Youbet and TVG to partner?

[NoCal Boy]

Coming on the heels of a nicely profitable 2Q, the CEO of Youbet this morning hardly dismissed a partnering of TVG in response to a question by an analyst, even stating they believe there are substantial synergies by combining the two. Pretty bold statements from a publicly traded company. A combination of the 2 would likely result in over $900MM in annual handle and significant distribution channels. Something to follow as it does make sense and TVG is for sale.

[rrbauer]

Between them there's probably enough cash in the bank for a couple Starbucks and some lunch!

[NoCal Boy]

you would be very surprised.

[richrosa]

YouBet can issue stock, to which it may interest Macrovision just fine considering the market for TVG which is probably very light.

[NoCal Boy]

YouBet can issue stock, to which it may interest Macrovision just fine considering the market for TVG which is probably very light.

Bingo. And a sale of United Tote will make Youbet debt free with plenty of free cash laying around.

Now the question is how much is TVG actually worth, or what does Macrovision want for it?

Churchill reports this afternoon with a CC tomorrow. Could they make a play for TVG or even Youbet? Think what a combination of TS and Youbet would look like, but I can not see Youbet selling out right now.

[rrbauer]

Why don't you check with a guy named Stronach and see how much cash or financing is out there that is interested in buying anything to do with horse racing? Pretty much everything MEC owns is for sale in one form or another.

Better yet, ask Bob Evans or our own guy, Ian Meyers, how they're feeling about the ADW business these days.

How much Youbet stock do you (NoCal Boy) have for sale?

[DJofSD]

Good luck on the approval process if they do go forward with the plan merger. It only took how long for Sirius and XM to get approval? Well over a year and a half?

[NoCal Boy]

Why don't you check with a guy named Stronach and see how much cash or financing is out there that is interested in buying anything to do with horse racing? Pretty much everything MEC owns is for sale in one form or another.

Better yet, ask Bob Evans or our own guy, Ian Meyers, how they're feeling about the ADW business these days.

How much Youbet stock do you (NoCal Boy) have for sale?

Not a share is for sale right now!!

Maybe Ian can share his own thoughts about Youbet.

If the deal makes sense, the deal gets financed. We are not talking hundreds of millions. Youbet could issue a combination of equity and debt quite comfortably if the deal makes sense. Take a quick look at who runs the show nowadays at Youbet. Ever hear of the Pritzker family of the Hyatt hotel fame? JB could write a check himself to finance it if he wants to play around.

[garyoz]

Good luck on the approval process if they do go forward with the plan merger. It only took how long for Sirius and XM to get approval? Well over a year and a half?


Sirius and XM were held up by the FCC, they use the electromagnetic spectrum and need licenses. They also were extorted by the Democrats to provide 9% of their channels to public broadcasting and minority stations. Satellite radio has only a 5% market share for all radio--so it was Washington at its worst--extorting money from entrepeneurs.

Youbet and TVG would be subject to antitrust review--don't think it would be a big deal if you can define the product market to include other types of gambling.

TVG is probably best valued as a multiple of EBITDA (operating cash flow)--probably a multiple in the low teens is my guess. There is a lot of money you can squeeze out of TVG--I remember a CDSN 10-K that indicated they were paying $6 million to operate HRTV (50% partner). TVG has to have a huge budget in comparison.

Youbet is the logical buyer--but don't see how they would finance the deal. Issuing stock would be dilutive--don't see how the combined companies could issue debt that they can service and plus have any plausable plan for principal repayment. Not like cash flow is going to grow that much. It is a tough credit market out there. Heard XM and Sirius are trying to do a junk deal that would have a 16% coupon (annual interest rate). Must be a zero coupon or a PIK.

[rrbauer]

Not a share is for sale right now!!

Maybe Ian can share his own thoughts about Youbet.

If the deal makes sense, the deal gets financed. We are not talking hundreds of millions. Youbet could issue a combination of equity and debt quite comfortably if the deal makes sense. Take a quick look at who runs the show nowadays at Youbet. Ever hear of the Pritzker family of the Hyatt hotel fame? JB could write a check himself to finance it if he wants to play around.

