The race is on for the Tote

With the state-owned bookmaker in line for a sell-off, horse-racing rivals are already jockeying for the lead, writes Dan Gledhill

Annual general meetings at the Tote were very different affairs when Woodrow Wyatt ran the state-owned bookmaker. The eccentric Tory peer revelled in his role as host to racing's glitterati over a bacchanalian lunch at London's Hyde Park Hotel, complete with a fine menu befitting the sport of kings.

Some 18 months since Wyatt's death, it is not just the venue which has changed. Horse racing's prime movers will gather on Tuesday in the equally salubrious surroundings of the Savoy, but the quality of the fare will be the last thing on the mind of Peter Jones, the new Tote chairman.

Under his stewardship, the meeting's emphasis has changed from self-indulgence to self-analysis. These are trying times for the Horserace Totaliser Board, as it is formally known. The Government's stated intention of selling the Tote has sparked a furious debate about the organisation's future. Most of the hot air has been generated by Peter Savill, outspoken chairman of the British Horseracing Board, the sport's governing body. A multi- millionaire businessman and racehorse owner, Savill covets the Tote for the BHB and has begun a typically high-profile campaign to realise his ambition. The biggest obstacle is Jones, who agrees that the Tote should belong to racing but is unattracted by the prospect of working for Savill. The Savill camp suggests that Jones has a different agenda, a plan to form a consortium to buy the organisation himself. The fact that Savill sits alongside Jones on the Tote's board is unlikely to prevent their simmering feud boiling over at Tuesday's meeting.

It was in May that Jack Straw, the Home Secretary, decided to end the 70 years of state ownership which the Tote has enjoyed since it was established by Winston Churchill to channel funds into racing and protect punters from scurrilous bookmakers. Although his decision owed much to the Treasury's desire to fill its coffers, it also followed pressure for the Tote's ownership structure to reflect its more commercial outlook.

Best known for its on-course operations, the Tote has also been busily expanding its portfolio of off-course betting shops, which now number 250. Jones is planning to double that figure over the next couple of years, an expansion plan which reflects the 57-year-old's undoubted business acumen. He joined the Tote from Omnicom, the world's largest advertising group where he had reached board level. The switch to a more business- like annual general meeting typifies the way the Tote has approached its market since Jones replaced Wyatt. The Government, however, has begun to feel uncomfortable with the idea of owning such an ambitious operation. The Tote's disadvantaged position compared to its private sector competitors was illustrated earlier this year by its failure to keep up with the bidding when rival Corals came up for sale.

But Jones's commercial instincts have aroused suspicion elsewhere. The Savill camp has been blamed for orchestrating a media campaign to discredit Jones. The BHB was also piqued by its exclusion from the steering committee chaired by Jones which showed little enthusiasm for the idea of transferring the Tote to the BHB. Another allegation - that Jones is a crony of Tony Blair - is particularly sensitive at a time when the racing industry is at loggerheads with the Government as to the precise nature of the Tote's ownership. The Treasury is eager to pocket the pounds 100m-plus which the Tote's sale should generate, but the industry does not understand why racing should be made to pay for an organisation whose raison d'etre is to assist the sport.

Jones is said to favour the creation of a trust to own the Tote, an idea which has been criticised for further complicating racing's already Byzantine administrative structure. At present the sport is governed by the British Horseracing Board, which prides itself on being a democratic organisation representative of all interests. Regulation is the job of the Jockey Club, while the Levy Board decides what proportion of bookmaking income is ploughed back into the sport.

The question of the contribution made to racing by the bookmakers hangs over the entire debate about the Tote's future. The BHB bemoans the perceived parsimony of British bookmakers compared to their foreign counterparts when it comes to putting money back into the sport which is the industry's life support. Pessimists point out that the investment of rich Arab owners which has sustained British horse racing cannot be taken for granted in the future, a hole which British bookmakers would have to plug.

But the betting industry is unlikely to be in a generous mood given this year's difficult trading conditions. The stock market showed its concern about the state of the betting market when it turned its back on Nomura's attempt to float the William Hill chain. Cinven and CVC, the venture capitalists, rode to the rescue but the idea of a private buyer for the Tote is politically unacceptable.

Supporters of Jones argue that the BHB does not have the commercial acumen necessary to run the Tote in these difficult markets, although it is difficult to quibble with Savill's business record. He has made two fortunes, first in publishing and then as a tour operator in the Caribbean. He has demonstrated his commitment to the sport with his wallet as one of Britain's biggest racehorse owners. But his uncompromising style is not to everyone's taste and may go some way to explaining why Jones is apparently unwilling to contemplate working under him.

Savill is unlikely to suppress this maverick spirit for the sake of good order and decorum at the Savoy. The Tote's board boasts some illustrious names, notably David Lipsey, the recently ennobled economist, and Robin Miller, chairman of Emap. Savill apart, these directors are said to be united behind Jones but that will not prevent the BHB chairman causing a stir. Still, at least the mischievous Lord Wyatt would have enjoyed it.