On Sunday, 21st May, the Racing Post published an excellent article written by Tom Kerr, with what looked like significant input from the Racehorse Owners Association. It really is an excellent read and I wouldn’t disagree with a single point. Since we started Owners for Owners five years ago, we have been arguing strongly for significant improvement in prize-money and the total owner experience. We’re delighted, therefore, that the Racing Post has finally acknowledged the need for radical improvement, particularly at the grass-roots level. If you haven’t already read it, here is the article in its entirety, with full acknowledgement of copyright to the Racing Post and Tom Kerr.
*****
What made this story notable enough to generate headlines across the mainstream media, was that Davis had been a racehorse owner for more than a quarter of a century without once previously gracing the winner’s podium. Davis was dubbed ‘Britain’s unluckiest racehorse owner’ by the press and his long, patient wait for success made for a delightful story. He was toasted as an exemplar of endurance, a man who tried and tried again and did not allow defeat to wear down his spirit. Yet no-one could have blamed him if he had quit the sport years ago, weighed down by heartache and expenditure.
“It was just madness that kept me searching for that first win,” he said.
While Davis’s long wait for success marks him out as an outlier cursed by poor fortune, the madness that kept him searching is evident in many long-term owners. They pour vast sums into racing for paltry returns, with around 30 per cent receiving no prize-money in any given year and owners of low-class horses unlikely to see ten pence back for every pound invested.
Those, like Davis, who remain through thick and thin, haemorrhaging money through the years, typically do it for the love of the game and for the sheer joy of being involved with racehorses. Some might enter the sport dreaming of glamour, victory and riches but if so those notions are soon disabused – more expect nothing other than to lose large sums of money. As the old wisecrack goes, the only way to make a small fortune in racing is to start with a large one.
The financial contribution to racing of all these owners is vast. If sales are factored in, the figure runs into billions of pounds per year, but just keeping horses in training costs British owners around £290 million in 2015, a sum more than five times as large as that realised by the bookmaker levy scheme of the same year. According to the most recent numbers provided by the Racehorse Owners Association (ROA), the average cost of keeping a horse in training is £22,595 per year on the Flat and £16,325 over jumps. For many, that is an unsustainable or unappetising burden when the return on investment is so low and success frequently elusive.
Relying on the benevolent madness shown by owners like Davis has served the sport well in the past but it is no sort of business model for the future. Already the strains are clearly showing. In the past decade thousands of owners have left the sport, particularly at the grassroots end, and many of their places in the sport have not been filled. Racing’s ability to halt and reverse this trend – to save racehorse ownership – is the single greatest challenge facing the sport today.
Where have all the owners gone?
Since 2008, when the number of owners with horses in training peaked at 9,551, the ranks have thinned by 17 per cent in just eight years, hitting 7,947 last year. The decline has been been particularly pronounced in certain areas: the number of sole owners (those who own without partners) has declined from 2,632 in 2005 to just 1,852 in 2015, a fall of 30 per cent, while the number of owners with a single horse in training has fallen by almost 25 per cent since 2008. In Ireland the decline is even more alarming. Since the number of owners hit a high of 5,588 in 2007, just before the financial crisis struck, it has fallen precipitously, slumping to 4,195 in 2012 and 3,663 in 2016.
There is the odd ray of light for racing. Partnerships have performed well relative to other models of ownership and now account for almost three-quarters of all active owners. Also, the number of owners with more than 21 horses in training has soared from 40 in 2002 to 79 in 2015, indicative of how the sport has become increasingly reliant on a small but growing group of mega-investors such as Godolphin, Qatar Racing and Al Shaqab. But as these behemoths grow they threaten to further squeeze out the small owner.
“IT’S a massive issue for the sport that we have lost that level of ownership,” says BHA chief operating officer Richard Wayman, who is leading several initiatives to halt the decline. “We don’t operate in a bubble, there’s been a double recession through that period which clearly will have had an impact on this. “But that to one side, this has to be one of the key priorities for the sport in the coming years, to reverse that decline and begin to grow ownership again at all levels. This is a cross-industry challenge and the sport’s future depends on us being able to reverse the decline of recent years.”
A sport that in the course of a single decade loses almost one in five of anything – fans, players, punters – is in trouble. When those lost participants are as economically vital as owners are to racing, it is clear there is a crisis brewing, one that if not checked will cripple the sport.
