Funding in Irish racing

It has probably always been thus, debates over the funding of Irish racing have probably raged since the 17th Century, when Sir William Temple first presented a set of proposals for setting up institutions that would oversee the running of racing, but attentions are rarely more focussed than when resources are scarce. An rud is annamh is iontach. Like now.

Of course, the manner in which racing is funded was always under continual scrutiny, even during the good times. The grant from government to racing still comes from central coffers, the same coffers as that from which the funding for teachers and schools and hospitals and nurses originate. Sympathetic ears that belong to non-racing fans are difficult to find, even after the arguments about employment, contribution and sport versus industry have been made.

Efforts to ring-fence the tax-take from betting for the funding of racing are running aground, and, even if they weren’t, there is still the small matter of the €35 million difference between the revenue generated from betting tax and the government grant to racing.

The new laws for the taxation of bets struck off-shore, a long time in the drafting and still eagerly awaited, are apparently all set to go. There has been much debate as to whether or not the new legislation will be effective in generating significant tax revenue (will a tax on winnings really be more palatable than a tax on turnover?), but the general feeling is that it will be. Importantly, in an interview published in the Irish Field 10 days, outgoing Horse Racing Ireland chairman Denis Brosnan said that he believed that the new legislation could work.

The worry, however, is that, even if the new legislation is effective, even if it does succeed in generating tax revenue of €35 million or thereabouts, it is not the bridging of the gap between current tax take and the amount needed to fund the industry that is often spoken about. It can’t be, if the tax take from betting is not going to be ring-fenced for racing. If there is no ring-fencing, there are no funds there to begin with. There is no gap to be bridged.

At its base level, an increase in tax revenue from betting will merely be extra tax revenue for the government. It will go into central coffers. The contribution to racing from the government will still be a grant. More tax revenue from betting would probably strengthen racing’s argument, given that there is generally a psychological link between betting and racing, but only psychologically, not materially. Racing would still be competing for governmental funding with schools and hospitals.

The argument for the ring-fencing is tenuous anyway. Despite the proliferation of betting on other sports, racing is still very important to bookmakers, no question, possibly more important than bookmakers would have you believe. That said, only a relatively small percentage of total betting in Irish betting shops, or on-line or by telephone with Irish betting firms, is on Irish racing, somewhere between 10% and 15%, the main firms estimate.

However, by contrast, the significant revenue stream that is the contribution that SIS make to Irish racecourses is directly and unequivocally attributable to Irish racing. At present, SIS pay over €30,000 per race meeting to the racecourse that stages it. SIS obviously feel that it is worth their while paying that amount for the picture rights, and indications from negotiations over Dundalk’s winter fixtures suggest that they think they are getting value at that.

In an interview with this paper published yesterday, outgoing Turf Club senior steward John McStay ventured that perhaps the racecourses should not be the sole beneficiaries of these funds. It’s a fair point. Of course, the racecourses are central to the staging of Irish racing, and many are now wholly dependent on the SIS revenue, but the racecourses are just one stakeholder.

Racecourses couldn’t function without the other stakeholders. Without the racecourses, there wouldn’t be a venue for sure, but without the owners and the trainers and the stable staff and the breeders, there wouldn’t be horses. Without the racegoers and the punters and the bookmakers, there wouldn’t be the same level of interest. Without the jockeys, there wouldn’t be, well, jockeys.

It is over seven years now since Peter Savill failed in his efforts to implement a system of funding for UK racing that was based on media and picture rights. It didn’t work, but there was a lot of good stuff in Savill’s plans, a lot of forward thinking, and, despite its different funding system, there were lessons in there for Ireland.

Which of racing’s stakeholders are the most important? Which are the most important components in an engine?

© The Racing Post, 13th September 2011

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