TV rights deal sends Arena shares racing
SHARES in Arena Leisure, the largest racecourse operator in Britain, soared by over 30 per cent yesterday after it announced a deal with Satellite Information Services (SIS) for the provision of horse racing coverage to licensed betting offices in the UK and Ireland.
Arena said that it will receive total revenues of around £106m over five years from the deal, which replaces its current £55m five-year contract with Bookmakers Afternoon Greyhound Service (BAGS), which is due to expire at the end of 2011.
“The new contract will lead to a substantial uplift in profitability in our media rights business from 2012,” Arena’s chief executive Mark Elliott said.
“This agreement will allow the group to reduce its net borrowings and significantly enhance future cash operating flows.”
The company will get an initial advance payment from SIS of £12.5m upon signing the deal. Further advanced payments of £12.5m and £7m will be paid in July 2010 and July 2011, upon provision of security by Arena.
SIS will pay the remainder of the estimated revenues on a per race basis throughout the five year period to December 2016.
Arena operates seven racecourses, at Doncaster, Royal Windsor, Folkestone, Lingfield Park, Southwell, Wolverhampton and Worcester.
SIS, which is owned by a mixture of leisure and financial investors, supplies TV and data services to the betting industry, as well as live coverage of news and sports events to broadcasters such as Sky and ITV.
Shares in Arena, which is due to report its first-half results on 30 June, rose by 30.43 per cent to 30p, having touched a high of 31.5p in early trading.