MEDIA RELATIONS: Was the game ever really going to be up? - The row between lottery operator Camelot and the Government over bonus payments to some directors was settled amicably, but was the Government merely playing to the masses?

In the end, after a week when differences appeared intractable and relationships seemed to have soured, a face-saving compromise was hammered out. Camelot and the Government were suddenly looking like the best of friends again.

In the end, after a week when differences appeared intractable and

relationships seemed to have soured, a face-saving compromise was

hammered out. Camelot and the Government were suddenly looking like the

best of friends again.

In an exchange of fulsome letters between Camelot chairman Sir George

Russell and National Heritage Secretary Chris Smith, the latter lauded

the lottery operator for its ’outstanding’ performance.

The issue that had dominated the headlines - the substantial increase in

bonus payments to top executives (or ’fat cats’) at a time when lottery

turnover had fallen - was well and truly fudged. Although the fudge -

whereby the Camelot directors agreed to establish a joint fund from

their long-term bonuses without any obligation to reveal the size of

their contributions to said fund - certainly favours Camelot.

Last Friday’s accord was the product of some intensive behind-the-scenes

negotiation but the question is for how long had they been going on?

Were Labour’s ministerial sabre-rattling, and the Camelot directors’

ostensible brinkmanship in threatening resignation just public

posturing, while a deal was being settled behind closed doors?

One Camelot insider certainly hints that this was so. ’We are not as

surprised as many people that it’s turned out this way,’ he says,

’This was all about the politics of theatre. Wise heads within the

government have now decided they’ve got the best out of the situation

and that it’s time to take things forward.’

Others, however, dismiss the suggestion of a deal worked out long


One lobbyist who works in the area, suggests Camelot was so confident it

had squared things with the regulator Oflot that it failed to address

the likely reaction of the new Government. Certainly Camelot and its

array of PR advisers - The Communication Group, Brunswick, Harrison

Cowley - were caught off-guard by how the story leaked out.

’The way it came out was the worst possible scenario for Camelot in that

they weren’t able to put any gloss on the figures,’ says Express

consumer editor Paul Crosbie. ’I think they handled it appallingly.’

Once the figures were public, the Government, buoyed by its huge

majority and basking in public approbation, shamelessly milked the fat

cats publicity for all it was worth.

Camelot was a convenient target and Labour made sure it drew media fire

by briefing senior journalists about Tony Blair’s anger at the

directors’ greed and insensitivity.

The tabloids went to town on yet another fat cats story. There were even

signs in some of the reporting elsewhere, notably by the FT, that some

of the shareholder companies in Camelot were no longer singing from the

same song sheet and were in danger of falling out, although, now that

the dust has settled, a united front is being presented.

’Camelot has done a splendid job so yes we are happy with how it has

handled things,’ says Sarah Carmichael, PR director of Camelot

shareholder GTech. But how good a job did Camelot’s PR machine do? It

had done much to prepare the ground with the financial media in previous

months, with a mini-roadshow, introducing directors to City journalists,

organised by Brunswick and Camelot’s in-house team.

This does appear to have paid off with broadsheet City editors rushing

to Camelot’s defence. The message that the bonuses were in fact for the

previous year’s record results and that independent research had found

the UK lottery to be the most efficient in the world also filtered

through to the main news sections.

Yet coverage in the tabloids - the papers whose readers, as Labour well

understood, buy the majority of lottery tickets - was overwhelmingly


What is impossible to know at this stage is how much damage the row has

caused the lottery in the long-term.

As for its relationship with the Government - it seems likely that

Camelot was saved more by Chris Smith’s miscalculation than its own

lobbying strategy.

One version of events has Minister without Portfolio Peter Mandelson

intervening and counselling compromise, fearing that Smith had painted

himself into a corner.

Whether he was involved or not, plainly Labour came to see that it had

gained the maximum capital it could out of the dispute. Not to have

given an inch would almost certainly have left Camelot’s senior

directors little option but to carry out their threat to resign.

Such an eventuality was not one Labour would have welcomed. It could

conceivably have sparked an exodus of top personnel from Camelot and

destabilised the National Lottery - an income source for public spending

Labour prizes every bit as much as the previous Government.

Moreover, as Camelot chief executive Tim Holley, communications director

David Rigg and finance director Peter Murphy all had their bonus

arrangements written into their original contracts - drawn up even

before Camelot secured the lottery franchise - they could conceivably

have launched legal action against the Government.

With Labour assiduously courting big business, a protracted and highly

prominent dispute with well-known businessmen was not a prospect which

Blair and his party managers would happily have countenanced.

Having hitherto made all the PR running, Labour decided there was more

to be gained from a swift conclusion to the affair. What will worry

public affairs practitioners elsewhere is the prospect that this is a

Government more concerned with playing to the masses than conducting a

sensible dialogue.

The evidence on this occasion is that neither side is a winner

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