Social media’s success in luring new punters to horseracing has helped Arena Leisure boost full-year pre-tax profits nearly 15 per cent ahead of a planned sale, despite a drop in overall revenue.
The owner and operator of seven UK racecourses – including Doncaster, Lingfield Park and Windsor – reported a 14.6 per cent rise in pre-tax profits to £4.15m for the year ended December 31, on the back of a 7.8 per cent increase in total attendances to a record 683,000 people.
“Twitter and Facebook have been integral to attracting new customers, which contributed to Arena’s record attendances,” said Mark Elliott, chief executive.
The company said no dividend would be paid as part of its planned sale to Reuben Brothers, which owns Northern Racing. A deal is expected to be completed by the end of the month.
Revenue dropped £2.5m from the previous year to £61.5m following a fall in the company’s share of the horseracing levy, which is taken from gross betting profits made on races by bookmakers.
The government is trying to broker a commercially based funding structure between the racing industry and gambling companies as a replacement for the levy, which has been going for 50 years and is regarded as antiquated by all parties.
The levy talks tend to provoke furious argument between representatives of the racing and betting worlds. The former claim that gambling companies have exploited loopholes to shirk their levy commitments; the latter argue that the sport is in decline as a betting product and they fund racing in numerous other ways.
Arena, which reported a £9.3m drop in net debt to £30.5m, has managed declines in the levy by diversifying into hosting pop concerts and catering. In 2009 it signed a £106m five-year deal with Satellite Information Services to provide racing content in betting shops, which began in January.
“The industry is coming out of the recession well,” said Mr Elliott. “We are not getting the revenues from the bookmakers [we once did] but generating additional revenue from higher attendances and greater spend per head.”
In February the Arena board recommended a 44.25p-a-share offer from Aldersgate Investments, an investment vehicle of the Reuben brothers, after they raised their stake in the company to slightly less than 30 per cent.
The offer values the equity at about £162m, or nearly 10 times 2011 gross profits, a 37 per cent premium to the share price before acquisition speculation began.
Diluted earnings per share rose from 1.02p to 1.15p.
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