Against a backdrop of a major recession, a significant fall in Levy yield and a challenging betting market, British Racing has shown resilience and stability, a major report has concluded. Economic Impact of British Racing 2013 was published today by the British Horseracing Authority (BHA) in conjunction with Deloitte.

The report determines that the industry has an overall impact of £3.45bn on the British economy. While this represents a marginal rise since the last report was published in 2009, once national rates of inflation are factored in the overall result is one of minor contraction of around 1.2%, only slightly greater than that for the wider economy.

Paul Bittar, Chief Executive of the BHA, said:

“British Racing has faced, and largely come through, a significant test. We were never going to be immune to the wider financial difficulties that still prevail, but can all be extremely proud of the scale of our sport’s continued contribution to the British economy. Core industry expenditure of over £1.1bn and a total economic impact of £3.45bn are just the headline demonstrations of our importance.

“Resilience is a recurring theme throughout. This resilience is however no accident, coming instead as a result of the collective steps taken within the sport over the last decade, which includes over £950m of capital investment.”

Racing remains the second largest sport in Britain on most metrics, including attendances, with a total attendance figure of 5.6m in 2012 despite competition from the London Olympics and the exceptionally wet weather prompting a record number of abandoned fixtures in the summer. Excluding the London Olympic and Paralympic Games, Racing accounted for four of the top ten attended sporting events in Britain in 2012.

British Racing has also performed well in comparison to other Racing nations on many metrics, not least in terms of the quality of its top races and bloodstock, all despite a lesser return to the sport from betting than many of its international counterparts.

The sport employs 17,400 full-time equivalents and over 22,000 individuals in full-time and part-time roles. These employees were a significant contributory factor in the £275m+ in tax generated by the sport, though represent an 8% decrease in employment in response to lower activity levels and cost reduction.

Media rights were the area of largest growth in the industry, generating £173m, up from £104m in the 2009 report. These increased media rights contributed heavily to racecourse cashflows being up by 1% overall, despite a marked decline in funds from the Levy.

Other headlines include:

• Almost £950m of capital investment has been made over the last decade in the industry’s infrastructure, more than £700m of which is at racecourses. While the majority of this investment was made in the earlier part of the decade, with only £203m of the total expenditure during the period directly covered by this report, it has undoubtedly contributed to the sport’s overall resilience during the recession.
• Every £1 spent in the Racing industry generates an additional spend of £1.53 in the wider, particularly rural, economy through secondary and business-to-business expenditure.
• Owners’ gross expenditure was £389m, whilst receiving an income of £85m through prize money and sponsorship (down from £92m in 2008).
• Further economic activity generated by British Racing, including veterinary and farriery services and the British Betting industry, means that it helps to sustain a total of more than 85,000 full-time jobs in the British economy.
• Over £14m of horse welfare related investment is estimated to have been made by British racecourses in the last four years.
• Racecourse sponsorship levels have risen from £25m to £31m – with the industry diversifying its sponsorship offerings with initiatives such as QIPCO’s sponsorship of British Champions Series and British Champions Day.
• 2012/13 gross win from betting on British Racing was estimated as £710m, consisting of £570m from licenced betting offices. This gross win has fallen from £1bn+ recorded in the six years up to 2008/09, reflecting competition with other sports, lower margins and the now offshore location of virtually all major online operations.

Alan Switzer, Director in the Sport Business Group of Deloitte said:

“Racing is comfortably the second biggest sport in Britain after football by many measures including revenue generation, attendances, taxation generated and employment. Top level sport now transcends national borders. The heritage and reputation of British Racing means it continues to attract many of the world’s top horses together with investment from an increasingly diverse set of major international partners.”