READ ABOUT WHAT THE COUNCIL IS DISCUSSING
by Michael Harris, ROA chief executive
Levy Board funding reductions
The news that levy income was continuing to decline was received with dismay. This came on top of a £5m funding reduction that would reflect on minimum prize-money values for the second half of the year. The President would continue to insist that funding reductions must be spread across all expenditure heads and not just relate to prize-money.
Once more, the Council rehearsed the main reasons why the levy was in rapid decline:
1. So-called “high-roller” punters had had a better-than-average year.
2. Off-shore internet sites had increased business at the expense of UK-based bookmakers.
3. The full impact of bookmakers paying less that the designated 10% of gross profits through the threshold system was now being felt as the number of shops being affected by this had increased.
The Council were particularly incensed by the threshold ‘loophole’ because this concession had been set up to help small independent bookmakers and now over 60% of betting shops, many of them owned by the major bookmakers, were exploiting it as a way of minimising their Levy payments.
The Council were unanimous in their view that pressure should be put on the independent members of the Levy Board to support racing in its quest to withdraw thresholds, to re-instate bookmakers paying levy on foreign racing and to find the means of forcing offshore bookmakers to pay tax and levy. The first two of these actions would not, in the view of Council, require primary legislation.
Racing Post Yearling Bonus Scheme
The Council agreed that races for next year’s bonus scheme should be allocated to racecourses on the basis of their advertised prize-money. It was suggested that these races should effectively be auctioned among racecourses so that events that had the highest prize-money should be earmarked for a bonus race. Similarly, those maiden races that were run at basic minimum values should be ignored for this purpose.
Fixture List for 2011
Many Council members believed that the projected 2011 fixture list of around 1,500 was unsustainable in the light of the funding reductions, believing that it should be cut by at least 250 fixtures. However, others acknowledged the potential danger of doing so on the basis that this would create gaps in the so-called levy “fixture criteria” and lead to an even worse funding situation as punters chose to bet on non-Levy products such as foreign racing.
State Aid
Legal advice had been received as to whether the Levy Board was vulnerable to State Aid challenges if changes were made to its constitution. The Council were pleased to hear there had been a strong legal opinion to say that the levy was not State Aid and therefore a legal challenge to it under European law was unlikely to be successful.
Picture rights
The Council discussed the increasing income that was now flowing to racecourses from the sale of picture rights. Since the break of the SIS monopoly in betting shops, it was clear that funding from this source was increasing while Levy income was diminishing. However, it was also clear that owners were not seeing the benefits from this gradual shift in the funding basis of the racing industry from levy to picture rights.
Leading on from this, the Council commented on the good work now being undertaken by the Horsemen’s Group’s new chief executive Alan Morcombe who had wide experience within this sphere, having played a central role in setting up the rival betting shop service, TurfTV.
The Council also heard that Alan’s efforts were now being focussed on the 48-hour Declaration Agreement, new terms for which were due to be agreed on with the racecourses by September of this year.
12/07/2010