Introduction
The thoroughbred industry in Great Britain is very complex and involves various stakeholders. Racing is a big sector for employment, which is crucial for the rural economy, as well as for international and domestic trade. Racehorse owners are regarded to be the lifeblood of this sport. It is a general opinion that prize money plays a significant role in attracting and retaining racehorse owners. Still, an owner experience is also important. The purpose of this paper is to provide an analysis of racehorse owners from a funding perspective and identify the key challenges and recommendations for improvement.
Economic Impact of Racehorse Owners
In the horserace sector, funding flows are enhanced, and sometimes they go outside the sector. Racehorse owners are involved in the supply chain to support racecourses. The popularity and sustainability of the thoroughbred industry are assessed by studying the trends in horse ownership and horserace attendance.
The ownership in the sector is concentrated on the owners with a high number of horses. It is stated that “the 7,931 registered owners recorded in 2014 was the lowest recorded figure since the data series began, down 17% from the peak in 2007” (Frontier Economics Ltd., 2016, p. 21). There is a high number of individuals who have a stake in horse-owning, which results in enhancing the syndicate or partnership model. At present, racing in Britain benefits from a variety of owners such as international ones who focus on Flat racing, racing syndicates, and clubs, which allows individuals to participate in horse ownership easily and at a low cost.
Racehorse owners play a significant role in the economic impact of the industry and its contribution to the economy of Great Britain. It is emphasized that “owners incurred a direct gross expenditure of ÂŁ389m but received ÂŁ85m back in prize money and sponsorship, resulting in a net expenditure of ÂŁ304m” (British Horseracing Authority, Deloitte LLP, 2013, p. 10). There are two forms of expenditures of owners on a racehorse. The first ongoing operating expenditure is horse keeping and training, which includes entry and training fees, jockey costs, vet, and transport costs. The second expenditure is capital costs on purchasing racehorses, which is incorporated through the expenditure of breeders. The owners also pay fees which include registration and entry handling. Some of these fees such as name reservation fee, Weatherby’s call center service, and foreign race entry fees are reported to increase in 2016.
The owners receive the main income from the prize money and sponsorship. It is possible to say that owners use the prize money to recoup the expenditures. This sum is deducted from a gross expenditure of owners to count the net investment made by them into British Racing. Prize money has three sources such as racecourses including contributions of sponsors, the Levy Board, and entry fees of owners. Although Levy Board contribution has declined over the past years, racecourses compensated it due to increasing media revenues. The owners who do not have a winner have a significantly lower recovery of their expenditures. It is noted that “approximately 80% of prize money is paid to owners, with the remainder going to trainers (7-8%), jockeys (7-8%), and stable staff (5%)” (British Horseracing Authority, Deloitte LLP, 2013, p. 31). Still, the final formula depends on the exact number of runners in a race.
Employment in the Racehorse Industry
The racehorse industry employs a large number of individuals. The main jobs in this industry include trainers, jockeys, and breeders. They are all closely collaborate with owners. Licensed trainers are occupied in training racehorses, and their total number is increased over the past years. Some amateurs train horses for hunter chase and point-to-point contests. The main income of trainers is the fees paid by the owners.
The profession of a jockey is recognized to be one of the most difficult as they have to travel long distances, working long hours, and risking their health every day. Still, their riding fees are relatively small, and the main income comes from the prize money with the small percentage which is set in the Rules of Racing. Thus, a jockey may not receive any meaningful amount of prize money for months. Some jockeys are known to benefit from sponsorship, but their number is not high.
Breeders link many fields of the racehorse industry. The investments to British racing are mainly dependent on the breeders. British racehorse industry is listed among seven main producers of thoroughbred horses in 2011. The owners are largely dependent on the breeders as they supply them stallions and broodmares of sufficient quality. It is believed that the standard of horses in Britain can be improved by removing the horses of low quality.
Key Challenges and Suggested Improvements
The latest initiatives in the horserace industry secured the implementation of the program that will transform the horserace ownership administration to make it simple and customer-friendly. Individuals and businesses were allowed to register their colors and bespoke designs. It is also stated that “the new Levy and Racing Authority means that racing can now seek to optimize the fixture list for the benefit of all participants and stakeholders, including betting operators” (British Horseracing Authority, 2016, p. 9).
The integrity in sport caused some challenges for the racehorse industry as the main sports associations were involved in the corruption scandals. BHA is known to be blamed for the errors in judgment. The appointment of a new board director resulted in evaluating of regulatory and integrity process of the organization by the external gambling and sporting experts. It should also be noted that British racing is different from the same industry in the UAE where horseracing is mainly the attraction for tourists and does not involve such an enhanced system of betting.
The suggested improvements to this industry include avoiding the use of whipping in horseracing and better safety strategy for jockeys as these aspects influence the attraction of the racing to some people who think that this sport is cruel. Some researchers state that “nearly two-thirds (64%) of whip-use offenses occurred when a horse had a winning chance, and whip offenses are more likely in higher-grade races” (Jones, Goodfellow, Yeates, & McGreevy, 2015, p. 140). It might benefit the industry and the incomes of owners due to a higher amount of betting and higher safety of horses.
Conclusion
The paper dealt with the analysis of racehorse owners in the thoroughbred industry in Great Britain. The economic impact of the owners was evaluated including their incomes and costs. The main employment areas in the industry were discussed. The main challenges and improvements were indicated to make the racing sport more successful.
References
British Horseracing Authority. (2016).Annual report and accounts. Web.
British Horseracing Authority, Deloitte LLP. (2013). Economic impact of British racing. Web.
Frontier Economics Ltd. (2016). An economic analysis of the funding of horseracing: A report prepared for the department for culture, media and sport. Web.
Jones, B., Goodfellow, J., Yeates, J., & McGreevy, P. D. (2015). A critical analysis of the British Horseracing Authority’s review of the use of the whip in horseracing. Animals, 5(1), 138-150.