Levy review offers hope in testing times
The deadline for the industry to respond to DCMS regarding the levy review will have passed by the time this edition of Owner Breeder is published. An enormous amount of work has been carried out by the industry team responsible, along with help from third-party consultants. In addition, I am delighted to say that there has been constructive dialogue with the major bookmakers and their representative body the Betting & Gaming Council.
Government have made it perfectly clear that the preferred position is for the industry representatives and the bookmakers to come to some sort of agreement and avoid the squabbles that used to epitomise the once annual levy negotiations. It is especially pertinent as the BHA-led strategy work has been developed with significant input from the betting industry in terms of betting patterns, what works and what doesn’t. A collaborative approach to the future racing product has shown that we can work together; let’s hope we can reach agreement on the future levy structure for the benefit of us all.
What gives us more cause for optimism is the mood music coming from government. There is no doubt that they understand that racing is a very different proposition to online gaming products and as such needs to be treated differently. There have been suggestions that levy reform can be used to mitigate the unintended consequences of affordability checks and sponsorship restrictions. What is undeniable is that in a high inflation era, the levy return in real terms is nowhere near the levels that were envisaged in the 2017 review, so we will have to wait and see if we get the result racing so desperately needs.
“What has made our case so much stronger is the staggering increase in the cost of owning horses”
In compiling the case for levy review, a new calculation of the cost of putting on the racing product has been developed. In simple terms, revenues into the industry were analysed along with costs for both racecourses and participants. What has made our case so much stronger than in 2017 is the staggering increase in the costs of owning and training our horses. One only has to look at a monthly trainer’s bill to see what owners are up against.
Trainers’ daily fees have risen dramatically in the last two years, with some daily rates now very close to £100 in response to the rise in costs in the wider economy, such as feed and staffing. In addition, a casual glance through the bills and the charges raised by the BHA and Weatherbys give a further insight, with owners paying more for farriers, vets, vet supplements, feed supplements, staff expenses for travel, box costs for racing visits, trainer expenses, dentist fees, vaccines, gallop fees, race entry fees, jockey riding fees, jockey insurance contributions to career-ending and PRIS, sponsorship registration fees, colours registrations etc – the list goes on.
The mind boggles when you add up the true costs of keeping a horse in training. Another aspect of the calculation is what happens when the horse is not in training for whatever reason, be it rest, recuperation or injury. Previously these costs were ignored from the calculation but have now been included, and as we know these can be significant, especially as there will be no prospect of any earnings during this period.
All of these costs have been factored into the calculation along with the rise in racecourse costs.
The gap between prize-money and the costs of ownership will never be closed completely, however with spiralling costs there comes a point when ownership just becomes unaffordable. That is why an increase in the levy is crucial to bolster prize-money across all parts of the race programme.
The strategy work will hopefully produce a new and exciting racing product, which will increase engagement, gate receipts and betting turnover. If we can also introduce other new sources of income into the pot along with levy reform, we can build on the prize-money levels and then begin to offset some of the eyewatering increases to owners’ costs.
The harsh reality is that if we don’t try to redress the balance then the pressure on owners will inevitably see more and more cry enough, the consequences of which would be dire for the industry.