Examination of Witnesses (Questions 60
- 79)
TUESDAY 13 NOVEMBER 2007
MR STEPHEN
ATKIN AND
MS CAROLINE
DAVIES
Q60 Chairman: Can I just go back
to what they say is your complicity in the previous arrangements?
We have had a position where list positions are traded and sold,
administered by the Levy Board and the Joint Pitch Council. You
sit on the Levy Board and the Joint Pitch Council but you are
essentially saying to us that even though these trades are taking
place with the understanding or the belief that they were in perpetuity,
actually you never thought they were but you just did not say
so?
Ms Davies: The essential point
here is that the lists are the bookmakers' lists. They are not
the racecourses' lists. There is not a contract between the racecourse
and the bookmakers. The Levy Board set its policy. The NJPC as
an administrator implemented that policy. The policy was governed
by the certificates of approval. When the 1963 Act was repealed,
along went with that the certificates of approval and the conditions
that went under that were National Pitch Rules.
Q61 Chairman: I understand the sequence
of events but you knew, presumably, that when Barry Johnson or
Keith Johnson, or whoever it was, paid a very large sum for a
particular pitch, he was doing so in the belief that he was purchasing
a permanent right?
Mr Atkin: I am not quite sure
whether we would have known precisely Mr Johnson's pitch because
I do not know whether it was an auction or a trade because in
trades they do not disclose the price. The National Joint Pitch
Council comes up with what they call tariff values but they are
not reported. I think our position is absolutely clear and it
is based around that original preamble to the 1998 Act. Everything
in that position stems from that, that there are no property rights.
We would have expected the buyers of those positions to have had
regard to that. The other point is this: clearly what we do not
know, and we cannot go behind the mindset of a bookmaker, is why
he bought a slot, a pitch that carries a high value. The bookmakers
do not disclose turnover or profits to us. We have no idea quite
how profitable those slots can be. It could well be that those
list positions are exceptionally profitable and that the £100,000
or £200,000 purchase price in this case is entirely justified
on the basis, if you like, of an amortization of that cost over
a period of time. Very few assets in life are perpetual assets.
Freehold property is one of the few exceptions.
Q62 Chairman: You have said that
you have never regarded this as in perpetuity; it was only for
a period of time. How long did you think that period was?
Mr Atkin: It was clearly for as
long as the certificates of approval were in existence.
Q63 Chairman: That might be in perpetuity.
You did not know that the law was going to change in that respect.
Mr Atkin: We knew that it was
likely the law was going to change from 2001 onwards when Professor
Budd's report came out. The RCA spent a lot of time an effort
in putting detailed submissions to all of the various stages throughout
the Budd Report, through the DCMS policy paper and beyond. We
clearly also spent a great deal of time and effort in dealing
with the administration of pitches and in making sure our members
are able to take on their legal responsibility that they have
taken on since 1 September. I think, in the end, the racecourses
were not parties to those transactions.
Q64 Chairman: When the system changed
in 1998, following that, a very large number of pitches were exchanged
and sold. That was done on the basis that this was a perpetual
right which was being sold. You shake your head and say they were
not, but you must have known that was what everybody thought was
going on. If you disagreed, why did you not get up and say, "Hold
on, just bear in mind this is not a perpetual right"?
Mr Atkin: There is nothing in
the literature, as far as I can see, that says it is a perpetual
right. I think it is a difference of view. Our view is that it
is quite clear on the face of the Pitch Rules and on the auction
literature that there is not a perpetual right. What I have heard
is that there is a viewpoint of people which is based on their
firmly held view, but not on evidence, that there is a perpetual
right. I am afraid that is the view we have always held and we
based our views on what is actually the current documentation.
I always considered that the prices that were paid (and for my
sins I am an accountant by profession and I do not know behind
the businesses) were depreciating assets. One can argue about
how long the asset is. Very few of the arrangements that racecourses
reach with any of the parties, none of them, involve perpetual
rights. There are periods of agreement. They go three to five
years; some may go beyond. That is the normal nature of the business
of a racecourse. The word "perpetuity" does not feature,
in our view, what the rights were.
Q65 Chairman: But, as you say, they
may have differing periods but at least it is a specified period.
You say that these rights were only going to last for a period,
but nowhere does it say, "This right expires after a certain
time".
