Last week we looked at the problems with taxation and made recommendations for the industry be given the same incentives for expansion and investment as offered to the Entertainment, Amusement and Tourism sector. Incentives currently being given to the Agricultural sector should also be extended to the Racing Industry. Currently only “lip service” is paid and the breeding of horses is forever seeking full recognition.
This week we continue with a look at the revenue and expenditure over the years and recommendations for the improvements that are urgently needed. Turnover is the only source of income available to the Racing Industry. Unless this is growing at a faster rate than expenditure then bankruptcy is inevitable. The largest recurring expenditure which the promoting company has is the weekly payment to the participants that are essential to the industry i.e. Jockeys, Trainers, Owners, Breeders etc. This is covered through purse payments. It is the current inadequacy of this payment which has brought things to a head. The table below looks at the performance over the last 5 years. We have done this analysis using the figures for local racing only.
YEAR SALES J$M PURSES PAID J$M EXPENSES (J$ per day basic)*
2003 1,632 257 (16%) 770
2004 1,578 303 (19%) 900
2005 1,855 313 (17%) 900
2006 2,110 341 (16%) 1,200
2007 2,412 373 (15%) 1,200
2008 2,748 391 (14%) 1,400
*Expenses are standard daily basic training fees and vary from trainer to trainer. In addition to the basic fee, trainers add: Veterinary bills e.g. Infusion, X-rays, Surgery, Farrier, racing plates, shoeing, Vaccines, Supplements/Vitamins, Deworming, Shearing, Exercise Jockey, Transportation, Pool , Air Conditioning/Electricity etc.
These costs average in the region of an additional J$ 20-30,000 per month. From the table above you will note that between the period 2003 to 2008 Sales on Local racing have increased by 68%, purses paid out have increased by 26% and expenses to the owners have increased by 82%. It must also be pointed out that only 48% of the purses paid come to owners to meet the charges from trainers. Breeders get 9% and the balance is shared: 15% to trainers (in addition to what they earn from charges to Owners), Jockeys 10% and Grooms 5%. Purse money is only paid to horses that finish between 1st and 4th in a race.
The structure of how purse money is distributed needs to be examined. There is an argument for increasing payments made for first pass the post from 60% to 75% but this is mere tinkering when the problem is more endemic – how can we increase the turnover and provide a larger pie from which to meet these increasing costs? Over the years simulcasting of races from overseas has been an important avenue for increased revenue.
In 2008 sales of Simulcast racing yielded an additional J$ 1,993M in revenue. This is an important source of additional revenue which attracts minimal expenses and needs to be expanded. Simulcasting now represents 44% of total sales and should be expanded to supplement the sales during local racing. These additional sales form an important part of the pie from which additional purses can be paid. Every effort must be made to expand simulcast racing. The impasse with the Contracts Committee needs to be resolved urgently. Egos and pride have no place in an arena where the livelihood of people is being affected. The promoting company has already lost 2 senior employees over this nonsensical breast beating exercise. I am surprised that the Minister has not intervened as he has with other entities under similar pressure.
Another contentious area of lost revenue is in the activity of the “bookmakers”. This off track operation started in the ‘50s as an attempt by the promoting company then to boost sales to those people who could not attend the track. Watson”s was appointed an agent selling bets on behalf of the promoting company but things got out of hand. There was no acceptable accounting for sales and the off track activity expanded with theparticipation of other off track operators. Things became so out of control that the Government had to intervene. Although there were several arrests in an attempt to control this illegal activity there was no abatement and the Government eventually legalised the operation in 1963 with the intention of regulating the activity and providing some contribution back to the promoting company. This contribution to the promoting company was never successfully implemented and today we have a totally unacceptable state of affairs where the property of the promoting company is being used with impunity and no compensation whatsoever. These operators now sell as much as 70% of the local sales of Caymanas Track. Of interest is the fact that their gross profit is in the region of 40% with none of the expenses of track maintenance, purse payments, etc.; while Caymanas Track has a gross profit of 32% with all the expenses to meet. This is a most inequitable situation and it is hoped that the Raphael Gordon Committee will address this major anomaly.
