The first fortnight of 1998 could scarcely have been more dramatic. BHB lost a Chairman and Racing gained a Financial Plan which effectively shaped the political agenda for the rest of the year. A year in which Racing acquired a new sense of central purpose and direction, which will stand it in good stead as it faces the challenges of 1999 and beyond. A year in which the Chairmanship baton passed from John Wakeham via Tommy Pilkington to Peter Savill, whose unanimous election by his colleagues in May put the final seal on the unity within the industry which remains a prerequisite to real and sustained progress being made on the key financial issues.
Against this background, I start my review of last year with three key issues which have dominated BHB’s political agenda during the past twelve months.
The BHB’s Financial Plan for British Racing, launched at this very Forum a year ago, has been, and continues to be the subject of an on-going dialogue with Government who, without passing any immediate judgement on it, welcomed the production of the Plan as a constructive contribution to the discussions and negotiations which will necessarily precede the imminent expiry of the Five Year Levy Agreement. At meetings during last year with Home Office, Treasury and Customs and Excise officials, BHB was asked a large number of questions arising from their initial review of the Plan, to which full and detailed answers have been provided. These were helpfully complemented by the TBA, who commissioned from NERA what proved to be a clear, if disturbing analysis of the problems facing the thoroughbred breeding industry. I am confident that, as we go into 1999 and prepare for meetings with Home Office and Treasury junior Ministers planned for next month, officials in those key Government Departments have a greater understanding of the dynamics, finances and structural weaknesses of the Racing and Breeding Industry.
This major British Industry was dealt a potentially damaging blow in June, when the Chancellor of the Exchequer suddenly announced that the Government would consider how to extend the existing public-private partnerships in the Tote into a broader partnership with the private sector. Notwithstanding subsequent reassurance from the Home Secretary that the consequent review would take account of, among other factors, the health of horseracing, BHB consistently sought to make it clear to Government that Racing has a unique relationship with the Tote which must be fully protected. The BHB’s detailed position will be explained to you a little later by Peter Savill.
More generally, the Tote had something of a rollercoaster year. Twelve months ago, Peter Jones and his colleagues had conditional agreement to an acquisition which would have increased the Tote’s presence in the highly profitable High Street market by over 60%. Taking a strategic view, and recognising the benefits to the Tote, BHB opposed a reference of Ladbrokes unconditional acquisition of Coral to the Monopolies and Mergers Commission, and in principle supported the merger in evidence to the MMC when it was referred. The fact that the Tote lost their share of Ladbroke and Coral shops when they were subsequently regrettably unable to purchase Coral in its entirety vindicated the position which the BHB took from the outset. As it is the Tote have been left with nothing but a large bill for professional fees. Lawyers, accountants and bankers have triumphed again!
BHB’s lawyers will derive some modest benefit from the BHB’s Board’s full support for a significant change to the BHB’s structure and decision-making process, which will necessitate major amendments to the Company’s Articles of Association. These reforms were drawn up by a representative Constitutional Review Group which worked quickly and thoroughly throughout the autumn, enabling comprehensive proposals to be unanimously backed by the Board and announced before Christmas. I can think of no better example of an unified BHB, rising above sectional interests and acting in the best interests of Racing. For once these reforms have been formally ratified, BHB will be in even better shape to pursue the policies which are right for Racing as a whole.
Prominent among those policies is ‘self help’ which, as you will all readily recall, features strongly in the BHB’s Financial Plan. In the key area of prize money, some excellent further progress has been made notwithstanding that the Levy Board’s contribution to prize money dropped from over 50% of the total in 1996 to just over 45% in 1998. In 1998, racecourse executive contributions to prize money increased by over £1m, or over 10%, while sponsors contributed nearly £13m, a rise of over £1.5m or over 13% on the 1997 figure. These were on top of increases in executive and sponsors’ contributions in 1997 of £1.1 million and £1 million respectively. Congratulations and thanks go to those two key contributors.
1998 also saw some welcome upward movements in levy receipts and levy yield forecasts. An additional £1.5m in 1997/98, an estimated additional £2.5m in the current financial year, halving the expected loss consequent upon the move by the Big 3 from the Company to the Shop-based Levy Scheme, and an increase in the forecast for 1999/2000 of £3m. The Tote’s contribution to Racing also continues to increase.
Taking all these upward movements together, and adding in increases in SFRO and copyright income, over £10.5 million annually has already been generated towards achievement of the £25m self help target.
The racecourses’ ability to generate additional funds is in part the result of steadily improving racecourse attendances. Despite necessary significant restrictions on attendances at the Cheltenham Festival and Royal Ascot and appalling weather on Boxing Day, average attendances again rose, this time by 1%, and we only just missed the 5 million total achieved in 1997. A very creditable performance by all concerned.
While major political issues have inevitably been the focus of much attention at BHB Board meetings and in the media, BHB’s other responsibilities have not been neglected and good progress has been made on a number of fronts. It is to these that I now propose to turn attention.