Mr Atkin: No, because as regards
the racecourse, there were no rights at all, which is quite clear
in the preamble to the Pitch Rules and to the auction process.
I think that is why we take that view.
Q66 Mr Sanders: It seems quite apparent,
from hearing your evidence and from all of the evidence we heard
before you, that there are two very different views as to what
is going on here. It is not the purpose or the job of this committee
to find a remedy to that, but can you conceive that there could
be a way of finding a remedy that does not involve legal proceedings,
or is this something that is just going to have to go to a court
of law for a judgment to be made?
Mr Atkin: I am profoundly of the
view that a commercial deal can be reached with all the bookmakers.
Nobody wants to go to a court of law—I have been there a
number of times—to defend actions. We think that commercial
arrangements can be reached. We are quite confident of our legal
position. Having said that, I approach every commercial discussion
with the base of how you can avoid having to test your view in
a court of law. It is a very expensive exercise; no one can be
certain of the outcome; and it is certainly not a dice that we
would like to throw unless it is absolutely unavoidable. I am
a glass half full person.
Q67 Chairman: None of you are betting
men then?
Mr Atkin: It is not an odds-on
shop but I think that we want on-course bookmakers to be on-course.
They are very important. They are not the only important part
of the day but they are a very important part of it. The heritage
of British racing is extremely attractive. One of the attractions
of British racing compared to the position in France and some
other countries is the variety of investment opportunities that
racecourses can offer racegoers. At the end of the day, that is
what drives my members' interests; how do you satisfy the consumers,
because without them we have nothing.
Q68 Chairman: Obviously, if we move
to free access for a commercial negotiation, there may be others
who suddenly see this opportunity to acquire a pitch which is
extremely valuable, and they may be prepared to offer more than
the existing pitch holder. In those circumstances, do you feel
any responsibility for the person who has invested a vast amount,
maybe their entire life savings and this is their retirement asset
which is suddenly going to be worthless because they have been
out-bid in these new commercial arrangements? Is your view that
they should have read the small print and you have no real responsibility
for them?
Mr Atkin: No, I am a human being
like everybody else. Someone referred earlier to the fact that
there are two types of bookmaker: recreational and professional.
That does not mean necessarily Ladbrokes; I think it spans a lot
of bookmakers. The professional bookmakers are important to racecourses
because they ensure a vibrant market. My answer to you really
is that I would start from the premise that there is no reason
why that person could still not be trading, should not still be
trading, in 2012. As has been said before, racecourses are fully
aware that when you are setting commercial opportunities, they
have to be fair and reasonable and they will act in that manner,
I am certain.
Q69 Chairman: Obviously you will
act in that manner but it does not give any recognition of the
investment that has been made prior to commercial negotiations.
Mr Atkin: I suppose, one, it depends
on how much that person paid; two, it depends on the rate of return
that he has achieved during the time when he has held that pitch;
and, three, it relies on how much further he might hold that pitch
in the future. I think whilst one cannot give guarantees about
that, racecourses want to sit down with the bookmaker and others
to talk about that.
Q70 Helen Southworth: You talked
about the experience of attending a racecourse. Do you actually
think that putting it on a commercial footing is going to help
that experience, improve it, or is it going to be detrimental
to it?
Ms Davies: I think one of the
key things for the racecourse moving forward which a commercial
arrangement will lead to is by far more a sense of partnership,
and so therefore it will be in both the racecourse's and the bookmakers'
best interest to attract as many customers to the racecourse as
is possible and provide them with a positive experience whilst
they are at that racecourse, whether it is in the range of services
or not, the location of where the bookmakers might be or the prices
that are available to them. The marketing of fixtures and the
attraction of the punters will be very much a partnership between
the racecourses and the bookmakers.
Q71 Helen Southworth: We heard the
evidence from the bookmakers and they seem quite categoric in
their belief that the change is going to exclude family bookmakers,
traditional bookmakers, the problems that we recognise it as being
a bookie rather than the shop or the commercial—it is unkind
to say unfriendly—business, the business without a direct
face. How hard are you going to work to prevent that from happening
so that you do still have this sense that it is the people who
are involved in the sale?
Ms Davies: As I said in answer
to the previous question, the racecourses want to enhance the
customer experience. One of the attractions is going to the ring
and having the variety of bookmakers there with which to place
the bet. There is no evidence on the racecourses' current deals
that large operators are preferred over small in the sense that
racecourses do deals with lots of different companies of lots
of different sizes.
