Keep Prize-Money Simple, and Motivating for Owners – Some Thoughts on Prize-Money Distribution

I’m only doing this blog because I was invited today by the ROA to complete a survey on Owners’ Prize-Money Distribution. No problems at all with that, and I duly completed it. You may know that prize-money is currently allocated between owners of winning and placed horses in line with the following distribution

	Flat	Flat	Jumps	Jumps
	Non-Pattern	Pattern	Non-Pattern	Pattern
	%	%	%	%
Owner of Winner	50.64	46.64	49.53	45.62
Owner of 2nd	16.78	19.06	16.41	18.65
Owner of 3rd	8.39	9.53	8.21	9.32
Owner of 4th	4.19	4.77	4.10	4.66

The first observation of course is that there doesn’t appear to be any logic whatsoever between the various percentages, none of which are the same so there is no consistency between Flat vs. Jumps or Pattern vs. Non-Pattern races.

Equally it is worth noting that these percentages don’t add up to 100% because an amount is taken out to split between trainers, jockeys and stable staff. I’m not going to address this subject in any detail today, other than saying that I’ve felt for a long time that the trainer percentage should be allocated much more to the grass-roots trainer. Do John Gosden, Aidan O’Brien, Nicky Henderson or Willie Mullins really need a percentage top-up to their already huge income from premium training fees? On the other hand, for many lesser trainers and their stable staff, this percentage is a lifeline without which they would probably go under.

Anyway, back to the prize-money distribution issue. Doubtless as a result of the ROA survey there will be some tinkering around with the percentages, but doesn’t that really miss the point? Wouldn’t it be so much better to have a prize-money allocation that owners can both understand easily and find motivating and “felt fair” …. and wouldn’t need a calculator to try to work it out? The Owners for Owners proposal would be that any horse that finishes 4th in any class of race picks up a minimum of £500 (thereby covering most of the costs on most race-days of getting the horse to the track); the 3rd, £1,000; 2nd, £2,000; and the winner, £4,000 (plus the percentage of stakes as now). Obviously this would be an overall increase of prize-money in each race, and I would fund that by reducing the total prize-money for Group and Listed races, and reallocating it to the bottom of the pyramid.

Before leaving the subject, I am very appreciative of the way prize-money now goes down to 8th in some races, particularly on those race tracks run by Jockey Club Racecourses. Again I’d argue for setting a figure for 5th to 8th that isn’t derisory, however, and then working up to the winner using the same principle as described above. I believe the current figure is £300, which isn’t a bad starting point when you think that jockey fees and entry fees (and then only for the lowest grades of races) take up the best part of £200, before you even get the horse to the course.

Rather than tinkering around with percentages, it would be far more positive for attracting and retaining owners to have a fundamental change. Alas, I would imagine that there is little chance of this being adopted, although hopefully the principle behind this blog might at least get an airing in the corridors of power.

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.

Beware Expensive NH Horses at Sales – Even If You Want to “Dine at the Top Table

I know, I know …. I must put into practice the New Year’s resolution and get out more; stop being Mr. Grumpy and doing an impersonation of The Curmudgeon; forget the stats and put away my anorak …. But yesterday, when I was watching racing from Warwick, the names of two owners triggered a memory of one of the sales. The horse was Mr. Whipped, who won the Gr.2 Ballymore Leamington Novices’ Hurdle over 2m 5f. The owners were Grech and Parkin. After the race, when interviewed, one of them said, “If you want to dine at the top table, you’ve got to be prepared to spend the money”, which they certainly had done on this fine son of Beneficial, having paid £160,000 for him.

I remember going to the Tattersalls’ Cheltenham Sale on 26th May 2016, where one of the top ten horses from that sale is also now owned by Messrs. Grech and Parkin, so in an idle moment between the end of ITV Racing and supping the first glass of claret, beyond the witching hour of 6pm, I went to check my records.

If you’ve been following the blog over the last few months you’ll already know my views that the Irish point-to-point scene, and the way in which winning horses appear in the top boutique sales, is questionable to say the least. Before m’learned friends sue me for libel, here is the performance of the top ten lots from that sale.

Lot 17, Redhotfillypeppers. Sale price £200k. By Robin Des Champs and trained by Willie Mullins. Had won a 4yo mares’ maiden P2P at Necarne thirteen days prior to the sale. Has won once since and total prize-money is £9,440.

