Betfred, BA chairman last runners in Tote race

LONDON (Reuters) - The final two bidders for state-owned Tote offered around 200 million pounds for the bookmaker and vied to win over a powerful racing lobby that has a say in who buys it.

Sports Investment Partners (SIP), the vehicle of British Airways Chairman Martin Broughton, said it would give the horseracing industry a 10 percent stake in the business and offer "racing friendly investors," such as owners, breeders, trainers and racecourses a further 25 percent shareholding.

Rival Betfred, Britain's fourth-biggest bookmaker, said its 40 years in the sports betting business put it in a strong position to unlock value in the Tote.

"The Tote has been underworked for the last seven years because of the 'for sale' sign over the door," Betfred co-founder and Executive Chairman Fred Done told Reuters in an interview on Tuesday.

The Tote, which takes bets on horse racing, soccer and other sports is being sold off by the coalition government as part of a wider disposal of state assets to tackle a record peacetime budget deficit.

The 200 million pounds valuation is in line with what analysts had expected and is about half the price Britain tried unsuccessfully to sell the company for five years ago.

The government has sought views on the Tote sale from the horse-racing industry and has pledged that the deal would be in its interest as well as the taxpayers'.

AIM FLOAT

Broughton's SIP, backed by stockbroker Cenkos, said it plans to float the Tote on London's junior AIM market if it wins the auction.

SIP, which has broad support from the horse racing industry, is also offering the industry two seats on the board of the company after a floatation.

"Our proposal is unique because we are striking a real partnership with Racing -- with guarantees in place which we believe no one else can offer," Broughton, a former chairman of Liverpool Football Club and the British Horseracing Board, said in a statement.

Betfred's Done said its proposals would represent value for both the racing industry and the government which is being advised by investment bank Lazard.

"I believe that we're paying a full price for the business. I think taxpayers have got a wonderful deal for themselves. Racing has got a great deal out of it. For 200 million pounds, I think Lazard has squeezed the pips," Done said.

Done said he believed that the auction had been narrowed down from 18 original bidders, leaving the field to just Betfred and SIP.

Betfred has committed to pumping 65 million pounds into horseracing over the next seven years -- 11 million pounds in the first year and at least 9 million each year thereafter -- while SIP has committed to an 11 million pounds annual contribution.

Both parties supported the government's pledge that 50 percent of proceeds from the sale would be put back into the racing industry.

A final decision on the sale may come as early as next week, Betfred's Done said.

Britain's Department of Culture, Media and Sport declined to comment on which bidders remained in the auction or when an announcement would be made.

Done said there would be no redundancies at the Tote's 517 betting shops if Betfred's bid was successful. However, he expected between 100 and 150 head office jobs would go.

Both Betfred and SIP said they would create jobs at the business over the medium term. SIP said it would keep the Tote's headquarters in Wigan while Betfred would integrate the Tote's HQ into its own head office in Warrington.

(Editing by Paul Hoskins and Erica Billingham)