UPDATE: Arena Leisure Sees 2010 Pft Hit By Industry Fund Cuts

2nd Aug 2010 14:59

(Adds detail, chairman's comment, analyst comment, share price.) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Horse-racing event organizer and racecourse operator Arena Leisure PLC (ARE.LN) said Monday it expects to take a GBP200,000 hit to profit this year and GBP800,000 next year due to a cut in industry funding. Arena Leisure said the cut to the Horserace Betting Levy, which assesses and collects monetary contributions from bookmakers and the Tote and distributes it across the U.K. horse racing industry, may also mean it has to spend more of its own money on prizes than it does now. Levy spending for U.K. horse racing is expected to be cut to about GBP70 million next year from a previous forecast of GBP94.5 million. "This is the impact from the currently announced measures but the worst scenario is that in the short-term we have to subsidize slightly more of the prize money or we have to increase the number of races per fixture," Chairman David Thorpe told Dow Jones Newswires. "We're concerned about what may happen but we think it's manageable because we're financially strong and most importantly the portfolio of fixtures we have are very profitable for us and bookmakers," he said. Altium Securities analysts Wayne Brown and Greg Feehely agreed, telling clients in a note that Arena is well placed because the fixture it hosts generate a lot of money. The levy funding hit Arena's first-half sales. In the period to June 30 sales fell to GBP30.1 million from GBP30.9 million a year earlier, reflecting a GBP1.1 million drop in levy funding. Total attendance at its race courses also fell, to 282,000 from 286,000, although the company said this was in part due to weaker trading in June while the World Cup soccer was on. Arena's half-year pretax profit fell to GBP936,000 from GBP1.1 million a year earlier It paid GBP498,000 of costs related to the new Marriott Hotel at its Lingfield Park track. Arena Leisure aims to become more media-focused and earlier this year sealed a media rights deal with SIS to provide content to U.K. and Irish betting shops over five years from 2012. It has also formed the At The Races joint venture, which pools the international distribution of media rights of all U.K. and Ireland race courses. "We're looking at things like a Twitter feed too, as with this type of marketing we can get to a more specific audience and it can be much more measurable and cheaper," Thorpe said. Altium's Brown and Feehely said the SIS media rights deal alone will transform Arena's base profit level from 2012. At 1342 GMT Arena Leisure shares were trading 3 pence, or 9.5%, lower at 34 pence, outperforming a 0.6% rise in the Dow Jones U.K. Smaller Companies index. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (END) Dow Jones Newswires August 02, 2010 09:59 ET (13:59 GMT)