Cantillon:The dust may have settled somewhat around the sale of Betdaq to Ladbrokes but the structure of the deal raises as many questions as it answers.
Betdaq has essentially been broken into two: Global Betting Exchange Alderney Limited (GBEA), which operates the betting exchange, and TBH Guernsey Limited (TBHG), the technology company that powers the exchange.
Ladbrokes is buying the betting exchange for €30 million and has taken a 10 per cent stake in the technology business for €4million.
It also has the option to buy the other 90 per cent of the technology business in four years, presumably for €36 million. Alternatively, it can sell the stake back to Dermot Desmond (pictured) for €4 million.
It’s a surprising arrangement given that the technology platform is, presumably, at the core of the whole shebang.
The first unanswered question is: did Ladbrokes not want to buy the technology business or did Desmond not want to sell it? Certainly the main rationale for the deal, according to Ladbrokes’ statement, is that it will allow it to offer customers a “high-quality, scalable betting exchange”.
Growing “digital revenues through investment in proprietary technology” comes second on the list.
This implies it wants the business more than the technology. Desmond’s thoughts on the matter remain a mystery, but technology has been central to several of his more successful public investments.
If anything, it looks as though the two sides could not agree on the value of the tech business and have decided to see how things pan out over the next three years.
Presumably Ladbrokes will spend that time trying to figure out whether it can develop or buy a cheaper platform on which to run Betdaq.
Desmond is also presumably confident that he will have a use for TBHG in three years should Ladbrokes not proceed.
One last question: what will Desmond charge Ladbrokes to provide technology maintenance and development to Betdaq?
Exchequer surplus brings out crystal balls
One swallow does not a summer make and the January exchequer returns are no great predictor of whether or not the Government finances are on track.
It may be enough just to note that a surplus of €703 million was recorded in January compared to a deficit of €394 million in January 2012. The reason is the once-off sale of about €1 billion of contingent capital notes in Bank of Ireland held by the Government. But few economic commentators could resist the urge yesterday to pore over the exchequer entrails and divine the direction of the economy.
Davy honed in on VAT and voiced some concern over the subdued growth of VAT receipts reflecting a weak Christmas period. “VAT receipts in January largely reflect December sales, so we would have expected stronger growth given the rise in the top rate of VAT from 21 per cent to 23 per cent in the year. This weak out-turn reflects the fall in retail sales in December,” they pointed out somewhat elliptically.
Merrion Economics was similarly cautious, noting “receipts in January this year were only 0.9 per cent higher than the first month of last year. An overall increase of 3.6 per cent in VAT receipts is envisaged for 2013 as a whole”, before adding, rather enigmatically, “the exchequer returns for January are likely to have been well received in official circles, particularly in relation to the income tax side”.
Colleagues in NCB, however, were almost positive, “Bringing it all together, while we would be loath to read too much into one month’s exchequer returns data, there are a number of encouraging signs from this release. In particular, we draw comfort from the 5.6 per cent underlying year-on-year increase in revenues, while the bulk of the rise in day-to-day spending appears to be down to timing issues as opposed to indiscipline on the expenditure side.”
Next to the Irish Tax Institute, who just went for it. “It is welcoming to see overall tax returns for January coming in on line with expectations; this is a positive start to the year on the tax front,” opined Mark Redmond, the chief executive.
Confused? Can’t blame you.
Gilmore lets enthusiasm get better of him
Minister for Finance Michael Noonan availed of the official opening of UPC’s national customer service headquarters in Limerick to put Donal Donovan straight on a few points.
The former former deputy director of the International Monetary Fund had pointed out that we were not necessarily doing ourselves any favours by demanding the same treatment as other bailout states while also arguing we are a special case.The idea that the 2008 bank guarantee was done to save European banks was a “slight misreading of history”, Mr Donovan told a conference of the Economic and Social Committee – a European Union body representing business and social groups – last Friday. “This grates with our partners in the negotiation room when we try to say something that is not actually quite correct,” he claimed.
It’s just not so, claimed Mr Noonan.
“We have a good reputation in Europe so I don’t know where Donal picked that up,” he said. “I haven’t picked that up there [in Europe] at all. They understand our position very well,” he countered.
If this is the case then it is very good news indeed as one suspects the majority of the Irish population do not understand the Government position on the promissory note, and last weekend’s reported comments by Tánaiste Eamon Gilmore have done little to help.
The Tánaiste seems to be happy enough to tell anyone important who will listen – albeit in private and in Chile – that failure to get a deal on the promissory note could lead to the Coalition falling apart as Labour would find it hard to go along with yet another austerity budget.
The import of this not very subtle threat is clear. With the Coalition would go Ireland’s bailout exit and Europe’s much needed “win” in the battle to prove that austerity works. However, when asked to confirm such comments on the record the Tánaiste seemed somewhat reluctant to admit to the Irish public that the Government could fall on the issue.
Sounds like the Tánaiste allowed his enthusiasm to get the better of him once again and he risks turning a crisis into a drama.
