13 Jun 2002 Pre-2014 Releases

Today marks the end of my first term as Chairman of the British Horseracing Board. It is perhaps fitting therefore to reflect on the progress that has been made in those four short years since the Financial Plan was launched.

Despite universal industry enthusiasm for the Financial Plan, the media, bookmakers and many others did not think its goals were achievable. My predecessor branded it a ‘wish list’ and resigned rather than support it; ‘seriously flawed’ screamed B.O.L.A. who hired our auditors – now our ex-auditors – to rubbish it; ‘no chance of success’ wrote the media. And they all sat back and waited for us to fail.

They said that it would be impossible to generate a further £105 million a year for the racing industry … that we’d never persuade Government to abolish the Levy … or to transfer the Tote to Racing … or to replace General Betting Duty with a tax on Gross Profits.

They said we had no chance of identifying a commercial mechanism to replace the Levy, never mind implementing that mechanism; and that racecourses would never be allowed to offer year-round gaming facilities.

As we strove to persuade Government of the merit of our beliefs, the scepticism mounted, and began to include those in racing who were comfortable with the Levy system they knew, those who were frightened of change and those who blow with the wind.

But to those who stayed faithful to the cause, to those whose support always remained steadfast and loyal … to those who truly believed in what we were doing … I salute you … I thank you … and I congratulate you. For today I can stand before you and say: we did it. We achieved every single one of those goals to which I have just referred, all of which were identified in the Financial Plan.

None of those goals however could have been achieved without the foresight and the wisdom of Government and their advisers and I would particularly like to pay tribute to the parts played by Gordon Brown, Tessa Jowell, Richard Caborn, Jack Straw, Mike O’Brien, Elliot Grant, Dave Bawden, Clive Hawkswood and Harry Bush without whose help and support we would undoubtedly have failed.

Unquestionably, the most important of our successes has been the substantial increase in income for the industry we have achieved. In the past twelve months, between the Attheraces, Data and LBO picture deals, we have signed contracts worth almost one billion pounds.

You will recall that the Financial Plan said that British Racing needed an additional £105 million a year to be generated from self help and betting and media rights. Since then, as we look at our income forecast for 2003, we have actually generated an additional £110 million a year, £15 million from self help and £95 million from betting and media rights.

But there have been six other significant achievements outside the goals of the Financial Plan.

On the statistical front, the four key indicators – number of horses in training, total prize money per race, numbers of racegoers per meeting and number of owners – have all risen during each of the past four years for the first time, with prize money up 26 per cent over that period.

Second, we have modernised our whole management structure and approach. When I became Chairman, the BHB Board comprised entirely non-executive industry directors who, as part-timers, developed industry strategy and viewed the executive purely as a civil service.

After two Structure Reviews in the past four years, we have now agreed to reshape the Board by reducing sectional interests and increasing independent expertise and objectivity. At the same time we have put together a very capable team of executives with a clear brief to develop strategy and lead the industry. This will enable us to implement the changes already made, to further modernise the sport and to respond professionally to the challenges which lie ahead.

The recent Structure Review was approved unanimously by the Board Members. So far all but one of the shareholders have ratified the changes and I am hopeful that the other will follow suit in July.

Third, we are the first sport to legally establish data as a commodity for which a charge can be made, and we have finally unlocked its true value.

It is little over a year since some were insisting that BHB’s data was worth no more than between 2%-5% of the value of pictures. That myth has now been firmly laid to rest and a very large part of the worth of the LBO and Attheraces deals is now vested in data.

Fourth, we managed Foot and Mouth last year firmly yet sensitively. We made the right decisions for our industry without jeopardising the containment of the disease. We withstood enormous criticism both from within and without but in the end won the argument and the respect of both the media and other sports who followed our example and copied our procedures.

Fifth, we have now created, along with the bookmakers, an environment for peace between the racing and betting industries after a long-fought battle to receive a larger return from betting. I said when we signed the data deal in April that I thought we would henceforth develop a strong relationship with betting and I have seen no reason to change my mind since then.

