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The full speech of Paul Bittar, Chief Executive British Horseracing Authority, to the 2012 Annual General Meeting of the ROA

Thank you to Rachel and Richard for the invitation.

First off I should declare a shared interest with you all. Firstly, I am a lover of the sport of racing. I am familiar with looking at the sport from an owner’s perspective because, like you, I am an owner and have been for the past four years. I have shares in two horses, one in Australia, an un-raced 2YO filly and one in New Zealand, a lovely 5YO mare with who we've been fortunate enough to win 5 races, gain a black type placing and have a hell of a lot of fun.

So my experiences as an Owner have been emotionally rewarding and importantly for this role, they've provided a valuable insight into the dynamics and drivers of ownership.

I have been fortunate enough to have fairly extensive experience of racing here and around the world, and of the major racing jurisdictions the ROA has arguably the most influential role of all owners’ associations. Credit for this is due not only to Rachel and Richard Wayman - who, might I add, I was aggrieved to hear was leaving the BHA at the same time I was appointed but fortunately he remains within the sport - but those who came before them including Michael Harris who spent many years representing the interests of owners to very good effect.

So where to start? Well, last week’s announcement regarding the deal struck by British Racing with Betfair seems the most appropriate place, seeing as it is both topical and deeply relevant to many of the issues which are of concern to the ROA - principally the future funding of the sport.

We firmly believe in the value of British Racing as a product and the need to work closely with the betting industry for our mutual benefit. And why shouldn’t we value our racing product, as after all, the quality and variety of British Racing is unmatched anywhere in the world – indeed it’s what tempted me to move a very young family to the other side of the world. As such the deal represents a landmark for both the racing and betting industries. It brings many benefits, including substantial and increased guaranteed funding as well as providing certainty for the sport in relation to Betfair’s contribution. The shift of their financial contributions from a voluntary sphere to a contractual one is critical. Perhaps most importantly though, the agreement aligns Betfair’s interests with those of British Racing in seeking to increase revenues derived from a thriving horseracing industry.

We have been very encouraged by the positive reaction to last week’s announcement, with a number of respected commentators endorsing the deal and similarly identifying the potential magnitude of the development in creating a viable option to replace the Levy. As Greg Wood wrote in yesterday’s Guardian, “The Levy’s greatest flaw is that it turns racing and betting into adversaries when the interests of both could be best served by one working with the other.”

However, on its own the deal will not turn around the finances of the sport. It will not bring about quantum uplift in prize money.

The Government is committed to bringing forward proposals to address the long-standing and damaging flaws in our current funding mechanism. We continue to engage fully in this process, but in parallel British Racing must also seek long-term commercial deals such as the deal struck with Betfair to assist in the transition to a wholly commercial future.

Under the current legislation there is no mechanism to bring other betting operators and particularly those with substantial parts of their business offshore, to the table other than a simple willingness on their part. The key task for Government is to ensure that there is a framework in place that requires all those taking bets on British Racing to have a funding deal in place with the sport.

Through further commercial deals we would like to create an environment in which there is greater certainty with regard to the sport’s funding. We can then focus on the customers and development of the business, seeking to get owners and other horsemen access to a fair share of all the revenue streams within racing thereby delivering improved prize money.

While the Levy has historically been equated to prize money, the fact is, this is less a direct correlation than ever and hence the other revenue streams are increasingly important, though the level of return from betting remains a critical issue and one we shouldn't lose focus on.

As I have said, this was British Racing, not BHA’s deal with Betfair. The three key groups in racing of BHA, racecourses and horsemen, signed up to the arrangements and I'm thankful to all involved for helping us get there. However, I am naturally delighted to think that we played a leading role on behalf of the sport. And it is worth just briefly explaining why I think it was entirely appropriate that the BHA played such a key role in developing a deal between racing and a betting operator.

In my mind there is paradoxically both a grey area on commercial matters as well as a distinct difference. There are commercial rights that racecourses hold in which we have no role, such as pictures and raceday data, but as far as the business of racing is concerned, on topics such as fixtures and the future funding of the sport via a Levy replacement, there’s always going to be a role for the BHA. Our role in these commercial matters is to lead and support the best outcome for our Members and this is not in conflict with our Members interests.

The reality is that one of the most commercial elements of the sport is the Fixture List and while we would always advocate developing the Fixture List in consultation, and ideally in agreement, with the racecourses and the horsemen, as provided for by our Members, the BHA is the final arbiter.

