ARE Arena Events Group Plc

RNS Number:6713Z
Arena Leisure PLC
11 June 2004



Arena Leisure Plc

Friday 11 June 2004




                   OFT reaches Provisional Agreement with BHB

                       over reform of British Horseracing



Arena Leisure notes the press releases issued by both the Office of Fair Trading
and the British Horseracing Board, which are attached.



Ian Penrose, Group Managing Director of Arena Leisure said:

"We are pleased that provisional agreements have been reached and hope that this
will lead to an end in the uncertainties that currently prevail in British
horseracing. We look forward to working towards delivering on the greater
commercial freedom this will facilitate within horseracing."





For further details contact:

Arena Leisure Plc

Ian R Penrose, Group Managing Director      Tel: 020-7495-2277

Bell Pottinger Corporate & Financial

David Rydell/Zoe Sanders                    Tel: 020-7861-3887



Office of Fair Trading Announcement:

OFT reaches provisional agreement with BHB over reform of British horseracing

94/04 10 June 2004

The OFT has reached a provisional agreement with the British Horseracing Board
(BHB) that proposed reforms of the running of British horseracing satisfy the
OFT's competition concerns.

The proposed reforms are principally set out in the BHB's 'The Modernisation of
British Racing' document published today. They will also be set out in an OFT
commitments notice (the first of its kind), which will be subject to public
consultation. Assuming the consultation process confirms the OFT's preliminary
position, it intends to make a decision to accept binding commitments and close
its file, using new powers introduced on 1 May 2004, following changes to EC and
UK competition law (see note 3).

The BHB's document is available on the BHB website.

The main changes proposed by the BHB include:

   *an increase in the overall number of racing fixtures
   *the introduction of a new process by which racecourses will be able to
    compete for existing racing fixtures and to bid for new ones
   *an end to the '50 mile rule', which prevented racecourses within 50 miles
    of each other from offering racing on the same date
   *an increase in racecourses' freedom to determine the types of racing they
    each put on
   *the creation of a new body, British Horseracing Enterprises, which will
    be responsible for commercialisation of the BHB racing database
   *the introduction of a new method by which income from the
    commercialisation of racing data will be passed on to racecourses in direct
    relation to their success in attracting betting, and
   *the introduction of an arbitration mechanism to provide a pricing
    safeguard for bookmakers in the event that BHB proposes specified increases
    in the price charged for access to its racing database.

Full details of all of the reforms, except those relating to data pricing
safeguards, are published today by the BHB, at their AGM, in the document 'The
Modernisation of British Racing'. Details of the remaining changes and the
commitments, together with an explanation of how the OFT believes the reforms
meet its competition law concerns, will be published by the OFT shortly.

These reforms to the running of British horseracing follow an OFT Competition
Act investigation and a review by the BHB of its role as the governing body of
racing.

The OFT investigation followed the notification by the BHB and the Jockey Club
of a number of agreements, including the Orders and Rules of Racing. The OFT
provisionally found in 2003 that the Orders and Rules raised a number of
competition concerns. These arose from the high level of central control exerted
by the BHB over how and when racecourses could offer horseracing and over the
way BHB could exploit horseracing commercially through its control over racing
data. The OFT was concerned that these agreements had the overall effect of
restricting competition between racecourses, by preventing them from altering
their racing in response to consumer demand, and prevented the emergence of
alternative providers of racing data.

The OFT has been in discussions with the BHB since the beginning of the year
about how these concerns might be addressed. The changes announced today by the
BHB significantly increase the freedom of, and scope for competition between,
racecourses to provide racing that will prove attractive to their customers. For
example, it should be easier for a racecourse to put on additional racing
fixtures at a time when racegoers wish to go racing. It should also be easier
for new racecourses to come into being. In addition, the OFT accepts that,
subject to certain safeguards on pricing that will be set out in the
commitments, the BHB may continue to sell horseracing data centrally, to ensure
universal access to a single, reliable and comprehensive database.

