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Prize-money: why is it so important? The need for respectable levels of prize-money in British racing is still not really understood.
PRIZE-MONEY. Ever since I have been aware of the politics of British horseracing it has been a divisive topic declared to be too low by some, while by others – first bookmakers and now racecourses – impossible to be improved.
British prize-money has been the laughing stock of the world for years now; it is not necessarily a COVIDrelated issue but definitely an important factor that has been exacerbated by the global pandemic and was not in a strong enough position to withstand the pressures brought on by this year.
On my first trip to the December international meeting at Sha Tin, some 10 years ago now, the media bus returning from the racetrack to the hotel was overrun by a group of loud Ozzie horsemen, trainers and owners. They decided to chat to the girl in the corner seat. My reply “from Britain” to their opening gambit “Where are you from?” was responded by a laugh and the comment: “We don’t know how your Brit trainers survive the prize-money is so sxxt!”
I didn’t really have a response, but to shrug my shoulders and join the laughter. I know if I had retorted in my best Pom voice: “But our racing is the best in the world, we have fabulous Turf racecourses that test every facet of a racehorse and a 200-year history” the antipodean giggles would have turned into raucous laughter.
Since then some prize-money improvements have been secured – the battle with the bookmakers as regards offshore betting income has been successfully concluded and for a time there were some positive vibes that could be built on. However, as ever with British racing, the issue took so long to reach a conclusion that by the time things had been reconciled, other factors had begun to impact – the unresolved debate over media rights and even the long-planned reform of the Levy have recently been overtaken by the global pandemic, and threat of recession.
There is such a misconception in Britain as to the role prize-money plays, the importance of maintaining respectable levels.
It is easier to go through point by point in order to make things clear but, before I head down a role of explanation, I have one thing to get off my chest. Those who say that “owners don’t do it for the money” are a little deluded, talking out of their xxxx; and quite frankly just making excuses for the status quo.
In Britain the continuing loss of the owner-breeder has everything to do with money, and it is ridiculous to argue otherwise.
So here we go BHA and the reasons why differing ownership groups value good prize-money.
1. It is good for the ego. Let’s face it a lot of people own racehorses for their egos; the racehorse is an outward show of that ego. If, after a racecourse win, our owner heads to the pub or the boardroom, meets friends or colleagues who just take the mickey because his or her middle-of-the-road type has not picked up more than the cost of long weekend in a middle-class hotel; sadly our owner’s ego is rapidly crushed.
In fact, it is often squashed before then as horses tend to lose more races than they win.
But for our poor owner to even be subject to piss-taking even in the throes of success; well it is just another kick in the guts.
By the time the winning cheque hits the bank balance with all of its deductions the horse may have had a subsequent losing run and the joyful day once spent on the racecourse, now in front of the TV in the lounge, is just a memory.
2. Earnings, as a reward, should be reflective of the effort involved, and no matter how much we might like to argue that it is just a blast owning racehorses, it does takes a lot of effort.
The high turnover of owners coming in and out of the sport is an indication that it is not always as easy as the owners’ groups might like to make it out to be.
Ownership can, of course, be a brilliant, successful, enlightening and involving experience, but it is always expensive, it can be disappointing, requires a longer-term view to get the most out of it, sometimes a battle with the family to continue funding racehorse ownership, as well as a willingness to understand a complex subject. As Richard Hannon will often quote, racehorse ownership requires successful people to become acquainted with losing.
One agent told me after buying a 90+ rated sprinter at the Tattersalls Horses In Training Sale holding decent premier handicap entries that it was just not worthwhile the horse remaining in the UK to take up those entries; they might as well ship the steed abroad straight off.
The race was one of the leading sprint handicaps of the year, remember how important races such as this are to the betting industry? If it is not even worth the horse taking up that entry, it is a worrying and sad reflection of the state of our sport.
