Why Prize Money MattersFebruary 20, 2019
Hidden behind the Equine Flu outbreak was another story potentially as devasting to the racing industry. Arena Racing has decided that it does not need to offer horsemen and women more than the absolute bare minimum to provide the horses that make the show happen. Arena Racing control around sixteen racecourses, but more critical is the volume of fixtures they control, particularly those at the grass roots. Together with our owners we compete because we love the sport, we love the test of horsemanship in the preparation, we love the analysis in finding the opportunity to win. The prize money is the recognition of these endeavours and it underpins the ability for us to follow our dreams together with our owners and provide entertainment for the public. Prize money matters, it makes the sport viable for many. It also matters to the public, and those that follow the sport and to the economy as a whole.
If the sport is to produce the great spectacles such as Cheltenham and Royal Ascot it requires grass roots. Somewhere, that allows the talent showcased at these great events to develop. It needs a place for horses to take their first steps up the racing pyramid, races for jockeys to hone their skills and opportunities for trainers to master their craft. Prize money matters because it offsets the investment put in by horsemen, it helps reward those who get it right. Few horses can be superstars but to create superstars many horses have to be bred and tested, this requires investment. It matters at the grass roots more than anywhere as this is where the non-superstar horses race. Prize money makes the grass roots viable, without it they will wither and die, ultimately bringing the whole sport down.
Owning a racehorse is a hugely rewarding experience few endeavours can match it, it evokes feelings that are seldom stirred, ones that can’t be bought. It’s hard to describe the emotion as your horse makes its move to win. But, emotion alone does not pay a training bill, a jockey fee or transport cost. Some owners use their investment to give an edge when it comes to gambling and some are able to trade horses profitably but the majority do it for love of the sport and the horse. A racehorse is expensive and prize money subsidises the endeavour, it allows the investments that are needed for a flourishing grass roots that is the bed rock of the great sport.
Racecourses are paid for hosting racing through a mix of media rights, bookmaker fees and the levy. Part of this money goes to the expenses of running the day and looking after the course and part goes to providing prize money. The idea should be that by offering more prize money courses attract more horses. The better the money, the better the horses a course gets. The more horses and the better the horses the better the show is. The better the show the more people want to watch it and bet on it the greater the income is from the various streams and a virtuous circle is created. This would work in a system where racecourses were competing to attract horses, but the very nature of Arena Racing Group controlling such a large chunk of the fixture list is that they control all of the opportunities that many horses have to run. There is little competition between tracks for these horses as they all offer the same low returns. They are able strangle prize money down, increasing their margin but gradually making the sport less and less accessible to owners.
Arena Racing Group appears to be running for cold hard profit, Arena Racing Group’s ultimate parent company is based offshore which presumably has some tax benefits too. In our opinion this is not an organisation that has the sports best interests at heart. Their strategy may appear a short-sited one initially, as if owners drop away the sport becomes less and less of an attraction for the viewing and betting public and the returns in running a racecourse will drop. They do however appear to have a good fall back position for when the profits begin to dry up, racecourses that are no longer viable could in most cases be developed for other purposes that would offer lucrative rewards to their shareholders. This is something Arena Racing have not been afraid of doing in the past.
Arena Racing will likely claim that horsemen and women are being unfair on them. They will plead poverty and claim that they can’t afford costs required to sustain prize money. Yet most other courses are managing to pay out at much higher levels, despite lacking the economy of scale on offer to Arena Racing. There is a scheme in place whereby racecourses can unlock higher funding for their fixtures by making above minimum contributions. Prize money has dropped at Arena Racing courses because they have refused to continue in this scheme. To fund the scheme across all their courses would require an annual investment of £2.7 million to which the higher funding would add a further £4.5 million. Broken down on a race by race basis we are led to believe it comes to about £900 per race. As each racecourse is reputedly receiving approximately £950 per runner in each race it would therefore appear pretty affordable for Arena Racing to cover the costs. As an example of the kinds of profits racecourse make Wolverhampton made over £646,000 profit and over £1.727 million profit after taxation in the two most recent years accounts have been published. Wolverhampton is just one of their 16 tracks.
The public should care about this issue because it is their money spent on following racing, be it watching, gambling or attending fixtures that pays for it. They are paying to see the best show possible not for Arena Racing Group to make as much money as possible. Bookmakers should care because the better the racing, the more competitive it is the more profit they can generate. The government should care too, racing is a huge employer – similar in scale to the airline industry. If ownership becomes less viable, training horses become less viable and jobs will be lost and ultimately the sport no longer function. That is why prize money matters and horsemen and women are passionate about this subject.