My Lords, Ladies and Gentlemen, honoured guests.
Welcome to the British Horseracing Conference and thank you for coming.
This is an annual event that gives all of us the opportunity to look back at the year just gone but importantly to discuss the critical issues affecting horseracing in the future.
Before we start I’d like to introduce the BHA stakeholders and executives here with us today.
Alongside me are:
· BHA Chief Executive, Nic Coward;
Representing our stakeholders:
· Rupert Arnold, Chief Executive of the National Trainers Federation;
· Ian Barlow, Chairman of the Racecourse Association;
· Paul Dixon, President of the Racehorse Owners Association and Chairman of the Horseman’s Group;
· and Kirsten Rausing, Chair of the Thoroughbred Breeders’ Association;
We’re also joined by:
· Chris McFadden, Chairman of Racing Enterprises Limited.
And naturally, alongside us we have my BHA Board Members and the BHA Executive team.
As at past conferences, we’ve allowed some time later in the morning for questions from the floor. I hope as many of you as possible will use that opportunity for a productive discussion. However, if we run out of time we’ll all be available over lunch to discuss any further points you wish to raise.
I’d like to direct your attention to the BHA Annual Review, which is available here today and reports on the highlights of our activities over the last year as well as setting out our 2010 objectives. It also gives you an insight into the day-to-day workings at the BHA whether that’s Racing, Race Day Operations, Integrity Services or Equine Science and Welfare.
As you know our role at the BHA is to ensure the continued health and successful development of British horseracing, providing the highest standards for the sport and its participants.
Of course it’s the racing itself that captures the imagination and 2009 was once again a stellar year for our sport. Kauto Star over the jumps and Sea the Stars on the flat were simply sensational. But I’m sure all of you will have your own personal and thrilling memories – and not just at Cheltenham or Epsom. Part of the pleasure and excitement of British horseracing is its diversity. It’s not just limited to our favourite trophy meetings. Sometimes the biggest thrill is when we unexpectedly spot the next superstar at one of our smaller racecourses.
I can’t think of another sport where passion runs as wide and as deep as it does in British horseracing.
But we are, of course, much more than a passionate hobby.
Directly and indirectly, British horseracing supports a big business: 100,000 full-time jobs, core industry spending of £1 billion, over £300 million paid in tax to the Treasury every year and an overall economic impact of nearly £3.5 billion per annum. Direct employment, more often than not, is based in rural areas where jobs are hard to come by.
We’re the second biggest spectator sport in the country with nearly 6 million individual attendances at racecourses, more day time terrestrial TV coverage than any other sport and approximately £11 billion wagered on racing in Britain alone.
Aside from the pure economics, our impact on the community is huge.
Through the Racing Together programme, BHA (with Business in the Community) has shown the warm heart of our sport, which provides just under two hundred charity racedays for a range of good causes each year, has helped tens of thousands of children to develop key learning skills and pursues many other community initiatives, large and small, local and national.
We also try to take care of our own. Words cannot express the grief felt by all of us in Racing at the loss of Jamie Kyne and Jan Wilson in the Malton fire last year. The Malton Fire Appeal, led by Racing Welfare, has raised more than £110,000 in donations over recent months: no compensation for the loss of these two vibrant young talents, but a sign that Racing cares and will never forget them.
As a sport, as a business and as a community Racing is an intrinsic part of British life and our social fabric.
At the BHA, we’re determined to ensure that Racing’s impact and importance is understood by all of those who have an influence on our future, especially government.
We’ll continue to present Racing’s case in a positive and cohesive manner so that we leave key opinion in no doubt as to the strength and correctness of our cause.
Sometimes our passion can work against us – as demonstrated by our previous failings on occasions to speak with one clear voice. Analysis, self criticism and internal debate are healthy and constructive and should be encouraged. However, sometimes people are still too quick to criticise, shoot from the hip and make one-off, destructive and often uninformed comments.
I know that when a leading trainer wakes up one morning and decides he has to get something of his chest, the words are usually heartfelt and certainly not designed to damage Racing.
But, in some cases, that’s the effect they have. The impression given can be one of confusion and disunity.
It’s therefore hardly surprising at times to hear respectable opinion making comments along the lines of: “Racing can’t get its act together” – “They can’t agree amongst themselves” – “not sure who’s saying what and who I’m supposed to be dealing with”. “And by the way haven’t they just moved to a very expensive new office in High Holborn.”
