Thursday, January 19, 2012

Tightening the belt

Tightening the belt

By Stephen Dwyer

In the end it could have been worse. In last month’s budget, Horse Racing Ireland received a two per cent cut in funding from the Government for 2012. This was expected but not catastrophic. Given our present financial situation an increase in funding was never likely. Undoubtedly the ideal result would have been a continuation of the funding levels of 2011 but the industry must absorb this 2pc reduction, its fifth cut in four years.

The contentious issue of prize money was quickly put to bed when it was announced that the base values of prize money will be unchanged. The minimum value remains at €7,000 per race, much higher than the corresponding minimum value in the UK. Many owners and trainers believe that this amount should be examined in closer detail as it is allocated in a lop-sided manner. Case in point was over the Christmas period when several valuable Group 1 races contained only a handful of runners. At Navan for example, there were two graded races worth close to €110,000, yet only four horses lined up in each race. There is a clearly a case for the principle of spreading the wealth.

It’s not all negative news for owners however as HRI announced that a rise of €1.1 million in prize money will take effect in 2012. This represents a forecast increase of €45.5m in 2012 from €44.4 million in 2011. Brian Kavanagh, Chief Executive of HRI commented about this increase: “The HRI Board considered it vital that we maintain prize money levels in 2012 because a further decline would have worsened our competitive position internationally against a background where prize money increases are anticipated in France and Great Britain next year.” Overall though, prize money for this year is on a par with 2002 levels as there is an additional 70 fixtures to fund in 2012.

Aside from prize money, if we take a broader point of view there are upwards of 16,000 people employed in the horse racing industry in Ireland. The farriers, stable hands and all those who provide ancillary services at yards up and down the country are equally as important as the jockey and trainer. Thankfully all grants to industry bodies, such as the Racing Apprentice Centre (RACE), the Blue Cross, the Irish Farriery School and the Irish Equine Centre, have been maintained at 2011 levels. This step will safeguard the livelihoods of those involved in the sector which is a welcome relief.

There was also positive news for racecourse managers as €6 million was allocated to a new initiative entitled the Racecourse Development Scheme. This will provide grants of not less than 30% and not more than 50% to assist racecourses with the development of customer facilities. For racegoers this is a significant development as it will improve the amenities at racecourses throughout the country. Areas earmarked for upgrading include grandstand improvements, restricted/disabled access enhancements, toilets, restaurants and bars.

The scheme also caters for some key industry projects (e.g. stableyards, stable staff and jockeys’ facilities). Brian Kavanagh again noted “The new Racecourse Development Scheme, whilst relatively modest compared to previous grants for this area, will allow racecourses to resume development of their facilities following three years when we could not provide any such support. Depending on the uptake by racecourses, this scheme will allow development of between €12m and €20m at Irish racecourses in the next year.”

Also last month, a joint committee was held in the Oireachtas by the Minister for Agriculture, Fisheries and Food, Deputy Simon Coveney. The minister publically recognized that the horse racing industry is worth about €1.1 billion to the economy. Minister Coveney was quick to defend the industry and is on record as stating; “We are world leaders, particularly in horse racing. We are second to none. We are the biggest exporter of race horses in the European Union. This year, we will export approximately €150 million worth of race horses”.

The Minister clearly recognises the value of horse racing in Ireland, he is also committed to introducing legislation to tax online bookmakers which will ensure the industry is self-financing. The facts were stark and required attention. Ten years ago the betting industry turned over €1 billion and generated €68 million in tax. In 2010 the same Irish betting industry turned over €5.5 billion but only generated €30 million in tax duty. This was unsustainable and the new tax rate of 1% could generate €20 million which will be used as financial support for the horse racing industry. Maybe we are starting to turn a corner after all.

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