Ever hear of Frank Stronach of Magna Int'l fame? He decided to play around in the horse-racing game. Burned a lot of his money and a lot more of MEC shareholders' money. The Pritzkers haven't invested (not reported anyway) anything directly in Youbet and are not involved in the operation of the business. Jay holds a Director position and his stock was an "award". His money was inherited and his interest in Youbet is via his venture capital firm. Like you say, they're astute with their money!

We don't know what TVG's numbers look like as a standalone operation, so I don't know how you can say what it would take to do a deal to acquire TVG. Youbet's market cap is about $55 million and its financials in terms of returns to its shareholders are putrid. Maybe they will get lucky!

[Premier Turf Club]

Not a share is for sale right now!!

Maybe Ian can share his own thoughts about Youbet.

If the deal makes sense, the deal gets financed. We are not talking hundreds of millions. Youbet could issue a combination of equity and debt quite comfortably if the deal makes sense. Take a quick look at who runs the show nowadays at Youbet. Ever hear of the Pritzker family of the Hyatt hotel fame? JB could write a check himself to finance it if he wants to play around.

NoCal Boy and I have talked about this offline in the past.

1. This is a very tough business to be in these days. There are pockets of opportunity, but it's a struggle.

2. That being said, Mike Brodsky has done a very good job to date cleaning up Youbet. He deserves kudos.

[NoCal Boy]

NoCal Boy and I have talked about this offline in the past.

1. This is a very tough business to be in these days. There are pockets of opportunity, but it's a struggle.

2. That being said, Mike Brodsky has done a very good job to date cleaning up Youbet. He deserves kudos.

The theory goes like this:

A combination of TVG and Youbet would mean an ADW with $900MM plus in handle, arguably the best wagering platform in the industry and a TV distribution network second to none. The ADW would take wagers from a maximum number of states that Youbet is currently in so the reach of the TVG channel is even greater than present. The total exclusivity model of TVG is a dinosaur that will be extinct by 2009, BUT the model whereby TVG retains TV exclusivity and allows for open wagering access is not only supported by the THG and other horsemen, but makes perfect sense economically for tracks. The TV distribution will drive viewers to this one huge ADW, which will be able to eliminate redundant and duplicative expenses. The one huge ADW could also have different player levels allowing for rebates to the higher end players and other player incentives. It really makes alot of sense, but at what price to put it together? That is the question. It is far from being far fetched and likely would put some smaller ADW's out of business over time.

[trigger]

The theory goes like this:

A combination of TVG and Youbet would mean an ADW with $900MM plus in handle, arguably the best wagering platform in the industry and a TV distribution network second to none. The ADW would take wagers from a maximum number of states that Youbet is currently in so the reach of the TVG channel is even greater than present. The total exclusivity model of TVG is a dinosaur that will be extinct by 2009, BUT the model whereby TVG retains TV exclusivity and allows for open wagering access is not only supported by the THG and other horsemen, but makes perfect sense economically for tracks. The TV distribution will drive viewers to this one huge ADW, which will be able to eliminate redundant and duplicative expenses. The one huge ADW could also have different player levels allowing for rebates to the higher end players and other player incentives. It really makes alot of sense, but at what price to put it together? That is the question. It is far from being far fetched and likely would put some smaller ADW's out of business over time.
Youbet better merge with TVG ASAP....Based on past and current relations with Churchill, Youbet would be hard pressed to stay in business if Churchill decided to buy TVG.

[NoCal Boy]

Youbet better merge with TVG ASAP....Based on past and current relations with Churchill, Youbet would be hard pressed to stay in business if Churchill decided to buy TVG.

Wrong, the TVG license agreement with Youbet goes along with a sale of TVG and that means Youbet would have access to all of the CHDN content if CHDN keeps it exclusive.

[NoCal Boy]

Youbet better merge with TVG ASAP....Based on past and current relations with Churchill, Youbet would be hard pressed to stay in business if Churchill decided to buy TVG.

You so sure about relations between Churchill and Youbet? Where is there any evidence the current regime at Youbet has disdain for Churchill? Or vice versa? Lots of common Illinois connections between the two. Churchill is moving away from TV and into internet TV platforms. Far more likely Churchill buys Youbet than TVG. You have to be comitted to the TV distribution for you to buy TVG.