3. In conjunction, international owners, upon whom our racing business relies to buy, train and fund the sport, and keep quality horses in Britain, can earn a lot more money elsewhere with much lesser horses. It is so easy to move horses around the globe now (at the moment easier for horses than for people) to chase decent prize-money and well-funded racing (at all levels) taking place in countries in all time zones. No further explanation required.
4. The media rights hit: aside from the obvious lack of transparency which is obstructing anyway for racing as a whole to make a “proper” business plan moving forward, individual owners, particularly those of the older generation, do not like the thought that other people are profiting from their endeavours and their effort (see 2) that they themselves put in to fund, provide for and support their racehorse.
This bunch of owners, who might own a solitary horse or possibly a handful of horses, take their involvement seriously, will be mindful of their welfare responsibilities and are indeed in it for the long term. While they do love ownership, and they are the group who does not expect to walk away with money in their pockets, they really don’t like to feel they are being taken advantage of; there is a genuine dislike at the lack of British fair play.
5. Syndicates. With the decline of our dear friends the owner-breeders, group ownership has always been the supposed way to plug the gap. And, yes, obviously syndicates do offer opportunities for affordable involvement, but the problem is that, although costs are reduced, the prize-money cheque is, too. By the time a £3,000-winning fund (less raceday costs) is split, there is not enough in an individual’s pot to even pay for a good night out.
It also requires a group of people who get on, have the same goals in mind, and are financially viable at the same time. And I also return to ego… for many ownership is all about their “own thing”, and plenty would rather not have a horse at all than to go into multiple ownership.
6. British racing can never copy the Australian model of mass ownership where those involved treat race earnings as share dividends; there is currently no point even wishing for that.
In Australia equine shareholders might not get to the races, into the paddock or onto the podium, but, if the horse has been successful, they get a nice dividend at the end of the season. This can be a life-changing amount if the horse proves significantly above average.
7. Micro-ownership is a model that is being investigated by groups of people as a way to get numbers involved, and indeed has been successfully adopted in the US as proved by the Kentucky Derby winner Authentic. However, it needs a good horse to make this a worthwhile venture for many to get involved.
“We started out with more modest horses, but now we are seeing what people really want,” said Michael Behrens of MyRacehorse.com to the TDN after the company purchased a 12.5 per cent interest in Kentucky Derby winner Authentic in order to sell off micro shares in the horse after he finished runner-up in the Grade 1 Santa Anita Derby.
“This is what people desire. People love the action on the big days. We keep getting feedback. This is what they want, a shot at the Derby, a shot at the Breeders’ Cup.”
That’s great, and really does open up a window of ownership and gives unique chances of top class involvement, but who pays the bills until the horse proves it is top-class and worthy to split into microshares? The trainer? The breeder? A trader? Of course, this concept could be extended to a “stable” share ownership, which could work for the top yards, but how does this benefit the whole of the racing pyramid?
8. However, an important side advantage of the mass ownership model, however it is established, is the extensive reach it offers to the wider public. A viral tweet in August from racing.com showing two 20-something Australian lads perfectly reciting a fullrace commentary over a few beers is indicative of this broad stretch of interest and wide demographic reach Australian racing achieves.
9. No business can survive without the introduction of new funds, and the same applies for racehorse ownership. Most owners can’t continually deplete his or her bank account for the fun of feeding the racehorse; either the financial firepower or the desire to fund the haynet eventually comes to an end. Even if ownership is viewed solely as a hobby, it is just too expensive an outlet for most to maintain unless money is returned to the account.
10. The sport may be the Sport of Kings, and it does require uber-wealthy people to be involved at large scale, but such is the size of the industry now, it needs far more people than just the financial elite.
If those in (9) above are not looked after economically, then they merely run out of money, are lost to the ownership ranks and we face a continual reducing ownership bank.
11. Decent prize-money has a massive effect on the incomes of the horsemen – trainers and those working in the yards can significantly supplement incomes in a good year. It is an important consideration for stable staff, and a vital way to be able to improve staff wages without adding to the trainer’s costs and by extension either the cost of training fees or the depth of the trainer’s overdraft.
