10 Jun 2004 Pre-2014 Releases

Since the formation of the British Horseracing Board in 1993, British Racing has achieved many notable successes specifically in realising enhanced revenues that have contributed to a remarkable increase in the prize fund from £34m to £94m during 2003; an expansion in the Fixture List from 1113 during 1993 to 1270 in 2003; and a rise in the number of horses in training and active owners, with the former showing formidable growth from 10,682 to 13,088 and the latter increasing from 8,265 in 1993 to 8,949 during 2003.

These outstanding statistics are supplemented by numerous policy initiatives by the BHB Board – the introduction of Sunday racing (with betting), Summer Jumping, the Appearance Money Scheme, Prize Money Incentive Scheme (which gave such an important boost to prize money when it was most under threat) and owners’ and jockeys’ sponsorship, together with a properly funded central marketing function, are only a few innovations which exemplify the structural change that has benefited British Racing since the BHB’s genesis. Equally importantly, from my perspective, is the international recognition of our Racing’s pre-eminence, with the significant enhancements to the Pattern during 2003 and 2004.

This is a sport in the ascendancy. When we add the further evolution of the sport detailed in the Modernisation of British Racing, supported as it is, by all sides of the industry, we can be assured of the continuance of its unprecedented success.

With such a demonstrable record of self-improvement, it is ironic that, as BHB celebrated its tenth anniversary, it should be facing its most momentous challenge yet, the Office of Fair Trading (OFT) investigation into British Racing.

In April 2003 the OFT issued its preliminary findings to the effect that British Racing operates Orders and Rules which infringe Chapter I of the Competition Act 1998. We strenuously contended that this view was wrong. The robust logic of our legal and economic arguments was complemented by an assertive PR campaign, together with cross-party support from Westminster.

I make no apology for taking what some believed to be an over-aggressive line in our responses to the OFT. It was essential for those within and outside our sport to understand why it was so important for British Racing that the OFT’s initial proposals were resisted. The forceful public posturing was complemented by the development by BHB, its Shareholders and all Racing’s stakeholders of a blueprint for the sport encompassing a redefinition of the commercial, governance and regulatory structures that have served the sport well in the past but are incompatible with dynamic business practice in the 21st century.

The results of BHB’s year-long Racing Review were published in April and June 2003. The conclusions of the Committee, of which I was a member, reflect the desire within the sport to ask the difficult questions of itself in order to develop and progress.

The Modernisation of British Racing document, launched today, continues that evolutionary process. It recognises that British Racing is a business and it promotes commercial principles to the forefront without unravelling the irreplaceable diversity and pre-eminence of the sport. In case anyone doubts it, we never forget that sport is the heart of our business. Peter will be talking in greater detail about the Modernisation of British Racing a little later.

I am compelled to emphasise the unparalleled success of British Racing, best exemplified by the new prize money record of £94m in 2003, attendances topping 6m for the first time and betting turnover, even though under unprecedented attack from a variety of different products, reaching in excess of £9bn. The popularity of British Racing amongst ordinary punters continues to grow.

The one blight was the regrettable decision by the Levy Board to reduce Prize Money by £6m in the last third of 2003. We strenuously argued that this measure was not only unnecessary but unsubstantiated. The reduction was in the event offset by an additional, highly commendable racecourse contribution of £1m at a time of year when little flexibility in budgeting exists.

Part of the reason for the rise in betting activity has been the expansion of the Fixture List, a key feature of both the Racing Review and the Modernisation of British Racing. There is no abatement of the Board’s policy to look to grow the sport where justified, and it is envisaged that in 2006 there will be 1,500 fixtures. The horse population and consumer demand more than warrant such an increase and we look to the initiatives emerging from Lord Donoughue’s Stable and Stud Staff Commission to provide a solid framework within which our irreplaceable, much-valued workforce can effectively service these new opportunities.

Some say that over-supply can only damage the image of British Racing. I strongly refute this: our marketing imperative should be to promote the best while our commercial imperative should be to maximise income for the best use of the horse population, in conjunction with racecourses. These two principles can co-exist without damaging British Racing’s best and most renowned characteristics – as an example, 2004 sees a record number of fixtures, but also 18 Pattern Race upgrades, approved by the European Pattern Committee in recognition of Britain’s pre-eminence.

On the promotional front, 2003 saw BHB launch Awards commemorating the excellence of our champion Flat and Jump performers. I am confident that these Awards will become established as the hallmark by which the “Greats” are judged. Falbrav was the worthy inaugural recipient of the Horse Of The Year Award on the Flat, having done so much for British Racing across the globe, with Best Mate the unquestionable Jump Horse Of The Year, following a third consecutive Tote Cheltenham Gold Cup. Formation of the BHB Grand Slam, Summer Triple Crown and Middle Distance Championship – the latter won by Falbrav – provided further excitement for an illustrious array of British Group 1 events.

I was particularly pleased with the success of our new procedure for the assessment of Applications for New Racecourses. Following full appraisals of all the proposals against published Guidelines, the Board endorsed Great Leighs’ application to construct a racecourse in Essex. We look forward to its world class track design and facilities adding further diversity and reaping commercial reward when, as is planned, it becomes operational in January 2006.

