The concern about a downturn in revenue caused by the governmental crackdown on Fixed Odds Betting Terminals (FOBTs) has caused Arena Racing Company (Arc) to slash their contribution to prize money in 2019 by £3 million.
It is the first admission of fear ahead of the maximum stake cut, which will come into power in April and see a reduction from £100 to £2.
It’s a move that caused widespread consternation in the industry, with bookmakers warning of shop closures and redundancies.
The prize money changes will come into effect on February 11, with more than 3,000 races directly affected. Their total prize kitty contribution in 2019 will be £15.3m; a reduction of some 16% from 2018’s figures.
There could be some light at the end of the tunnel, however, with around £4.5m possibly made available to Arc via levy funds to help mitigate the loss to owners, trainers and staff.
Arc operates 16 tracks across the UK and Ireland, with a total of 570 meetings set to be staged at their venues next year. The decision to reduce contributions to prize money ‘had not been taken lightly’, according to the firm’s chief executive, Martin Cruddace.
“At the time of the 2017 funding review it was agreed that the race incentive fund and appearance money scheme, paid for by these levy increases, should be unlocked alongside further direct investment from racecourses,” he said.
“Today, however, the well-publicised impact of betting shop closures on racecourses’ media rights income has already started to take effect, and will only increase in the months and years to come.
“As a result of this, Arc simply cannot continue to support our current levels of executive contribution to prize-money and unlock all qualifying races, as was the case throughout 2018.”
Dark Times Ahead for High Street Betting
The cut in FOBT stakes will have a major impact on the UK and Irish horse racing industry, with some 1,000 betting shops expected to close in the next year, according to Arc’s budgeting.
That in turn will lead to a reduction in media rights payments, which are estimated to weigh in at around £50m.
British racing had agreed a new scheme where courses could trigger appearance money and grant funding when they made a contribution of £900 or more above the minimum prize money per race, but a downturn in the market has caused a rethink from Arc head honchos.
They already claim that they do not receive a fair share of levy funding given the amount of betting revenue their fixtures generate.
It’s cast a rather gloomy shadow over the new year and an otherwise scintillating couple of months of National Hunt racing, and the hope is that other stakeholders in racing step up to the plate to keep the grassroots of the sport alive.
“We fully understand the importance of prize money across the industry, and do not take such a decision lightly,” Cruddace continued.
“It is for this reason that we are working with the whole industry to review funding and the allocation of the substantial and hard-won increased levy income to support the prize-money levels for grassroots racing that we have, until now, been able to provide.
“It is therefore hoped, contingent on the support of our colleagues at the BHA and Horsemen’s Group, that owners and trainers who are kind enough to run their horses at our racecourses do not then see an appreciable difference.”
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The concern now is that other course-management brands will follow in Arc’s footsteps and make their own prize fund cuts.
That would severely hamper the bottom line of many yards, and bring the profitability of UK racing into question.
As the Racecourse Association’s chair, Maggie Carver, recognises: “These are challenging financial times for Britain’s racecourses as the media rights landscape, in particular, has fundamentally shifted in recent months, so we can understand Arc’s decision.
“The RCA and its members will continue to work with horsemen and the BHA to try to mitigate the situation as the funding environment evolves.”
The BHA’s media spokesman, Robin Mounsey, said: “The sport’s stakeholders are working together to understand the likely financial implications of the change in legislation coming into place from April, with the aim of developing a strategy that delivers the best outcome for the sport and limits the impact on all parties within it.
“This includes ongoing discussions with government, which has publicly promised to help mitigate the impact on racing.”