Racing’s overall economic impact
Jump racing’s audience holds up
Racing For Change — Getting the right result for racing
Hospitality market adapts
Compass Group votes for racing
Jumping is investing in itself
Britain’s 60th racecourse opens
Owners, Trainers & stable staff
Bloodstock sector adapts to shrinking market
A ROBUST APPROACH TO ECONOMIC ADVERSITY
Racing’s overall economic impact
The Economic Impact of British Racing Report, produced for the British Horseracing Authority by the Sports Business Group at Deloitte set out the sheer scale and diversity of British Racing. It found a core industry with annual expenditure of over £1 billion and a total economic impact of £3.4 billion, that contributes £325 million in taxation each year and has over 100,000 direct, indirect and associated jobs. The Deloitte report showed that Racing is the country’s second biggest sport after football by many measures. Jump racing forms a critical part of the overall industry and is enjoying a sustained period of prosperity. Britain’s Jump racing is the finest in the world and varies from the annual Jump racing “Olympics” that is the Cheltenham Festival to the extensive grass roots of the sport exhibited through many smaller rural racecourses and the thriving point-to-point amateur racing.
Alan Switzer of Deloitte reports:
“Our work in the Sports Business Group at Deloitte has exposed us to the consequences of the global economic downturn on many sports. While sport is certainly not immune from its effects we have seen an encouraging resilience, with the commitment and passion of its loyal followers and participants a key factor. Jump racing more than most benefits from this affection. Jump racing’s solid fundamentals should mean it is well placed to bounce back once economic conditions improve.”
Back to top
Jump racing’s audience holds up
On the face of it, a luxury like a day at the races appeared vulnerable to a tightening of the purse strings as the downturn impacted upon personal disposable income. Throughout 2008, all the signals of a deterioration in trading conditions showed themselves in a variety of different ways.
Yet spectator footfall has held up extraordinarily well. Overall, attendance across 2008 fell less than 4% to a figure of 2.08 million, the same as in 2003. That story might have been very different but for the dramatic abandonment of the second day of the Cheltenham Festival, which reduced aggregate footfall by about 50,000, after high winds damaged some of the temporary structures erected for the annual Festival. But for that result, the year end aggregate would have been virtually identical to 2007.
Aintree continued its recent success story, adding an additional 15,000 spectator visits across its short season, whilst other leading performers included Ascot, (up 4%), Newbury (up 4.5%) and Sandown Park (up 26%). The Grand National success story was perpetuated on a regional basis by good spectator growth at the venues staging the Coral Welsh National – Chepstow – and in Scotland at Ayr, home of the Coral Scottish Grand National.
Jump racing’s audience is very loyal. Its footfall is largely dominated by major events that take place on a regional basis. Aintree’s Grand National, Sandown’s Bet365 Gold Cup Meeting, Kempton’s Christmas Meeting, Ayr’s Scottish Grand National and the big autumn events at Cheltenham all represent iconic local or regional events and attract crowds for whom this might be their only racing outing each year. They are diary dates in a way that a trip to the cinema is not, and only reluctantly dropped. This is, in part, one of Jump racing’s strengths, and also one of its challenges. Persuading those once a year racegoers to attend just one more time would make a huge upward impact upon annual footfall, yet the barriers to that second visit have not yet been lowered. It is to be hoped that the recent BHA Racing for Change agenda will help racecourses address this challenge.
Alan Switzer, co-author of the Deloitte report, commented:
“The reach of Jump racing is illustrated in its 42 racecourses which cover the length and breadth of Britain. Other than the Scottish Highlands, no part of the mainland is further than 90 minutes travel from a racecourse.”
Many of these visitors build longer trips around the racing, injecting further expenditure into the local shops, hotels, bars and restaurants. A further 600,000 spectators are estimated to attend the over 200 Point-to-point fixtures staged each year spread across 117 courses.
Back to top
Racing For Change — Getting the right result for racing
Racing for Change is the title for an ambitious and wide-reaching campaign that aims to modernise the sport and broaden its appeal.
This new initiative brings together all the main facets of the industry with the common goal of growing interest in the sport for the future wellbeing of British horseracing.
The move to market the sport more aggressively has come about following the results of a major research study in 2009 that showed how racing had assets to die for but was failing to exploit them fully.
Amongst the main strengths of the sport are its year round availability and some of the best sporting fixtures in the UK calendar. Racing can proudly claim four out of the top ten most highly attended sporting events in Britain, thanks to Royal Ascot, the Cheltenham Festival, the Derby and the Grand National.
Add to this some of the best equine stars in the world, a sizeable stable of extraordinarily talented trainers and jockeys and some of the most stunning racecourses on the planet that can add demonstrably to the event experience in a way that a closed stadium never can. Racing can certainly justify its description as the Sport of Kings.
Over the next 18 months, Racing for Change aims to capitalise on these assets by:
- Defining and launching a strategy that leads
with distinctive premium-branded racing events
52 weeks a year.
- Developing a pro-active relationship with bookmakers
to maximise betting turnover on horseracing,
both in betting shops and online.
