher Stoddart, chief executive of Go Racing, said: "Our offer to the industry last November was for all rights, present and future. Go Racing cannot take the significant business risk of having important rights excluded."

Critics of the BHB's approach questioned its commitment to any deal with Go Racing, after Mr Savill last week publicly lambasted its offer as financially inadequate. He also said that Carlton would have been a better choice and called for the bidding to be started again. Yesterday, he spoke with enthusiasm about a new tendering process for racing rights, this time with the BHB at the centre of the talks.

"I have received three phone calls from substitute consortiums, which I'm not prepared to name, interested in developing media rights. There may also be interest from parts of the Go Racing consortium," he said.

Members of Go Racing said it was too early to say whether they remained interested. Certainly, in Channel 4 and BSkyB, the BHB appears to have antagonised two of the most powerful broadcasters in Britain. Channel 4 has said that unless it is part of a new deal which offers non-terrestrial coverage, racing will disappear from its schedules altogether.

The Office of Fair Trading, which is investigating the BHB's pricing structure for racecard information, will also take a close look at the sinking of the Go Racing deal.

The only media deal that racing has been able to produce during this whole process was a break-away rights agreement led by Lord Hesketh ­ lampooned at the time ­ between a new company called GG-Media and the 10 smallest courses.

The modernisation of horse racing is looking stuck in the stalls.