The parent company of Sky Bet and Paddy Power has warned that horse racing must adopt major changes as it has become “unprofitable” for punters, with audiences shrinking and the “core quality” of the sport declining.
Writing in Racing Post in the middle Media Rights Class In an interview with horse racing group Arena Racing Company, Ian Brown, CEO of Flutter Entertainment’s UK and Ireland division, also questioned the levels of prize money and asked where the payouts go to the racetracks.
The comments come a week after Flatter’s latest attempt to pressure ARC back to the negotiating table over the media rights deal between the two sides. Last week, Paddy Power and Sky Bet did not offer early prices for a meeting at ARC-owned Chepstow, instead offering only odds in the minutes leading up to each race.
This followed a similar move earlier this month for a card at fellow Chepstow club Bath. On that occasion the bookmakers were not due to offer any prices for the match, but eventually took bets on the fixtures just before kick-off following legal intervention by the ARC.
In his article, Brown said that the bookmakers and British motor racing face “some serious shared challenges”.
“Our data shows how lower prize money leads to lower court sizes, making the product less attractive to customers. This in turn leads to lower betting revenues, and therefore lower sports revenues. It’s a clear and worrying spiral,” he added.
Betting companies contribute around £350 million ($451.5 million) to British horse racing each year through media rights payments, fees and sponsorship. However, Brown warned the sport that his company was paying more for a deteriorating product and said the relationship between media rights payments and prize money was becoming increasingly distant.
“Our data suggests that the additional value customers place on some matches is far less than the cost we incur simply to broadcast those races. In fact, what we pay as a single bookmaker is often close to the total prize money on offer,” he added.
“We estimate that the total live streaming revenue is around three times the prize money for meetings like Bath and Chepstow – and that’s also before tax contributions – which makes us wonder where the rest of the money goes.
“But there is a bigger, more fundamental problem here. As Flutter, we simply cannot afford to continue investing in horse racing as an unprofitable product with a shrinking audience, as media costs escalate at exponential rates, and as the core quality of the product declines.”
Brown praised the sport’s willingness to try new things, saying the Premier League racing days were outperforming other dates, but called on racing to consider going “further and faster” with the initiative while exploring other options for innovation and experimentation.
The media rights deal between ARC and Flutter runs until 2027. While the agreements are private, Flutter has previously claimed that total media rights payments from bookmakers to racecourses were more than double the tax, which stood at £105m in the latest scheme. Media rights deals typically involve the operator paying racecourses a percentage of betting sales in exchange for live streaming rights in betting shops and online.
