“””THE WAY FORWARD FOR BRITISH RACING””
“”The Way Forward for British Racing”” – but what do we mean by “”British Racing””? Is Racing a product provided primarily as a vehicle for gambling or a medium for owners and breeders who want to own and produce the best horses and build racing up as a national industry and sport while enjoying it at a reasonable cost?
Most of you in this room would say the former, but the major investors in British Racing – the owners and racecourses – would say the latter.
The British racing industry is the only industry in the world which subjugates the interests of the investors to the interests of those who make the profits from it. There is constant discussion about the level of bookmakers’ profits but no talk of profits, or even reduced losses, for the main investors in racing.
It currently costs £342 million to stage British racing each year. Owners invest £186 million of this, racecourses £98 million and betting only £58 million. Next year the contribution from betting will drop to around £53 million. That makes the betting industry very much a minority investor in British racing – a 17% investor to be precise.
So before you all start giving advice on how to run British racing, how many Sunday and evening fixtures we should have, what sort of races we should include in our programme and how much Levy we will lose if we do this or that, let’s make one thing clear. If the betting industry want a bigger say in how we run our industry, indeed if it wants as much say as it has been given in the past, it will have to invest more money in our industry and become a bigger stakeholder. Because we intend to run British racing like any other commercial enterprise – in the best interests of the majority investors. In Japan, France, South Africa, USA and Australia betting is the majority investor in the racing product and exerts considerable influence over the way in which the product is fashioned, marketed and distributed. In Britain betting is very much a minority investor and unless it is prepared to invest much more heavily in our product, it will in future have much less influence over the way that we fashion, market and distribute our product.
While on the subject of the financing of British Racing, it would seem appropriate to comment on the Levy system. It is a topical subject not simply because your Chairman recently wrote to you all stating that he was anxious to get rid of the Levy once and for all, but because for the first time in five years we are about to embark on a new Levy negotiation.
I too am sceptical about the structure of the Levy and would like to see us all work towards replacing it with a more commercial mechanism. I am unhappy with it, though, for different reasons to yours. You wish to see it abolished so that you will pay nothing for the product which generates over 70% of your turnover. I wish to see it replaced so that the betting industry can no longer claim to be subsidising racing, so that we can get away from a system that allows the buyer to make the first offer to the seller, and so that we can put an end to racing being forced to negotiate with a 100% monopoly distributor.
I have every confidence that Robert Hughes, the new Levy Board Chairman, whose appointment I welcome as an enlightened one, will do everything in his power to bring about an agreement between racing and betting. But we must not forget that the two sides are currently poles apart and the Levy Board, at the end of the day, can only accept or reject the Bookmakers’ Committee’s offer.
The replacement system which we should explore is the selling of the picture signal. This is the system by which American racing is financed and it is the system by which, in future, betting will be controlled and distributed around the world. The Signal System is the financing system of the future; the Levy System the anachronistic, uncommercial system of the past. I urge Robert Hughes to take a visionary approach to racing’s basic financial structure and work to bring the racing and betting industries together with a visionary system that will enable them to develop stronger ties and build their own industries into stronger entities.
The Way Forward for British Racing must also encompass the widening of the distribution of betting on horseracing outside dedicated Licensed Betting Offices. A siege mentality and an unwillingness to countenance progress will be insufficient to prevent this inevitable step. The widening of the distribution of betting outside LBOs should be seen, not as a threat, but as an opportunity to participate in an expanding market.
For widening the distribution will widen the audience and broaden the demographic of both the racegoer and the punter. It will also enable us to locate tomorrow’s customer who must be different from today’s if we are not to run out of customers as old age claims them one by one.
We need to capture new punters in the evenings and on Sundays. For the current inventory of LBOs is primarily located to capture punters from Monday to Saturday, noon to six. I urge you to look into the future, be positive and proactive, and fight for your share of the new market that will be generated.
Widening the distribution, however, is only part of the solution required to broaden the audience, which we must do if we are to compete for the leisure pound and grow both the racing and betting industries.
We must run our race meetings wherever practicable at times when people can go racing. This will almost inevitably mean that we will race in future on more Sundays and on more evenings, though we must ensure that the greater revenues which will flow to the racecourses flow to the rest of the industry through prize money.
We must advertise the fun and excitement of racing and concentrate on attracting a younger audience in the way that Japan has done since the mid 80s. Today, almost 80% of their racegoers are under the age of 25.
And finally, the Way Forward for British Racing must include the deregulation of our racecourses to enable them to generate revenue from their core product every day of the year instead of only an average of 20 days a year as at present. The current return to racecourse owners on the value of British racecourses is around 1%. It is blatantly insufficient. We are hopeful of persuading Government to allow British racecourses to operate Australian style Tabarets which are effectively social clubs or meeting places where food and drink are served and housed under the same roof as a betting lounge and a slot machine gaming room. They have transformed the profitability of three of Melbourne’s major racetracks and have been one of the major reasons for Victoria’s prize money increase of 55% in the past 4 years.
I trust BBOA will support our proposals when they have been finalised, since it will enable racecourses to make a greater contribution to prize money thCopy2
“ereby potentially reducing some of the burden we will otherwise place on the betting industry.
There are then, in summary, five fundamental requirements for the “”Way Forward for British Racing””:
First, we need greater investment by the betting industry in British racing. This investment is badly needed, must come from a higher percentage of betting turnover being returned to racing and will result in a better racing product which will grow betting turnover and improve betting industry profitability.

Second, we should move towards a replacement of the Levy System in the next few years. This will produce a fairer, more commercial system which will enable racing and betting to work together in increased harmony.

Third, we look for a wider distribution of betting on horseracing. This will reduce the overhead of the betting distribution system, broaden the audience, extend choice for the punter, and increase betting turnover.
Fourth, we must appeal to a broader audience through marketing to a younger customer, racing on days and times when racegoers can go racing and developing new ways to market the sport.

And finally, we must push for the deregulation of our racecourses in order to enable them to maximise their assets, increase their income and contribution to prize money and provide a broader community service.
Five Ways Forward for British Racing. How many will the betting industry support in the enlightened belief that a better racing product is good for the betting industry? I would like to think every one of them but I would not be surprised if the betting industry opposed them all.
That is the sign of the true gulf between our two industries. The racing industry wants investment and growth; the betting industry, perhaps for too long able to sit back with its monopoly of the distribution of racing’s product acting as a crutch to complacency rather than as a clarion call to forward thinking appears to want the status quo. But the racing industry has firmly decided that the status quo is no longer an option and if there is one message that I hope I have conveyed today, it is that there will be no “”Way Forward for British Racing”” without significant change in the next few years.
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