Bad year could get a lot worse
British racing faces problems on and off the track, writes Ian McClean
The deadline for the deadlocked 50th levy negotiations passes in Britain at midnight tonight. If, as seems inevitable, the BHA is unable to broker a deal between the main stakeholders, it then passes over to government -- resentfully -- for determination.
If the ability to gain consensus amongst key stakeholders is a keystone of leadership, then the BHA has singularly failed to demonstrate any. With bookmaker relations at an all-time low, owners threatening to boycott race meetings starting as early as tomorrow, and funding cuts as draconian as 40 per cent a looming possibility, the BHA's school report reads 'could do better' -- at the very kindest. Instead of Racing For Change, it could be racing for pocket change.
In the final week before the deadline, rather than a media profiling the tireless efforts BHA leadership is enduring on behalf of the sport to avoid potentially calamitous government mediation, it is instead delighting in portraying the dubious public relations wisdom of BHA chairman Paul Roy profiting from a betting exchange.
Paul Roy, since his appointment at the BHA, has consistently criticised Betfair for its lack of financial contribution to the sport. So the announcement that New Smith Asset Management, a business co-founded and chaired by Roy, was revealed as an investor in Betfair's IPO on the stock market has left many industry insiders aghast.
Let's be clear. There is nothing corrupt here. This is no sleaze scandal. Paul Roy is a businessman making, via his company, a business judgement -- and a very astute one at that as the share price rose 19 per cent in the opening day's trading. Okay, so New Smith didn't get the 40 million worth of Betfair shares it originally applied for -- it got five million -- but no-one ever went broke making a profit.
However, this is the same Paul Roy who, in his capacity as chairman of the BHA, as recently as a month ago accused Betfair of being disruptive to racing's finances; and who admonished other racing nations considering Betfair to give very careful thought to the impact on their sport, and learn from the British experience. His statement on Betfair also included the reference of an underpayment to racing of £30m. On one hand Mr Roy wants £30m a year from Betfair for racing, whilst on the other he wants to maximise profit for Betfair. Yet he claims no conflict of interests. This is the equivalent of the chairman of Greenpeace buying shares in BP.
This has been a bad year for the BHA governing body. Apart from the Levy dispute and the bitching factions, it was embroiled in a high-profile disciplinary case against professional gambler Harry Findlay, who continues to harbour serious misgivings over the conduct of both the BHA and its chairman, certain of which he wrote about in last week's newspaper.
Mark Phillips was a leading BHA investigator and betting analyst closest to the coalface of the Findlay case. He describes the BHA role as to fight against people not running their horses on their merits. He reflects on his scrutiny of Findlay's betting activity over a sustained period. "Harry's horses were run on their merits," he says. "I never saw a case in all the time I was involved with the case where they weren't run on their merits. So he wasn't the bad guy."
It was Mark Phillips who explained to Findlay's Denman co-owner Paul Barber what had happened immediately after the ban was announced.
"He (Barber) asked me, 'What's the truth behind the ban?' And I said, 'Harry broke the rules but there was no corruption involved. There was no stopping of horses. It was more technical than that. He wanted the horse to win, not to lose'. That was how I explained in layman's terms for someone like him who didn't understand gambling."
Phillips makes an interesting point about the issue of laying horses from yards where an owner has horses in training: "It's not against the rules and I obviously know what his profit and loss was from laying horses from these yards and I didn't have a problem with it. One of the main things for me in Harry's case is that Betfair didn't close his account, which they always do. When people are warned off, they close their account. They didn't because they saw it for what it was. The fact that they continue to let him bet is a big thing."
Paul Roy's statement at the time said: "The BHA never gave permission to Harry Findlay to lay horses in yards where he has horses in training . . . He was also reminded of the Code of Conduct for racehorse owners, which states they should refrain from laying any horse from a yard where you have a horse in training."
Findlay has always disputed this. He maintains he was granted permission and Mark Phillips sheds some light on how the misunderstanding might have arisen. "Harry certainly would have known that it wasn't against the rules. I certainly didn't have any problem with his betting. In a conversation at his home he actually offered and said, 'If you want I won't lay horses full stop'. But I said no that's not necessary. His point was I've got horses in so many yards, if you don't want me to lay horses from those yards I won't lay horses at all. I remember he offered that and I said that wasn't necessary. So that I suppose is what Harry is taking as permission." Preventing Harry Findlay from laying horses on Betfair would deprive the exchange's balance sheet of over
£100m a year -- Findlay's average turnover during the past eight years.
Obviously one function of the BHA is to oversee the integrity of racing. Phillips says: "The penalties for most things to me are way too lenient but this was the opposite." He continues: "I thought the penalties were harsh for what he'd done. I never thought there'd be a ban. By the letter of the law he laid his own horses so he had to be banned but it's a lot more complex than that. They (The BHA) will be addressing it in the future -- they have no choice but to -- because this has proven that it's not black and white."
Yet despite the view of the BHA official closest to the case, and the appeal panel who overturned the original Findlay ban that a clear distinction needs to be made between an outright lay bet and a lay bet as part of a hedging strategy, the BHA has no intention of amending this rule in any material way
Although neither would welcome the comparison, Roy and Findlay have something in common in the business context. Findlay broke the letter of the law but not the spirit. Paul Roy has not broken any law but is playing loose with the spirit.
Roy sees nothing untoward about his own commercial decision, but the BHA sees it unfit to change the rule around Findlay's. If the BHA's central function is about upholding standards -- make Roy's a double.