Why appearance money scheme is the right start

New wealth coming into the sport but early ambitions need to be realistic

With levy reform now on the statute books, there is an obvious temptation to start allocating additional money before it has been received.

Not that I would suggest for a moment that the threat of a legal challenge to the new funding system should prevent us from going full steam ahead, but there are more tangible reasons why we should enter British racing’s brave new world with a degree of restraint.

Even allowing for the transitionary period of at least nine months between when the Levy Board ends its function of collection and distribution and when the Gambling Commission and Racing Authority take on these tasks, there is not, in any case, going to be a sudden explosion of additional money.

Certainly, the online loophole has been closed and racing is now seeing extra funds coming from all UK betting on horseracing, including the substantial part that is processed by overseas-based betting operators.

In a full year, there is an expectation this will boost racing’s central funding by at least £30 million, but we must remember the Levy Board has been digging into reserves for a few years to keep up its levels of expenditure. The starting point for measuring central funding expenditure is therefore significantly lower than it might appear.

With only an estimated £8m extra to spend in this current financial year, a general view has emerged that the area most deserving of extra funds is the middle and lower tiers of racing, where there are many horses that win nothing or virtually nothing in prize-money, therefore providing no cushion to their owners’ costs.

The scheme would pay down to eighth place in the hope of creating more races of eight runners or more

Clearly, this situation works against racing’s desire to increase the number of owners and the betting industry’s wishes to create field sizes of at least eight runners for each-way betting. At present 36% of races still fall below this threshold. It is against this background that the sport’s tripartite structure of the BHA, Horsemen’s Group and Racecourse Association now believes the best use of the first tranche of new money coming into racing is to create an appearance money scheme targeted at grassroots races.

However, it would not be an across-the-board, pay-all scheme but one that is paid down to eighth place in the anticipation that this would have a beneficial effect on creating more races of eight runners or more.

How this would work practically is still under scrutiny but there is a view that the new appearance money should be targeted on races with prize-money that exceed minimum values by an agreed amount, so that racecourses which put more into their prize-money would benefit from having bigger fields. There are two reasons why this is important to racecourses.

One is that, generally speaking, small fields are not attractive to racegoers, but a much more tangible reason is that it directly affects their income.

Already, the racecourses have media rights deals where they receive less money when races have fewer than eight runners, but next year, when the new, highly lucrative, Racecourse Media Group deal with SIS comes into being, small-field penalties are likely to be more onerous.

Even allowing for the beneficial effects of levy reform, the racecourses’ income from media rights will continue to dwarf central funding. This means the Racing Authority, whose function will be to decide on central funding expenditure from next year, has to take an innovative approach to allocating funds.

Funding must, therefore, always be targeted in a way that incentivises racecourses to maximise their own contribution to prize-money, while it is equally important that the link between the racing and betting industries – far from being lost because of the imminent demise of the Levy Board – is strengthened to the point where each gets the most out of a truly symbiotic relationship.
An appearance money scheme, as proposed, looks like a winner for owners, for racecourses and for bookmakers – not a bad start for racing’s new world.

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