Tuesday 17 October 2017

Racing chief eyes the fences ahead

A new report has shown the huge potential of the horse racing industry, HRI boss Brian Kavanagh tells Fearghal O'Connor

Brian Kavanagh, CEO of Horse Racing Ireland, at Listowel Races. Photo: Don MacMonagle
Brian Kavanagh, CEO of Horse Racing Ireland, at Listowel Races. Photo: Don MacMonagle

Fearghal O'Connor

Even the great and the powerful have their weaknesses and home comforts on which they depend. Take the thoroughbred Sizing John. Imperious as he romped home in the Gold Cup at Cheltenham last March, he's a nervous traveller, dependent upon his best friend and stable mate Harvey the goat.

Brian Kavanagh, the long-time chief executive of Horse Racing Ireland, tells the tale of Sizing John and Harvey to illustrate the massive complexities that could afflict the horse industry in Ireland should Brexit unfold in all its sorry potential.

"Sizing John is a nervous horse, so the old farming techniques come into play and his trainer got him a pal - a goat called Harvey," says Kavanagh, displaying the intimate knowledge of the horse industry that he will later tell me is a key reason he remains the right man for his role.

"Sizing John and Harvey are devoted to each other and the horse will go nowhere without the goat," he continues.

But there was a major problem ahead of Cheltenham. Sizing John, as a horse, was entitled to free movement and travel to the UK under an important deal between the two countries that allows horse racing to thrive between the two islands. Harvey, as a goat, was not entitled to anything like this free movement.

"Before Cheltenham it took 15 days with visits from Department of Agriculture vets, certification and paperwork to be allowed bring Sizing John's companion," he says.

If Brexit makes that the norm for horses too it will have major implications for Irish breeders and trainers, says Kavanagh. Ireland produces the third-highest number of thoroughbred foals in the world, with only Australia and the US producing more. And 65pc of those foals are exported, with 80pc of that total going to the UK.

"There are 10,000 horse movements a year between Britain and Ireland and a further 8,000 between north and south," he says.

The impressive economic impact of Ireland's horse breeding and racing industry - as well as some of the challenges it faces - were highlighted earlier this month by a Deloitte report, commissioned by Kavanagh. It showed that the sector generates €1.8bn annually, sustaining 28,000 jobs nationwide.

"This industry ticks every box in terms of rural development and we have natural advantages over other countries due to climate, soil structure and Irish people's affinity with horses and ability to handle them."

But, says Kavanagh, the Deloitte report did flash some "warning lights".

"This industry is mobile and needs careful handling," he says. "One concern is that the bigger trainers are getting bigger and within that context the ability of smaller trainers to compete and survive is a challenge."

Smaller race courses are also under pressure, even though overall attendances have risen back to pre-recession levels of 1.3 million a year.

"The bigger meetings are becoming very popular, the same trend you are seeing in other sports. Everyone wants to go and see United v Liverpool or the All Ireland final. But smaller matches are a harder sell, particularly with so much sport and racing now on TV. Racing has to adapt."

Brexit presents challenges around the movement of horses, tariffs and exchange rate volatility, an issue already impacting media rights deals struck by many Irish racecourses.

"The big guys are under pressure from Brexit as well, because so much of their market is dependent on the UK. But the more vulnerable group is the much larger group of small players."

People think of the big names in the industry and believe it is "the sport of kings", but Kavanagh says there are 7,000 horse owners in Ireland, 8,000 breeders and 92pc of them have fewer than five horses.

"They are the ones that are exposed. It's like the hurricane in Florida. When the flood waters come in, the skyscrapers in Miami will be okay but it's the beach huts that are vulnerable," he says.

Another issue that Kavanagh fears could have massive implications, particularly on smaller players, is the controversy over employment standards in the sector. A detailed consultant's report commissioned by Independents 4 Change TD Clare Daly has raised numerous concerns around pension issues and the long working hours of stable staff. Are there issues highlighted in that report that need attention?

"No, not in that report. Look, the industry has a pension scheme, which is about to be launched in the next couple of weeks, which is a non-contributory pension scheme for full-time staff. That's a positive element," he says.

A newly-recruited human-resources specialist at HRI is also looking at the development of career pathways and well-being services for staff in the industry. But this would suggest that some problems did exist? "I think it is fair comment. You can't say, you know, our strength is our people and then someone says 'what are you doing for those people?' You know, these decisions were taken 18 months ago, not 18 days ago."

