On 31 August the Tellytrack Partnership informed commercial users, who comprise mostly bookmakers, that the terms and conditions under which commercial users in South Africa will be permitted to display Tellytrack in their commercial outlets will change.
Tellytrack, a partnership between horseracing and tote betting operators Phumelela, Gold Circle and Kenilworth Racing, provides live coverage of all South African races and selected international races on channel 239 DStv.
The two most important changes to the terms and conditions of usage by commercial users are firstly to the contracting parties and secondly the fees payable.
The main effect of the contractual change is that commercial users will in future be required to contract directly with the Tellytrack Partnership instead of one of the three bookmaker associations to obtain the rights to display Tellytrack in their commercial outlets.
As has been the case until now, commercial users will still be required to retain their contractual relationship with MultiChoice in order to obtain a viewing card and a decoder.
Until now commercial users have contracted with MultiChoice to obtain a viewing card and a decoder, and the three bookmaker associations (Gauteng, KwaZulu-Natal and the Western Cape) have contracted with the Tellytrack Partnership for the supply of Tellytrack to their members.
With effect from 1 October this year, the Tellytrack Partnership will contract with commercial users directly. This does not, however, preclude collective negotiation by one or more of the bookmaker associations.
Tellytrack viewers who view the channel via their DStv bouquet at home or, for example, in a hotel will not be affected in any way.
Presently, bookmakers pay a monthly licence fee of R 5,600 per commercial outlet. For the months of October and November this year, commercial users will be required to pay the Tellytrack Partnership R6,000 a month per commercial outlet. And from 1 December, the fee for the rights to display Tellytrack in a commercial outlet will change to 3% of the betting turnover on horseracing generated in or at the premises.
As an alternative to Tellytrack, Phumelela has offered to make visual broadcasts of races at its racecourses available for display in the retail outlets of those bookmakers who do not wish to subscribe to Tellytrack on the new terms.
The cost of these visual broadcasts will be the proportionate cost of producing such broadcasts. In respect of races staged at Turffontein the proportionate cost recovery is subject to the approval of the Gauteng Gambling Board and in respect of races at Arlington and Fairview, the proportionate cost recovery is subject to the approval of the Eastern Cape Gambling Board.
For races at the Vaal and in Kimberley, Phumelela will permit a reasonable number of camera operators, production staff, equipment and outside broadcast vehicles on course, so that bookmakers who do not wish to pay the cost recovery proposed by Phumelela, may produce the visual broadcast for themselves at their own cost.
The Tellytrack Partnership agreed to charge an interim R6,000 monthly fee for October and November, and to postpone the implementation of the 3% fee for an additional two months so as to allow bookmakers to consider their options.
Commenting on the changes the CEO of the Tellytrack Partnership, John Stuart, said:
“Tellytrack has evolved over time. Originally, its content comprised 100% South African racing, whereas today content comprises some 75% international racing and only 25% South African racing. Furthermore, most recently our television outside broadcast units, cameras and studio equipment had to be upgraded from 4:3 to be 16:9 compliant. And within the next 18 months all equipment will have to be upgraded to be High Definition compliant.”
“The costs that have been, and are to be incurred, are significant. By way of example, we recently bought a second-hand 16:9 compliant outside broadcast vehicle for the Western Cape for R6 million. And it must be borne in mind that we must have outside broadcast vehicles or fixed facilities at each of our 10 racecourses! As a result of these huge costs we would, in any event, have had to pass on substantial increases in Tellytrack charges to bookmakers.”
Stuart added: “The sport of horseracing is also in desperate need of additional funding. Like other sports such as soccer, rugby and cricket which earn more than 50% of revenue from television rights, horseracing in future must generate income from its intellectual property and media rights in order to survive.”
“Phumelela, Gold Circle and Kenilworth Racing commit to one another to stage 445 race meetings annually (Phumelela 252 Gold Circle 109 and Kenilworth Racing 84). The cost, including prize money, of holding these race meetings is some R700 million a year. In addition to the reciprocal commitment in respect of the minimum number of race meetings, Phumelela, Gold Circle and Kenilworth Racing pay 3% of turnover for the right to bet on each other’s race meetings.”
“Phumelela, Gold Circle and Kenilworth Racing also pay 3% of turnover to international racing operators for the right to bet on their racing. Thus the new fee to commercial users of Tellytrack is identical to what Phumelela, Gold Circle and Kenilworth Racing pay for the right to bet on international races. And being a percentage of turnover, the new fee will ensure that ‘smaller’ bookmakers are not effectively put out of business as could be the case with a substantial fixed monthly payment.
“Negotiations with the various bookmaker associations have been protracted, but have always been focussed on what is best for horseracing and what is fair and equitable in terms of the true value of the intellectual property of Tellytrack. The increased revenue flowing from the new structure will benefit racing and enable Tellytrack to remain on a par with global horseracing channels,” concluded Stuart.
Rian du Plessis, CEO of Phumelela summarised by saying: “It’s really all about commercial realities and choices. The costs of producing a world-class Tellytrack channel, as demanded by our customers, will keep rising. A flat-fee business model is not equitable as it does not acknowledge the extent of usage of the intellectual property. We have to move to a more equitable and appropriate fee and the 3% chosen is the norm between Tote betting operators in South Africa and globally.
“Bookmakers can choose from several options which include subscribing to a global-standard Tellytrack channel, obtaining the raw visual broadcasts and putting together their own production of South African and international racing or choosing not to commercially exploit horseracing’s intellectual property at all.”