08 Dec 1998 Pre-2014 Releases





In this room twelve months ago, Michael Osborne, on behalf of Sheikh Mohammed, delivered the most forthright Gimcrack speech since the war. “”Improve the financial structure of British Racing or one of the most influential families in the history of the Turf will take its business elsewhere””. It was a clear message to the BHB, the betting industry and the Government to put Racing’s house in order and replace the rhetoric of the past 30 years with results.
At the time of the speech, I was in London putting together the finishing touches to the Financial Plan for British Racing. But if I needed any help in understanding the impact of what was said that night, the following day left me in no doubt. I had requests for interviews from at least 15-20 news editors, sports editors and racing correspondents in the space of 24 hours. I have not seen any story in British Racing have such impact on the front pages since Shergar’s disappearance in 1983.
Curiously, a few minutes later, Peter Jones in his speech as Chairman of the Tote said “”British Racing is in the best shape it’s been in for years””. This is a theme which we have heard many times in the eleven months since the Financial Plan was published – in speeches and quotations from Chris Bell of Ladbrokes, John Brown of William Hill, Tom Kelly of BOLA and even Peter Jones himself.
It is the age old strategy of maintaining that “”everything in the garden is rosy”” as the best antidote to those demanding change.
To get our message across in the face of such a strategy is just one of many challenges facing British Racing as we approach the Millennium.
Tonight I would like to talk about three of those challenges.
Undoubtedly, the first and major challenge facing us all is to put British Racing on a firm financial footing for the long term. To the bookmakers and others who try to claim that there is nothing wrong with British Racing I ask four simple questions:
1. Can you look us in the eye and say that the racing industry has sufficient, well trained and well paid staff?

2. Can you look us in the eye and say that the British breeding industry is anything other than a deteriorating industry, rapidly losing ground to its Irish, American and Japanese counterparts?

3. Can you look us in the eye and tell us that prize money, the lifeblood of all racing industries, is anything other than unacceptable in Britain as a return for arguably the best racing product in the world?

