Is the British racing model really so bad?
The quiet week with no Jump racing got me musing about how other racecourses earn a return on their capital. The common perception is that British racing may offer the finest sport, but the sport is grossly imbalanced, and underfunded, meaning owners cannot achieve a sustainable return on their ownership through prize money, and trainers cannot earn a respectable wage from training.
But is this really the truth, or are we now conditioned to see British horseracing as the fall guy, where funds leech away to third parties and not enough is left to sustain the sport? The reality may be somewhat different.
There seems little doubt that a strategic error was made back in 1964 when betting shops were legalized and the Horserace Betting Levy was created. With no historical data to apply, ministers and their civil servants arrived at a formula which has been a bone of contention almost ever since! The original intention of the Levy was to act as compensation for the reduction in racecourse attendances resulting from the availability of betting on the high street. The levy is applied to the gross profits of bookmakers betting on British racing. In 2022, ┬ú70m was distributed to racecourses to support prize money alone.
This might sound a great deal of money, but in reality, the levy income is being eroded year on year by the growth of other sports betting and the globalization of sport. Events like the Fifa World Cup in Qatar are more profitable for most bookmakers, because their cost base on these events is much lower, and the appeal of the events is far higher.┬á Some $136bn was bet on the last World Cup tournament in Moscow in 2018. One thing all turf authorities across the world would agree is that the sport is being marginalized by more mainstream ball sports.
So how have others adapted? Is there best practice to be adopted by the experience of other countries?
The richest country in the world includes many racetracks, and a plethora of different business models changing between states. Major events like the Kentucky Derby are standout spectator events with huge crowds, where admission and ancillary income from spectators is an important part of the business mix.
In the mid-west, where thoroughbred racing is often mixed with quarter horse racing, it’s not unusual for racing to be staged as part of a state fair, the equivalent of an agricultural show for us. The racing is subsidized by the sheer scale of the fair and its attendance.
But a majority of racecourses offer free admission, encouraging enthusiasts to come racing, where slots and a casino are an integral part of the mix. Many of these have expanded their offering by the addition of casino websites. A trip to Golden Gate Fields for example, is as much a gaming experience as a racing and social experience. The result is that spectator footfall in great numbers can be quite sporadic.
One exception which follows the British model is American Jump racing, where fixtures benefit very little from betting. This exclusively east coast group of some 30 fixtures is almost a throwback to the Victorian era, with tailgate parties more akin to a Point-to-Point. But don’t underestimate it: when Shark Hanlon plundered the Grand National Hurdle at Far Hills in October 2022, some 40,000 attended from affluent New York state and New Jersey.
British trainers look enviously across┬ála Manche at their French counterparts, whose prize money structure is blessed with largesse. A Pari-mutuel monopoly means that racing has a far bigger kitty to live off than in the UK, totalling some Ôé¼430m in 2021, of which some Ôé¼250m is disbursed in prize money. The upshot of this is that prizes are as a rule of thumb, 30% higher than in the UK, with generous travel allowances for trainers per horse. Small wonder that a small but noticeable stream of trainers have made their way across the Channel to trade in France, either with satellite yards, like Sophie Leech and Tom George, or permanently like Nick Littmoden and Nick Williams.
But there’s a downside. The availability of betting through every street cafe provides the perfect excuse for spectators to ignore the sport. Racecourse attendances are by and large poor, and the envy is a two-way street. French racecourses are aghast at the spectator following for our racing even on an ordinary weekend. Crowds such as Cheltenham and Royal Ascot simply don’t arise, and the enormous crowd that attends the Arc in October would be two-thirds the size without a migration across the Channel from British fans.
But the reliance upon disbursements from France Galop means often that admission to the races is free.
The rest of Europe
Other racing nations like Germany, Sweden, Belgium, Italy, Spain and Czech Republic are also heavily reliant upon betting take, but unlike the British and French equivalents, their races are broadcast to much smaller audiences, sometimes merely within their own countries. In Germany, bookmakers co-exist alongside a tote, but there is nothing like the market sector strength of bookmaking in Britain.
As a result, spectator footfall is much more important than in France, but even more important than that are foreign runners, which allow for their races to be broadcast in those countries as well.
France Galop competes internationally to broadcast its races and those of its partner nations turf jurisdictions against the likes of Racing UK and At The Races.
The Australian model is quite possibly the most successful of the mixed business models. 350 racecourses span a huge continent where racing is a huge sport. Whilst we’ve all become familiar with the Melbourne Cup, a multitude of racecourses are staging their Boxing Day meets in 10 days time to large picnic summer crowds.
Whilst betting take is important to the likes of Ellerslie, spectator footfall is critical for the huge number of country club racecourses where racing is one of a fairly limited range of sporting activity on offer. AUS$10-20 admission is not unusual although membership of one club often infers reciprocal admission at others.
Racing is a curate’s egg in New Zealand. The robust horses, bred in an environment not dissimilar to Ireland, were first drawn to British racegoers’ attention when trainer David Barons met success importing NZ breds back in the eighties.
NZ Racing has been looking after the 67 racing clubs who practice at 51 racecourses, and published a 5 year plan focused on maximizing return from the top 20 racedays, both in terms of spectator revenue and betting handle.Ambitious plans include a new AWT track at Awapuni and the reconstruction of the Te Aroha course.
The focus on headline days has involved prioritization. The cost of lifting every Group I from NZ$220 to NZ$300 has been considerable, and some consolidation is taking place, meaning a few of the country courses are under threat of closure. But the governing body’s income is 95% provided by betting, so this is a jurisdiction where admission is often free.
Founded in 1884 to promote racing and riding, the Hong Kong Jockey Club is today one of the world’s foremost racing and sports wagering organisations as well as one of its largest charity donors, contributing very significantly to the economic and social development of Hong Kong. Its racecourses at Happy Valley and Sha Tin are world-renowned.
In the most recent financial year ending April ’22, HK$41.8bn (yes, billion) (┬ú4.3bn) arrived in the coffers of the Jockey Club, of which over 75% was disbursed in prize money or charitable support of the community. Through a monopoly on racing and football wagering, plus a lottery, this makes the HKJC the most successful turf authority in the world. With money like this, who cares about the admission price?
So, plenty of different models, and only one stand out success. We can paint the bookies as the bad guys, leeching money out of the sport, if we wish, but the business environment is not consistent across the world, nor is there a right or wrong way. The British racing model is far from perfect, but there are many other attributes that encourage people to own horses here. Racing is a highly aspirational sport, unlike in the US for example. And as we all know, no-one needs to own a racehorse.
Even if we all hope to one day!