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BUSINESS
Funding + Integrity = Racing’s Future A
FUNDAMENTAL rule of business: a proportion of profits should always be invested in growing areas of the business that will allow it to increase its competitive lead and market share. A fundamental rule of sport: any mainstream sport needs to recruit and retain a wide fan base if it is to survive. Both these rules have never been more relevant to the sport of racing than in this present economic climate, a fact recognised in the recently published White Paper produced by the European Pari Mutuel Association on the Sustainable Funding of the European Horseracing Sector through PMU betting. “The symbiotic link between the horseracing sector and betting that the European Pari Mutuel Association (EPMA) model manages to implement is a fragile one”, page 18 of the EPMA White Paper declares. The above two rules must be applied to racing if it is to hold rank in Europe as the sport of kings. Otherwise, warns the White Paper, the vicious circle that starts with any of the following inter-related elements – fall in betting turnover, fall in prize money, decrease in top quality runners, decrease in the quality of racing, fewer punters, fall in betting dividend – can bring the sport to a virtual standstill as has happened in Germany and Belgium. So who really funds racing? Owners will say that it is they who fund racing, that they are the “customers” of the trainers, jockeys, vets, breeders and without them there would simply be no racing. Those that bet say it is they who fund racing, that they are the “customers” of the betting chains and bookmakers, TV channels, racing press and racecourses, and that without them there would be no racing. Owners have a large disposable income to spend on their chosen
60 TRAINERMAGAZINE.com ISSUE 26
But is it possible to level the playing field for all? By Niki Sweetnam hobby, of which they invest thousands in the purchase of a racehorse, and continue to pay fixed “maintenance” costs independently of that horse’s subsequent earnings on the racetrack. Principle complaint: prize money comes nowhere close to covering costs. Gamblers on the other hand generally place bets within their means or what they can afford to lose and can choose to minimise their outlay until their pockets deepen again. Principle complaint: state take-out on bets returns them less winnings than they would like. Neither of course is guaranteed a return on their investment and in uncertain economic times it goes without saying that both have less money to spend on life’s “nonessentials.” It is a sorry fact that racing as a whole does not generate the huge profits from gate
“It is a sorry fact that racing as a whole does not generate the huge profits from gate money or sponsorship that other sports might”
money or sponsorship that other sports might. Let’s step back from the owner/punter debate and examine PMU betting as a source of funding. The Pari Mutuel Urbain (PMU) system of wagering was invented in France in the 1860s. Amounts bet on all individual horses are totalled and distributed to the winners in proportion to the amount of each bet, and PMU betting now accounts for 78% of the total amount bet on horseracing worldwide. Formed just two years ago, the EPMA is a gathering of Europe’s leading PMU operators, present in 15 countries, with the aims of promoting the PMU business model, influencing how future betting legislation is shaped, developing related commercial activities and facilitating best practice. It is with these precise aims in mind that they published the above White Paper in September 2008 and followed it up with a conference entitled ‘The PMU Model for the Funding of Racing and Sport’ in January 2009 to open up dialogue at the highest level on the White Paper’s contents. The report outlines the issues that affect the future of the horseracing industry, namely sustainable funding and integrity, and the impact that current EC gaming legislation has on them. PMU wagering differs from other forms of betting in that it enables betting on successful outcomes only. It returns a considerably larger percentage of betting turnover to racing than any other form of betting – 2008 figures show €14 billion of turnover, €11 billion returned to the punter and €1.5 billion invested back into the European horseracing industry. PMU betting is State supervised in all cases, and finally, unlike an on-course bookmaker, the PMU operator has nothing to lose by putting all the information available at the disposal of the punter as he does not have to balance his books at the end of a day’s trading.