- Introducing senior-level marketing expertise to develop
and launch a co-ordinated marketing and PR strategy
- Establishing a template and assessment criteria
for the racing experience.
Central to the Racing for Change strategy is the recognition that the sport needs to connect with a new and younger audience whilst retaining its loyal customer base. Evidence from previous research in the young adult age group indicated that lack of a clear end game for the sport prevented many from adopting the sport. This may be reversed by creating a series of events that the public can follow as well as the development of new betting products that present the sport in a compelling way.
Delivery of the strategy will also be achieved via a significant improvement in racecourse standards with respect to showmanship and quality of customer experience. This varies enormously between racecourses and between individual events. And, finally, a marketing communications programme will be initiated in order to capitalise more effectively on racing’s great news stories, every week of the year.
Work has already commenced on the marketing and PR front with the establishment of a pro-active consumer communications resource for the industry. This work stream will also be focused on getting the sport talked about beyond the racing pages, whilst capitalising on the news and personalities that will create a broader interest in horseracing.
The Racing for Change team will also be introducing a number of new initiatives during 2010 that are expected to appeal to both current and new customers.
More major announcements are also expected throughout the year that could result in some radical changes to the 2011 fixture list.
Successful change comes from innovation, initiative and invention and Racing for Change plans to deliver on all three.
Back to top
Hospitality market adapts
Racing at large has always relied heavily on its appeal for private entertainment. No grandstand has been built recently without funding from the development of private boxes and their lucrative sale on a seasonal or daily basis. The trend over 2008, and into 2009 has seen a contraction of the hospitality market by around 15% in volume terms.
The causes of this contraction are familiar to everyone in the UK and Ireland in the past 12 months. Worsening trading conditions and a dramatic loss of business confidence in the final quarter of 2008 led to a drop off in enquiries as spending was reined in by companies.
Jump racing’s private entertainment customer profile is to an extent dependant on the finance and construction sectors, both of which have been squeezed hard in the past 12 months. Yet there is a certain resilience to the downturn as private individuals have picked up the slack left by corporations.
And by adapting their catering offerings, many racecourses have been able to protect their margin per customer.
The story also puts racing’s strength into perspective.
Paul Terry, MD of Events International, a leading hospitality sales company, says of the racing market:
“In these testing times companies are increasingly highlighting value-for-money as their main reason for choosing to entertain at a particular event.
Many sports have been hesitant to reduce the cost of their corporate hospitality packages. However, horse racing has taken a much more pragmatic approach. Companies are acutely aware that it can cost up to ten times more to secure business from new customers than from existing clients. Against this backdrop it makes sound economic sense to look after existing customers like never before, which is why corporate hospitality is such a valuable marketing tool. Horse racing provides companies with a variety of products to suit individual budgets which enable companies to invite a wide range of customers, as well as choosing to invite male colleagues or couples.
In our experience, customer satisfaction from horse racing corporate entertainment events is amongst the highest across all sports. Horse Racing also gives us a high proportion of premium days, such as the totesport Cheltenham Gold Cup, that compete favourably with other high profile sports such as rugby union at Twickenham and the F1 British Grand Prix; an invitation to the Gold Cup is unlikely to be refused!”
In short, racing’s broad church of support, iconic sporting events, and cross gender appeal keep it in the vanguard of UK sports both for hospitality and general admission.
Compass Group votes for racing
Compass Group won a protracted fight for the right to partner Jockey Club Racecourses Group, the largest racecourse owner in the UK, in March 2009. As the largest caterer in the UK, with contracts as diverse as sporting venues, schools and the Ministry of Defence, Compass’s long term investment in racing, both Jump and Flat, is a massive fillip for the sport. The partnership will deliver revenue of £500 million over the next ten years, and improved offerings to spectator, sponsor and restaurant customer alike.
Back to top
Jumping is investing in itself
Britain boasts many of the best Jump racing venues with over £450 million invested in these racecourses in the last five years in top class racegoer and equine facilities. Aintree, Ascot, Cheltenham and Doncaster are just some of the racecourses to benefit from this investment.
2009 also heralded the opening of the first new Jump racecourse since 1927 in the widely praised Ffos Las racecourse in South Wales.
But that investment is not merely in infrastructure.
A resilient approach to economic reverses has been minimized by the capacity for every racecourse to know its market and adapt to it, as the case of Market Rasen shows (see Case Studies page).
Back to top
Britain’s 60th racecourse opens
Remarkably, two new racecourses opened for business during the 12 months concluding June 2009. Great Leighs, staging All-Weather Flat cards, opened to acclaim from the trade professionals, but closed for business in January 2009 and remains in administration.
In contrast, Ffos Las, a dual purpose Flat and Jumps course near Llanelli in South Wales, opened on time and within budget on June 18th, to a sell out crowd of just under 10,000. Subsequent attendances have shown a sustained interest in racing within this region and cumulative attendance through the summer has exceeded 33,000.
The project, the brain child of racing enthusiasts, the late Mel Davies and Dai Walters, had a painful birth, being in planning on a separate site before Ffos Las for nearly 10 years before completion. The racecourse cost £21 million, financed by a joint venture between Pembrey Racecourse and the Walters Group engineering company, with a £4 million interest free loan from the Levy Board. The racecourse is managed by Northern Racing Ltd.
