President’s blog

By Paul Dixon

March 2010

At a time when prize-money looks sure to decline substantially, we must remind politicians of all complexions why prize-money is so crucial in sustaining British racing and why it plays a key role in helping the rural economy.

Point to any successful racing industry virtually the world over and you’ll see much higher prize-money than we enjoy in Britain. It might be an inconvenient fact for bookmakers and some racecourses, but it is a universal truth that prize-money has a direct influence on the number and behaviour of racehorse owners.

With the exception of the few super-rich, almost all racehorse owners, large or small, are sensitive to the financial costs of owning racehorses and the level of their expenditure is clearly influenced by how much prize-money they can win. For the great majority of British owners, it is more a case of losing less than winning more, a fact that is illustrated by our owners recovering, in aggregate terms, only around 23 per cent of their costs, far less than in virtually every other major racing country.

That’s not to say that prize-money levels override all the other factors that go into making a decision as to where owners run their horses. Of course they don’t, any more than our owners decline to run because prize-money is so poor. On most occasions there is little choice. It is a sad fact of British racing life that you run your horse for poor prize-money or you don’t get a run at all.

It is fair to say, however, that almost all owners look at what racing has cost them at the end of the year and adjust their expenditure accordingly. Today’s financial realities of ownership are translating into most owners cutting back and this will have a direct bearing on the financial well-being of trainers, breeders, jockeys and stable staff.

The amount that an owner is prepared to pay determines what a trainer can charge and, in turn, what the trainer can pay his staff. This economic cycle has a direct bearing on the number of horses in training and the financial margins to which most trainers have to work. It is also a major contributor as to why we are seeing a slow but steady decline in the number of horses in training and, to a lesser extent, why breeders and bloodstock sales are now suffering so badly.

And all this takes no account of the fact that trainers, jockeys and stable staff receive a direct benefit from prize-money through the percentages they receive on their horses either winning or being placed.

The relative wealth of trainers and breeders trickles down to employment in rural areas. It also affects the livelihoods of numerous people involved in producing ancillary products and services that make up the rural economy. Reverberations from any decline in the British racing industry are felt in many diverse areas ranging from veterinary practices, feed suppliers, insurance services and many agricultural activities.

From the Deloittes-compiled Economic Impact of British Racing, we see that the core racing industry sustains over 18,600 jobs, while, if betting is taken into account, this figure becomes over 100,000. Trainers and breeders alone are responsible for 9,500 full-time and around 7,400 part-time employees. Levels of prize-money might appear remote to the lives of many of these people but there is a sound economic argument to show that it isn’t. The cycle begins when an owner puts his hand in his pocket to buy a horse and then keeps putting his hand in his pocket to pay for training fees.

These are the arguments that we must impress on politicians who are much more concerned about employment and the appearance of social justice than they are about whether racehorse owners receive a fair return on their investments.

They are arguments that must be impressed upon those politicians who can, for instance, make decisions and push buttons on reforming the Horserace Betting Levy Board on whose shoulders the future welfare of our sport still rests. Or on the future of the Tote whose acquisition by British racing could have such an impact on the wealth of our sport for years to come.

For too long there has been a temptation in British racing to regard owners as the cash cow that can always be relied upon whatever the political and economic landscape. But, as we enter a period of prize-money decline in a time of economic recession, this conviction will be tested like never before. It would be cold comfort to be proved right that even the British racehorse owner has a limit.

February's Blog Entry
January's Blog Entry