Lot 37, Lough Derg Spirit. Sale price £190k. By Westerner and trained by Nicky Henderson. Owned by Grech and Parkin. Had won a 4yo geldings’ maiden P2P at Athlacca nineteen days prior to the sale. Has won twice since, and total prize-money £33,372.

Lot 28, Secret Investor. Sale price £175k. By Kayf Tara and trained by Paul Nicholls. Had won a 4yo geldings’ maiden P2P at the same meeting as Lough Derg Spirit. Has not won a race since, and total prize-money of £4,694.

Lot 64, Super Follo. Sale price £150k. By Enrique and trained by Noel Meade. Had won a 4yo maiden P2P at Barlemy ten days prior to the sale. Hasn’t raced since.

Lot 47, Drovers Lane. Sale price £135k. By Oscar and trained by Rebecca Curtis. Had won a 4yo geldings’ maiden at Necarne twelve days prior to the sale. Hasn’t raced since.

Lot 52, One More Hero. Sale price £100k. By Milan and trained by Paul Nicholls. Had won a maiden P2P at Dromahane 32 days prior to the sale. Has raced once since, winning £286.

Lot 34, Minella Rebellion. Sale price £90k. By King’s Theatre and trained by Nicky Henderson. Had come 2nd in a 4yo maiden P2P at Dawstown 24 days prior to the sale. Has not won a race since and total prize-money £1,145.

Lot 32, Searching For Gold. Sale price £88k. By Gold Well and trained by Charlie Longsdon. Had won a 4yo maiden P2P at Ballindenisk eighteen days prior to the sale. Has won once since and total prize-money of £2,093.

Lot 45, Westendorf. Sale price £85k. By Coroner and trained by Jonjo O’Neill. Had won a P2P Flat race at Tipperary fourteen days prior to the sale. Has won once since and prize-money £12,139.

Lot 26, Glen Rocco. Sale price £80k. By Shirocco and trained by Nick Gifford. Had won a 5 & 6yo geldings’ maiden P2P at Ballindenisk eighteen days prior to the sale. Hasn’t won a race since and prize money of £954.

Dear oh dear. Apparently great P2P form going into the sales, but equally apparently pretty lamentable performances subsequently. Total hammer spend of £1,293,000 and a cool 10% commission to sales house and agents of £129,300, let’s say £50k each on training fees and associated costs as most of the trainers are not exactly the cheapest is another £500,000, giving total spend of £1,922,300. Between the lot of them, they’ve only won five races since the sale, with total prize-money a measly £63,169 at an average per horse of £6,317. If you then do the maths and work out the return on total investment, it is a staggeringly dismal 3.2%.

Methinks there’s not too much fine dining at the top table for anyone involved with these horses. Without doing a massively time-consuming exercise looking at all the other sales, I think I’ll stand by the assertion that turning up at top sales and spending money like water is the way to the poor-house. Anorak now taken off again. Time for another glass of fine claret. Cheers!

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.

ROA National Racehorse Owners Survey – Part 2, Identifying the Key Factors in Acquisition and Retention

My wife and I were lucky enough to be at our favourite racecourse – York – to watch the Nunthorpe, won in devastating style by Mecca’s Angel. Such a tough horse, and a superb buy at only 16,000 guineas out of Book 2 Tattersalls October Yearling Sale in 2012. She is the first filly to win the Nunthorpe twice, and it was a delight to watch the turbo-chargers kick in as she scorched through the final furlong. David Metcalfe, the owner, was clearly delighted and the whole experience was everything that owners aspire to. In a rather less restrained celebration, the Here For The Craic partnership couldn’t believe their fortune when – every syndicate’s dream – Heartbreak City won the Ebor for Tony Martin. These results, and the York racecourse experience, sum up what brings owners into the game and keeps them there.

However the backdrop for the first National Racehorse Owners Survey (summarised in the blog on 15th August) is the ongoing decline in ownership since the financial crisis of 2008. Numbers coming in were lower than numbers going out in seven of the last eight years, although encouragingly there has started to be some improvement recently.  The headline messages from the survey, of over 2,200 current and lapsed owners, include:

• 73% of owners start out with others, particularly friends, family or through a syndicate.
• 53% of owners say that speaking to a trainer or visiting a yard is the most influential step in their decision to own. However, 44% of owners say that there isn’t enough information available on costs, income or prize-money in the public domain to make that decision.
• 45% of current owners would increase their number of horses in training if prize-money increased.
• 44% of lapsed owners cite facilities and treatment of owners at racecourses as a key factor in their decision to give up ownership.
• Three out of four lapsed owners would return to owning if the circumstances were right.

