Problems mount up for Jockey Club
Mike Deasy says the ending of Investec’s Derby sponsorship is another problem facing Jockey Club Racecourses
Like every business the impact of Covid-19 is being acutely felt by Jockey Club Racecourses, as revenue streams dry up without racecourse attendance and loss of non-racing events.
But it’s not just the coronavirus pandemic that is causing headaches for JCR, there are other issues as well – all distractions for the biggest racecourse-owning group whose profits are vital for the sport.
JCR was hoping to raise a considerable amount of money through property development at Kempton and Sandown.
The proposed housing development at Kempton initially meant the closure of the Sunbury racecourse. The loss of the jumps track in particular lead to a major backlash – with the question being asked how the JCR raison detre of returning its profits to racing stacks up if it closes a major venue.
Money emanating from the sale of the land was to have gone towards a major refurbishment project at nearby Sandown and the building of a new all-weather track at Newmarket.
With the National Hunt community in the vanguard of opposing the Kempton plan, another all-weather circuit was no compensation for the loss of a valued jumps track.
However, the main opposition for the Kempton development came from local residents, who had already sharpened their teeth by reducing the number of new dwellings built on nearby land formerly owned by London Irish rugby club.
Anyone who knows the area would first question the local infrastructure’s ability to cope with a major housing development and second point to the amount of land at Kempton which is no longer raced on which could be used for building.
Eventually, JCR scaled back their proposal to build on the vacant land but that is now on the back-burner as the local council have been less than supportive of the project.
Over at Sandown, more modest plans have also struggled against local opposition – home-county suburban residents are very feisty in challenging anything which impacts on their local community. Again, the local authority hasn’t been keen to accept the increase in homes within the borough.
Meanwhile, Sandown has undertaken refurbishment work, some of it to provide premium racegoing facilities, the benefits of which have been denied to the course.
When the fixtures were announced for the resumption of racing, JCR did not put two of its racecourses, Carlisle and Nottingham, forward to the BHA to hold meetings. If you could trade in shares in the two tracks, you’d view their mothballing as a reason to sell.
And holding the Cheltenham Festival days before the lockdown continues to draw adverse comment, whether or not it contributed to increased infections and loss of life.
Then there is the juxtaposition of monetary contributions to the running of Health Secretary and Newmarket MP for Matt Hancock’s constituency office. Even if the donations have been made in a private capacity, links are made to JCR.
Only last week the Daily Mirror devoted much space to the financial support Hancock was receiving from racing’s establishment figures.
Whether or not Hancock is a sound “investment” in terms of future influence is another matter.
And now there is the search for someone to replace Investec as Derby sponsors. The banking and wealth management company’s departure shouldn’t really come as a surprise.
The firm’s founder Bernard Kantor was a racing enthusiast, but he left the company last year. And other sponsorship deals in cricket and hockey have come to an end. The writing was on the wall.
Nevertheless, JCR thought it had a deal that would run until 2026. But the parties agreed to an amicable separation, with an issue in the background about this year’s event being held behind closed, thus diminishing the value of the agreement worth £3m annually.
But Investec were a model sponsor – helped by their zebra image which neatly dovetailed with the thoroughbred form. They spent a considerable amount on promoting the event, not least with highly visible press and poster advertising.
There have only ever been three sponsors of the Derby, Ever-ready batteries, Vodaphone and Investec. It may not be the most difficult sponsorship to sell in normal times, but times are not normal and when businesses feel financial pressure, the marketing spend is often hit hard. Much as rugby union has found, sponsorhip no longer commands the price that it once did.
With the JCR ethos of existing for the benefit of the sport, it naturally becomes the centre of attention in respect of swinging cuts in prize-money which racehorse owners see as inequitable. Their bills have not gone down, but their rewards have.
The demand from the Racehorse Owners Association has been for transparency in racecourse earnings from media rights – just about the only income racecourses have at the moment.
There is a degree of naivety in respect of wanting prize-money to be restored to something like pre-lockdown levels and the Association surely has the ability to research on its members’ behalf the financial model to which tracks work.
Lee Mottershead in the Racing Post pointed out for example that the books of local authority owned Musselburgh are in the public domain and give a good insight of income and outlays in the operation of a racecourse.
Meanwhile, the Association is surveying its members on prize-money and how it is apportioned to the different levels of the sport. There are over 20 quite detailed questions and it wouldn’t be too difficult to predict where opinions lie.
Because racecourses are commercially run enterprises, there are limits to what they are going to be prepared to reveal, but JCR do not have shareholders, unlike Arena Racing, and they are under the greatest pressure to provide some degree of illumination in the correlation of media rights earnings and distribution of prize money.
It would do no harm for JCR to give an indicative breakdown of how the money is spent, not least in enhancing the racegoers’ experience which, of course, includes owners.
The owners’ mantra is that the sport cannot exist without their support, but nor can it survive without punters – part of the equation which is sometimes overlooked.
It would be wrong to say that JCR have become accident prone, but they are having to devote time and energy to various extraneous matters some of which they have brought upon themselves.
And again, if shares were traded, investors looking on would worry that the business has lost some of its mojo.
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