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No doubt if prize money was upped significantly some would try to claim the cost of buying a horse at the lower end of the market increases and that cost is passed onto the owner/s. It’s a no win situation. And then we would get more horses bred etc.
Surely part of the problem is that the original price for purchasing each individual horse to race in Britain is totally unrealistic when you think about prize money earnings of a horse in relation to the costs involved? That doesn’t change significantly based on a race being worth £14k compared to £9k. And of course this is a general point, but once you win and collect your share of a £9 or 14k race, you have something called the handicapper attempting to "stop" you.
Some of the costs are created artificially by breeders and the breeding industry.
Up the prize money and who are we subsidising? Or in fact which costs will be pushed up as a result of it?
We really do need to get away from this terrible idea that the major bookmakers need horse racing. They remain profitable without horse racing and their dependency on horse racing is only going to go one way.
The Future
3.32 The longer the levy exists as a subsidy/state-aided solution to the funding of racing, the more dependent on it racing will be.
3.33 The longer the levy exists as a subsidy/state-aided solution the less likely it is that a commercial alternative shall be introduced.
3.34 The levy is, by its very nature, a divisive mechanism. Every year bookmakers and racing, through the auspices of the HBLB, negotiate a new deal. Negotiations do not take the form of a commercial negotiation between a willing buyer and a willing seller but that of an adversarial environment that is damaging to what should be a positive relationship for mutual benefit.
3.35 The Committee believes that migration in the medium-term to a truly commercial relationship between bookmakers and racing is the only realistic option to achieve a long-term solution to the problems associated with the levy.
3.36 The levy should cease.Are bookmakers wrong?
As the data rights case failed, I feel it’s time this sport accepted it doesn’t have a right to just to claim money it doesn’t generate itself. By all means, if the government change the levy to distribute 10% of bookmaker profits generated by all sports betting to help each individual sport, then horse racing can receive what it’s worth on an even and fair footing.
Bookmakers with retail outlets DO need horse racing/greyhound racing, Jose. You are underselling the sport.
Online, I would probably agree with you. Not retail outlets though: Without horse racing/greyhound racing, the places become glorified Barry Noble/Sun Valley arcades – and we all know what happened to them.
Even the most moribund racing pessimist would agree that no self-respecting man would willingly get out of bed to make a visit to a Barry Noble-type arcade.
Bookmakers know it too – they aren’t stupid. Blokes might go to a pub and play the fruit machine there, but not to an arcade – which is what a high street bookie will inevitably become without horse and greyhound racing.
It has also been my firm contention that horse racing is more attractive to punters than the bookmakers would have us believe.
I bet purely with live bookmakers in towns like Newark, Arnold, Ripley and in Nottingham City (plus on-course.)
Plenty of high street turf accountants I do business with have a large and loyal customer base with significant inherent repeat business. No betting shop I frequent is in any danger of shutting down.
On Friday, the main Ladbrokes in Arnold (a small suburb north of Nottingham City), had around twenty people betting at Ascot by the third race. A new independent opens there next week making five shops in a square mile and a half. I’m not saying we’re in a Robbie Box-style golden era of packed betting shops, but the sport isn’t on its last legs either. Don’t believe the hype.
They’ll pay too. Racing needs to grow a pair of balls to get them to do it – and there might be casualties – but they’ll pay. They can’t afford not to.
We’re not seeing this positive news in the mainstream press – witness that foul Daily Telegraph article written by that stroppy Tory bint recently – and we’re in danger of letting the bookmakers lead a misleading narrative in order to sparkle up their balance sheets.
Good post from Alan…
Most owners get involved knowing it will cost them money to run their horse, but also that there is a "chance" they could recoup some of the investment or make money if their horse performs notably well. It has got to the stage, certainly at the minor meetings, where the win prize-money isn’t even covering the costs of running – so it is literally now a case of throwing your money down the drain regardless of how your horse performs.
I only own a small share in one horse and very much enjoy the whole ownership experience, but I wouldn’t want to get involved to any greater extent as I couldn’t possibly justify the now almost guaranteed expense.
Maxillon5, I’m not going to quote all your post, but where I live the local Corals generates absolutely nothing from horse racing. All the money they take is machine money and football bets. The staff in there know there will be job cuts in the near future.
I’m clear anyway that bookmakers shouldn’t have to pay a levy on horse racing as it stands currently.
I wasn’t asked my opinion by R4C and as such, I’m more of a Weed than a Bill or Ben and that’s frustrating.
Max, you can have your say on the R4C Website.
You will need to register but that’s just email, name and password and then go to ‘Have Your Say’.
As some may find this of interest below is the Bookmakers’ Committee Recommendations for next years Levy.