The survey has been analysed under three main themes of the owner, the trainer and the racecourse experience. The more the results of the survey were examined, the more it became clear to us that the factors bringing owners into the sport are not necessarily the same as those that drive them out. This is illustrated in our diagram below, while drawing on the survey’s findings.

A Dual Industry-Wide Strategy is Required: Attracting AND Retaining Owners

 

 

Doubtless the analysis and conclusions from the survey will feed into the BHA’s Strategy for Growth and all the operational planning associated with its implementation. Our recommendation is that in the light of the dual factor model outlined, there needs to be a similar dual strategy with different goals and interventions. Acquiring new owners is closely linked to marketing, PR and timely, detailed and transparent provision of information about ownership, particularly while potential owners are visiting trainers. Retaining owners is much more challenging because of the inevitable disappointments of ownership, the high relative costs and dissatisfaction with racecourse facilities. It is essential that the industry doesn’t just concentrate on marketing and PR campaigns, but addresses properly the financial and experiential factors driving unnecessarily high owner churn rates. Indeed we would argue that this should be the prime strategic imperative of the BHA’s Strategy for Growth. 

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.

What are the Motivations of Owners to Own, and What Demotivates Them?

It’s funny how the start of the year seems to have thrown up a huge number of subjects for me to write about in the blog. Initially I started drafting one on the change of broadcasting contract from Channel 4 to ITV, but I was also considering coverage of Ascot and Cheltenham prize-money increases, Richard Johnson’s 3,000th NH winner, authorised betting partner stand-offs and whether Ladbrokes will lose the sponsorship of the World Hurdle, whip bans / rules, etc.

However, I’ve just been invited to be interviewed by a research group for a study that is being carried out for the Department for Culture, Media & Sport on the economics of the horseracing industry. This is taking place today, so in preparation for it I started thinking about what motivates and demotivates owners. Many decades ago, when I was studying social psychology at university, I liked the “two factor theory” of a chap called Herzberg. He suggested a range of factors that motivate people in work and another set that had the opposite effect. Sometimes they are one and the same, but equally they can vary.

Interestingly in the recent BHA Review of Jump Racing there is a section that explores the problems of low return on ownership while arguing for a greater emphasis on the pleasures of owning horses through an emotional return on ownership. That resonates with one of my new year resolutions as an owner: we often see the “Keep Calm and Carry On” message, but I’m trying to adopt my own racehorse-owning version as “Stay Positive and Keep Spending”. I’m sure that all the OfO trainers will be delighted to hear that!

So, bringing these ideas together, I’ve created a chart of ten “satisfiers” of being an owner and then ten “dissatisfiers”. Do let me know what you think about them. By the way, this is only a listing – I’m not implying a prioritisation. I’m sure there is an interesting research study to be done in that area. One for the ROA?

DISSATISFIERS	SATISFIERS
Emotional return on ownership: Low Financial return on ownership: Low;	Emotional return on ownership: High Financial return on ownership: High
Factors that may drive an owner out of the sport and / or lead to a reduction in ownership involvement.	Factors that may attract or retain an owner into the sport and / or lead to an increase in ownership involvement.
Experiencing a horse fatality or serious injury that keeps the horse away from the track.	Buying and owning a winning, progressive racehorse that stays sound over several seasons.
Making the costly mistake of selecting a poor performing trainer with the wrong personal values.	Selecting and working with a competent, professional and empathetic trainer.
Winning next to nothing in prize-money and finding that place money doesn’t cover the costs of racing.	Securing sufficient prize-money to mitigate some costs and provide some capital for reinvestment.
Finding yourself in a racing syndicate when the trainer, racing manager and owners don’t get on.	Forming close friendships with like-minded co-owners, trainers and within the racing community.
Discovering that the horse possesses little potential and / or was sold to you with physical defects.	Buying a young horse and watching it develop over a number of seasons to realise its potential.
Frequenting lesser tracks at lowlier meetings to watch your horse finish way down the field.	Savouring the buzz and excitement of racing as an owner at the larger meetings and race tracks.
Being treated as a “wallet on legs” with costs continually going up and prize-money coming down.	Feeling that your financial investment is properly valued by trainers, racecourses and the industry.
Poor car parks, problems with badges, hostile O&T desks, dreadful food and inadequate facilities.	A high quality, hassle-free ownership experience when going racing.
Infrequent and over-optimistic communication leading to a mismatch of expectations.	Regular, comprehensive and honest communication and feedback from a trainer using a range of media.
Inflexible and overly harsh handicapping forcing the horse to race at the wrong grade for too long.	Being able to enter your horse in races that it can win, without unnecessary cost or restriction.