If proof is needed, look no further than the fact that we asked John Brown to be our guest speaker here today – and he accepted. Two years ago both scenarios would have been unthinkable.

And finally, we put together a charter for harmony within racing called the Future Funding Plan which was more than a year in the making but was finally signed by BHB and 49 racecourses last June.

The Future Funding Plan agreed how rights should be sold, how countless issues within racing should be resolved and how income should be divided.

In an interview in February this year I said “Since June 21, 2001, when the Future Funding Plan was signed, there has been a completely different mood, a spirit of cooperation and I don’t think we will ever again see the in-fighting of the past”.

Both the BHB and myself were firmly committed to the Future Funding Plan. Although I am deeply saddened that the RCA and racecourses chose to cancel the agreement I no more intend to point fingers in public over the collapse of the Future Funding Plan that I intend to go over my views on the LBO picture deal. We are where we are and I will not allow these two disappointments to diminish the outstanding achievements which the industry has engineered these past four years. I prefer to pay tribute to the BHB Board, executive and staff who have worked tirelessly for the best interests of British Racing. To all of you a sincere thank you.

There is however one aspect of the LBO picture deal which I would like to highlight. Section 72 of the Copyright, Designs and Patent Act of 1988 allows terrestrial television to be shown free of charge in public places unless that public place either charges admission or increases the price of its food and drink during broadcast. In other words the intention of the Act is to prevent commercial gain being derived from free-to-air television.

The fact that bookmakers are willing to pay a racecourse £24,000 a race meeting for pictures which are not broadcast on terrestrial television is proof that the betting industry derives considerable commercial gain from showing pictures of horse races. So why should bookies be allowed to pay nothing to Epsom for the Vodafone Derby and nothing to Aintree for the Martell Grand National just because the pictures are available on terrestrial television? It is neither fair nor consistent with the spirit of the Copyright Act.

A Communications Bill will shortly be going through Parliament which could and should close this loophole and I urge the politicians in this room today to seek an amendment to the Bill which will prevent the screening of terrestrial television in betting shops on the grounds that it creates commercial gain for bookmakers without any recompense to the racecourses.

The considerable successes which I have outlined today, of which we should all be proud, have led some to conclude that there are no more challenges left for British Racing. Nothing could be further from the truth.

The Board has asked me, and I have agreed, to stay on as Chairman for a further two years. After that I shall definitely be standing down to spend more time with my young family and anyway by 2004 it will be time for a fresh pair of legs to take over.

For different reasons, the next two years will be just as demanding as the last four. We have undergone considerable change since 1998 and change is not always easy to manage, especially in an industry as reluctant to change as racing.

I foresee four main challenges that will confront us during the next couple of years.

First, we must manage our new business efficiently. Historically BHB has had very little business to manage. But in the new commercial environment, we must ensure that licences are signed with all who use our product, and that payments by users reflect both the value to their businesses and the contractual undertakings that they have entered into. Compliance procedures, as with all intellectual property use, will be of paramount importance.

So too will the expansion of our business and we shall be looking to the commercial arm of BHB, which will be operated under the name of BHB Enterprises plc., to develop new income streams for the benefit of the industry.

Second, we must spend our new-found wealth wisely. Much of it will continue to pass through the Levy Board for the next three years or so and we must work closely with Rob Hughes and his team to ensure that we plan properly, allocate fairly and evaluate thoroughly. We must also keep a watchful eye on costs and should constantly expect cost centres to justify the money they are spending.

Third, we must develop a Business Plan for the industry. When you don’t know how much money your rights deals will generate, that is virtually impossible. Now that we can project the income for our industry with reasonable accuracy, we face a different problem. What shape and size of industry do we want? Until we answer that question we cannot produce a Business Plan.

