The Sportsman Launches
On March 22nd, The Sportsman filled the void created by the merger (or effective closure) of The Sporting Life with the Racing Post in 1998.
The new paper represents a big gamble, both for its investors, who have put up £11 million, and for those who have elected to leave their previous jobs to join it.
"Since the abolition of turnover-based 6.75 per cent General Betting Duty there has been a gambling boom, much of its centred on sports book betting."
Clearly there was not room for two specialist betting dailies in 1998 and total newspaper sales have continued to fall gently since, giving the impression the newspaper industry continues in long-term decline.
On the plus side, since the abolition of turnover-based 6.75 per cent General Betting Duty and the introduction instead of 15 percent Gross Profits Tax in 2001, there has been a gambling boom, much of its centred on sports book betting.
"Whether, however, that segment contains sufficient numbers of people willing to spend £1 a day on a news sports betting title remains to be seen."
It would appear that The Sportsman, rather than taking on the Racing Post directly, has tried to create a niche for itself by targeting readers of the ‘red top’ (Sun, Mirror, Star) sports pages.
This is certainly a large segment of the market, comprising millions of readers.
Whether, however, that segment contains sufficient numbers of people willing to spend a £1 (£1.20 at weekends) a day on a news sports betting title remains to be seen.
The ‘name’ writers, which include SKY’s Andy Gray and Soccer AM’s Helen Chamberlain, certainly seem designed to attempt to lure such red-top readers.
Consequently many Racing Post readers have derided the title, on the grounds that it hasn’t got enough racing, and it is too downmarket for their taste.
Given The Sportsman is evidently not targeting them anyway, they might as well criticise the next edition of Cosmopolitan for not carrying advance racecards.
"Many of the early front-page leads of The Sportsman are all ‘news’ stories, many of which seem only loosely connected with betting at all."
So far, it could be argued The Sportsman has failed to stamp its identity clearly as a sports betting, as opposed to merely general sports, product.
Whereas in its early days in the 1980s, when still establishing an identity as a paper for punters, the Racing Post would carry a tipping item on the front page, many of the early front-page leads of The Sportsman are all ‘news’ stories, many of which seem only loosely connected with betting at all.
However, The Sportsman’s treatment of racing is arguably the oddest aspect of its coverage.
"The paper has recruited some very sober, serious, high brow students of form."
The paper has recruited some very sober, serious, high brow students of form and, rather than having similar coverage in terms of pagination to that of the red tops, the paper carries 40-50 pages of racing daily, falling short of the kind of coverage the Racing Post offers, but substantially more than you will find in any national daily.
This must certainly add significantly to production costs, but how many racing fans it will win remains to be seen.
The paper has not yet signed up to the Audit Bureau of Circulation so it may be some time, if ever, before any independently audited sales figures become known.
Betfair Concludes Softbank Deal
Betfair has concluded the sale of 23% of its parent company, The Sporting Exchange Ltd, to Japanese giants Softbank in a deal which values the betting exchange at £1.54 billion.
Given Betfair’s annual profit figures for the tax year just ended are expected to be circa £35 million, this represents a multiple of 44, which some in the City consider very high.
"It is the likely profit figures of a company five years hence, not today, that determine its valuation."
However, it is often said that it is the likely profit figures of a company five years hence, not today, that determine its valuation, and it is also worth noting that Betfair, whose profits the previous tax year were £22 million, could relocate to Malta, where it is already licenced, at any time, save many millions of pounds by being freed of the obligations to: pay Gross Profits Tax, the Levy and comply with the Gambling Bill when it comes into force in 2007, yet still be free to market to other EU countries.
Andrew Black, the company’s co founder, is reportedly very keen to float the company – it is apparently his dream to see it listed in the FTSE100 – preferably as soon as possible, Softbank are also likely to seek a float sooner rather than later and Tim Bunting the company’s chairman said recently a float might take place next year.
"This might mean higher commission rates, either upfront or by stealth."
The implications of this for exchange punters are unclear, but it seems safe to assume that once the company, which now employs 730 staff, is a plc and major financial institutions buy in, the pressure will intensify upon Betfair to exploit its monopoly position to the full and maximise profits to produce big dividends for shareholders plus a buoyant share price.
This might mean higher commission rates, either upfront or by stealth, with tinkering with the commission scale and selected rises to the MBR for certain markets, as was the case last year with Big Brother.
BBC