John Vickers, OFT Chairman, said: 'The BHB's reforms give British horseracing a
more competitive future. Greater freedom for courses - old and new - to compete
to meet the demands of racegoers, punters and owners should be good for the
public and for the sport.'

The OFT proposes to close its investigation with respect to the Jockey Club's
role in the administration of horseracing without formal commitments, on the
basis that the Jockey Club's position no longer gives rise to competition
concerns.

The OFT will shortly be consulting third parties on a formal commitments notice
setting out in more detail how the proposed changes meet the OFT's competition
concerns.

NOTES

1. The BHB and the Jockey Club notified the Orders and Rules of Racing to the
OFT in June 2000, along with other agreements relating to the administration of
British horseracing. The OFT issued a Rule 14 Notice to the BHB and Jockey Club
in April 2003, in which it set out the grounds for its preliminary finding that
the Orders and Rules infringed the Chapter I provision of the Competition Act
1998 (see press release 38/03). The BHB's decision to offer commitments to
address the OFT's competition concerns follows the OFT's indication to the BHB
that, notwithstanding the representations on the Rule 14 Notice received from
the BHB and the Jockey Club, it continued to have such concerns.

2. The Competition Act 1998 gives the OFT powers to investigate suspected
infringements of the Act's prohibitions (which mirror the EC competition rules:

    i) the Chapter I prohibition prohibits agreements between undertakings,
    decisions by associations of undertakings or concerted practices which have
    the object or effect of preventing, restricting or distorting competition in
    the UK (or any part of it) and which may affect trade within the UK (or any
    part of it)

    ii) the Chapter II prohibition prohibits conduct by one or more undertakings
    which amounts to the abuse of a dominant position in a market which may
    affect trade within the UK (or any part of it).

3. The Competition Act 1998 has been amended, with effect from 1 May this year,
to allow the OFT to accept binding commitments from those under investigation.
The formal acceptance of such commitments, which must address the OFT's
competition concerns, requires the OFT to close its investigation into the
conduct addressed by the commitments. The OFT has not yet formally accepted the
commitments offered by the BHB, as the statutory consultation process has not
yet commenced, but expects to launch this process very shortly, by formal
notice.


British Horseracing Board Announcement:

10/6/2004 - BHB and OFT Reach Agreement on How Racing Should be Modernised

British Racing's commitment to modernisation has taken another major step
forward with the announcement by the BHB today that it will be implementing a
wide-ranging series of changes to the financial, administrative and governance
structure of racing outlined in a 42 page document entitled "The Modernisation
of British Racing".

These changes will have a dramatic effect on British Racing. It is anticipated
that in 2006 data income will grow from #110 million a year to a projected #140
million; that prize money will grow from #94 million a year to a projected #125
million; and that annual racecourse attendance will grow from 6 million to a
projected 7 million. Punters, spectators, racecourses, owners, trainers,
breeders, jockeys, stable staff and bookmakers will all be better off as a
result of the modernisation of the sport.

The BHB has undertaken to provide commitments to the Office of Fair Trading
(OFT) that reflect these changes and the OFT has indicated that it proposes to
accept these commitments, subject to a short period of consultation, and close
its investigation without the BHB or the Jockey Club having been found to have
breached competition law.

The Modernisation of British Racing represents the latest chapter in the process
of modernising the sport that began in the early 1990s and has, since 1998,
accelerated following the introduction of the Financial Plan for British Racing,
the Future Funding Plan, the Racing Review and now The Modernisation of British
Racing.

It is anticipated that the proposals contained in The Modernisation of British
Racing will be implemented by 1st January 2006.

The Report recommends seven key changes to the structure of the sport:

(i) the separation of the governance and commercial functions of the British
Horseracing Board (BHB);
(ii) the restructuring of the BHB Board;
(iii) changes to the management of racing's commercial interests;
(iv) changes to the method of allocation and distribution of data income;
(v) the establishment of a prize money agreement between racecourses and the
recipients of prize money (owners, trainers, jockeys and stable staff);
(vi) the introduction of greater competition between racecourses for fixtures;
(vii) the modernisation of the Orders & Rules of Racing.