Ffos Las will stage 28 days racing in 2010, of which 16 are Jumps fixtures.
Back to top
Owners, Trainers & stable staff
The number of horses in training has remained remarkably constant, despite the economic downturn. In fact, the number of horses in training for Jumping, a combination of those retained solely for Steeplechasing and those dual purpose horses able to compete on the Flat also, went up marginally in 2008. There is a modest but noticeable trend to keep dual purpose horses rather than specialists, but the majority of horses remain specific to one type of racing.
Over 40,000 individuals are estimated to be involved in racehorse ownership in some way. Involvement ranges from individual owners with strings of over 20 horses to racing syndicates and clubs which make the ownership experience more accessible by lowering the entry cost.
Jump horse owners incurred over £125 million of expenditure in keeping their horses in training in 2008. The five year trend for prize money is on a upward curve, as reflected in the chart below, underwritten by commercial sponsorship.
On average 6,500 horses were in training in 2008, but 8,600 horses were in training at some point. A large majority of this expenditure is on trainer costs, vets, medical and farrier fees and hence is directly injected into the local rural economy. In addition, owners incur substantial purchase costs of buying Jump horses, with much of this expenditure supporting British breeding operations – another important rural industry. The passion of Jump horse owners for the sport is illustrated by the fact that owners spend this money in the knowledge that very little of their initial outlay will be recovered through future breeding values.
Owners’ initial cash injections then flow through the local economy on buying goods and services as stable staff and other racing employees spend their wages. Racing’s support of the rural economy is particularly valuable given the pressure many farming businesses face.
There is a slightly different story amongst Trainers, where a small reduction in the number of both full-time trainers and permit holders illustrates that the margins on training operations are slim. The downturn has in all likelihood accelerated a natural wastage that was overdue.
The same trend is more marked among jockeys. The number of riders at the top level has always been select, and the majority of rides are now absorbed by the big names, making the trade less attractive for new entrants. The positive side of this trend is that owners and trainers stand a better chance of getting a top rider to ride for them. The Amateur ranks, for so long a bastion of the Jumps game, and the nursery for many a senior rider, have diminished to just over 400. Against this, the Point-to-Point circuit continues to flourish and participants are focusing their efforts in that sector rather than in the senior sport.
Back to top
Bloodstock sector adapts to shrinking market
One area where the economic downturn is showing itself markedly is in the bloodstock sector. Although plenty of horses are sold privately, public auctions offer the best barometer of market sentiment, and all have shown a drop in both the number of horses sold and the median sale value. This of course is a double-edged sword. Whilst the sport needs the breeding of horses to be profitable, their lower sale value also offers opportunities for prospective owners to enter the market at prices that are demonstrably better value than during the previous few years.
Ed Prosser, who covers the UK Bloodstock market for the Racing Post, reports:
“The unraced store horse market has been hit as badly as any sales sector – flat or jumping – by the economy. The new Irish money, much of it from the building and property worlds, had been responsible for that market’s strength in the past couple of years and most of those people are no longer buying horses.”
And it’s certainly the case that the Irish market for unraced store horses has been hit harder than its UK counterpart. The Spring sales at Tattersalls Ireland and the Goffs Land Rover Sale were 38.8% and 50.5% down on the previous year’s aggregate takings, whilst the biggest UK Spring sale at Doncaster recorded a 34.1% decline.
In contrast, the market for Jump horses with some level of form – often just in bumpers or Irish point-to-points– has held up much better, particularly at the top end.
Some highlights from the sale ring in 2009 including William Hill National Hunt Chase winner Tricky Trickster being sold by Million In Mind for £320,000 at Doncaster in May. He was bought as a Grand National prospect by Paul Nicholls on behalf of relatively-new owner in Chris Giles, CEO of Giles Insurance. At Tattersalls’ Horses-In-Training Sale in November 2009, Graham Wylie was underbidder on Royal Diamond who was sold for 400,000gns. A first-time owner paid 280,000gns for Fiulin to join Evan Williams as a hurdler and there were a big variety of jumping buyers with budgets of around 80,000gns.
Looking at the private market, Anthony Bromley of Highflyer Bloodstock – probably the most active agent in that world – reports that trade at the top end remains good.
“The private market for high-quality horses has been as strong as it has ever been this year,” said Bromley. “That’s a supply and demand thing because there are very few of those special horses about. But the overall volume of private sales has dropped this year and that’s a sign of the times.”
In short, buyers are becoming more discerning about their purchases, looking for value, and for horses with a proven track record – a mirror of market sentiment across Europe, immaterial of the sector.
But does it matter if horses are no longer sold for large sums of money? Lower initial costs for embarking upon racehorse ownership can surely be no bad thing, provided that a sustainable breeding sector can be maintained. The sector has always been cyclical, and a great many horses in the Jumps world are home-bred, the apple of a farmer’s eye, and not necessarily bred deliberately for the sale ring. This is part of the sport’s stability.
Back to top