Race planning continued to pursue its principal objectives of maximising competitiveness, ensuring a balanced provision of opportunities for the horse population, encouraging increases in the total prize money pool and adopting a flexible approach to race programming. The successful pursuit of these objectives can best be illustrated by reference to a number of key figures and initiatives in 1998:
* Average field sizes for Flat and National Hunt racing both rose, the latter by as much as 9% from 8.82 to 9.61.
* Arrangements were made for the transfer of two Group races which would otherwise have been lost to the weather.
* Arrangements for reoffering weekend races at the overnight stage were enhanced.
* A new system of advertising prize money in major races was introduced for the Flat for the start of the 1998 Turf season and was extended to Jumping on 1st January this year. This provides a more effective and attractive means of promoting the actual prize money on offer.
* Showcase races, part of a programme of initiatives designed at least to protect racing’s share of the off-course betting market, got off to a very encouraging start in 1998, with the enhanced prize funds no doubt contributing to well above average field sizes. To further improve the effectiveness of this important initiative, BHB recently announced the introduction of one Showcase Handicap each day, with continuing welcome sponsorship support from the betting industry.
* Technology continues to be harnessed effectively, with the continuing development of TRICL (The Racing Industry Computer Links) and the imminent creation of a Central On Line Database of Statistics.
All these initiatives were taken, and all future initiatives will be taken, for the benefit of Racing’s customers and those who invest and work in the industry. Our customers are also of course the targets of our Marketing Department, who, in another busy year, continued to apply their frustratingly limited resources to maximum effect, working alongside other sectors of the Racing industry. Protection and promotion of the SFRO Scheme, which has generated nearly £14 million for owners since its launch in 1994; seminars for prospective racehorse owners; manning the award-winning Racing Village; co-ordination of Sunday Racing promotional activity; and organising a most successful outward Trade Mission to Japan and visits to this country by senior representatives of the Chinese Government are just a few of the items on the Marketing Department’s varied agenda.
The item on that agenda which attracted most media attention was the Jockeys Sponsorship Scheme. After months of consultation the Board approved in October a Code of Conduct, including provision for an owner’s right of non participation, which had the full and unqualified support of the key interested parties, including the Jockeys Association and the ROA, as well, of course, as of BHB itself. There should have been no surprise at the inclusion within the Code of an individual owner’s right of non-participation, particularly given the continuing vital importance of the VAT Scheme for Racehorse Owners, of which owners’ sponsorship is such a crucial part and which benefits directly, and indirectly all sectors of the industry, including jockeys. We wish Michael Caulfield, Richard Dunwoody, John Reid and their colleagues every success in quickly securing a group sponsorship deal.
In general, BHB remains totally committed to maintaining a central team of professional marketeers helping to set industry-wide standards and complementing the marketing initiatives of individual racing sectors. Regrettably however, until the BHB’s Financial Plan which calls, among other things, for a substantial increase in marketing investment is successfully implemented, Racing’s marketing budget is likely to remain depressingly small.
BHB’s Marketing budget is one of many calls on the Racing Administration Fund, which finances the BHB itself, including the Weatherby’s contract, and the Jockey Club in its regulatory role. Continuing tight control of costs by both BHB and the Jockey Club has enabled fee increases for the industry for 1999 to be restricted to no more than the rate of inflation, notwithstanding an ever-increasing workload within both the Governing and Regulatory Authorities.
One of many areas in which the two Authorities will continue to work closely together is that relating to applications for new racecourses. In September last year, BHB published detailed guidelines which are designed to clarify the parameters within which such applications will be considered and thus to help would-be investors focus on the key opportunities and constraints. Although there are as yet no detailed fully costed proposals on the table, it is encouraging that there are people out there – both outside and inside the industry – who regard a new racecourse project as an attractive investment opportunity.
Attractive opportunities of all kinds fortunately abound in racing, including of course the opportunity for people, with a passion for horses, to work closely with the animals they love. We must not forget – nor do we – the contribution made by the lads and lasses in the stable yards and studs up and down the country who work so loyally and enthusiastically for the horses in their care. Lads and lasses whose training at the British Racing School, Northern Racing College and the National Stud is overseen by the BHB’s training arm, operating since the summer as the British Horseracing Training Board. BHTB too has had another challenging year, as it, together with the Schools, continues to widen the scope of training, advance training standards and maximise recruitment efforts. BHTB has also continued to run highly successful Graduate and Junior Management courses and, for the first time last year, a much sought after one-day course designed to give a general but informed overview of the workings of the Racing Industry.