BHB Chairman Peter Savill, who led the development of The Modernisation of
British Racing, said today:

"This agreement with the OFT is a victory for common sense. We have preserved a
structured fixture list under the BHB's supervision; we have ensured the future
of Jump Racing by persuading the OFT that it should be treated largely as a
different sport; we have maintained the right to sell our data centrally; and we
have preserved the crucial sporting rules which enable us to govern the sport
and establish a sporting structure that supports the integrity of the sport and
the development of the breed.

"At the same time we are happy to split the BHB's commercial and governance
functions, to introduce more competition between racecourses for fixtures, and
to enable racecourses and the rest of the industry to be involved in the central
selling, collection and distribution of data income.

"Everyone connected with the sport will be better off as a result of the
modernisation of British Racing."

Notes

1. Following the joint notification of the Governance Agreements of British
Racing by BHB and the Jockey Club in June 2000, the OFT in its Rule 14 Notice of
8th April 2003 provisionally concluded that some of the arrangements relating to
British Racing constituted an infringement of Chapter I of the Competition Act
1998. BHB, in its representations and in other submissions and in its evidence,
has denied, and continues to deny, that there was or is any such infringement.

2. The Executive Summary from The Modernisation of British Racing document is
attached. The full document is available at:

http://www.britishhorseracing.com/inside_horseracing/about/reports.asp

EXECUTIVE SUMMARY

1. The 'Modernisation of British Racing' is the latest chapter in the process of
modernising the sport of racing that began in the early 1990s and has, since
1998, accelerated following the introduction of the Financial Plan for British
Racing, the Future Funding Plan, the Racing Review and now The Modernisation of
British Racing.

2. The report proposes seven key changes to the financial, administrative and
governance structure of the sport:

(i) the separation of the governance and commercial functions of the British
Horseracing Board (BHB);
(ii) the restructuring of the BHB Board;
(iii) the central selling of data by a commercial company (BHE) rather than by
BHB;
(iv) changes to the method of allocation and distribution of data income;
(v) the establishment of a prize money agreement between racecourses and the
recipients of prize money (owners, trainers, jockeys and stable staff);
(vi) the introduction of greater competition between racecourses for fixtures;
(vii) the modernisation of the Orders & Rules of Racing.

3. The BHB will retain its governance functions, relinquish its commercial
functions and take over the appropriate functions of the Levy Board when it is
abolished in 2006. The Jockey Club's BHB directors have recommended to the
Jockey Club that discussions should take place in 2008 between the Jockey Club
and the BHB about merging governance and regulation.

4. The BHB Board will be restructured to reduce shareholder members (ICHL,
Jockey Club, RCA and ROA) from nine voting seats to four (one each), and to add
the NTF, an additional independent and an additional Executive in order to
create a more independent, less sectional Board.

5. Ownership and control of BHB Enterprises, BHB's commercial arm, will be
transferred from the BHB to the industry and renamed British Horseracing
Enterprises (BHE).

6. BHE will enter a 10-year licence agreement with BHB to commercialise the
content of the BHB database and will license its use, ensure compliance,
collection and audit of all use made and pay out all income according to an
agreed formula.

7. All data income for Racecourse Fixtures (see point 14 of this Summary) will
be distributed under an agreed formula whereby the apportioned costs of
governance, regulation and commercial activity are top-sliced from gross data
income, an Incentive Fund is set up to encourage racecourses to contribute their
own money into the prize fund, with the balance hypothecated and distributed to
racecourses in proportion to the amount of betting turnover generated by each
fixture.

8. In return for the distribution of hypothecated income to racecourses for
Racecourse Fixtures, racecourses will contribute 75% of all data income received
from Racecourse Fixtures to prize money up to a threshold of #80m at which point
racecourses shall be obligated to contribute 50% of all data income received
from Racecourse Fixtures to prize money.