Q72 Helen Southworth: So you think
choice for the punter is important to a racecourse?
Ms Davies: Yes. The offer to the
punter in a whole range of things, whether it be bookmaking or
catering, they are all things that racecourses are looking to
enhance. We are in the business of competing for the leisure pound.
The competition, not only from other racecourses but from other
sporting venues, other arts venues, other leisure venues, is always
increasing.
Q73 Helen Southworth: So you think
that a variety of bookmakers has a commercial benefit to the racecourses?
Ms Davies: It certainly is an
attraction to the punter and it would be an advantage to the racecourse
obviously, yes.
Q74 Helen Southworth: Does the accountant
think that as well?
Mr Atkin: Absolutely; it is all
about the race day experience. I think that with on-course bookmakers,
there is a large number of varied businesses. That is one of the
attractions. Bear in mind that the large bookmakers are probably
going to be there in betting shops anyway, so there will always
be a betting shop on a racecourse. We need to put that variety
of attractions there for the punter and the punter chooses where
to spend his or her money.
Q75 Philip Davies: Could you clarify
something on which I am slightly confused? You made the point
that the principle of reform has been accepted since the Budd
Report, that people therefore should have been well aware of what
was coming after that, which is obviously disputed. Would you
therefore agree that those people who bought their positions in
1998, 1999 and 2000 would have had absolutely no idea of what
was coming round the corner?
Mr Atkin: No, I would not agree
with that. As I say, the National Joint Pitch Rules from 1998
on were absolutely clear on the issue of tenure. The people at
the RCA at the time—I was not at the RCA at the time—would
have been keen to see that preamble on those pitch rules. They
are not there by mistake. That is in there by intent. You would
have been uncomfortable if they had not been there. It has always
been an issue for racecourses that they have a measure of control
over their own property.
Q76 Chairman: Why then does the National
Joint Pitch Council say that positions were sold and purchased
in good faith on the understanding that the positions would last
in perpetuity and the NJPC administered the process on this premise,
and the Levy Board says that it can see how some purchasers in
1998 and in the years immediately thereafter might have thought
that, since the administrative arrangements were underpinned by
the 1963 Act, in effect bookmakers who had purchased pitches would
retain the right to a trade from those pitches, subject only to
the pitches being transferred on the basis of the rules? So both
the Levy Board and the National Joint Pitch Council accept that
it was perfectly sensible for bookmakers to believe that they
were purchasing something in perpetuity.
Ms Davies: To qualify that, it
is during the period that the 1963 Act was applicable.
Mr Atkin: As I said before, there
is no evidence of any tenure going. I understand that that is
the bookmakers' view. I do not think there is a particular sound
basis in terms of hard evidence that they have that view.
Q77 Philip Davies: Is it not the
case, though, that one of the bookmakers has actually floated
his company on AIM and part of the company's records is the assets
of their positions. City people are very conscientious about due
diligence and making sure that everything that is found is absolutely
accurate. It strikes me that those financial experts in the City
seem convinced that this was a proper and real asset. The on-course
bookmakers who bought the pitches are all adamant that it was
an asset that was in perpetuity, as do the National Joint Pitch
Council in their submission and they say exactly the same thing
as the Levy Board, as we have just heard from their Chairman.
Is it not the case that the only group in the whole country who
did not think that is the Racecourse Association?
Mr Atkin: No, I do not think that
is right at all.
Q78 Philip Davies: Who else did?
Mr Atkin: All I can say is that
it is quite clear in the rules what the position is. I cannot
see how anybody can interpret it in any other way.
Q79 Philip Davies: So everyone else
is wrong?
Mr Atkin: I like to base my views
and opinions on evidence. I think that whilst hearsay is interesting,
and I can understand the position, there is nothing actually in
evidence to support that view. In the same evidence that you pointed
to, earlier on it says quite clearly that no security of tenure
was given. That is plain. That is absolutely accurate. There was
no security of tenure given. There may have been an expectation,
whether it was a reasonable expectation or otherwise. In reference
to AIM point, I do think there is a reasonability on the sponsor
there to carry out due diligence; they certainly did not come
to us to ask for a view at that time. Whether they should have
done so or not is a matter for them. I am not going to comment
on that. Clearly, just because someone is listed on AIM does not
give that any more authenticity.
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