Racing: Bookies queue up in race for Coral

Coral/Ladbroke deal: While shrewd punters celebrate the MMC ruling, it is back to the drawing board for the Tote

IT IS, as an estate agent would put it, a unique opportunity to acquire an extensive and much sought-after property. Coral, the third- largest chain of betting shops in the country, is back on the market, much to the annoyance of Ladbrokes, who paid Bass pounds 375.5m for the Coral estate - including 833 shops, two greyhound stadiums and an off-course credit betting business - almost nine months ago. Peter Mandelson yesterday agreed with the Monopolies and Mergers Commission that the takeover would "operate against the public interest", but if Ladbrokes cannot buy Coral, then someone else will.

Chris Bell, Ladbrokes' managing director, says that "over 20 people have expressed an interest in acquiring this business". The identity of the successful bidder will be of immense significance both to the off-course betting market, and the chance that racing will enjoy a secure financial future.

The list of interested parties in the deal which fell apart yesterday went well beyond Ladbrokes, Coral and their staff. The Tote, the state- owned bookie which returns its profits to racing, might have added almost 300 outlets to its current chain of 210 shops, becoming a serious player in the process. This prospect had persuaded the British Horseracing Board to lend public support to the takeover. Now, 133 ex-Coral shops which had already been purchased conditionally by the Tote must immediately return to their former owners.

There were brief, carefully worded expressions of regret from both Tote House and Portman Square yesterday as the residents considered if there might yet be a Plan B.

"We are disappointed that the decision means we will now lose the shops we purchased conditionally from Ladbroke Group at the turn of the year and have been trading in so successfully for the past eight months," Peter Jones, the Tote's chairman, said.

"Nonetheless, we will seek to explore with our financial advisers what options are available to the Tote."

The BHB said that the decision was "a concern, at least until it becomes clear as to where this leaves the Tote."

The obvious answer is that it leaves the Tote back at square one, as a relative bystander in an off-course betting industry which turns over pounds 500m each year. And that is where it will surely remain, unless Jones can somehow find the money to buy Coral outright.

In theory, Bell believes that "Ladbrokes can sell it in any way we wish." In practice, though, and particularly in view of the six-month deadline imposed on the sale, it seems unlikely that Ladbrokes will want the added complication of splitting up the chain.

Bell also believes that "Coral has had a good year, and it's a better business now than it was when we bought it." An enforced sale it may be, but not necessarily at a bargain price, and the Tote will do well to raise anything like the sum which Ladbrokes paid for Coral in the first place.

William Hill, the third member of the "Big Three", was sold last year to Nomura, a Japanese investment bank, with a view to making a healthy short-term profit from resale or flotation. Coral could well go to a buyer with a similar profile and motive, which would at least be good news for hundreds of their employees who would presumably then keep their jobs.

Alternatively, there is one British bookmaker who could find the opportunity difficult to resist. Stanley Leisure, which is based in Liverpool and has about 460 betting shops, mainly in the north, is already the country's fourth-largest bookie. Swallowing up Coral would propel it in an instant to within sight of William Hill's total of 1,500 outlets. It is a chance which may never present itself again.

While a handful of executives talk telephone numbers, though, the average punter is left to wonder what, if anything, this all means to them. Some, it is true, would hand their daily 50p Yankee to Al Capone if they thought it might increase their chance of winning. Others, though, will consider the important issues of competition, and the future well being of the racing industry which keeps them entertained.

The punters' self-appointed champion, John McCririck, was in typically garrulous form yesterday, claiming that "this magnificent verdict is their biggest winner since betting shops opened in 1961". Racing, he said, "has been saved from the dangerous prospect of Ladbrokes increasingly controlling betting".

This is true, to a point, although it could be argued that Ladbrokes is already so dominant - particularly in terms of its share of turnover - that another 500 or so shops would have made little realistic difference.

And while it is important that sensible punters will still benefit from added competition in early-price and ante-post markets, one of the more depressing statistics yesterday was Chris Bell's comment that these areas account for only two per cent of their business. The vast majority of punters, in other words, still bet at the starting price, which all but guarantees a good profit for the bookie, and makes the issue of exactly who is taking their money rather irrelevant.

None the less, a degree of competition between bookmakers will now remain for those with the sense to exploit it.

More worrying, though, is the possible suffocation of the Tote's off- course ambitions, which seemed to offer the most credible - perhaps only - solution to racing's perennial problem of underfunding. There is still a chance that Peter Jones, an able and imaginative man, will pluck something from the wreckage, but he will need to move, think and deal at high speed.

If the money is not there for a wholesale takeover, an alternative might be a joint approach with Stanley Leisure, with Coral divided up on a north- south basis. Stanley, after all, would need only the southern shops to secure a true national presence, while the Tote would still increase its estate by as much as 200 per cent.

If, however, the Tote emerges empty-handed, racing's long-term prospects will undoubtedly be damaged. Punters may enjoy extra competition tomorrow, but they, and the vast industry they support, may also pay the price in 10 years' time.

Business, page 19

HISTORY OF CORAL BOOKMAKERS

1926: Joe Coral launches career as an on-course bookmaker

1943: Starts credit telephone betting office in London's West End

1961: Opens first high-street shop on legalisation of betting shops

1962: Owns just 23 of Britain's 13,340 betting shops

1971: Merger with Mark Lane chain brings Coral's estate to 589 shops

1974: Coral becomes public company and moves into hotels, casinos and bingo

1977: Four firms dominate off-course betting. Coral owns 24% of Britain's 13,254 betting shops

1981: Taken over by Bass (Joe Coral becomes life president)

1995: Buys Arthur Prince chain of 114 shops

1996: Joe Coral dies

1998: Ladbroke announce a pounds 375.5m takeover but the deal is referred to the Monopolies & Merger commission

1998 (September): The Trade Secretary, Peter Mandelson, blocks Ladbroke's acquisition of Coral bookmakers chain from Bass