50th Levy Scheme: Bookmakers’ Committee Recommendations and Racing Submission(Corrected)14 July 2010
Date: Thursday, 15 July 2010
1. I am pleased to submit the Bookmakers’ Committee recommendations for the 50th Levy Scheme per our statutory responsibility. We continue to believe that a levy based upon gross profit remains the fairest and most reliable indication of a bookmaker’s capacity to pay and therefore recommend very few changes to the terms of the 49th Levy Scheme.
2. We have noted racings’ submission to the Levy Board, and intend to provide further comment on it by the end of July. However, in making our recommendations, we are cognisant of the fact that the submission by racing deals almost exclusively with its own perceived needs and desires; the impact of economic, fiscal and social circumstances are essentially ignored in the submission. These factors have had a significant, and very recent, impact on the revenues and profits of betting, and therefore on betting’s capacity to pay the levy. We therefore believe the following should be taken into account when agreeing the levy:
a) The significant additional cost (since January 2008) of providing TV pictures into Licensed Betting Offices (LBOs) and the prospect of further substantial increases in January 2011, before the start of the 50th Levy Scheme. The amount received by racing (racecourses) has risen from £38m in 2007/8 to £56m in 2009/10.
b) We now face the worst economic outlook in Britain for many decades. Consumer spending is under extreme pressure and bookmakers’ revenues and profits are under the same pressure. In addition we face a VAT increase to 20%, much of which is irrecoverable by bookmakers, thus putting profits and our capacity to pay under further pressure.
c) The accelerating decline in the popularity of British horseracing amongst LBO clients has resulted in a constant decrease in British horseracing as a share of bookmakers’ revenue and also in absolute terms.
d) The total cost of levy and TV pictures now exceeds the EBITDA made by bookmakers from British horseracing. In 2000 circa 55% of bookmakers’ British horseracing EBITDA was paid in this way; the figure now is circa 110%.
3. In making our submission, we are conscious that the levy was never intended to be a price for a product and it is difficult to see how it could be. Further, it was certainly never intended to be a one-way street via an upward only rent review. The statute refers to a levy mechanism and has never envisaged a guaranteed yield. Racing, like bookmakers, cannot be protected from the impact of economic, fiscal and social circumstances and their resultant impact on both racing’s reasonable needs and the bookmakers’ capacity to pay.
4. The yield from the 50th Levy Scheme will depend as much, or more, upon racing and the bookmakers’ ability to work together, in what is a very difficult economic climate, as it does upon the terms of the Scheme. We believe that by working together on key strategic issues, such as reducing the number of non runners, developing a ‘levy friendly’ fixture list and more effective picture distribution, racing and bookmaking can increase betting revenues and therefore maximise the levy yield.
5. We believe that a ‘gross profit’ levy scheme remains the fairest and most reliable way to balance racings’ needs with the bookmakers’ capacity to pay, by taking into account the social and economic factors affecting the sector at that time; it also protects the consumer by ‘taxing’ bookmakers’ profits, as opposed to punters’ winnings.
6. We are particularly concerned at the impact that a simple ‘roll-over’ may have on smaller LBOs; it is in nobody’s interest for us to see continued closures of community-led LBOs and the associated social problems of unemployment as, even if paying less than the headline 10%, they do contribute to the levy. Additionally, the fact that levy yield has reduced, due to reduced betting on British horseracing with levy-paying bookmakers, is not a reason to increase the amount payable by those bookmakers still subject to levy.
7. We therefore recommend an above inflation rise in the LBO threshold to £123,000. Our calculations estimate that on flat revenues this would reduce the levy yield by circa £8.5m, which equates to only 25% of the additional cost to LBOs as a result of the increased media charges, and only 50% of the additional revenue received by racing (racecourses) each year from the sale of these rights.
8. We do not recommend any other significant changes to the 49th Levy Scheme. In the current economic climate, we see no possible case for any increase in the headline 10% rate of levy for LBOs, Telephone Betting, Internet Betting and Betting Exchanges.
9. In the longer term, we believe that racing and bookmaking should look to further their shared interests by working together to boost betting revenues derived from British horseracing.
10. My Committee and I look forward to your response to our submission.
Yours sincerely
Will Roseff
Chairman
For and on behalf of
The Bookmakers’ Committee 14th July 2010The one thing I don’t understand is D)
The total cost of levy and TV pictures now exceeds the EBITDA made by bookmakers from British horseracing. In 2000 circa 55% of bookmakers’ British horseracing EBITDA was paid in this way; the figure now is circa 110%.
Can someone explain this?
Btw EBITDA – Earnings Before Interest, Taxes, Depreciation and Amortization.
Thanks for that, Pete. Will make some comments soon.
Jose, read your post and will agree to differ with you on this one.
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It has got to the stage, certainly at the minor meetings, where the win prize-money isn’t even covering the costs of running – so it is literally now a case of throwing your money down the drain regardless of how your horse performs.