Incidentally, the answer to that is “No”. The move saved the sport a million pounds.
Whilst accepting that we’re a complex constituency of interests, we all really do need to think hard before we speak out on issues of the day so as to make our case reasoned, consistent and compelling. A question for you. Is it inconceivable that we can get the majority of people in our sport on the same page with regard to key issues? I firmly believe we can.
We need to demonstrate we’ve a thoughtful and cohesive plan to meet Racing’s challenges, rather than a list of abstract issues and whinges.
Incidentally, I hope you don’t think I’m being an over-sensitive flower here. I agree with Francis Baron, Rugby Union’s chief executive, when he told a newspaper the other day – “you don’t want to get involved in sport management if you’re not prepared to take a bit of flak”.
Later on this morning we’re going to hear from Rod Street about the Racing for Change project.
RFC has prompted a hailstorm of forthright and honestly held views, some of them better informed than others. Some say that it’s going too far, others that it’s not going far enough. I think it’s steering a sound course – right between the middle of these conflicting opinions.
I don’t accept the suggestion by some well-known Racing journalists that we’re wasting our time appealing to a new audience that simply doesn’t exist. I’ve never been involved in a business or project in my life which accepts the status quo. No business, however successful, should take its customer base for granted. It’s simply defeatist and wrong to claim, as I’ve heard say, that these new customers don’t exist.
One of the things that RFC will do is to find ways to help us connect with an emerging generation of new potential race goers.
When I was a young boy growing up in Epsom my passion for racing started by going up to the Downs, seeing horses on the gallops and standing at Tattenham Corner watching racing for free. I didn’t have Facebook, a Twitter account, a mobile phone, or an IPOD and satellite TV in my bedroom. The world was not competing for my attention as ferociously as it does now. The simple fact is that we all have to work much harder to be heard and to be seen.
Racing for Change is a vital project that we need to support if we’re to maintain and grow our popularity and, of course, our revenues.
By the way, RFC isn’t something that’s been dreamt up by a bunch of marketing suits, as I’ve seen it described. It’s not a product of minds unacquainted with Racing. Any changes to the fixture list and to the way we attract new audiences will only be introduced with Racing’s blessing. The consultation process has been and continues to be far reaching and comprehensive. It’s not the BHA’s project – it’s Racing’s. All of Racing’s constituents are being listened to and are contributing.
RFC isn’t about dumbing down our sport or taking it to some hopelessly low common denominator. There’s absolutely no way we’ll undermine the bedrock of our sport. No dismissal of values and tradition that make British horseracing the best in the world. There’ll be no attempt to “fix something that’s not broken”. It’ll be very much about making more of the crown jewels and the valuable assets that we already have.
And frankly none of us know for sure whether all of RFC’s proposals will fly. But we’re never to going to find out if we don’t make the effort. Doing nothing in this competitive world isn’t an option.
Above all, and I’m sure Rod will talk about this, it means getting our story out there. Everyone in this room knows that British horseracing is the best. But they don’t all know it “out there”, and, by the way, with a few exceptions, they don’t know it in Westminster. If they did I doubt whether we’d still be facing some of the funding issues which Nic and I will talk about later.
It goes without saying that we also have to keep our existing customers happy. Last year we did. Racecourses did a great job. Attendances were fractionally up on 2008. Not many achieved that kind of performance in a desperately tough year for the economy and the consumer.
We do however, have to keep an eye on other statistics. Over the year horses in training declined by 3.2%, active broodmares by 2.5% and foal production was down 5.5%. Perhaps more importantly, foals born in Ireland fell by over a fifth. These trends are likely to continue downwards and are important leading indicators for the sport.
Whilst we’ve seen some signs of recovery in markets, it’s clear that the economic background will remain difficult in 2010.
The BHA will continue to be diligent with regard to its costs – delivering more and better service to the sport for less, through changes in working practice, better control of expenses and other initiatives. Having kept the budget flat for two years, Nic’s team is now reducing it for 2010, with part of the savings coming from the successful move to new offices in Holborn.
The new office houses the BHA alongside all of its stakeholders, thus serving the dual purpose of saving money and bringing the sport closer together. It’s already evident there’s a much better dialogue going on by everyone being in the same location.
BHA delivered many tangible benefits to the sport over the course of the year, all of which are highlighted in our Review and Nic will mention some of these in his comments.