Our financial and management structures have finally moved into the 21st Century but our racing product hasn’t changed much since the 18th Century. Is that what our customers, and more importantly our potential customers, want? Do our stakeholders desire change?

The honest answer is that we don’t actually know because, although we’ve tinkered with our product on a needs-must basis over the past few years, we’ve never had a top-to-bottom review of racing and how it is presented.

To make decisions on the future shape of the industry we are going to have to ask ourselves some searching questions. How many additional owners and horses will be attracted by the greater rewards that will now be on offer? How many fixtures do we want? Who is going to fund them? Do we want horses to be rewarded according to merit? Do we want narrower handicap bands? Should we establish tighter limits on the number of runners in a race? Do we want a more readily identifiable Premier Racing product? Do we want more, or less, centralised race planning? Should we be offering a regular morning racing product?

The collapse of the Future Funding Plan means that we have to ask ourselves other questions as well. How, for instance, do we ensure a fair distribution of income between all the stakeholders? How do we free-up competition between courses without creating chaos?

These questions and many more all need answers. I am therefore delighted that on Tuesday the Board authorised a thorough review of racing that will be both far-reaching and all-encompassing.

I am also delighted that at Tuesday’s Board Meeting, the various sectors of racing agreed to put their recent disagreements behind them in order to work together cooperatively and collaboratively to find the right answers.

This process must not only embrace all of racing’s stakeholders but must be inclusive of the betting industry, the media and the fans.

We should not prejudge the outcome of our Review. We may recommend no changes at all, though I doubt it. It is certain that the substantial increases in prize money that will occur in 2003 will bring about a significant rise in the horse population, which will in turn encourage the creation of even more fixtures. While this will be anathema to some, we must not lose sight of the fact that in the new commercial and deregulatory environment we must compete for punters’ attention with other products. If ours is not available, punters will spend their money elsewhere.

No-one should underestimate the enormity of the task nor the challenge of finding solutions acceptable to the many sectors of racing as well as our key customer groups. We must also be mindful that our solutions must pass muster with the competition authorities and be complete by the end of the year so that we can take them into consideration when planning the fixtures and race programmes for 2004.

Which brings me to the last but by no means the least challenge – keeping the industry together. Change, as I have already said, is never easy to manage. We have already undergone enormous change in the past four years – and survived it. Now we are likely to want to make further changes to adjust to our new financial situation and may be required to make even more changes by the competition authorities.

Managing this set of changes will be harder than ever because there are so many divergent views on the way forward. But we must not lose sight of our commonality of purpose†_x0013_ to have a thriving racing industry†_x0013_ and our interdependence. Without horses there would be no racecourses but without racecourses there would be no racing.

If the will is there to bury the hatchet, to work together and to compromise occasionally for the good of the sport, there is no limit to what we can achieve. Those of us in leadership positions must encourage our constituents to embrace this ethos while we work to agree a vision for British Racing.

The role of the BHB is simple. It is to balance, by majority vote, the interests of the many stakeholders in the industry for the overall good of the sport. BHB, in topical football parlance, is the referee between the players and the venues, there to ensure a sporting, fairly-played game.

One of the benefits of the new BHB Board structure will be that any sector of the racing industry will be able to make its case to seven out of twelve directors who will not have been appointed by an industry association, since those four independent, and three executive, directors will have no other motivation than to act in the best interests of British Racing.

You can rest assured that I shall continue to do everything in my power to bring all sectors of the industry together. But I cannot succeed in this task without everyone’s cooperation.

Let us make sure that we build on what we have achieved, because the opportunities presented by our new financial status are many and exciting. However, we can only benefit from them fully if we have the desire to provide the leadership and example to our constituents and the will to overcome the very real challenges which lie ahead, just as we showed the will to overcome the ones that faced us back in 1998.

But above all else, today is a day for celebration. We should rejoice in our progress and our achievements. As the finest racing nation in the world, British Racing deserves nothing less. It has been a long journey, but a worthwhile one.