Tuesday 15 October 2013

2014 Prize-money – Both Good & Bad News with Arena Racing Company (ARC)

I’ve always loved Private Eye as a magazine, and have long been a follower of Lord Gnome. Much of the content has varied over the years, but as many of you will know, some themes have remained the same, with the hardy chestnuts of HP Sauce, Rotten Boroughs, Nooks and Corners, Colemanballs, Pseuds Corner …. and the immortal Glenda Slagg with her ability to argue both ways at the same time. Over the last week or two, there have been a few Glenda Slagg moments in terms of prize-money – both good and not so good.

ARC was formed from the merger of Arena Leisure and Northern Racing in 2012. They control 15 tracks and 40% of the racing calendar. The former leader of the Conservative party, Michael Howard, is chairman and Tony Kelly is the MD. The company is owned by the extremely astute Reuben brothers.

Much of the lowest grade racing in the country is under ARC’s auspices. With notable exceptions such as Doncaster, prize-money is lamentable – over 70% of the Flat races run at ARC tracks carry total prize-money of £4,000 or less. The good news though is that they have pushed up prize-money by 18% in 2013, 24% in 2014 and are now committing to a rebranding of all-weather racing, including £2m extra annual prize-money as part of an initial three-year commitment to improve the sport. 52 new Class 2 and Class 3 races are going to be included and they are launching (in conjunction with their partners Ladbrokes, Coral, 32 Red and Bookmakers.co.uk) an A/W championship series between 26th October 2013 and a new fixture on Good Friday, 18th April 2014. Horses can take part in “win and you’re in” A/W qualifiers at their Lingfield, Southwell and Wolverhampton tracks as well as at Kempton Park, owned by the Jockey Club. The Good Friday bash will have six championship categories, with each race worth £150,000, including a 7f 3yo race, 6f sprint, mile and middle distance races and a 2m marathon. It will be the richest A/W card ever staged in Europe.

Lots of people are dead against the Good Friday meeting. Traditionally there has been no racing on that day, and it is when Lambourn and Middleham hold their popular open days. Personally I thought it inevitable that this would happen, and am more than prepared to support the ARC initiative. If it raises the overall quality and prize-money throughout the winter, then that is all to the good, even though it is not a form of racing that I particularly like – not because of its being run on the all-weather so much as the dreary quality of it. I see it as just dross racing for the betting industry, but if it drives revenue and people want to support it, then why resist it? This subject will get an airing in the next blog.

So where is the bad news? Philip Freedman, Chairman of the Horseman’s Group, and Rachel Hood, President of the Racehorse Owners Association, have been working for some time, together with the authorities, on collaborative negotiations with the racecourses to secure contractual commitments linking the rapidly increasing media revenues to prize-money contribution. These negotiations have gone well ….. or at least they were doing until ARC announced, on 9th October, that they were not going to sign up to these prize-money agreements. This is a major blow, with all the key players “extremely disappointed”.

Unless there is a change of heart, this is going to put ARC at loggerheads with the industry, and may well lead to sanctions. Race fixture allocation over time can be changed so that fixtures go to the racecourses that have signed up to the contracts; bonuses such as the European Breeders’ Fund and the Racing Post Yearling Bonus Scheme can follow suit; and of course trainers and owners can vote with their feet and not support ARC courses. Collaboration has a lot going for it, but it now seems as though ARC just doesn’t want to play ball at the moment. I’m sure there will be a lot of negotiation going on behind the scenes.

Glenda Slagg would probably say: “Hats off to ARC. Can’t wait for Hunky Howard, the man in the big Chair, to put me under starter’s orders. He’s my long shot, I can tell you!! Always welcome for some late-night negotiation round at Glenda’s gaff ….. Seen the new ARC deal. What a car crash ??! Hateful Howard. Couldn’t run the Tories and can’t run a racecourse. What a loser – all bets off for me!! Send that nice John Gosden round and we’ll soon get collaboration cooking. Byeee!!”

(Get back to your blog. You’re fired. Ed.)

Tuesday 1 October 2013

The Prize Money Challenge – £200m by 2020 and 50% ROO

As followers of the blog know, I’ve been looking at the economics of racing, starting with the lamentable state of owner prize money in the UK. Interestingly, when I went along to a recent Racehorse Owners’ Association presentation at Newbury on 20th September, this was definitely their number one issue because it is such a fundamental part of the whole fabric of racing.

The CEO, Richard Wayman, outlined the three key priorities for the ROA: firstly the negotiations with racecourses to secure a contractual obligation to inject money from media rights into prize money; secondly, supporting the case for fundamental legislative reform of the betting industry, particularly evasion of levy through offshore operations out of Gibraltar; and thirdly, improving the quality of the owner experience on the racecourses themselves. There was a Q&A session after Richard’s presentation, and I argued for a clear goal for prize money. That whole line of thinking appeared to be well received by the owners present.

The Owners for Owners Challenge is for a clear goal to be agreed of at least £200m of prize money available for owners by 2020, thereby ensuring that British racing is at least somewhere near parity with the French and that the return on ownership increases from 20p in the pound to nearer 50p.

There were three main reactions to this goal at Newbury. Apparently some years ago a very famous National Hunt owner was well reported as saying that “Owning a racehorse is a hobby, you shouldn’t expect to cover your costs and if you cannot afford it, don’t do it”. When a member of the audience mentioned this, there was no doubting whatsoever the views of the owners present. The whole mind-set around that statement was seen as ludicrous …. and yet as I said in the last blog, it is a relatively common one. Owners are injecting almost £0.5bn a year into the industry, and without an acceptable return the base of the sport will be eroded.

Another reaction was a challenge as to whether there was really an appetite across the owner population to fight for a fair and acceptable return on ownership. Quite clearly, once there are contractual prize money agreements in place with some racecourses, it will be very interesting indeed to see what the ROA, and in turn, owners are prepared to do with the racecourses that won’t sign up for a prize money increase as a result of the revenue secured through media rights. My own position is that we should do everything possible to support the courses that are prepared to increase prize money, and vote with our horses’ feet – don’t send them to the tracks that aren’t prepared to reward owners properly.

The final reaction was to do with the goal itself, or more accurately, the actions needed to achieve it. A goal of this magnitude cannot be achieved just by incremental tweaking around the margins of cost and revenue. It will need much more fundamental and transformational change. Furthermore, this will have to reflect the huge innovations under way in betting, with the migration to PC and smartphone platforms. The vast majority of the revenue needed for additional prize money has to come from betting. Either bookmakers are persuaded / forced to make a much bigger contribution, or the racing industry itself should push for changes in the betting landscape: indeed, could racing itself link up with major investors and launch its own suite of betting platforms, harnessing the most modern technologies? A number of our owners believe this is a route that should definitely be explored and evaluated. It may seem far-fetched at the moment, but step changes of this type could well be what racing needs. More about this on the next blog.