A series of recent inspections by Workplace Relations Commission (WRC) inspectors on yards across the country have led to one high-profile case at the Labour Court, stemming from a change in legislation in 2015 that appeared to redefine agriculture so as not to include the horse industry.

"That would remove the flexibility employers have in terms of pay and the hours they require staff to work," said Kavanagh. "We would argue very, very strongly that everything we do is agricultural. Horses are not a Monday to Friday, nine-to-five activity. A foal is likely to be born at 2am, for example, and race meetings are run at times that suit the general public. The reality is a rigid Monday to Friday week won't work. There is a need for some flexibility."

He agrees the outcome of the Labour Court case involving Ballydoyle Racing Stable could prove critical to the future direction of the industry. "It's an important case. The industry will be watching it with great interest," he says.

Not allowing horse yards to operate as agricultural entities in terms of employment law "could put a lot of businesses to the wall", he says. "I'm not sure it is something the staff would want either.

"You know, you're already talking about a fragile business model for trainers as it is. Those type of changes would render the business model for a lot of trainers and breeders not sustainable. The Labour Court is one forum. There is the court of the land beyond that. It is down to interpretations."

Kavanagh's own €190,000 salary became a hot topic last year after his appointment as chief executive for a third consecutive seven-year term, despite term limits for chief executives of state agencies. His contract was complex but the issue has been dealt with, he says. "I'd be more than happy to go through any interview process. I'd have relished it. There is a need for flexibility in the rules. No one situation is the same - sometimes you want consistency and expertise and sometimes you want new thinking and change.

"Racing is a technical business and is built on relationships and experience. We have since restructured the organisation at senior level with a new senior management team. The idea is not to be too dependent on any one individual."

Kavanagh is sanguine about the affair and puts it down to just part of the job. He shrugs when I ask him was it personally difficult to find himself at the eye of such a public controversy.

"It goes with the territory and it's part of what you sign up for," he says. But, like Sizing John, Kavanagh has his own version of Harvey the Goat - in the form of a young family - to distract and entertain when the day job becomes intense.

"It bothered me that racing was in the papers for those sort of reasons as much as it was Brian Kavanagh. But the kids are great levellers. You go home and you think you are having a bad day and you think it is the biggest thing in the world and the kids will ask you something totally off the beam and you think 'Jaysus, you know, it really isn't that important'."

Of course, he is also convinced that HRI gets good value for money from the varied skillsets he provides.

"It's a diverse industry, from breeding to betting to racecourses to the entertainment sector, each requiring different expertise. One minute you are the accountant doing governance stuff, then you are the extrovert doing the Barnum & Bailey 'come to the circus' routine, and then you are the bloodline expert who can talk at an informed level with senior figures in the global breeding sector."

Likewise, he insists government gets good value for money from its annual horse industry investment. "If we didn't have the horse industry here you would have a think tank of people sitting down and saying 'Imagine we could create something that is spread all around the country, that's labour intensive, that brings international money into the country and is environmentally friendly, that leads to capital investment in rural Ireland, that's 80pc export driven and in which we are in the top two globally'." That, he says, is a trite way of saying "it's a very significant industry that warrants the government support it gets".

State support of the horse and greyhound industries is paid for by ring-fencing the €51m raised by the tax levied on gambling. The Government adds a further €29m from Exchequer funds and, last year, the horse industry received €64m of the total pot, with the greyhound sector getting €16m.

Kavanagh has lobbied the Government to raise the betting tax so that no Exchequer top-up would be required.

It is not hard to picture the HRI board in its gloomier moments imagining a future government with little affinity for horse racing axing this top up. A sector closely linked with gambling actually pushing for increased gambling taxes appears counter intuitive but may well be a smart future- proofing move.

"We actually believe funding to the industry should be increased with scope to do this through the betting tax," says Kavanagh. "Our proposal would save the Exchequer money and gambling taxes would still be lower here than in other countries."

But, he says, trying to second guess the budget is like trying to stay dry at the Curragh.

Sizing John will no doubt win a few more races but his future likely holds much rest, relaxation and pleasures befitting of a Roman emperor. The very top stallions standing at stud in Ireland can command a fee of up to €120,000 for every "cover" - as the job at hand is delicately known in the industry.

Meanwhile, for Brian Kavanagh, the work continues, with the ambitious Curragh revamp likely to provide a highlight as his time in the job winds down. When in five years, after 21 years, he does finally step down he will be just 57. He envisages more challenges rather than a life of retirement.

"I love this business, it's fantastic," he says. "Ireland is a world leader and there is great pride in that. But who knows what I will do. It will be interesting to see what opportunities are around."

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