The Racing Post, with the help of more than a dozen interviews conducted with owners, syndicate managers and others from across the racing industry, has sought to understand why the decline has occurred and how it might be reversed. To that end, this newspaper has identified five areas where action should be, and sometimes is being, taken to make the ownership experience more appealing.
- Prize-money
It is impossible to address the question of ownership without first confronting the impoverished elephant in the room: the sport, always expensive to get into, is in Britain uniquely unaffordable. In 2016, the ROA found that more than 80 per cent of lapsed owners cited the expense of owning as a reason for quitting, while over 60 per cent mentioned poor prize-money, making them the two most commonly cited reasons for leaving the sport.
Famously, British owners receive less than a 25p in the pound return on their investments in racing, around half what their counterparts in France can expect, but recent research carried out by the BHA shows that, as prize-money is not equally distributed among owners, an owner of a modestly talented Flat horse can actually expect to lose an average of 92p in every pound invested.
“The economics of it are so unattractive that it is very hard to retain people,” says Wayman. “The sport works very hard to recruit new people, but as they come in you’re losing people out the other end and working very hard just to stand still.”
While prize-money has reached record levels in Britain, hitting £137.6m in 2016 (up from £93.9m at its nadir in 2011), it has largely been spent at the top end of the sport, lavished on festivals and feature races at the expense of grassroots racing. Little of that spending has found its way into the pockets of ordinary owners. With the advent of the reformed levy and the transfer of funding control to British racing, exercised through the new Racing Authority, an opportunity to address this problem has emerged and a two-stage plan set to be rolled out next year has been proposed.
First, money will be ploughed into low-level racing, where many races have not risen in value for a decade or more (Wayman suggests a £3,000 race could become a £6,000 race). Second, the sport plans to begin paying prize-money down to eighth place, a scheme designed to return more to owners and encourage competitive field sizes.
“Eight runners is important to us in terms of creating a product people want to bet on,” says Wayman. “If we can reward horsemen for creating eight-runner fields, then potentially everyone is benefiting from that.”
Although much can be done to improve the prize-money situation for those at the bottom of the sport, the reality of Britain’s levy-based funding model means the return-on-investment figure is only ever likely to shift from appalling to unappetising. That does not preclude ownership from being successful, but it does mean the sport must seriously consider the value for money its product offers prospective owners. - Racecourse experience
According to the ROA, the average cost per run for owners is over £3,000, making each trip to the racecourse equivalent in cost to a luxury holiday. Yet for many the racecourse experience is more Butlins than Bahamas. Owners’ complaints indicate something bordering on indifference from some of the tracks visited, while tired and overcrowded owners’ areas are a common complaint.
“One thing our members want is a warm welcome by someone who is expecting them to arrive rather than a rather bleak entrance,” says Charlie Liverton, chief executive of the ROA. “It’s not all about champagne and caviar. The average age of an owner is 59 – a cup of tea and a sit down actually would make the world of difference.”
A lack of something as basic as comfortable seating indicates a sport that is far off its aspiration to offer owners a luxury experience. The owner experience is now at the centre of farsighted track administrators’ vision for the future, especially as media rights payments – a lucrative source of income for racecourses – are increasingly linked to field sizes.
“All our thinking about the future is what we can do for the owners to improve their experience,” says Bill Farnsworth, general manager at Musselburgh, which holds an ROA gold standard award for its owner experience and is one of several courses planning new facilities. “The cost of owning a racehorse and frustration of owning a racehorse is huge, so it’s a major achievement just getting to the racecourse and the least we can do is treat them like it’s a special day out.” - Catering for syndicates
Racehorse ownership’s most promising area of growth, at least outside of the ultra-wealthy, is syndicates and partnerships, a model that has been successful in other parts of the world, notably Australia, which in 2015-16 had almost 80,000 people involved in ownership (up from 68,000 a decade earlier). Yet while syndicates grow, drawing owners to racecourses in larger numbers than ever before, many tracks are unable or unwilling to adjust to the new reality. Speaking to those who run and join syndicates, the most common complaint relates to securing access to the paddock before racing.
One syndicate manager recounted taking 25 members – each of whom had paid £3,000 to be part of the venture – to Kempton for a recent Wednesday evening meeting. The track was typically underpopulated, but nonetheless only 14 owners’ tickets were forthcoming from the racecourse. The result? “I had to piss off almost half the owners,” the syndicate manager says.