Doubtless every owner would have their own personal list of positives and negatives. I’ll be interested to hear more from you, in particular about the factors that could encourage you to increase involvement and own more horses, and equally the combination of factors that would make you decide to cut back or even abandon the sport. In view of the centrality of ownership to racing, it is absolutely amazing that there is so little information digging into this line of questioning in a properly analytical and well-researched manner.

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.

The Tesco Approach: “Every Little Helps” – But will extending prize-money down to 6th increase frequency of running horses, and as a result, field sizes?

We received a letter recently from Ruth Quinn, Director of Racing at the BHA, informing Owners for Owners that as part of the agreement on the 53rd levy scheme, the four largest retail bookmakers (William Hill, Ladbrokes, Coral and Betfred) have made additional voluntary contributions of £4.5m on top of their statutory levy payments for 2014/15. As a result, a total of £5m (the extra £0.5m coming from the Levy Board) is being injected into extending prize-money from 1st December 2014.

Basically, in some Class 2 to Class 6 races, place-money will go down to either 6th or 8th, with payments of between £200 and £400 paid on top of existing prize-money. This will ensure, in eligible races, that every horse finishing down to 8th in a Class 2 or 6th in other classes down to Class 6 will receive at least £400 or £200 in prize-money respectively.

Why is this being done? Initially, I thought it was purely for the obvious reason of providing additional prize-money for owners, and particularly providing additional reward for placed horses. As readers of the blog will know, I’ve advocated for some time that there should be much greater focus on placed horses, both in terms of prize-money and the whole owner experience, with racecourses being encouraged to acknowledge the performance of these horses even though they haven’t won or even come in the first three or four.

My second initial reaction was that while really appreciating the additional money, it is still unlikely in many instances to cover the costs of sending a horse to the racecourse. In another blog I mentioned a horse I was involved in, who ran really well at Wincanton in a 17-runner handicap to finish 4th, but where the prize-money was still only £238.50. When you consider the NH jockey fee of £161, riders’ insurance £21, entry fee of say £50, transport of c. £300, lads’ expenses of £50, racing plates at £70 plus my own costs of driving to the course and back of £50, then the total is more like £700. While enjoying the day out at Wincanton (which is one of my favourite tracks), the returns are clearly out of kilter with the costs ….. even with an additional £300 if the race was eligible for the new extension in prize-money (which it wasn’t).

So I decided to contact Ruth Quinn to seek her views. Interestingly from her replies to me it is now clear that the main logic of the extension to prize-money is actually all about trying to impact owner behaviour so that horses are run more frequently. Increasing the number of runs per horse could help significantly improve the overall competitiveness of British racing, boost field sizes and betting turnover etc.

Paul Bittar, former CEO of the BHA, was a strong advocate of owners running horses more frequently. Personally I think this is a complete non-starter, as do our trainers. Surely we all run our horses as often as makes sense for the horse, taking into account their wellbeing, suitability of going, race targets etc. Would I really encourage my trainers to run a horse more frequently, purely because there is a possibility of picking up an extra £200-400 of place-money – and equally, would they advocate the same?

Notwithstanding the point raised above that even if I did run I’d be losing money, but the horse would be unable to run for at least another three weeks. Let’s say the horse ran well and came 4th in an eligible class 4, I’m still only going to win a maximum of about £600, but with the cost of those three weeks’ training fees and all the running costs coming to, say, £1,500, I end up in an even worse position being £900 out of pocket.

If anyone can see a flaw in my logic, do please let me know! If there isn’t such a flaw, then why on earth do the racing authorities believe that owner behaviour can be influenced by such paltry amounts of money?

I’m going to be very interested indeed to see how the scheme works, and whether it does have any behavioural impact. As you can see from this note, I remain deeply sceptical and, I have to say, rather perturbed that there appears to be such a huge gap in thinking and practicalities between trainers / owners and those who want (quite rightly) to improve the competitiveness of British racing. Surely this scheme can’t be part of the solution ….. even though I always welcome every little increase in prize-money.

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.