Racing prize-money: a right old pickle
Racing has got itself into a right old pickle over its finances and the impact this will have on prize-money.
First, bookmakers installed fixed odds betting terminals (FOBTs) into its shops, and opened more shops so that more terminals could be installed. With minimum stakes of £100, the machines offered big pay-outs, but also made it easy for those addicted to gambling to feed the machines ever more desperately in the vain hope that one big jackpot would solve their problems.
The harmful effect these machines soon became apparent and the groundswell of opposition gathered momentum and bookmakers were fighting a losing battle in trying to defend them.
They, like the problem gamblers, had become dependent on them but, unlike the problem gamblers, they were winning.
That meant that those who owned the media rights of races being shown in betting shops, whether or not the races were being viewed, drove a hard bargain for betting shops to show live racing.
But, with neither bookmakers or media rights owners having a Plan B if betting shop profitability went out the window if minimum stakes for FOBTs were slashed, the knock-on effect for prize-money was plain to see.
Hay was made while the sun shone, and racecourses increased prize money. Owners and trainers basked in the warmth of better rewards, but then the storm clouds gathered.
It didn’t need a long-term forecast to issue a warning that it was going to get chilly.
The racecourses, who did deals based on revenue derived from media rights based on payment from betting shops, are now trying to budget for lost income due to the probable closure of around 1,000 betting shops caused by the effect of reduced FOBT minimum stakes slashed from £100 to £2.
The Arena Racing Company (Lingfield, Newcastle, Wolverhampton, etc) announced that it was reducing its contribution to prize-money, meaning that it couldn’t touch funds made available from the Levy Board to supplement prize-money for lower grade racing.
Jockey Club Racecourses warned that they were monitoring the situation but they’ve sounded their first weather-warning by abandoning plans to increase prize-money for the Cesarewitch to £1m and, instead, this year’s race will be worth £350,000 compared to £500,000 last year.
Of the independent tracks, Pontefract have announced they’ll be reducing prize-money but will stay above minimum race values.
The response to ARCs cut in prize-money was a boycott by trainers of two races at Lingfield, with a more orchestrated boycott to follow. You can sympathise with the trainers up to a point.
ARC were brutal with their plan to reduce prize-money at the lower end. It was only after a meeting with the National Trainers Federation that they back-tracked on the original plan to cut prize-money for lower grade races.
Instead, they are going to rob Peter to pay Paul by transferring prize-money from the higher end to maintain low grade prizemoney. That’s much like JCR with their reduction of the Cesarewitch purse.
These scribblings have never seen the merit of inflating top-end prize-money when the rank and file has needed all the help it can get.
There is the case for competing with big money available on the international stage, where British racing trades on its legacy rather than on the rewards. But was there such an overriding case to make the Cesarewitch a £1m race?
Clearly not as it’s now going to be worth less this year.
The same applies to big jump races, where there’s no bloodstock value at stake. Are any of the Cheltenham Festival races more desirable to win with the odd £5,000 added to the prize fund over the past three or four year?
Clearly spelt out
What would have been helpful in this sorry situation is if the impact of the reduced media rights to racecourse could have been spelt out more clearly and a plan drawn up with everyone involved to cope with the impact it is going to have.
There is much naivety in some trainers’ response to the issue and their call for a boycott. As business owners, they should have planned for a worst-case scenario and sought a collective solution to the problem.
That’s now beginning to happen, but much of the pain, with more to come, has been self-inflicted by all the sport’s stakeholders.