I have said a number of times (almost ad nauseam for some of my team) I see the BHA’s role as primarily two-fold: it's about leadership and it's about service. The term regulator does not adequately describe the scope and breadth of what we do on behalf of British Racing.

We are constantly seeking to improve how we service the industry and at what cost. To that end, one of our recent initiatives was to set up a review of our operations, both raceday and the services provided at head office, with a view to delivering improvements to our efficiencies and the quality of our service. The two objectives need not be mutually exclusive and we are seeking to incorporate the initial results of the review into the final quarter of 2012 and more significantly into our business plan and budget for 2013.

I am committed that the BHA will strive to deliver those objectives on behalf of the sport. Rachel and the ROA have been vocal in the past about the efficiency or otherwise of the BHA. However, if I take a macro view, this is an industry of scarce resources, so collectively we should be committed across all the various industry’s bodies and associations to ensuring we run the sport as efficiently as possible. Many of the current strategies or concepts being proposed within the sport do not have this premise at their core and I believe they should.

I see an equally important role of BHA’s as being the ability to provide objective leadership and advocacy on behalf of and in the best interests of the sport. In this way we are also serving our stakeholders and members, you the owners and everyone involved with the industry.

Leadership takes many forms. For example, we provide leadership in representing Racing in the industry’s dealings with Government. In this sphere there is now clear evidence of the benefits of that strategy. This Government has a better understanding of the issues which challenge Racing and we are no longer held back by mixed messages from the industry hindering the delicate process of bringing about changes in legislation. We await the release later this year of a public consultation on options to replace the Levy with a mechanism that meets the key criteria laid out and developed by Racing in recent years.

The BHA also clearly has the lead role on behalf of its Members in ensuring British Racing develops a Fixture List which meets the interests of both the sport’s participants and the sport’s customers. Our objective here is to develop the sport’s Fixture List so that it is built on the principles of ‘supply and demand’ and that we seek to satisfy the customer demand as best we can.

Demand for fixtures comes from a range of parties, including racecourses (and their various customer groups), horsemen, the betting industry and broadcasters. The resulting Fixture List should accept and explain any supply constraints (i.e. horse population) and ideally have the support of both stakeholders and customers.

While the two are inextricably linked, I also make an important distinction between the Fixture List and the Race Programme. The aim in developing the Fixture List is consumer focused to optimise income streams for the sport, while it is the role of the Race Programme to best reflect the needs of the horse population. By framing appropriate races we can better meet the demand of not only owners and trainers, but all of the sport’s customers too.

A more structured and inclusive approach is being applied to the compilation of the 2013 Fixture List, and this will be further developed for 2014 and beyond.

Linking this to one of the key elements of the Betfair deal is the sharing of betting data, enabling the direction and content of the Fixture List and Race Programme to be based on solid, reliable data. This data covers the three key items of racecourse profitability and income streams, the make-up of the horse population and betting revenue data.

The information we have clearly indicates that a reduction in fixtures would result in a reduction in industry revenue, so the contention that less fixtures would result in higher prize money is simply not supported by the data we have.

And following consultation it is clear that demand for fixtures from both the betting industry and racecourses remains (at least) on a par with that of 2012.

What is also clear is that with a declining horse population, maintaining current fixture numbers whilst operating in the same way is likely to impact on average field sizes. This is an area that an objective body such as BHA can demonstrate its value to the industry and we need to be much more innovative about our handicapping and racing policies to encourage more starts per horse per season.

As an example, in New Zealand - where as I mentioned I race a horse - horses start on average 5.8 times per season. This statistic is similar to Victoria where I most recently worked but is one full start per season more than horses start on average in Britain. If we could achieve one extra start per horse per season - which can only be a good thing for Owners - we would deliver an additional 20,000 runners per season which would cure all of our concerns about the size of the fixture list. The BHA should be leading the analysis and debate on how to achieve this outcome.

So in closing I believe that despite the protestations of some, the BHA is the best placed of all Racing’s various bodies and associations to help influence and shape the future of the sport and to bring the industry together. We can provide a balanced outlook and highlight common, shared interests.

Our goal - one shared by the ROA leadership - is to ensure that there is a framework recognised across the industry - embedded in the Rules if necessary - that provides owners and other horsemen with a fair and appropriate share of all the revenues generated within racing.

Within British Racing there is both a place and a critical role for all three groups of the BHA, racecourses and horsemen - and to be honest, it should not be harder to build trusting relationships, sensibly reach agreement, or strike mutually beneficial deals within our own industry than it is to do so with the betting industry.

Thank you.

10 July 2012