ROA AGM 2008 – Presidents Speech

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ROA AGM 2008 – Presidents Speech Powered By Docstoc
					Ladies and Gentlemen,

Today, I have pleasure in presenting you with a „State of the Nation‟
address for the British horseracing industry.

This address may not entirely reflect the state of the industry as all others
see it, but I am pretty sure most of these views will be shared by the
representative bodies of trainers, breeders, jockeys and stable staff, who,
together with owners, are the constituent parts of the Horsemen‟s Group.

Here, I have to declare an interest. I am also the Chairman of the
Horsemen‟s Group. But, even allowing for my obvious bias, I truly believe
the formation of the Horsemen‟s Group has been one of the really positive
developments in racing in recent years.

Working with the Horsemen‟s Group this past year, it is evident to me
there is much, much more that unites us than divides us. Of course, there
are obvious areas of potential friction but the real motivation that all
members of the Horsemen‟s Group share is to get British racing on a
stronger financial footing so that prize-money increases for the general
benefit of all those who work and take part within this wonderful industry
of ours. Pursuit of this objective must and does override any differences
we have on a more domestic level.

You might wonder why the ROA needs the support of trainers, breeders,
jockeys and stable staff. You might suggest that, because owners pay the
bills, they should be given ultimate control. But the world has moved on
from those days. The power of trade unions may have ebbed away during
the past 25 years but the modern world increasingly concerns itself with
matters such as workers‟ rights and the need for people to have a say in
how their industry is organised.

The Horsemen‟s Group concept works on several different levels. From
the perspective of the outside world it is seen as fair, democratic and
representative. It has the right sort of ring to it in Government circles. It
works on the domestic level, because it gives all the non-racecourse
constituents in racing a voice at the top table and allows the BHA and
Levy Board to know who they are dealing with – a fact that probably
explains why they have recently shown a lot more enthusiasm in
acknowledging the Horsemen‟s Group concept.

Most of all, however, the Horsemen‟s Group gives us the sort of collective
strength that no one body could achieve on its own. It dissuades us from
squabbling amongst ourselves, while it encourages us to support each
other.

In recent months the Horsemen‟s Group, working hand-in-hand with the
ROA, is playing a pivotal role in getting racing‟s new commercial arm,
Racing Enterprises Ltd (REL), put onto a new, exciting level after a very
slow start.




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It has pushed through reforms such as getting a „reserves on the day of
the race‟ principle established for three races at Royal Ascot and has
energetically pursued a prize-money agreement that has now been signed
by 52 of Britain‟s 60 racecourses. It has also provided the conduit through
which a special payment process with racing‟s two digital TV companies on
48-hour declarations has been organised.

The Horsemen‟s Group is a 50 per cent shareholder in REL, with the RCA
owning the other 50 per cent. This means that, as REL helps to set racing
on a new commercial course in its quest to develop new markets, the
representatives of owners, trainers, breeders, jockeys and stable staff will,
along with racecourses, have a say in helping to mould this future.

REL now establishes the clear division between governance and regulation
on the one hand and commercial on the other, in line with the agreement
struck several years ago with the Office of Fair Trading. It is inevitable
that this line will on occasions get a little fuzzy but, going forward, there
will be a requirement on the part of both REL and BHA – especially the
BHA - to adopt a mature approach to dealing with those occasions when
regulatory and governance matters overlap with commercial.

But REL‟s excellent new independent Chairman, Chris McFadden, is not a
man to let politics get in the way of the main thrust of what REL is there
to do. Similarly, Chris knows that his diplomatic skills are sometimes
going to be tested to the extreme in dealing with the relationship between
the representatives of Horsemen and racecourses who make up the board
of REL.

Another man who knows the importance of diplomacy is Douglas Erskine-
Crum, who has had what amounts to a baptism of fire in his new role as
the Levy Board‟s Chief Executive. Douglas will be addressing the audience
shortly – and I am certainly not about to steal his thunder – but it would
be remiss of me not to say a few words about the Levy Board, which does,
of course, remain racing‟s principal funding body.

You could write a book about the complexities surrounding the Levy
determination process that started after the bookmakers and racing failed
to agree on the basis of the Levy last October. Failure to agree means the
Secretary of State, on this occasion Gerry Sutcliffe, is brought in to
adjudicate. All governments hate doing this. In fact, they were so
determined that this dispute should not land on their desk ever again that
they immediately set up a working group whereby racing and the
bookmakers came together in an effort to put all their cards on the table
to find a long-term solution that both sides could sign up to. It was
supposed to be the equivalent to locking people in a room and not letting
them out till they have found agreement but, sadly, the little matter of a
court case involving major bookmakers and major racecourses has
inevitably put these negotiations on hold.

There is, of course, only one logical solution when the basis of the next
Levy has to be decided again in October. The two sides, with the Levy
Board, must persuade government that the only route to take, in view of


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the complications created by the court case, is to duplicate the terms of
the current Levy scheme. Then we have bought time. Everybody knows
where they stand and long-term discussions with the bookmakers will not
have to be conducted in a climate of hostility.

