FEBRUARY 6, 2001
More money trouble for Arrows
NO sooner has Repsol-YPF left Arrows than word comes from the City of London that Eurobet is unlikely to continue supporting Arrows next year. The company is owned by betting firm Coral, which has just had to have a $67m budget top-up from its parent company Morgan Grenfell Private Equity. MGPE is, of course, a partner in the Arrows team but it is hard to see how it can continue to fund the Eurobet sponsorship as the extra costs of marketing and debt payments meant that Coral made a $78m loss last year. The extra funding had to be made available to avoid Coral breaching covenants made with the banks and came about because a planned flotation of the business was called off last year because of adverse market conditions. Coral spent $45m marketing the Eurobet name in 2000 but repaying the company's debt and pushing the new brand proved to be a heavy burden and the company's promotional budget is much reduced this year.
The British betting companies are under pressure from the government to close down offshore operations but argue that it was necessary to compete with Internet gambling firms. The government is currently working on a new taxation system for betting companies, worried that it will lose revenue of around $750m a year if the companies go offshore.