Arena improves on media rights

RACECOURSE operator Arena Leisure has seen trading improve after signing new media agreements for the coverage of its race meetings.

Arena, which operates seven courses in the UK including Wolverhampton, Worcester and Doncaster, said the increased contribution came from international media rights distributed through At The Races (ATR), Arena’s 45.85% affiliate.  

The firm also operates Royal Windsor, Lingfield Park, Folkestone and Southwell. It said trading was expected to receive a boost during the latter part of the year following the opening on May 10 of the new Lingfield Park Marriott Hotel and Country Club.

In a statement ahead of its AGM, Arena said that trading in the first four months of the year had been in line with expectations with a moderate improvement on last year.

Across Arena’s seven racecourses, 138 fixtures were staged during the period (2009: 142).  Of these, 11 were lost to bad weather in the early part of the year but due to the all-weather course at Wolverhampton an additional eight fixtures were arranged at short notice.

Total attendances in the early part of the year were hit by the bad weather, however, recent meetings had shown more encouraging numbers.

In total, meetings were attended by 133,000 racegoers (2009: 131,000) resulting in an average attendance 5% ahead of the same period in 2009.  

Private and corporate hospitality business in the period was approximately 25% higher than in 2009.  However, this period represents on average only 15% of the annual total for the hospitality business and is not viewed as wholly representative of the more significant summer season.  

Preliminary industry statistics, across all UK racecourses, for the period indicate total attendance was at the same level as 2009 and that average attendances increased by 4% on a lower number of fixtures.

Recent reductions in Levy yield have seen prize money fall by 8% this year so far, with further reduction expected from July. In addition to reduced prize money, the Levy Board has also said it intends to reduce incentive payments to racecourses for scheduling fixtures at less profitable times of the year.

Arena said such a reduction would have a direct negative impact on profitability.

“If the Levy proceeds with its proposals in this regard, the board’s current best estimate is that the 2010 profit impact will be £0.2m and the full year impact in 2011 will be approximately £0.8m,” said Arena.

However, growth in the business is being generated, particularly from revenues through the international distribution of UK and Irish racing rights.  

“Arena benefits from these revenues through its relationship with ATR as both a supplier of content and as an equity shareholder.  

“Compared to the first four months of 2009, revenues due from ATR media rights in the period have increased by approximately £0.2m with an estimated uplift of £0.4m for the full year,” it said.

This increase is due mainly to the organic growth of ATR’s business and is set to be enhanced further by a new joint venture with RMG – GBI Racing – that came into effect on March 1 and which allows for the unified international distribution of all UK and Irish horseracing.  

Arena said that following the successful £55m refinancing of the business, with facilities provided by Lloyds Banking Group, it had reviewed its hedging arrangements with regards to interest rate exposure. 

It has amended the structure of these hedges by converting a £12m cap and collar instrument (effective at rates between 4.76% to 5.50%) into a £15m fixed rate at an effective rate of 4.77%.

The hedge amortises to £10m from January 1, 2011 and £5m from January 1, 2012, expiring on December 31, 2013.

Arena said this amendment provided a more appropriate alignment of interest rate hedging to the company’s projected debt profile.

The group said trading over the crucial summer period was more dependent on the economic recovery and consumer confidence and therefore remained uncertain.

It said hospitality bookings for the summer season and the September St Leger festival were limited and that overall, booking patterns were similar to last year.

“We maintain our previous view that 2010 is likely to have a similar outcome,” said the firm.

Arena also announced that chairman Raymond Mould was stepping down from his position and was being replaced by David Thorpe.

Mr Thorpe, 60, is an experienced chairman with a track record of growth and profitable performance with extensive board level experience in general management, consulting, operations and sales and marketing. 

In 2009 he completed a successful five-year term as chairman of the Racecourse Association, the trade association for 59 UK racecourses.  He is currently a non-executive director on the boards of four companies; The Innovation Group, Interserve, Clinical Solution and SHL Group.

Mr Thorpe said: “I have watched the evolution of Arena over the last six years and I am tremendously impressed by the development of the business that has been undertaken and its future growth prospects. 

“It has wonderful racecourses and is led by a great team.  I am delighted to be joining the board.”