12. There was a recent debate on TV in August discussing whether trainers should factor prize-money into business plans. Of course, in a sensible world, no they should not, in a real world, of course they need to. So many have to discount training fees to attract owners and horses into the yard, that it becomes a vital part of the model to make up the difference.
Good prize-money allows trainers to either offer inventive deals to owners to encourage purchase of racehorses, or allows them to be self-supporting as in France. Our Gallic trainers own many horses themselves and run horses to win money and premiums and so supporting their businesses. Lesser horses will either be retained for prize-money capabilities or sold on claims, the better horse will be sold to the next level of owner.
It is difficult to find cost cutting methods for trainers to offer owners – the training of racehorses has remodelled (the days of one groom to three horses are long gone), but it is still a people intensive industry with high wage costs, and there is little that can be done to reduce the ongoing costs of property, feed and veterinary inputs.
So it is hard for our trainers to operate as the High Street with cost-cutting methods and flash sales, the only way they can offer something different is with such private options as “pay when we win” deals i.e. owners can use prize-money earnings to settle up.
13. In fact, the racing industry has a duty to provide an environment in which it can ensure those trainers, who are good at their jobs (generally identified in this industry by producing winners and quality runners) and can operate businesses that are self-sufficient, strong, vibrate and feasible.
We can’t have whole sectors of the racing industry running on the red – apart from the obvious financial implications, it is not a suitable way to protect the mental heath and wellbeing of those involved.
15. Despite the advantages that French horsemen enjoy, Britain can’t look enviously at France with its PMU; this system will not be established in the UK.
Neither is it a direct route we should ever consider heading towards with its impact on crowds, such an important source of finance and, as clearly evidenced over the last few months, the raceday experience for those at the races for the sport.
16. Neither, to an extent, is the Australian model something to be copied – the prize-money is almost too high and it can mean that some less desirable influences are happy to justify whatever means they can to achieve success on the racecourse.
17. British-based racehorse owners refill the coffers, and bring in those required outside funds (9) into their small racing ownership “businesses”, by selling racehorses to other racing jurisdictions. Large sums can be made if owners are lucky enough to have one suitable to head to Hong Kong or Australia or the US.
In fact, they don’t have to be superstars – a 75-rated horse with the right profile can be sold for good money to go abroad.
Selling horses is no new phenomena at all, but with the international demand so high, and the offers so big, now it seems that trading is for many the raison d’etre for ownership.
Many owners are only involved in ownership for resale, and while that resale used to generally only take place when a horse had reached its peak in the competitive racing in the UK, now horses are sold on often after one promising run in maiden company.
Quite obviously if the good horses move on too early then the quality of the British racing has to take a fall (2), and eventually resale values will fall, too.
If British-based owners were adequately rewarded by prize-money, and not looking at one big downward red-lined spiral with the only way forward perceived to be a pot of gold wafted their way by Australian owners, then there is a chance they will hold onto their horses for longer.
This has obvious benefits for all horsemen employed in the industry, as well as the ongoing breeding industry and the quality of the sport offered.
And a final question...
Has the British racing industry just gotten too big? Can it really find the long term sustainable finance at the size it has grown to? Are its aspirations as a sport trying to consider itself as “big business” too high? Is British racing actually viable? Are there just too many racehorses, too many individual businesses, too many racecourses? As harsh as it would be has racing just got to de-size in order to bring the finances back under control, ensure the fewer horsemen, owners, trainers and individuals are properly rewarded for their efforts? Could a more streamlined business work better?
Should any casualties of this year just be viewed as a part of a essential business of restructure?
Or should racing be touting at the top echelons of the sport with the financial power that could bring?
And now a final thought...
It is appearing at present that the model of racehorse ownership is changing... we have a developing bracket of first-tier of owners / traders who essentially produce the horses to a starter base and then sell on to their wealthier compatriots once a horse has proved that it is above average, or looks likely to fill a niche abroad in the richer racing nations.
