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Read the speech of the ROA President Rachel Hood (pictured with Chief Executive Richard Wayman) to this year's Annual General Meeting in full...

Ladies and Gentlemen,

Our objectives to improve the state of British racing remain on the horizon – tantalizingly within sight but still some way from our grasp.

What is clear, however, is that racing’s prime objectives fall into two distinct categories. One relates to the work that racing is doing with the government and betting industry to replace the Levy Board as racing’s central funding body. The other relates specifically to racing itself setting up a representative body whose dual function will be to negotiate with bookmakers and carry out the crucial role of distributing racing’s income.

But before we get into these key subjects, I must first take a take a very brief look back over the past twelve months. We were all deeply frustrated by the outcome of the government’s sell-off of the Tote, with racing not able to bring any meaningful influence over the sale. Racing has since set up its own charity, the Racing Foundation, to provide sensible stewardship of the bulk of its share of the sale proceeds and the appointment of our recently retired chief executive, Michael Harris, as one of its four Trustees, can be considered a silver lining to this otherwise disappointing affair.

Now, with that important point made, I want to focus on the future. As I have said, we are now beginning to see the outline of a structure that government is building with the racing and betting industries – a structure that will eventually replace the Levy Board as a central funding body. Less clear – but certainly also under intense discussion – is the image of how racing will form a body that will receive and distribute its overall income.

Within these two basic areas, huge complexities abound.

Nevertheless, we should take encouragement that the government has been true to their word in helping racing and betting to find a system that will eventually supplant the statutory Levy. And last week’s five-year Betfair deal with racing has shown what can be achieved when there is a real willingness to leap across a divide that had previously appeared impassable.

So what progress has been made? With the involvement of the Department for Culture Media and Sport, I am pleased to say that a Trust structure is emerging from the tripartite discussions involving the government, the betting industry and racing, as part of a viable alternative to the Levy. This would allow the bookmakers’ payments to racing to continue to be made VAT-free. However, the nub of the new scheme would be a licence condition that requires any bookmaker taking bets on British horseracing to have an agreement in place with racing’s representative body.

Under this structure, the ROA would be very keen to see the agreements between racing and bookmakers go back to being based on turnover. In my view the current gross profits system, has, at least in recent years, sold British racing short.

The number of fixtures and the race programme would also, in all likelihood, be a central part of this negotiation. And, of course, in an ideal world, this should be a true commercial negotiation without recourse to arbitration. We believe the two parties should be locked in a room until they do agree, though I fear that some form of binding arbitration process might eventually be allowed to find its way into the new terms.

Such a system would do much to close the offshore bookmaker loophole on payments to racing which is now responsible for so much income wastage.

Working in tandem with this would be the current resolve by this government to make offshore bookmakers pay gross profits tax by changing to a point-of-consumption tax. This change is the direct result of the work of Matthew Hancock MP, who has quickly established himself as a hugely influential supporter of racing within the corridors of power. Thanks to his tireless efforts, the Offshore Gambling Bill will receive its second reading in January 2013 and, when this becomes law, the commercial reasons for offshore firms remaining overseas would be consigned to the history books.

Of course, within this basic framework there are numerous strands of complications, not least that the new scheme will require either primary or secondary legislation which will take us to a starting point of 2014 at the earliest. Neither will this go through without attracting attention from European legislators, while our other nemesis, competition law, is also likely to play its usual tiresome role.

But owners must see this as real progress, even if it will never deliver the sort of prize-money levels and cost recovery that overseas’ owners enjoy. And here we must remember the sad facts to come from not having the funding regimes that racing industries in other countries enjoy. Taking France as an example, an owner there retrieves £54 for every £100 spent, while the British owner does well to get back £21.

The extent to which it helps us, the owners, is, of course, dependent on how the racing industry responds to this initiative. Without the statutory Levy, a void will be created, because part of the Levy function is not only to collect money from bookmakers but also to distribute it to racing.

So what will the racing body that is set up to negotiate with bookmakers and to fulfil the function of fund distribution look like? It will be made up by horsemen (of which the ROA plays a central role) and the racecourses.

As for the BHA, as many of you will know, I have previously been very critical of racing’s governing authority, both in terms of capability and cost. I am pleased to say, however, that since Paul Bittar arrived in January, my view of his organisation has become much more positive and I have no doubt that, under his leadership, the BHA has a major role to play in helping to facilitate the best possible outcome for its members, which obviously includes the ROA.

