Monday, May 23, 2011

Paddy Power and betting tax

Paddy Power and the betting tax

By Stephen Dwyer

In a time when the eyes of millions are upon us with the visit of the Queen and Barack Obama, we are reminded of Ireland’s contribution to the world throughout the centuries. Aside from our rich cultural history which includes Joyce, Yeats, Wilde and Beckett, we are famous for punching above our weight. But over the past few decades, we have become just as famous for our brand names.

Guinness, Waterford Crystal, Riverdance, U2, and Ryanair are recognised in almost every country. Another brand name, the ubiquitous green betting shops of Paddy Power is fast becoming another symbol that signifies Ireland. They are seen as light hearted rogues, bucking the trend of the old-fashioned scrooge-faced bookmaker. But financially there is no doubt that Paddy Power plc. are trailblazing their way through the world of betting.

The first thing you need to know about Paddy Power is that they dance to their own tune. They were founded in 1988 at a time when opening a bookmakers shop in Ireland was much easier to do that in the UK. The business was not founded by a single Paddy Power but by the merging of three bookmakers. This consolidation grew rapidly through shrewd management and they hired their namesake, Paddy Power who was a graduate of business studies from DCU, to become their head of communications and public spokesperson. Clever stuff.

The second thing you need to know about them is that they are shameless self-promoters. Habitually offering odds for controversial events and tongue-in-cheek promotions is centric to their business model. However, when you dissect their marketing drives, many are borderline insensitive and inflammatory.

Shamelessly, Paddy Power has offered odds that the Pope would sign for Glasgow Rangers and that Barack Obama “would not finish” his first term on office (i.e. that he would be assassinated). They ran advertising campaigns following the death of Pope John Paul II featuring Leonardo da Vinci’s Last Supper with Jesus and his apostles surrounded by roulette wheels and betting chips. Most recently, a TV commercial by Paddy Power featuring a cat being kicked into a tree by a blind soccer player became the most complained about advert in the UK in 2010 and the third most complained about advert of all time. Patrick Kennedy, the CEO of Paddy Power defended the ad, shrugging off the criticism by simply saying that it got people talking.

All of this leads us on to point number three; Paddy Power are admittedly, very good at what they do. They have become Ireland’s largest bookmakers with over 200 shops nationwide. As of May 15th, their bank balance is €113 million. €47 million of this is comprised of customer accounts. It would seem Paddy Power have more money in their coffers than many of our banks.

To their credit they have pioneered the world of online betting and their latest financial report notes that online revenues have increased by over one-third. In this year alone they opened 14 shops in the UK. Despite this growth on the back of a record year, their CEO is up in arms about the Governments plans to double betting tax to 2 per cent.

Betting tax in Ireland is used primarily to fund prize money for horse and greyhound racing as well as supporting the racing industry. Understandably, the Government have reduced the funding available. The reduction to Horse and Greyhound Racing Fund is dramatic, from €76m in 2008 to €57m this year. This is a serious shortfall and simply has to be clawed back through the raising of betting taxes.

Irish punters do not pay the betting tax; it is absorbed by the bookmakers. This should continue to be the case as without the industry, their existence would be threatened. In the UK, this year’s budget brought in sweeping changes to the betting tax system.

Chancellor Gordon Brown announced that bookmakers would be taxed on their gross profits at a flat rate of 15%. As of January 2010, he is scrapping the system in which the Government collects betting tax of 6.75% from bookmakers; this is then passed on to punters in a 9% tax.

You cut your cloth to measure as they say, so Paddy Power should do exactly what their cleverly-spun adverts suggest, just grin and bear it.

Sunday, May 8, 2011

Hurricane Fly

Hurricane Fly

By Stephen Dwyer

Now there can be no doubt, Hurricane Fly is horse of the year. His performance in the Irish Champion Hurdle at Punchestown will live long in the memory. He is five wins from five starts this season and finishes out the year as an unbeaten Champion. Willie Mullins, trainer of Hurricane Fly noted after his rout in the Irish Champion Hurdle “That was just awesome, the best I’ve seen from him”.

His five length victory and the manner in which he destroyed the small but select field was truly remarkable. He turned a race featuring last year’s Champion Hurdler and Supreme Novice’s winner into a cakewalk. Not often does that happen in a Grade 1 at the end of the season in a race worth €160,000 and the rarity of this occurrence typifies the class of Horse Hurricane Fly is, an indisputable superstar.

Just before the Irish Champion Hurdle was off, my phone received a text from a racing colleague, “there’s a hurricane warning at Punchestown” it read. How right my weatherman friend was. The race was settled in a few short strides between the second and last hurdle, Hurricane Fly jumps hurdles with such speed and prowess that very few can live with him.

This season, Hurricane Fly answered every question asked of him. He is not the biggest horse in the world and prone to injury. Suspensory ligament problems resulted in him missing the last two Cheltenham festivals before claiming the Champion crown last March, at the first time of asking.

Hurricane Fly is by Montjeu, himself a world Champion. One of the top sires in the world for flat horses, his progeny has produced two Irish and two English Derby winners as well as the Prix de l'Arc de Triomphe and St. Leger. Montjeu’s speed has been passed on to Hurricane Fly and he is by far and away his most successful son on the national hunt circuit.

Hurricane Fly was bred in Ireland and sold as a yearling at Goffs for €65,000. He was sent to France and subsequently bought out of the Jean-Luc Pelletan yard for an undisclosed sum on the advice of bloodstock agent Richard Hobson. The acquisition by Hobson (who is also responsible for the purchase of Golden Silver and Pomme Tiepy) was on behalf of retired Belfast construction worker George Creighton and Rose Boyd who runs an equestrian centre in Co. Down. The horse previously won three times in France and was sent to trainer Wille Mullins. Hurricane Fly won at the first time of asking in May 2008 at Punchestown. Since then, he has been beaten only once in eleven starts and is still a seven year old and may improve again next season as he is filling out all the time.

In what could be seen as a passing of the hurdling mantle, Istabraq was honoured at Punchestown this year when a 13ft x 10ft painting was unveiled. The canvas, the largest horse painting in Europe was entitled 'Istabraq - Ireland's Favourite'. By the end of the week, Hurricane Fly was rapidly advancing on that title.

The imperious Istabraq was six when he won the first of his three Champion hurdles, Hurricane Fly is a best priced 7/4 chance for repeating his Cheltenham win next year and if he stays injury free, his ability and turn of foot will see him home. Ruby Walsh said yesterday "He'd win a Group One on the Flat, too, if you wanted"
Long before thoughts of returning to Cheltenham should be entertained, we should reflect a on the achievements of Hurricane Fly this season. When running at Cheltenham this year, he had already won seven Grade 1 races; this was more than all of his Champion Hurdle rivals put together. He became the first horse since Hardy Eustace in 2004 to complete the Champion Hurdle double at Cheltenham and Punchestown.

His win at the Cheltenham Festival under Ruby Walsh was particularly special. This victory means that Ruby is now one of only four jockeys in the past four decades to have completed the treble of Champion Hurdle, Cheltenham Gold Cup and Grand National.

With the season now wrapped up, he is Ireland’s highest rated National Hunt horse. He will have a deserved break.

On a final note, Hurricane Fly’s groom, Gail Carlisle, says his guilty pleasure is carrots.

I feel there will be no shortage of them around Closutton this summer.

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