A striking and worrying claim. Let’s look at one, low-grade example:
17:50 Newcastle (Saturday)
Penalty value: £1813
LESS
Entry: (£20)
Jockey fee: (£100)
Jockey percentage: (£180)
Trainer percentage: (£180)
Horse Transport and subsistence: (£300)I’m quite sure I’ve missed some elements out, though the jockey, trainer and transport figures may be on the generous side; but that still leaves us with £1000+, doesn’t it? What have I missed?
I would imagine that training fees would be considered part of the costs of running. Not sure you’ll get very far on that £1000 with most trainers.
Thanks for that, Pete. Will make some comments soon.
Jose, read your post and will agree to differ with you on this one.
But the shop will still generate exactly the same profit as it is now – the cost of 2-3 people that aren’t needed. It won’t change and that is the main point. They don’t need as many staff now because no one is betting on horse racing in the first place.
Astonishing stuff indeed in your earlier posts APR, thanks. The use of levy to guarantee and/or bolster BHA pension funds is particularly depressing, distasteful and in my view indefensible
You also wrote:
the ladies race at Ascot on todays card four years ago – the prize money then was £14,000, today it’s £9,700.
Going to Wolverhampton to race for £5,000 seemed OK four years ago, going there now to race for £2,400 doesn’t
What in your opinion is the reason for this?
It would seem obvious to an ill-informed me that, in the main at least, that it’s due to a static or declining levy having to be spread ever more thinly over ever more races. So eventual negative feedback: new owners pile into the game, more and more races put on to satisfy their need, they get less and less reward for winning, owner leaves, fixture list shrinks (hopefully), remaining races better endowed. Start over, bubble baloons again
Maxillon5, I’m not going to quote all your post, but where I live the local Corals generates absolutely nothing from horse racing. All the money they take is machine money and football bets. The staff in there know there will be job cuts in the near future.
I’m clear anyway that bookmakers shouldn’t have to pay a levy on horse racing as it stands currently.
It must be a regional thing. The Coral nearest to me is full of racing punters most of the time, there are perhaps three or four people play the machines & they’re regulars. The other ‘high street’ bookies in the city centre all seem to do the majority of their business on racing too. Football gets it share of punters but the only time it really gets busy with them is on matchdays.
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I would imagine that training fees would be considered part of the costs of running. Not sure you’ll get very far on that £1000 with most trainers.
Indeed you won’t. But I don’t think it would be reasonable to count those weekly/monthly fees as part of the "costs to run", any more than purchase or lease costs. My query was about the apparent suggestion that winning a low-grade race might leave the owner out of pocket,
per se
.
News bulletin 1:
http://www.racingpost.com/news/horse-ra … 46703/top/
Looks like racing has a zealot on its hands. With his frenetic urgency, his zoned-out proclamations and his strange eye movements, Topping reminds me of Ayatollah Khomeni.
Still – is this another nail in the coffin for the levy? How much more bad news can Paul Roy withstand before he actually emerges from his ennui bubble.
News bulletin 2:
Three noteworthy things happened on Saturday.
A) 42,000 people attended York races – a modern day record. I think I’m right in saying only five Premier League football teams have higher attendances than this. (Dying sport? Yeh okay.)
B) Newcastle sold out weeks in advance – for low prize money Beeswing card pitched a couple of classes above the Yarmouth borefestival today.
C) A £47,000 placepot dividend was declared at the same track – a record.
So. What is it going to take for the BHA to assimilate, absorb and act on these two seemingly conflicting fragments of information about the state of horse racing? When will the Tunguska Moment for the funding of the sport arrive – and what will it be?
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So. What is it going to take for the BHA to assimilate, absorb and act on these two seemingly conflicting fragments of information about the state of horse racing? When will the Tunguska Moment for the funding of the sport arrive – and what will it be?
There’ve been some impressive postings on this thread, and this one in particular hits the nail on the head. The trends are indeed in conflict.
Although it might be thought that those convenient "market forces" should right the fiscal ship in the medium term, with breeders reducing stock, small owners paying lower prices, and the number of races reduced to keep prize money as reasonable as possible, there are a number of reasons why this can’t happen.
(1) The
bookmakers
will not continue paying the Levy at the rate they’ve done in the past. William Hill’s offshore decision is only the latest nail in that coffin, and no Government – least of all Brokeback Coalition – is going to get into legal hot water by trying to penalise them for so doing.
(2) The dominance of the
large commercial and private owner-breeders
for whom price is no object (Godolphin, Coolmore, Aga Khan, Juddmonte…) skews the market on a global basis, keeping bloodstock prices artificially inflated by their competition against one another.
(3) The
BHA
‘s need to respond to bookmaker threats by inflating the fixture list to unsustainable levels, in order to keep the Levy as high as possible. This has been done without logistic geographical sense, thus creating a two-tier system where some courses/fixtures are enjoying attendances higher than any since World War II, whilst others are playing to one man and a dog.