As Nic will explain in greater detail, a lot of effort went into improving the fixture list last year and this continues to be work in progress. We want to make the most of our best racing and we aim to have a transparent funding mechanism in place to incentivise the racecourses to deliver that. This is however against a background of declining levy income.
In the next couple of weeks we’ll be working with the betting industry and the Levy Board on the 50th levy scheme. In this era of fast-moving change, it seems more than a little odd that the biggest single part of Racing’s income is generated through a formula that’s almost as old as I am. Whilst everyone’s been working on modernisation of the levy, a replacement is still unfinished business.
Our approach to negotiation is consistent with what I’ve told this conference in past years. Racing demands a fair return from betting for the product that it delivers, nothing more, nothing less.
One of the starkest figures to come out of Deloitte’s review of the Economic Impact of British Racing last year was the comparison between Britain and other major racing nations of betting turnover and returns to the Racing industry. In Japan, betting returns 5.3% of turnover to Racing. In the United States and France the figure is even higher at 8%. In the UK the figure is just 1%.
The return from the PMU in France is over €700 million, around six times more than the return to British horseracing from the levy and the Tote.
And it’s getting worse. Last year Racing saw a 20% drop in its receipts from the levy; this year it’s forecast to drop further, not least as a result of moves offshore by some of the major bookmakers.
Betting’s obligations to Racing in this country have been enshrined in legislation for many, many years. The fact that changes in communications, technology and regulation have enabled betting to change its way of doing business – for example by going offshore – doesn’t remove Betting’s debt to Racing. I look to Government to develop – as a matter of urgency – the means to ensure that these obligations are met as intended by the law of the land.
I’m encouraged by the Sports Minister’s announcement in January and his stated intention to ensure that all operators taking bets on British races pay to support British horseracing. But I’m also conscious that this will probably require a new licensing system and legislation – and that takes time.
Yet we must also show some understanding to the betting industry. For the first time since I can remember there’s a much more constructive dialogue taking place between us at all levels. That includes sharing important betting data and positioning Racing as an attractive betting opportunity relative to other sports. The key betting appointments as part of the Racing for Change project recognise this need for closer cooperation.
Betting and Racing also need to work together to understand how the development of exchanges will affect us over the years to come. The impact of exchanges on liquidity, bookmaking margins and the maintenance of integrity services with its escalating costs is significant. This is an enormous challenge facing both traditional bookmakers and Racing and we must respond to it.
Bottom line, betting is changing but we’re determined that Racing doesn’t foot the bill for its transition to a new business model. Whether that’s high street versus on-line, on-shore or off-shore. Whatever the business model Racing has an absolute funding need and betting has an absolute funding obligation. Betting’s contribution simply doesn’t sustain our current racing programme and the attendant costs of the sport including welfare, veterinary research and integrity services. Nic will talk in a few minutes about the work we are doing in these and other areas.
Nor does betting’s contribution support a level of prize money to reflect the cost of racehorse ownership. Something has to give. At present the British horseracing purse is too thinly spread. Either race numbers have to come down, which is counter to the demands from bookmakers, or the prize money has to go up. We can’t afford to lag behind our international competitors any more.
I’d also like to say a few words about the Tote.
Whilst it’s evident that Government needs to reduce its deficit, this aim should exclude the sale of the Tote on any basis other than one that enables it to fulfil its core, age-old mission to support Racing.
To quote the Government – “The founding purposes of the Tote in 1928 were to run on-course pool betting on horseracing as a non-profit making activity and to distribute any surpluses for the benefit of racing”.
To imperil this aim, or to water it down in some way, would be totally wrong and a body blow to Racing at a time when we simply can’t afford it. It would be wrong for Racing and wrong for the Tote, its employees and customers. Ultimately, given Racing’s contributions to tax revenues, it would be wrong for the Treasury too.
The Tote hasn’t cost a penny of taxpayers’ money. It’s part of Racing and that’s where it should stay.
At the BHA we’re enormously grateful for the hard work of all our staff, our stakeholders and the many others who contribute so much to keeping our sport moving forward.
Racing has its challenges but I’m confident that we now have a sharper focus on the key issues. I’m much encouraged by the very vibrant, healthy debate and discussion that’s currently taking place in the sport. There’ll always be differences of opinion but I believe that we’re starting to identify opportunities and initiate change which will enable us to grow the sport and take it to another level. None of this could be achieved without the enthusiasm and passion of our stakeholders and participants – unrivalled in any other sport.