As Sky and Channnel 4 vie for the rights to televise live action from the 12 British "premier league" racecourses, sponsors are warning that they could pull out if racing were wiped off terrestrial channels.

Discussions continued in London on Monday as Channel 4 gave details of an enhanced offer in the face of strong competition from Sky.

The so called "Super 12" tracks (Aintree, Ascot, Cheltenham, Doncaster, Epsom, Goodwood, Haydock, Kempton, Newbury, Newmarket, Sandown and York) have yet to make a decision, but an announcement is expected later this week.

Sponsorship was worth over Stg £18 million to British racing last year, a significant contribution to the total prize money pool of around Stg £60 million and is crucially linked to the size of the television audience.

Terry Barwick of Vodafone, who will be sponsoring the Epsom Derby until 2002 to the tune of Stg £3 million, commented: "Racing knows that the one thing sponsors watch very closely is the size of the TV audience.

"Whatever happens the Derby will be shown on national television but no one has approached us or any other sponsors as far as I know about our views on who should get the new contract.

"Although Sky might pay more it won't be a good deal for the sponsors and ultimately the racecourses if the audience is minimalised. I'm sure a lot of sponsors would think twice."

Clearly Channel 4's audience on terrestrial television would be greater than Sky's but another consideration for the Super 12 is which horse to back when looking at revenue accrued from interactive television betting - an imminent development in the technology revolution.

Both competitors are offering such facilities. Channel 4 are linked to NTL, a worldwide cable network, while Sky has a stake in the digital service Open which has just announced a tie-up with Blue Square, an online betting company whose service will be up and running by the end of March.

Rupert Murdoch owns Sky and Bill Gates, the Microsoft tycoon, is a substantial shareholder in NTL.

The reason for their interest has nothing, of course, to do with altruism and the desire to assist the equine industry but everything to do with the huge profits predicted from global gambling on British racing.

Built in to whatever deal the Super 12 eventually agree would be a percentage of this worldwide drop.

Whether the 12 go ahead on their own in this or whether the remaining 47 tracks are brought in could become a contentious issue but the Racecourse Association, which looks after all 59 racetracks in Britain, has been making noises along the lines of "united we stand, divided we fall".

Included in the Channel 4 package is an offer to cover a race meeting every day on its terrestrial station in addition to launching a specialised racing channel.

Whoever wins there will be no worries about coverage of the Derby and Grand National, two protected national events. Legally these must be available to terrestrial television and part of the Sky package is that the BBC will have access to these races.