The second owner is then guaranteed sport (as far as owning racehorses can) at the higher level – he or she is buying a Saturday-type horse or a stakes-class performer – there is reduced risk, which many want, compared to buying drafts of yearlings who may prove to be average and with earning capabilities to match.
Nothing wrong with this, to an extent, and the industry has to make decisions whether this is the ownership and pyramid model that is to be adopted and facilitated in this country.
We can’t have whole sectors of the racing industry running on the red – apart from the obvious financial implications, it is not a suitable way to protect the mental heath and wellbeing of those involved
Time is now for British Racing Ltd
IT IS TIME FOR BRITISH RACING CORP or LTD or PLC to be established.
It has been discussed and put forward as an option previously, but it really is time that a commercial company is established for racing, possibly modelled in outline on the Premier League or Formula1 as a way to take advantage of the commercial deals on offer.
Something such as this for racing has previously been dismissed as too divisive, and indeed former ideas have concentrated on setting up a top tier within racing, but there is actually no need for it to be just “premier”, the function of the company could work for the whole of racing’s product.
There has been some good and positive work with the forming of the Horsemen’s Group, but it doesn’t have any real commercial clout to act for whole of the sport of racing and allow it to operate in a manner similar to the powerful Premier League.
Before the arrival of Bernie Ecclestone in F1 the circuit owners controlled the income of the teams and negotiated with each individually; however, Ecclestone persuaded the teams to “hunt as a pack” through FOCA.He offered Formula One to circuit owners as a package, which they could take or leave. In return for the package, almost all that was required was to surrender trackside advertising.
The FA Premier League was founded in 1992 following the decision of clubs in the Football League First Division to break away from the Football League, founded in 1888, in order to take advantage of a lucrative television rights deal.
The deal was worth around £1 billion a year domestically as of 2013–14, with Sky and BT Group securing the domestic rights to broadcast 116 and 38 games respectively.
The league is a private company and a corporation in which the member clubs act as shareholders. Each individual club remains independent, and has to operate within the various domestic and international rules of the sport.
According to www.statista.com, the majority of Premier League revenue is generated through broadcasting fees, which brought in roughly £2.84 billion during the 2917-18 season.
The remainder is generated through commercial and sponsorship deals with approximately £1.3 billion, followed by matchday revenue with £670 million.
According to the Premier League’s own website: “Consultation is at the heart of the Premier League and shareholder meetings are the ultimate decision-making forum for Premier League policy and are held at regular intervals during the course of the season”.
Whether this is the actual experience who knows, but this stated policy would be preferable way for racing to move forwards than its continual vocal and public in-fighting. Neither F1 nor the Premier League are without fault, commercially or otherwise, but both experiences do show that a sport taking control of its own destiny makes money that can be harnessed for the good of the sport.
British Racing Corp could set up as a share ownership vehicle, and market and sell itself as a whole, instead of in the smaller chunks as it does currently.
Perhaps the media boat of riches has sailed for racing, but there are always ways to reanchor, and perhaps now, while the tides are turbulent, it could be the ideal point to aboutturn to make a decisive, life-saving move.
British racing has been viewed very positively this summer and has come out of lockdown in a good light, the TV coverage has been excellent, betting has been strong and, it might be my imagination, the anti-lobby seems to be a little more controlled.
Perhaps it has been realised that outdoor sport is a healthy pastime for human beings, with the equine participants cared for at the highest levels.
The line by John Lubbock and quoted by Winston Churchill, “There’s something about the outside of a horse that is good for the inside of a man” has never been more apt.
Live sport as a whole is now viewed hugely positively by the TV companies as the right sporting occasion in this world of diverse digital media entertainment guarantees sizeable audiences… watching sport on catch-up is never, ever the same.
Surely the Premier League model could offer some form of blueprint to give horsemen and the BHA greater power and commercial strength over its product, while still ensuring it works in association with needs of all stakeholders?