9. All data income for BHB Fixtures (see points 15 and 16 of this Summary) will
be distributed in full to those courses operating BHB Fixtures, after
top-slicing the apportioned costs of regulation, governance and commercial, in
accordance with the amount of betting turnover generated by each fixture.

10. Fixture Incentives, Abandonment Payments, Divided Race Fund and Basic Daily
Rates will all be withdrawn upon the abolition of the Levy Board, to be replaced
by an all-encompassing data payment to each course.

11. With the expansion of the Fixture List and the better utilisation of the
horse population through a reduction in maximum field sizes and other measures,
it is projected that data income will increase from #110 million in 2003 to #140
million in 2006 and prize money is projected to increase from #94 million in
2003 to around #125 million in 2006.

12. The BHB will expand the Fixture List in 2006 to approximately 1500 fixtures
after introducing narrow-band handicaps, initially for Flat racing only, and
after limiting field sizes, other than in special cases and at certain times of
the year, to fourteen runners.

13. The BHB will set up two separate Fixture Matrices - one for Jumping and one
for the Flat - and will establish an appropriate number of Flat and Jump
fixtures on a week-by-week basis throughout the year, based on the needs of the
horse population.

The BHB believes that Flat and Jump Racing have different consumers and in
general should be treated as separate branches of racing. The Flat Matrix will
include Regional Racing and All-Weather Racing. Turf and All-Weather racecourses
will compete against each other within the Flat Matrix. Other than in a very few
instances, Flat and Jumping courses will not compete against each other in the
fixture allocation process.

14. All fixtures will be divided into 'Racecourse Fixtures' (1203) and 'BHB
Fixtures' (297). Racecourse Fixtures will comprise all 2004 fixtures except
Regional Racing Fixtures and BHB leasehold fixtures which were granted on an
agreed leasehold basis. Racecourse Fixtures will effectively be Class A
fixtures.

15. BHB Fixtures will comprise the rest of the fixture list, over half of which
fixtures will be created for the 2006 Fixture List for the first time, and will
effectively be Class B fixtures. The large majority of BHB Fixtures will be Flat
fixtures.

16. Racecourses will bid for BHB Fixtures competitively against each other for a
3-year lease with the course willing to bid the most prize money contribution
winning the bid.

17. New racecourses will be defined as those courses that have never operated
any fixtures. They will receive preferential treatment in the acquisition of up
to 16 BHB Fixtures since they will only be able to acquire Racecourse Fixtures
over a period of time.

18. A racecourse will, in future, be able to more easily improve its fixture
list by:
*moving 10% of its Racecourse Fixtures every three years to other Racecourse
Fixture slots;
* moving a percentage of its BHB National Fixtures every three years into
Racecourse Fixtures;
* bidding for BHB Fixtures;
* swapping, trading or purchasing fixtures.

19. The new fixture allocation process ends 'In Perpetuity Protection' of a
fixture and replaces it with 'Three Year Tenure'.

20. The BHB will establish a Development Fund which will be used by the Racing
Department to incentivise racecourses, primarily to put on races which are
necessary for the development of young racehorses and the breed.

21. Certain Orders of Racing will be dispensed with including the 50 mile rule,
minimum entry fees, restrictions on the number of handicaps, sellers and
claimers that a racecourse can programme and restrictions on valuable races
clashing with Pattern, Listed or other valuable races.

22. Minimum values will be replaced by meritocracy bands. In future, the BHB
shall set the sum of the lower levels of meritocracy bands in totality at no
greater than the total amount of money that must be contributed to prize money,
thereby leaving racecourses free to decide how much they wish to contribute to
prize money from their own funds.

23. Field sizes and the number of races that a racecourse can run shall be
restricted so that the BHB can ensure that a Fixture List of around 1500
fixtures can be programmed.







                      This information is provided by RNS
            The company news service from the London Stock Exchange

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