4. Can you look us in the eye and say that £2.6 million is sufficient to market a major sport and leisure industry?
The answer of course, if you’re honest, is “”No you can’t””. More than 30% understaffed; wage levels for a skilled stablelad lower than for an unskilled agricultural worker; trainer profitability at a record low; owners, without whom there would be no racing, losing 77% of their money per year; racecourse owners getting about a 1% return on the value of their racecourses; and a domestic breeding industry which hasn’t been able to afford to purchase a top class stallion in living memory.
Everywhere we looked in producing the Financial Plan for British Racing we found an industry starved of the money needed to put on the show.
That money can only come from owners, racecourses or the betting industry, for all major racing nations are funded by a combination of income from these three sources. In France, Australia, America, Japan, South Africa and Italy, the majority of the cost of putting on the show comes from a percentage of betting turnover. In Britain, betting turnover provides just 17% of that £342 million annual cost, with owners contributing £186 million (54%) and racecourses £98 million (29%).
Betting turnover in Britain provides so little because the betting industry has been able to get away for 37 years with paying only around 1% of its turnover while all other major racing nations pay between 4.4%-15% of their turnover to racing.
How have British bookmakers managed to pay so little? Because the betting industry has a 100% monopoly of the distribution of betting on horseracing through Licensed Betting Offices – and is permitted through legislation and the Levy system to use that negotiating position in a monopolistic way through the Bookmakers’ Committee. It is questionable whether such a system encourages anything other than an abuse of monopoly power and anti-competitiveness.
How do we solve the problem? By a substantial increase in the percentage of betting turnover being returned to racing. Owners cannot reasonably be expected to pay more and racecourses can only make substantial additional contributions to the cost of staging racing if they can raise additional revenue through a more spectator-friendly fixture policy. The betting industry argues that such a policy would be counter-productive because it would have a negative effect on the Levy. But we beg to differ. We are confident that a more spectator-friendly fixture list will have a positive effect on racing’s finances and, in the absence of a Levy settlement in the next three months, it is a policy we will pursue for the year 2000.
The whole of our industry must spread the word and argue the case. We must make sure that the Government, who alone have the power to change the financial structure of British racing, accept our arguments and understand the huge benefits to them – notably greatly increased tax revenues, many more jobs and stability within a major British industry. It is time for British Racing to unite and speak loudly with one voice, for this must be a broadly based movement devoid of apathy.
Which brings me to the second challenge facing us – namely maintaining unity within the racing industry. I was fortunate to take over as Chairman of the BHB on a wave of unity from within the racing industry and I pledged to do my best to maintain it. Apart from a mid summer hiccough over jockeys’ sponsorship and a scurrilous article claiming that I was trying to get rid of the Jockey Club from the BHB, relationships within the industry have been at an all-time high.
I very much want all the associations of racing to play their part in moving our industry forward and I very much expect the Jockey Club to play a major part in that process. I have the highest respect for Christopher Spence, the Senior Steward, and the Board of the BHB is working together more closely than ever before – if those who have been there longer than I are to be believed!
Unity requires openness and honesty with each other and a sense of common purpose. The key relationship in racing is undoubtedly between the racehorse owners and the racecourses (respectively the performers and the venue of the racing show) and I’ve made it one of my priorities ever since I “Copy2
“entered racing politics to foster a good relationship between the two organisations. It is sometimes a brittle relationship because British Racing, unlike America, does not require a contract between owners and racecourses which stipulates the precise division of income between the two. Nor, unlike Australia, must British racecourses be non-profit organisations.
As a result, the potential for conflict, and even abuse, is much greater in Britain than in America or Australia and there is far more need for communication and explanation.
At present racecourses struggle to generate a fair return to their owners but when we achieve the goals of the Financial Plan and more money is available from betting turnover, we must not forget that prize money is an expense of a racecourse. There is a possibility that racecourses will become prey to corporate raiders anxious to keep down costs in pursuit of greater profits.
The new merit system by which Levy Board money paid to racecourses is more strongly linked to executive contributions and sponsorship will help prevent this. While racecourses are to be congratulated on the considerable increase in executive and sponsorship contributions made in the past year or two, we cannot allow monies to flow into racecourses without a clear understanding as to whether the income streams have been maximised and how that money will flow through the industry.
Unless racecourses and the RCA become more open with the broader industry in terms of how they are conducting their negotiations over media rights, I foresee, to quote an old northern adage, “”trouble at t’mill””.
As both a racehorse and racecourse owner, I can make these statements without accusation of partisanship and I would be remiss in not alerting the industry to a major challenge for which solutions must be found.
The third challenge facing British racing is how to compete with the other international racing nations and with domestic sports and leisure industries. We can no longer sit on our laurels, waving a Union Jack, claiming the best racing product in the world. Ask leaders of our steel, coal and shipping industries where that attitude got their predecessors. John Wakeham was right when he accused British racing of being too inward looking and insular. We live in an internationally competitive world and manage one of the most internationally competitive industries.
We are fortunate to be just about the only sport where, whether as an owner or punter, you can participate, spectate and socialise at the same time. Unfortunately that is insufficient to prevent racing being a minority sport in the eyes of sports enthusiasts and TV executives. Quite simply, you don’t ‘play’ racing at school and there is no team element to the sport.
Be sure that the money now flowing into soccer, motor racing, rugby and even cricket will be used to increase those sports’ market shares at the expense of minority sports such as racing.
As for our international competitiveness, the Financial Plan produced 12 charts comparing racing in Britain with our eight major international competitors. Britain is placed last or second last in nine out of the twelve charts. Case proved.
So how do we compete? The first answer is that, without the money to invest in racing, we simply cannot compete. But, even with the money, we need to gear up for the 21st Century now and think ‘Future’.
Any business or industry is only as good as its management team and its corporate structure. We must stop thinking that BHB should be a trade association run by bureaucrats instead of aristocrats, with too great an emphasis on management by non-executives and where rule by committee and sub-committee is the democratic answer to the old rule by Jockey Club.
We need a strong, representative Governing Body with a clear mandate and a strong, commercially minded Executive Branch reporting to a knowledgeable Board of Directors. To those who say the BHB should not be run like a business, I say that the BHB is charged with ensuring a healthy financial structure for British Racing and putting in place a fixture list which best enables the goals of British racing to be achieved – the same conceptual goals any business has.
We must ensure that we have a streamlined, efficient system for decision making by a team of executives and directors who can best think through the strategies and programmes that will increase racing’s market share of the leisure industry. We must be innovative and open to new ideas like the Europe v Middle East team challenge and the Superbet.
I am hopeful that, at the end of the current review of the BHB Constitution, we will, sometime in 1999, be able to put in place such a system and structure which will receive the support of the whole industry and enable racing more easily to compete with racing around the world and with other domestic sports and leisure activities.
There are many more challenges to be faced in the next few years but putting British Racing on a firm financial footing for the long term, maintaining the unity of the racing industry, and finding a system and structure by which the BHB can lead British Racing in competition with other racing nations and other sports and leisure pursuits are the three most pressing challenges which I ask all of you to unite behind and to which I ask all of you to make your best contribution.