MATT WELSH. Monday, July 24, 2017
I recently posed the question on Twitter “should breeders (vendors) pay a tax on horses sold in Australian sales rings”?
The response was split between raucous support from the punting fraternity and vehement defence from breeders. And, I‘d expect nothing less.
According to the Australian Racing Factbook 2015/16, the average price of yearlings has more than doubled since 2002/03. Prizemoney has increased 80% over the same period.
These figures are exceptional. They paint the picture of a very healthy industry.
Given the trends, it’s fair to assume horse prices will only continue to rise. As will the demand for increased prizemoney.
Currently, prizemoney is funded through wagering turnover, which isn’t growing at the same pace as bloodstock sales. Having enjoyed a 37% increase in wagering between 2002/03 and 2008/09 in line with the boom in corporate bookmaking, turnover grew a mere 8.9% through the following eight racing seasons. That figure is well below Australia’s CPI index increase over the same period and well behind Australia’s growth in total gambling turnover.
To quantify just how reliant the industry is on wagering revenue, Racing Victoria’s total revenue of $402,712,000 in 2015/16 comprised $368,557,000 in wagering-related income.
Wagering on racing continues to grow, but since the internet boom in the early-2000’s it has levelled off and competition from sports betting is an ever-increasing threat.
As a percentage of overall wagering turnover in Australia, racing is on the slide. As sports betting continues to grow the racing industry will reach a tipping point that sees revenue from gambling begin to fall.
There are of course two ways of propping up wagering receipts:
• Take measures to promote increased wagering
• Slug punters with further tax hikes and product fee charges
As it stands, the industry can sustain current high prizemoney levels and even continue to grow them in the short-term. However, is it wise to have the whole industry reliant upon sustained wagering growth to ensure its future viability? Does the sport need to do some future-proofing by opening up additional revenue streams?
I can understand breeders being protective of their golden goose, and naturally defensive when a punter like me makes an off-handed comment on Twitter. Additionally, it’s clear that any tax (better worded a ‘levy’) on horse transactions would need to be means tested. No one (from what I see) wants the hobby breeder forced out of the industry.
Everyone in the racing industry sips from the golden fountain, yet it’s the punters who ensure there’s a lick to be had. A 2% levy on all horse sales (through the sales ring) in 2015/16 would have netted the industry in excess of $10 million.
Maybe revenue raised from a sales levy could fund a ‘first horse owners’ grant to encourage new participants to racing? First-time owners in turn become wagering customers and ultimately the foundations of a strong racing industry in 20 years’ time. A small investment to encourage new players to the game suddenly has a far-reaching and sustainable impact on the wider industry.
Generating revenue through breeders and vendors is one method racing can call on to diversify its income generating activity. There are myriad options available to racing administrators. In Victoria, Racing.com has built a strong platform to become a valuable income generating asset. NSW is leading the way with the self-funding ‘The Everest’ race which doesn’t place undue stress on wagering revenue while at the same time making a significant contribution through exposure.
Racing needs to be future-proofed. The decisions made, or not made, today won’t have an immediate impact but will be felt in 20 years to come. Failure to engage the 18-40YO bracket now is robbing the 2037 racing industry of its biggest financiers.
Similarly, relying on a sole income stream leaves the sport dangerously exposed and potentially comprised should wagering take a hit. In this instance, the first to feel the pinch would be trainers, jockeys and owners as the continuing demand for rising prizemoney levels can no longer be sustained.
MATT WELSH. Friday, July 21, 2017
The battle lines were drawn on RSN’s The Verdict on Monday morning. Racing NSW’s Chief Executive, Peter V’landys, traded blows with the MRC Chairman, Mike Symons and Victoria’s Chief Racing Writer, Matt Stewart. It was both compelling listening and thought provoking.
V’landys comes across as a leader. By his actions, he clearly prioritises NSW racing participants above all else, which is his prime function. The Everest has been a masterstroke. Not only is it a largely self-funded race, meaning it doesn’t impinge heavily on industry funds, but the slots have been filled months in advance and the PR juggernaut has left the station.
It’s important to develop alternative revenue streams to fund prizemoney. Wagering growth has stagnated and current trends will see the current healthy prizemoney levels in jeopardy before too long. Creating a race that raises its purse through entry fees, as opposed to wagering revenue, is both prudent and sustainable business.
In lieu of a proper national approach, one where a single entity runs the sport for the betterment of the nation’s racing, the states are clearly competing against one another.
V’Landys quipped “the world has changed in the last 10 years”. He’s right. But to take that a little further, the racing calendar was developed for a bygone era and decades of evolution have placed NSW’s major races at a huge disadvantage, both in terms of competition and prevailing weather pattern.
Racing can’t compete with the two football juggernauts, the AFL and NRL. The two Sydney carnivals dovetail the football seasons, which poses its challenges. It’s an unenviable position and an issue not faced by Racing Victoria administrators.
The suggestion that Victoria might retaliate by pushing back its Autumn Carnival seems ludicrous. The Victorian Autumn Carnival couldn’t be better placed coming off the back-end of summer and leading right into the start of the AFL season. Delaying the Victorian Autumn Carnival would see it compete with the early rounds of the AFL and that wouldn’t end well.
The wagering landscape has further heightened the need for a state vs state mentality. The advent of corporate bookmakers has seen a situation where funds bet by NSW punters on Victorian racing end up in Racing Victoria’s coffers.
As a Victorian, I’m proud of the racing we produce. As a whole, Victoria has the best tracks, quality jockey ranks, leading trainers and without a doubt the best racing carnival in Australia. However, the response to a little healthy competition from north of the border has been childish.
The suggestion that a state deserves ‘clean air’ is a stale argument that belongs in the 20th century. We live in a fast-paced world and the changing racing landscape demands innovation to stay relevant.
There are three days in a weekend and, with night racing becoming more popular, five potential time slots to hold feature meetings. There’s plenty of ‘clean air’ for those willing to seek it out. 30 years ago the AFL (then VFL), like racing, held its matches on Saturday afternoon but it has to be said spreading the focus over the weekend has been somewhat successful. Maybe racing jurisdictions should take note?
Embrace the challenge. Understand, that thanks to The Everest, there will likely be increased interest and wagering turnover from NSW punters on the Caulfield Guineas meeting. Additionally, an international sprinter (or two) that can be could lured south for Cup Week.
V’landys is doing what any good leader does, he’s acting in the best interests of his constituents. NSW Racing will enjoy a huge windfall from The Everest and, with V’Landys at the helm, seems well-positioned to navigate some rough waters ahead for horse racing.
A national approach to racing would reduce operational overheads and deliver a greater return to owners, trainers and jockeys. It would allow racing to tackle its true competition, sports betting, head-on. But, with that outcome unlikely, it’s up to the state-based leaders to fight for their share of a stagnating wagering pie.
Hats off to Mr V’landys on his success with The Everest.