Here, though, one major problem exists. It seems the bookmakers are
still intent to argue for a lower rate of Levy on gross profits to offset their
higher payments for Turf TV. It has always been – and remains – a
ridiculous proposal. It confuses statutory and commercial obligations. It‟s
the equivalent of arguing that if bookmakers found a way of reducing their
costs, then the Levy should increase accordingly. How much would the
bookies laugh at that!

The fact is, however – and I know Douglas will agree – racing has to find
a way through. We have to find a way of extracting the government from
the Levy process but, much more than that, we have to find a way of
increasing our market share in betting shops. For, whatever problems
might exist in re-structuring the Levy process, the real problem is that we
are feeling the increasing effects of bookmakers weaning their punters
away from horseracing and on to other products.

Now, we have to be careful in getting our thinking straight here. We know
from the lessons that have come from the emergence of Turf TV that
racing remains very important to bookmakers. There is plenty of evidence
that says, without racing, bookmakers‟ business is badly affected.

There is equal evidence that tells us that betting remains the single
biggest driver of horseracing prosperity. It may provide some with a warm
feeling to think that racing can somehow survive without the support of
betting, but it can‟t. Neither can it survive without the support of the
major bookmakers.

A man of letters might say we have a “symbiotic” relationship and,
therefore, we somehow have to find a way of working together to the
benefit of each other. Yes, sad though it might sound, we need each
other.

But the predicament is this. We know that betting on horseracing is, at
best, stagnant because that is what the Levy figures are telling us. Yet the
additional product racing has given the betting industry through
increasing fixtures over the years has seen no commensurate increase in
return to racing. If you were running a business and increased your
output by 25 per cent but your returns stayed about the same, you‟d have
to say the business was doing badly. That, by and large, is what has
happened to racing.

Addressing this point in the latest issue of the excellent Thoroughbred
Owner & Breeder magazine, I summed this up by asking, should we
continue to mistrust the betting industry‟s analysis of what‟s happening to
horserace betting in their shops to the extent where we simply ignore
their calls for a more bookmaker-orientated product, believing that we
have been there before and no good will come of it? Do we insist on


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seeing the colour of their money before agreeing to what they want? Or
do we make the changes they are asking for in the hope that betting on
horseracing returns to something like its glory days?

There is no doubt in my mind that we have to engage once more with the
betting industry but can it be done in a climate of trust and can it be done
in a way that gets the support of the people who carry most of the burden
– the people who make up the Horsemen‟s Group? For, lest we forget, it is
owners, trainers, jockeys and stable staff who will take on most of this
burden and it is they who must be given reassurance that any further
attempt at achieving a more bookmaker/punter-friendly fixture list and
race programme must result in a constant flow of information and, of
course, we must be party to proper financial planning. If we put on an
additional fixture of the type bookmakers are looking for, what does that
actually mean in cash terms for racing?

I could go on to mention the dire need for a more transparent auditing
process of the levy, or the need to return to charging levy on overseas
racing but these are matters best left to Douglas.

Instead, I will conclude by saying a few words about the sale of the Tote.

As many of you know, the Government, in their wisdom, rejected a bid
from a racing consortium of £320m last autumn and has since decided to
sell the Tote on the open market to the highest bidder.

Putting aside the fact that the market has since collapsed, so they are
going to struggle to find a buyer willing to pay that amount, we cannot
ever let the Government forget that it made two manifesto pledges to sell
the Tote to racing for the benefit of racing. The fact they cannot or will not
stay true to that pledge gives racing a pretty strong case for ensuring that
half the proceeds from the sale will come our way. This has been a more
recent undertaking given by the Sports Minister, though we have few
details as to how this might happen.

Of course, it is right that the racing industry, as an entity, pursues this
objective, bearing in mind, of course, that State Aid law will restrict the
spending of this money to non-commercial activities. But even with that
proviso, it would give racing an enormous boost.

I must, however, make it clear that this doesn‟t prevent the ROA from
continuing to form commercial partnerships that keep us within this
process. And that‟s exactly what we are doing.

For racing to sit back and watch the Tote‟s 550 betting shops end up with
a major bookmaker is one thing, but to see the exclusive seven-year pool
betting licence go the same way is something I find difficult to swallow.
The thought of a bookmaker owning the rights to exploit pool betting in
this country is entirely alien to me and, if it happens, I have no doubt
history will judge us badly.




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In fact, I believe such a development would mark the third major reverse
the British racing industry has experienced in the last 50 years. After the
legalisation of off-course bookmakers in the early sixties, we then saw
those same bookmakers gain a stranglehold on the communications
structure for sending racecourse pictures to betting shops in the early
eighties with the setting up of SIS. Now, if one of the bookies is allowed to
annex pool betting, the Government will be complicit in allowing the
betting industry to claim a glorious treble.

That is not to say, of course, that partnerships should not continue to be
formed with the bookmakers as with Tote Direct, which is an important
and thriving part of the current Tote infrastructure. I continue to be
passionate about the possibilities offered by pool betting and believe it to
be British racing‟s biggest hope for the future.

It may be a future that remains fraught with difficulties and uncertainties,
but, as we have seen with the setting up of the Horsemen‟s Group, co-
operation, compromise and flexibility are not words of weakness. They are
words of strength.

Can British racing and the British betting industry ever learn that lesson?
If they do, I believe we would all get a lot further, a lot faster. Thank you.

End.




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