Reform is racing's best bet to survive
Published 24/01/2010 | 05:00
No one can dispute the problems facing the Irish racing industry as recession bites deeper. Last year's figures from Horse Racing Ireland show sharp falls in attendances, sponsorship, bloodstock sales, owners, new owners, horses in training and on-course betting.
This year's crop of foals is also expected to fall by as much as a third and unless there is a swift, and implausible, economic recovery, the downward trends will continue through 2010 and 2011. On top of that, of course, the industry is being squeezed by cuts in government funding.
So what happens? Ireland's situation is by no means unique, but the relative importance of the industry is far greater than in its nearest rivals in France and the UK. The horse industry is a significant employer, plays an important role in generating tourism revenues and is, more importantly, a world leader. Its success, however, does not mean that it is self-sufficient or that it is maximising its own potential. It needs government funding, and that funding is under relentless pressure.
For the industry, the answer is relatively simple: it believes more money should be extracted from betting. Last week the Labour Party agreed, publishing proposals to increase the betting tax to 1.5 per cent along with plans that would force all betting companies to be licensed in Ireland and pay tax on all Irish-generated income. Those that were not licensed would be taken off the internet by Irish service providers, a scheme that Labour hopes would allow the Revenue get its hands on all the money currently gambled off-shore. If successful, it would almost triple the tax revenues from gambling to €90m -- enough to fund the racing industry with plenty left to supplement the Irish Sports Council's budget.
The British authorities are examining similar proposals to tax off-shore betting and it is possible that a Europe-wide approach might work, but it will not be easy and it will not happen quickly. The billions gambled from Ireland (estimated to be close to €6bn annually) do not provide a fixed target for the tax authorities. An ill-conceived, ill-executed plan could drive that money further away from the clutches of the revenue and reduce, rather than increase, the tax take.
It also sticks in the throat. The Department of Arts, Sport and Tourism has already found out what happens when you try to combat falling revenues by hiking taxes, or when you think that easy taxes can be raised without consequences on a particular sector. The passenger departure tax has played a role in driving numbers down at Irish airports and it is unlikely that a 40 per cent increase in airport charges over the next three years will improve the situation. More tax from the betting industry might be possible, but will not solve all the problems the racing industry faces.
Irish racing has taken the view that the high levels of prize money are essential to raising the quality and profile of the sport. That may be true, but enhancing quality is not just achieved by paying out the best prizes. The Irish industry has not stood still over the past decade of government funding, but it has not moved forward with sufficient pace. The Curragh, possibly the best natural racecourse in Europe, should be the industry's shining jewel. Instead, the Turf Club has presided over a steady and wasteful degradation.
Would fewer racecourses with a greater concentration of higher quality races attract bigger attendances and bigger TV pay-outs from the racing channels? Can more people be attracted to races by reduced prices and aggressive marketing? Do we follow suggestions from Britain that racing needs to dumb down by introducing decimalised odds for a mathematically challenged generation of youngsters? (Maybe not).
Whatever reforms the industry embraces, however, will not make it self-sufficient. The question for government is whether it values racing as an industry that provides jobs in rural, often disadvantaged, areas and if so, how does it propose to support it?
The first step should be a backward one. The politics of funding racing have been confused by placing it in the Department of Arts, Sport and Tourism. It needs to return to Agriculture, where it can be treated as a legitimate rural industry. Raising extra tax from a betting industry that draws less and less of its money from Irish racing would solve funding issues, but it is not as simple or as equitable as it sounds. The government is preparing a number of reviews -- on the industry and on the tax issue -- and should provide clarity this year. While it waits for an answer, the industry should up the pace of reform: extracting The Curragh from the Turf Club would be a start.