I am pleased again to confirm that welfare remains high on the BHB’s agenda. There could be no more tangible evidence of this than the steps which the Board took, in close liaison with the Jockey Club and the ROA, to streamline the procedures for dealing with those regrettable, but happily small number of cases of neglect and ill-treatment of former racehorses. A key part of this welfare package was BHB’s £100,000 donation to the Emergency Relief for Thoroughbreds, the new charity recently launched by the Racehorse Owners Association, who are to be warmly congratulated on taking the initiative in this important field. Furthermore, tomorrow Andrew Parker Bowles will be chairing a meeting of interested parties aimed at identifying how best to cater for racehorses at the end of their racing careers. The meeting will be looking at the existing provisions and exploring the most appropriate way to take the matter forward in this country.
A very unwelcome feature of the racing scene during 1998 were the allegations of race-fixing. Regrettably, these are still unresolved and have been given a further profile as a result of events at the end of last week.
It goes without saying that the health of British racing, both as a sport and as a betting medium, depends on public confidence in its integrity.
In common with other sports where betting is available, racing is vulnerable to criminal activity. If public confidence is to be maintained, it is vital that allegations of malpractice are thoroughly investigated, and that where such allegations are proved, appropriate action is taken against the perpetrators. Equally, it is important that the rules of natural justice are observed and that those associated with allegations of malpractice are deemed innocent until proven guilty.
The Jockey Club is the Regulator of British racing, but as a non-statutory body its powers are limited. For this reason, whenever the Jockey Club uncovers prima facie evidence of criminal activity, it has a duty to present such evidence to the police. This is what happened with the recent allegations.
Since then, responsibility for the investigation has lain clearly, and quite properly, with the police – rather than with the Jockey Club as the regulator of the sport or with the BHB as the governing authority.
The BHB is aware that the length of the police investigation has been a source of concern, and that last week’s arrests may have fuelled an anxiety in some quarters about the impact of the investigation on the image of racing.
In the Board’s view, the overwhelming priority is that such investigations should be both independent and thorough, thereby ensuring that everything possible is done to safeguard British racing as a sport with a reputation for integrity which is second to none.
However, while recognising that such cases are intrinsically complex and can, inevitably, be time-consuming, the Board shares the view that it is in the best interests of racing, and of those directly involved, that the investigation should be brought to a conclusion as speedily as possible. Yesterday, we wrote to the Crown Prosecution Service to this effect.
I conclude my review of 1998 with a brief focus on an area of BHB activity which is fundamental to the future development and commercial success of Racing: the annual BHB Fixture List. Before I comment more generally, there are two particular aspects which merit a special mention this morning. First, National Hunt Racing, which was understandably unsettled by Windsor’s commercial decision to cease Jumping at the end of last year, and to a lesser extent by the decision, since reversed, to cease all Jumping at Lingfield. BHB quickly responded to these announcements by reaffirming its total commitment to National Hunt Racing, which it continues to regard as an absolutely integral part of Racing in this country, and by giving an assurance that no further transfers between codes would be permitted at least until the findings of its National Hunt and Fixtures Review Group, set up in the wake of Windsor’s decision, have been fully considered. The important links between Racing, including National Hunt Racing, and the rural economy were reflected in a strong racing presence at the Countryside March in London ten months ago, while the strong links between Steeplechasing and Point to Pointing were recognised in the Levy Board’s welcome decision to increase significantly its grant to Point to Points in 1999.
Secondly, Sunday Racing, which made strong further progress last year with attendances showing a 7% increase on 1997 and average field sizes rising by 15%, influenced no doubt by much increased Appearance Money payments and higher prize money generally. There is now universal recognition that Sunday Racing is a key promotional opportunity for enticing the first time racegoer and family visits and we must continue to build on the growing support which is manifesting itself for racing on this prime leisure day.
And so, finally, to the Fixture List generally. The 1999 Fixture List, the last to be drawn up under the constraints of the Five Year Levy Agreement, attracted a pretty good press – particularly from the betting industry. Indeed in early August I received a letter from the Director General of the Betting Office Licensees Association, congratulating BHB on the 1999 Fixture List. Whether Tom Kelly will feel disposed to send me a similar letter this coming summer will probably depend on the betting industry’s reaction to the more spectator-friendly fixture list which BHB proposes to put in place as a contribution to increasing Racing’s overall revenue and thus to the successful implementation of BHB’s Financial Plan. A Plan which the betting industry would do well to recognise benefits them hugely, as it does also Government and the punter as well as Racing itself.
And so, we have come full circle. I started with the BHB’s Financial Plan and I finish with the BHB’s Financial Plan. Nothing could of course be more appropriate, given the importance to all sectors of Racing represented here today of its successful implementation. Racing came together twelve months ago to unite behind the Plan. Under strong and determined leadership from BHB, not only must this unity continue to be maintained, but that Plan must be implemented.
Further progress on the Plan and other key issues will be reported at the next BHB Forum, which is being timed to coincide with the Board’s Annual General Meeting, now scheduled for Thursday 10th June.
I now hand you over to the Chairman of BHB, Peter Savill.