“It’s easy to forget how much people spend in syndicates,” says Adrian King, who runs Henacre Racing Club, a new low-cost syndicate designed to get new owners into the sport. “We’ve got one guy who works in Tesco for a couple of days a week to support his pension and allow him to be involved in racing. “Some of the racecourses are brilliant. But some of them, to put it quite bluntly, need to pull their finger out.”
The ROA recently piloted a scheme at Lingfield and Windsor where syndicates could apply for up to 50 extra paddock passes (health and safety restrictions allowing) and are in talks with racecourses about rolling it out across Britain. Although some racecourses are limited by their facilities, ensuring syndicate members have access to the paddock is so vital to the experience tracks must do everything in their power, including redevelopment work, to allow access. To do otherwise is to deprive owners of the most precious part of racehorse ownership: being part of the action. - Administration and signing up
A really slick registration process for racehorse owners might not be the sexiest advert for the sport, but it shouldn’t be underestimated just how burdensome, unappealing and antiquated the byzantine setup in use right now is.
“The current system is very much paper-based, so it’s pretty much been in place all along,” says Wayman. “Right now if you want to become an owner we would ask you to complete a significant number of registration forms. That’s very time-consuming, and there’s an element of duplication where you are asked the same questions twice or more.”
After signing up, owners don’t get a glossy welcome pack congratulating them on joining the exciting world of racehorse ownership, as might be expected. Instead they get “a little bit of administrative stuff”, says Wayman, and then bills, bills and more bills. As a reward for signing up to spend tens of thousands a year, it is more than a little underwhelming.
This is an area the BHA and Weatherbys, which provides the sport’s administrative systems, are hard at work on. Originally slated for a spring launch but now pushed back to July, a new digital system is being designed to allow prospective owners to sign up in just 20 minutes and the applications to be processed within a working day. Owners will also have access to the racing calendar, whereas at the moment they would need to subscribe to the programme book (another bill to pay) if they wish to review race options for their horse. The many fees levied on owners are also being reviewed, with £150,000-worth abolished and others condensed into a single annual bill.
All this is vital, particularly in terms of making ownership attractive to those generations used to seamlessly managing their life from the comfort of a phone or laptop. “It’s about providing a customer friendly service, in the same way as the banks have moved almost everything online,” says Wayman. - Communication and the off-course experience
“The average owner goes racing five times a year with his horse,” says the ROA’s Liverton, “so effectively the industry has got to – got to, got to – give them action the other 360 days.”
There is no area with greater potential to enhance ownership than communication, with the full range of digital platforms offering racehorse trainers and syndicate managers unprecedented ability to share information, pictures and videos with owners. At the moment, in this respect trainers and syndicate managers unsurprisingly run the gamut from garrulous to JD Salinger.
When trainers are good, the approval from owners is table-rattling. Matt Pryce, who began as a syndicate member at Jeremy Gask’s before going on to create his own partnership, explains what made his experience so positive: “I always felt you got treated the same if you owned the ear of a 50-rated horse or you had Medicean Man. They provided weekly audio updates, videos and a feeling you were involved in decisions. The yard also do a weekly newsletter so you can support their other runners too.”
Communication like this makes an enormous impact and the sport as a whole can do much to help trainers. Many don’t have the technical know-how to take advantage of the digital tools at their disposal, something which the ROA’s Liverton suggests should become part of their training modules and revisited frequently to ensure the latest technology is understood and being utilised. These days it is the work of a moment for videos and audio updates to be pinged off to owners and the sport should be looking at working with technology companies to develop custom software and apps to make the process as simple and rewarding as possible.
Racing should also be thinking about where it wants to be in ten, 20 or 30 years’ time. One day, owners should be able to tap a button on their smart device and pull up a live stream of their racehorse, with details of workouts, schedule and upcoming targets all at their fingertips.
Working hard to get ahead
Owning racehorses is a rewarding experience that can provide enormous pleasure. Its success over the decades, despite all the frustrations and expenses, is testament to a product with genuine staying power. Yet racing can’t take owners for granted, nor assume the model that once worked will do so into the future.
Racing needs to do more than just address the concerns of current and former owners. It must also make the product appealing to a younger generation of prospective owners that has higher expectations and more choice on where to spend their leisure pound than ever before.
Racing is working hard to stand still right now. It must work even harder to get ahead.
I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.
0 comments:
Post a Comment