Horseracing finds itself a valuable commodity

Teflon Corbett; IPO discrimination

And they're off. What looked to begin with as if it might be a one-horse race after the present incumbent, Channel 4, threw in its lot with Arena Leisure and BSkyB, was joined with gusto some weeks ago by Carlton Communications, which rapidly took up the running. Now the Arena consortium is back with a late challenge for the rights to screen British horseracing and as they approach the finishing line, it's neck and neck.

And they're off. What looked to begin with as if it might be a one-horse race after the present incumbent, Channel 4, threw in its lot with Arena Leisure and BSkyB, was joined with gusto some weeks ago by Carlton Communications, which rapidly took up the running. Now the Arena consortium is back with a late challenge for the rights to screen British horseracing and as they approach the finishing line, it's neck and neck.

That a wet Sunday afternoon at Doncaster races could excite so much interest must surely come as a surprise even to the most passionate devotees of the sport. Some horseracing, notably the Derby, Ascot and the Grand National, attracts mass TV audiences, but the vast majority of it does not.

Even so, the TV rights to Britain's 59 racecourses are being hotly contested and the British Horseracing Board suddenly finds itself being lovebombed from all sides. At present, the terrestrial TV rights are sold for just £6m a year. On top of that, the racecourses get £15m a year from satellite broadcasts to betting shops.

The current round of bidding promises a step change, to perhaps as much as £75m a year or more for the terrestrial rights alone. Both bidders believe that interactive TV makes possible a big additional revenue stream from TV rights not previously available - that of online betting. It is this, as much as the traditional value of the rights, that is generating the interest.

As things stand there's not much between the two bids, notwithstanding Arena's claim yesterday that its offer would be worth £750m over 10 years. The two cash bids are essentially the same. Arena promises £320m and £80m of marketing; Carlton is offering £350m and £50m. The remaining £350m of Arena's headline figure is derived from an assumed share of revenues from online betting. Carlton dismisses these assumptions as probably too optimistic, but insists if the same parameters are applied to its own profit-sharing proposals, its bid would be worth more.

In the absence of clear ground between the two financially, the British Racecourse Association will be forced to fall back on other criteria. In this department, the Arena consortium suffers from one obvious handicap. It already owns seven racecourses, an apparent conflict of interest which may be a problem for some rival racecourse owners.

Both Arena and Sky also have their own online betting operations already. Given the challenge that interactive TV betting is bound to pose to traditional high street betting, that could be a problem too. A stewards inquiry is just what the racecourse owners want least. At the risk of mixing our metaphors, they'll be praying that one of the two eventually lands a financially winning punch.

Teflon Corbett

Travelling somewhere by train this weekend? Don't bother. Two weeks after Hatfield and five days on from the Great Storm, the rail network is, if anything, getting worse, not better. Rail timetables now resemble statements of intent, not travel guides. Railtrack seems to have carte blanche to suspend services at the drop of a hat on almost any pretext imaginable, as the station announcer at any mainline terminus will sombrely tell you.

Leaves on the line, speed restrictions, shortage of crews, "other operational factors". You name it, there is an excuse where there should have been a six-car train set waiting on the platform.

This weekend, passengers are promised more misery and more unscheduled diversions by bus as Railtrack embarks on another maintenance blitz of the network. It may not be as bad as a week ago when the West Coast Mainline was closed without notice. But it is bad enough.

The man responsible for all this is Gerald Corbett. As chief executive of Railtrack, he has done a masterful job of managing his way through the Hatfield disaster and the Rail Regulator's mangle while keeping the City and much of the political establishment onside. He led from the front, as usual, as soon as the GNER express left the tracks, first tendering his resignation, then seeing it rejected and finally emerging after the biggest peacetime closure of the rail system to declare that the network was "safe".

But can the same be said about his job? Leaving Railtrack leaderless and rudderless in the immediate aftermath of Hatfield would have served no one's interests, least of all passengers'. But the more time passes, and the longer it takes for tangible improvements to show through, the harder it becomes for Mr Corbett to avoid the charge of failure.

That may be unfair since Mr Corbett has done more than anyone to change the culture on the railways, but this is a tough old game and Mr Corbett knows it better than any. He wants to stay in his post but John Prescott wants him out. After a suitable delay to let the dust settle, it looks like the Fat Controller will get his way.

IPO discrimination

The retail investor is disadvantaged against big professional players across so many fronts that one more hardly seems to matter. Dealing costs and access to information are just two of them. The latest to excite passions is access to initial public offerings. According to a study by Growth Company Investor, the value of shares in IPOs open to retail subscription in the past year has fallen 18 per cent. On the other hand, those earmarked exclusively for wholesale investors have shown a stonking 54 per cent gain.

Of course, the situation isn't quite as bad as these bald statistics suggest. The retail investor who bought into all IPOs at the first available opportunity, which means at some stage during the first day's dealing for most IPOs, would still be showing a sizeable gain overall.

All the same, it has long been hard for the retail investor to get in at the ground floor and it seems to be getting harder. The statistics would suggest that only the dogs are open to retail subscription. Goldman "for our friends only" Sachs has been particularly aggressive in keeping its choicest IPOs for its own favoured clients. Even some top-drawer London institutions have struggled to achieve a fair allocation in the Goldman IPOs, which have included Bookham and many other soaraway stocks.

There are all kinds of reasons for the apparent discrimination. The one most commonly cited is that retail investors are simply a pain. They cost quite a lot to service, they complain a lot, and they often don't understand the company they are investing in. Many are also short-term holders, prone relentlessly to dump stock in the aftermarket.

Another is that many IPOs these days are more akin to venture capital situations than conventional publicly quoted companies. It has always been difficult for all but the richest and best-connected retail investors to get into promising venture capital plays.

Even so, discrimination between different types of buyer is plainly as wrong in investment as it would be in any other form of trade. By the same token, however, it is not clear what can or should be done about it. To make a retail offering part of the listing requirements would only succeed in driving many IPOs to rival overseas markets, and in any case, it is no part of a regulator's job to determine who should sell to whom and on what terms.

On IPOs at least, the retail investor seems destined to remain disadvantaged.

* outlook@independent.co.uk