Wednesday 7 December 2016

Recession-hit racing body aims to lead the recovery

He's an unlikely figure in horse racing, but HRI's head is confident the industry can continue to drive rural job creation, says Peter Flanagan

Published 24/02/2011 | 05:00

HORSE RACING has a certain stereotype; you know the one, the rich owner waltzing in to the winner's enclosure, turned out in his best tweed and trilby, to claim his trophy and huge prize money, usually won with a horse that cost millions.

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Brian Kavanagh doesn't fit this stereotype. And the body he heads up, Horse Racing Ireland (HRI), doesn't either.

The semi-state body for horse racing and breeding in Ireland is based in a modern office building at The Curragh, Co Kildare. The racing calendars that line the walls are the only giveaway that this isn't an accountants or a law firm.

One would think that managing a racing industry in a country that is famous world wide for it equine bloodlines and pedigrees, Mr Kavanagh, along with chairman Denis Brosnan, would have a relatively straightforward job, but like most businesses in this recession, it requires a lot more work now. The recent sale by Goffs of part of its interests in France brought the bloodstock industry's issues into sharp focus. Prize money is back at 2002 levels, and the improvement programme for racetracks around the country is on hold. The Curragh, Ireland's showpiece track, has a main stand that has not been touched in more than 30 years.

On top of that, it is estimated that some 2,500 jobs have been lost in the industry since the downturn began, while stories of owners handing horses they can no longer afford back to trainers are rampant. HRI itself has reduced its staff by 30.

An accountant by trade, Mr Kavanagh grew up in Monkstown and went racing at Leopardstown and the now defunct Phoenix Park. He took a job in the Turf Club in 1989 before becoming chief executive of HRI when it was created in 2001.

The funding of HRI by the exchequer has come under the spotlight during the downturn, with many feeling this money could be put to better use. It is something Mr Kavanagh acknowledges.

"I'm acutely aware of the questions surrounding the funding of the industry, and we are trying to get away from state funding," he says.

When HRI was set up, it was hoped the industry would pay for itself through taxes paid on betting. This has not worked well, however. In 2001, when the tax on betting was 5pc, some €68m was paid in tax on €1.3bn worth of betting.

Now, the tax is 1pc and, with the advent of offshore and online betting which is not currently subject to any tax, the take has plummeted to €31m despite the level of betting quadrupling to €4.5bn.

"That is not sustainable," says Kavanagh.

"We want to get back to being self-sufficient. Ireland has the most open betting regime in the world. France, which is actively targeting the Irish industry, has a tax of about 15pc, of which 8pc goes to the industry. That gives them the firepower to fund themselves and lure breeders there. "Fortunately the issue is beginning to be addressed with the recent Finance Bill.

"By introducing a licensing system for the online exchanges the industry will move closer to self-sufficiency.

"To a certain extent we fall into disposable income for most people. That has been demolished.

"Having said that, the bloodstock industry has great potential and if you were looking to create an industry to help with the recovery, this is one you would want.

"It's labour intensive, creates rural jobs (16,500 or so), it is export driven (Ireland exports 50pc of its foals to over 40 countries), is environmentally sound and draws significant levels of overseas investment, such as Dubai's Maktoum family or the Aga Khan having major stud farms or horses in training here."

During the boom, racing became strongly associated with the property developer set. One of the premier handicaps of the year was sponsored by Pierse Construction while a recent television programme showed developer Michael O'Flynn arriving at the races by helicopter. Images like that don't do the business any favours when it's struggling. "Although the builders and developers were very supportive of racing, so were lawyers, accountants, and most other professions. Those guys may have had a higher profile, but it was never the case where they were the only supporters of the industry."

Mr Kavanagh makes references to the "industry" throughout, something he happily explains. "Is it a sport, an industry or an agri-business? In truth, it's all of these things.

"The punter at the Curragh only sees the horses arrive in the parade ring and heading out to the track but a lot goes on just to get them there. The industry drives employment, particularly in rural areas where there aren't a huge amount of jobs."

And that's the point. At a time when the country is losing jobs hand over fist, racing plays a crucial part in providing jobs in rural Ireland.

A recent study picked out a number of areas around the country and highlighted the employment profile of them. In the Bagenalstown area of Co Carlow, 428 people are employed in the racing and breeding. In Enniscorthy, Co Wexford, 259 jobs are directly related to the sector.

"It's not all about the big owners and breeders with dozens of horse in training. Some 92pc of breeders have less than five horses, and the economic hit has had a knock-on effect around the country.

"By our estimates, around 2,500 jobs have been lost in our industry in the past two years but because they are lost in dribs and drabs, it doesn't get the attention as when a factory closes with 500 or 1,000 job losses".

Mr Kavanagh remains confident these problems can be surmounted, however.

"There is a great will within the industry to see it succeed and get back on our own feet, and, with the proper funding in place, we are confident we can do that."

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