Now this is where the fun begins. The first question is how much of racing’s overall income will the new body have within its control? Will it be dealing solely with money flowing from bookmakers under the new agreement? Or will it have influence over all of racing’s income. It is a leading question because racecourse-owned media rights have increased to a level of, I believe, around £84m, while the Levy yield has declined from a high of £115m in 2007/8 to today’s level of about £70m.

Whilst the Levy Board deserves praise for allocating a growing share of its income to prize money, the situation relating to media rights revenues remains a major concern for owners. Not only is there a lack of transparency regarding the amounts racecourses receive in media rights, they can also spend that income however they wish.

So, although racecourses deserve credit for increasing their contributions to prize-money from 2010 to 2011 by £15m, we must recognise that this was within a period where racecourse income grew dramatically.

It is clear from all of this that amongst the functions of racing’s new body would be to provide greater transparency regarding all of racing’s income streams. It would then need to hammer out a long-term agreement so that an appropriate share of all revenues is committed to prize-money.

It is, after all, the owners and other horsemen who provide the racecourses with their stock in trade – runners and riders. And let’s not forget, that the overall extremely high quality of horses running under both codes in Britain is unsurpassed anywhere else in the world.

As I have said, the fixture list and race programme, will be key considerations under the new system from every perspective and, again, it must be accepted that the horsemen play a central part in both of these areas. Establishing a centralised race programme that meets the requirements of the horse population has long been recognised as one the most important elements to the efficiency of our sport.

In particular, we would like to see a change to the system the Levy employs to fund prize-money. Instead of the money flowing to racecourses on the basis of a daily fixture allocation as now, we would like to see a system where the prize-money allocation is made not to the fixture but to individual races so, the better the grade of race put on, the higher the allocation. This system would neatly dovetail with our long-held view that racing is fundamentally about meritocracy.

So you see, Ladies and Gentlemen, it is worth emphasising that the future of our industry revolves almost as much around the relationship between racecourses and horsemen as it does between the racing and betting industries.

I am reminded of this relationship in a positive way by the outstanding success the new half million pound Horsemen’s Group Bonus Scheme is proving to be by injecting over £300,000 this year into the pockets of ROA members, while providing further benefits for all members of the Horsemen’s Group. It is difficult to believe it could have attracted any adverse publicity. Suffice it to say, we hope that it can be continued and built upon in years to come.

The bonus is a small example of what can be achieved when horsemen and racecourses work together. Indeed, there remains much scope for increasing the work and co-operation between the ROA and the RCA in areas other than prize-money.

Of course, we have our own Gold Standard Awards which have done so much to improve an owner’s race-day experience, but we need to work with all racecourses – Gold Standard or not – to ensure that owners receive the best possible treatment when they go racing, whether they win or lose, whether they are at a championship course like Ascot or enjoying the attractions of a country jumping course like Fakenham. (The latter, incidentally, plays a vital role in its local economy and therefore recognises the significance of the many owners that support it).

Once more, I stress that without the owners providing horses, racecourse businesses could not survive. Owners should therefore be accorded the treatment of a very special customer by the racecourse when they have a runner, with every facility put at their disposal and every courtesy extended.

It works both ways, of course, because we are entering a period where a decreasing horse population means racecourses are often going to find runners in short supply. Owners who believe they have been treated much better at course ‘x’ than course ‘y’ may be sufficiently impressed for it to influence their running plans.

The joy of ownership is also about what happens away from the racecourse and it is reassuring that an increasing number of trainers are recognising that an owner’s experience at the yard can, at least in some way, make up for having a slow horse.

Talking of the various relationships that exist across the industry, I am pleased to be able to end on a positive note.

As some of you will know, the ROA lost its sponsor last year when Betfred bought the Tote and immediately withdrew their support. The association has therefore managed to continue heroically by providing sponsorship under an ROA banner to allow us to buy some time. However, I am now pleased to tell you that – thanks to a deal brokered by our new Chief Executive Richard Wayman - our search for a new sponsor has ended with success.

From September, ROA members who are part of our scheme will be wearing an SIS logo on their silks. The moral of this story is ‘never let old grievances stand in the way of a good deal’. And why do I say this? I say it because Satellite Information Services is, of course, largely owned by the major bookmakers.

So thank you SIS. It is an agreement that marks one of those rare and refreshing moments when the betting industry and owners see a mutual benefit. In the post-Levy era that beckons I hope there will be many more of these.

So to conclude, I would like to give my assurances to all members that everybody at the ROA will continue to work to resolve the many ongoing issues that I have spoken about today. Indeed, I will finish with the very specific message that finding solutions to support the people who are by the largest financial contributors to our sport is what the ROA strives to do every day of the year. And this is nothing short of essential for the future of British Racing.

10 July 2012