(4)
Racing For Change
has absolutely no power to do anything other than tinker at the margins, yet they seem to ignore the examples of those particular courses/fixtures at sell-out levels (because they don’t understand how or why this is happening) in favour of trying to apply models from "sexier" sports such as football – ironic when football is in a far worse fiscal state than racing, despite its stranglehold on media and public attention.
(5) In its
governance
Racing represents the interests of a small segment of society comparatively unaffected by the current fiscal and social crisis; yet because so much of its
infrastructure
(betting, racecourses, service industries) is affected by that crisis, there’s currently a mismatch between what the Big Players expect, and what the BHA can actually deliver.
**********
Rich men and women will continue to race horses. They may find themselves doing it more exclusively, in the French manner, and losing the range of experience available here. A two-tier system is probably not very far away, with the low-quality (and potentially corrupt) gaffs providing a betting medium for the mass market, whilst the upper echelons keep the "purity" of the sport intact.
The sadness of this will be the disappearance of those middle-range, midweek meetings which are so full of interest for the
aficionado
, but which don’t have enough prize money to attract one side of the equation, nor enough sheer numbers to provide ideal roulette-betting fodder.
Some of the more startling posts on this thread have shown how far the BHA needs to get its own house in order, with so much of the Levy not benefiting prize funds at all. Racing, good horses, exciting sport will continue. What we stand to lose is the rich diversity of what’s currently on offer.
When will the Tunguska Moment for the funding of the sport arrive – and what will it be?
VG
Forget the Tunguska zephyr, an end-Cretaceous mass-extinction of the dinosaurs is required. The signs are encouraging: the stegosaurus sought sanctuary in the mediterranean and the brontosaurus has now followed. T Rex remains, looming large over a dying coral reef and picking over the corpses of billions of starved inbred equids; he too will soon head south and that will be the magic sign. From the butchered and skeletal remains a healthier, stronger and small self-sustaining population of quadriped will evolve which will grow fat on the ample lush vegetation supplied by the grateful bipeds who love them so much. And all will be well in the brave new world
no gain without pain
boom bust boom
Drone,
Referring back to your query on why prize money has fallen based on the examples I gave – been away since Sunday a.m.
In the case of Ascot, the drop from £14k to £9.7k mirrors the drop in the permitted minimum prize money for a race of that class, as specified by the BHA. The BHA base their figures on the basic daily rate paid by the Levy Board to the courses – as that falls, so does the minimum level of prize money the tracks must provide at each class level.
These figures seem to take no account of any income the tracks are getting from other sources, such as the media rights money that has been descused elsewhere on TRF reently.
Of course, the prize money for the King George continues to rise as the money for the supporting races on the card falls. This is to ‘ensure that the race retains it’s rightful position in the international calendar’ and continues to attract massive fields of proven Group 1 performers, just like it did this year!
Or it could just be that the Ascot management have a big bet every year on Stoute winning the trainers championship ……
So in the case of Ascot, I don’t think the volume of fixtures is the key problem – the priorities of the Asct management look to be the number one reason for the fall.
Personally, I dislike the idea of minimum prize money levels, as my view is that they encourage courses to opt for the lowest common demoninator for the majority of races, thus depriving owners of choice based on competition for runners. From my own experience with placing horses in recent years, I’d say that NH racing provides more options and better rewards for moderate horses.
Wolverhampton is obviously different and there’s no way they could fund prize money above what the bookies provide, with the odd exception like their Lincoln trial meeting, as they can’t hope to compete with the big tracks on attendances or sponsorship.
Btw, the big crowd at Tork on Saturday was mentioned – wasn’t that mainly due to yet another post racing concert – I saw the sound stage at the far end of Tatts on the TV pictures.
AP
Btw, the big crowd at
Tork
on Saturday was mentioned – wasn’t that mainly due to yet another post racing concert – I saw the sound stage at the far end of Tatts on the TV pictures.
Yep the ‘Stars from X Factor’ took to the stage after racing on Saturday to murder a medley of too-familiar toons. How many of the 42,000 stayed on to watch I don’t know but 27,000 were present at the rather more enticing Madness concert after Friday’s meet
As mentioned in the ‘Americanization’ thread I wouldn’t be so bold as to be dogmatic about whether the concerts were responsible for boosting the crowds towards colossal. Friday is the sole York evening meeting, summer Saturdays are usually packed, the weather was spot on and this was the start of the school summer hols so the course got lucky on at least four counts.
Your finger slip was a Freudian slip methinks. Did The Monkees play live after racing at Ally Pally once? Happy days
Thanks for the comprehensive reply. Don’t think I’ll ever get to grips with racing’s financial gordian knot
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