[Photo Finish]

The National HBPA could finance the Youbet acquisition of TVG. N-HBPA could establish itself as a Mutual Company with its members as shareholders. They could cede a percentage of purse money in exchange for convertible oreferred bonds with a yield that would immediately exceed purse earnings for those horses owners who's entries would otherwise finish in a position for a piece of the purse. Even those HBPA members who's horses would not earn a piece of the purse would reap the benefit of the yield that would exceed earnings on purses even if they had.

The arrangement could interject a new paradigm for horsemen by providing a revenue source for which they do not have to compete, and yet earn collectively and individually by virtue of not taking their cut automatically off the top. The yield on the bonds combined with the appreciation in the underlying share price could far exceed any purse winnings only a small percentage of them would ever earn in the first place.

A deal structure like this could help the N-HBPA expand in those places where they do not currently represent the horsemen. In addition, the HBPA members themselves; and their associates, would be incentivized to run their handle through the combined Youbet/TVG as well/

[Indulto]

The National HBPA could finance the Youbet acquisition of TVG. N-HBPA could establish itself as a Mutual Company with its members as shareholders. They could cede a percentage of purse money in exchange for convertible oreferred bonds with a yield that would immediately exceed purse earnings for those horses owners who's entries would otherwise finish in a position for a piece of the purse. Even those HBPA members who's horses would not earn a piece of the purse would reap the benefit of the yield that would exceed earnings on purses even if they had.

The arrangement could interject a new paradigm for horsemen by providing a revenue source for which they do not have to compete, and yet earn collectively and individually by virtue of not taking their cut automatically off the top. The yield on the bonds combined with the appreciation in the underlying share price could far exceed any purse winnings only a small percentage of them would ever earn in the first place.

A deal structure like this could help the N-HBPA expand in those places where they do not currently represent the horsemen. In addition, the HBPA members themselves; and their associates, would be incentivized to run their handle through the combined Youbet/TVG as well/Welcome to the board, PF. Interesting premise, but how do you propose to reconcile the potential conflict of interest posed by a horsemen-owned ADW and the horsemen's current authority to approve all ADW contracts?

[trigger]

You so sure about relations between Churchill and Youbet? Where is there any evidence the current regime at Youbet has disdain for Churchill? Or vice versa? Lots of common Illinois connections between the two. Churchill is moving away from TV and into internet TV platforms. Far more likely Churchill buys Youbet than TVG. You have to be comitted to the TV distribution for you to buy TVG.

Youbet's track list doesn't list any Churchill controlled race tracks except for SA (due to the special California deal) so where's the cozy relationship? Evans does not like Youbet because it is an enabler of TVG's continuing ability to maintain its exclusivity stance.
Also, even if you don't, Youbet's new management recognizes the importance of merging with TVG before Churchill gets into the act.

[trigger]

Wrong, the TVG license agreement with Youbet goes along with a sale of TVG and that means Youbet would have access to all of the CHDN content if CHDN keeps it exclusive.
IMHO, if Churchill does buy TVG, it will drop TVG's exclusivity but it will cost Youbet dearly to carry TVG's former exclusive signals and also introduce competition from other ADWs.

[Photo Finish]

First; the ADW would be owned by the public shareholders, not by the "horsemen". The N-HBPA would own the debt (convertible to stock) but in no way on a conversion basis that would represent a controlling interest.

They could still choose to withold the signal from the ADW for which they are holding the debt instrument, in the event that they could not come to terms on the amount to be paid to purses, or the amount to be credited towards the debt instrument.

They could also grant; or withhold the signal from those that will either fund the purse account from ADW proceeds at level acceptable to them; or not.

[thruncy]

Tried to mimic TVG's touchtone bet menu. Unsuccessfully. Most of you people seem glued to a computer. Which is fine with the "low rent" policies of Youbet, Twinspires, and Expressbet. What do you do if you're at the track & want to get down fast? From all the angles I've looked at nobody comes close to the diverse technologies TVG offers. And it appears that most of those in this discussion are ignorant of TVG's diversity.