By William Hayler
Racing's search for financial security restarted yesterday after a long-running legal battle over data rights drew to an end with defeat for the British Horseracing Board in the Court of Appeal.
A promised new era of prosperity for the sport now depends on whether a commercial agreement can be reached between racing and bookmakers.
And although officials were insisting that yesterday's decision would not leave racing in crisis, the bargaining power of the bookmakers has unquestionably received a sizeable boost.
BHB plans to charge bookmakers for the use of information extracted from their database have been abandoned after Lord Justices Pill, Clarke and Jacob delivered their unanimous verdict.
The judgment brought to an end a legal process that began back in 2000 when the racing authority initiated action against bookmakers William Hill for using lists of runners and riders.
Success would have enabled the BHB to continue with its plans to replace the existing Levy, which the Government has repeatedly made clear it wants to abolish.
However, it now looks increasingly likely that racing will have to rely on statutory power if it is to ensure that money continues to flow into the sport at a rate acceptable to both parties.
While bookmakers are unlikely to refuse to carry on paying for racing beyond the end of the Levy in 2009, they could expect to have a much greater influence in exactly what sort of racing takes place, putting pressure on small-field events such as novice chases.
In outlining the reasons for their decision to allow William Hill's appeal, all three judges admitted yesterday that while they had sympathy for the BHB's case, guidance from the European Court Of Justice was clear.
Lord Justice Clarke said: "I am conscious that... I have agreed to allowing an appeal against a decision which I was inclined to think was correct when the case was last before the Court of Appeal in July 2001.
"The reason for my change of view is of course the decision and reasoning of the ECJ. The whole point of a reference to the ECJ was to ensure, so far as possible, that the relevant directive is construed in the same way throughout the European Union."
A further hearing in the afternoon confirmed that the majority of costs are to be met by the BHB, with William Hill believed to have spent in the region of £800,000 on the case.
However, a greater financial blow to the BHB may be yet to come, with existing contracts based on the sale of data to bookmakers in Ireland and other countries.
While the BHB have been advised by their legal counsel that these contracts remain valid despite the judgment, a forthcoming case in Dublin could, in theory, force the BHB to return payments already received under the contract. Last year the BHB received a total of more than £17m in commercial income from data deals with bookmakers in Ireland and other parts of Europe.
Spending cuts introduced last year to such as owners' premiums and the fixture development fund are now unlikely to be reversed.
But the extension of the Levy until 2009 and the guaranteed income that generates to racing does give the sport breathing space. A commission headed by Lord Donoughue was set up last year by the BHB to investigate possible future commercial arrangements, but initial discussions have failed to provide any obvious paths.
Speaking shortly after the court verdict, Martin Broughton, the BHB chairman, said: "It is a black day for racing because this decision prevents the lift-off that we all wanted. But it is not a crisis. We have had time to look at the judgment and it basically seems to come down to the difference between data that is created, obtained and verified. Essentially what we need to reflect upon is exactly what sort of database could charge for data, because if this one can't, then actually we can't think of one that can."
A statement from William Hill, whose chief executive is David Harding, said: "Whilst any future litigation remains at the call of the BHB, William Hill hope that the racing industry will now look forward to developing a valid alternative for the future funding of racing."
The BHB chief executive, Greg Nichols, added: "Effectively they have neutered the value of a database. By ruling that the final declarations are created rather than obtained, it seems to fly in the face of technological development. There will be a lot of sports, not just football, sitting up and taking notice of this ruling." Nichols was referring to the difference asserted first by the ECJ and then supported in court yesterday between the "creation" of data, in sending out lists of declared runners and riders, and the "compilation" of data.Reuse content