Still a burning issue in 2003, and likely to remain so, was that of betting exchanges and their impact on Racing. It is fair to say that they have provoked outrage internationally with major international horseracing jurisdictions, most notably Hong Kong, Australia, the US and France strongly asserting that exchanges represent a significant threat to the sport’s integrity.

The damage that could be created by a betting exchange market operating without appropriate regulation was evident in many recent media headlines, inevitably reducing public confidence in integrity, the foundation of our great industry. Whatever potential problems existed in the past, there is no doubt in my mind that the scale of this threat is unprecedented.

BHB, while acknowledging the undoubted popularity of betting exchanges, has long held the view that they must be subject to proper regulation. Racing requires support in order to maintain public backing for the sport and we ask DCMS and others in Government to recognise this and take the appropriate steps. The recommendations we made to, and which were accepted, by the Joint Scrutiny Committee on the Gambling Bill hardly represent a burden on betting exchanges as they will, by the betting exchanges own admission, affect so few of their customers. And yet, they would afford our great sport the protection it so clearly needs against the damage which can be caused by so few.

If Betfair take the integrity of the sport as seriously as they claim, we would encourage Betfair, and other exchanges, to set aside their drive for even more profits today and take a more enlightened approach to this issue and not dismiss repeatedly the genuine concerns being expressed in many quarters. A lack of resolve by those who determine these matters may undermine both the integrity and, ultimately, the financial viability of a sport that has experienced recent exponential growth unmatched by other sports in this country.

I should add that BHB has been accused of deploying integrity arguments only to mask our commercial interests. This is absolutely not the case, and never will be. The integrity of racing will never be sacrificed for the pursuit of commercial goals.

We make no apology, however, for having commercial goals. The betting exchange market utilises BHB’s database and, as such, must pay a fair price. The Board is convinced that the exchange market does not pay an appropriate price to Racing for the value that it receives.

On a like-for-like comparison – for every pound of levy generated by the traditional betting industry, the betting exchange market remits approximately 25 pence, for an identical use of the British Racing database.

If the betting exchange market were to pay for the use of BHB’s database solely by reference to a betting exchange’s commission, then as more exchanges emerge and the market becomes ever more competitive driving down commissions, we could face the prospect of a strongly growing multi billion pound betting exchange market contributing just a few million pounds for British Racing without which it could not exist. That cannot be right.

And for those exchanges which tell us that they are bookmakers purely because they have a bookmaker’s permit and consequently should pay on the same basis as traditional bookmakers, one simple test tells us that they are not. If Ladbrokes lose their bookmaking permit, they have no business. Take away Betfair’s bookmaking permit and their business won’t miss a beat.

And for those who say that regulation will simply drive exchanges offshore, let me say categorically that we will not supply data to any exchange which seeks to evade proper regulation and will continue to seek out and prevent any unauthorised use of our data, wherever it takes place.

Let me assure betting exchanges that we see that a properly constructed relationship can be positive for us both. We are therefore taking time to develop our thinking. We look forward to a constructive dialogue with exchanges over the coming months to ensure that the proper price is paid by the betting exchange market for British Racing.

As I have often stated, the success of British Racing is not limited to an analysis of its financial prosperity. There are many initiatives within the sport that go unheralded. The Retraining of Racehorses programme continued its vital support for the work of charitable Rehabilitation Centres during 2003. The creative activity of the centres and the interest shown by many owners and trainers in securing the futures of ex-racehorses are benchmarks to which our international colleagues rightly aspire.

We have again enjoyed the encouragement and support of the All Party Racing Group jointly chaired by Jeff Ennis and Richard Page. Their passion for racing is boundless and their vocal support throughout the OFT process was greatly appreciated. The Shadow Racing Trust, under the Chairmanship of Lord Lipsey, dealt with ongoing issues relating to the transfer of the Tote. We look forward to this matter being progressed to Racing’s continued satisfaction during the latter half of 2004 following the passage of the legislation which will also lead to the abolition of the Levy Board, planned for 2006.

The demise of the attheraces channel in March 2004 was a disappointment to all in the sport. At the time of writing, we have the prospect of two rival channels succeeding attheraces. Precedent suggests that two channels are not commercially sustainable, but only time will tell. As it holds no picture rights, BHB’s involvement is limited, but we are committed to achieving an outcome that does not replicate the shortcomings of predecessors. A single channel, with coverage of all 59 racecourses, would be of obvious benefit to the sport and would deliver the promotional and commercial advantages that other sports can only envy.

I take this opportunity to extend my gratitude to the outstanding BHB Executive team and staff members. Their unstinting commitment encourages me to reiterate my long standing view that BHB employees unfailingly demonstrate a quality, passion and enthusiasm unrivalled in the international racing fraternity. My only disappointment was the departure of James Halley as BHB Finance Director in March 2004. James’s intellect, engaging personality and thorough professionalism all contributed to a deserved reputation throughout British Racing as an outstanding custodian of the sport’s finances.

I end with the man who has been synonymous with BHB since 1998 and who departs as Chairman at the end of June 2004. Time will demonstrate the true worth of the legacy left by Peter Savill during his remarkable tenure. I personally will miss the presence of an inspirational Chairman, whose tireless devotion to the best interests of British Racing deserves the recognition and gratitude of every one of us involved in the greatest of all sports.