TODAY marks the start of the Cheltenham Festival – the jewel in the crown of the jump racing calendar and one of the biggest days of the year for Simon Bazalgette, chief executive of the Jockey Club, which owns and runs the sporting event.
Over the four days until the festival reaches its climax with the Cheltenham Gold Cup on Friday, about 250,000 punters are expected to pass through the racecourse turnstiles, “hundreds of millions of pounds” will be spent on sporting bets, and the sleepy county of Gloucestershire will receive a projected positive economic impact of £50m.
As Bazalgette points out, Cheltenham is just one of many sporting fixtures that contribute to the health of the UK racing industry, which is the second biggest sports employer in the country, after football, and the second biggest sports contributor to GDP.
In other words, horseracing is big business, which is why Bazalgette and his Board members, known appropriately as stewards, run the Jockey Club as a Plc to support the racing industry, with all the profits generated by the company reinvested in the sport.
In 2009, the Jockey Club posted a turnover of £99.9m and operating profits of £17.2m, down slightly from 2008’s turnover of £100.9m, and Bazalgette expects the financial results for 2010 to be roughly flat year on year.
Total prize money for the sport reached £41.3m in 2009, of which The Jockey Club contributed 30 per cent, or £12.4m.
The Jockey Club raises money through its four commercial divisions: the land management arm Jockey Club Estates, thoroughbred breeding business the National Stud, industry charity Racing Welfare, and Jockey Club Racecourses, which oversees the operation of a portfolio of 14 racecourses and joint venture Jockey Club Catering.
The racecourses arm is by far the biggest moneyspinner for the business, contributing between 80 and 90 per cent of its revenue through marketing, media rights and hospitality.
The recent diversification into conferences, outdoor concerts and exhibitions should also be noted, bringing in a small but “steadily growing” 10 to 15 per cent of that total, through ventures such as the weekly antiques fair at Kempton.
The biggest project on the horizon at the Jockey Club is the British Champion Series, a joint venture with The Horsemen’s Group and racecourses that will launch to the racing public through “the biggest marketing campaign in British racing to date” in mid-April.
The aim of the series is to boost the popularity of the flat-racing season, spanning from the Guineas at Newmarket to a new day at Ascot in October, to be called British Champions Day, which will extend the flat-racing calendar by five races.
Broadcast rights for the finale’s five races have been bought by the BBC – although Bazalgette refuses to reveal for how much – giving the Corporation the media rights to 16 of the season’s flat races, with Channel 4 broadcasting the remaining 19.
The headline sponsor for the British Champions Series will be announced in the next two weeks – although again, Bazalgette will not yet reveal which firms are bidding or for how much.
The “most critical” issue for securing the commercial future of racing is modernising the Levy, the rights fee paid by bookmakers in return for making an income from the sport, following the rise of “loopholes” such as betting firms moving offshore to pay less tax on their profits. In the year to 31 March 2008, the Levy paid £155m to the Jockey Club; over the same period for this year, the company will receive just £60m to £65m.
“The legislation was drafted in different days,” says Bazalgette. “If bookies go offshore, they can avoid paying the Levy and gross profits tax. And if bookmakers are operating offshore, one of the big issues is that consumers won’t bet with them because they don’t have consumer protection under UK law. People need to know they won’t be taken advantage of.”
Fortuitously for racing, the Department for Culture, Media and Sport is working on a new licensing regime to bring errant bookmakers “back into the net”, and culture minister Jeremy Hunt has already stipulated The Jockey Club must receive between £74m and £81m for 2011/12.
Meanwhile, the debate over whether the pool betting quango the Tote should move to ownership by a new trust called the Tote Foundation, or by one of four bidders, rumoured to be Gala Coral, Reuben Brothers, Sir Martin Broughton and Betfred. The Jockey Club takes £11m per year from the Tote’s profits and £9m per year from its contribution to the Levy and, unsurprisingly, Bazalgette wants to see that revenue protected.
“The racing industry is working with the government to find a solution that is fair for the taxpayer and fair for racing,” says Bazalgette. “Our preferred outcome is that the Tote stays independent under a structure that would give the taxpayer some money, as the charitable trust proposal by the Tote Board has put forward.”
As the legal battle with the bookmakers over Turf TV – The Jockey Club’s most valuable media rights, through its 25 per cent stake in the venture – fades into history, Bazalgette can focus on “optimising” the media deals with the BBC and Channel 4 and doing what he loves best – getting the nation as passionate about the sport of horseracing as he is.
He tells the anecdote with pride of how last Tuesday, the Tote Jackpot of £1.4m was won by Steve Whiteley, a heating engineer from North Tawton in Devon, who went racing through a local promotion organised by the Jockey Club.
“This is a guy who took a free bus to Exeter racecourse and won £1.4m with a £2 stake,” Bazalgette says.
Refreshing to see that even a man who owns a stake in seven racehorses has an egalitarian approach to the Sport of Kings.
CV | SIMON BAZALGETTE
2008 to present: Chief executive, the Jockey Club and chair of Jockey Club Racecourses.
2004: Executive chairman of Racing UK and chairman of Racecourse Media Services.
1993: Joins Music Choice, rising to chief executive of Music Choice Europe by 1999 and leading its 2000 flotation.
1984: Qualifies as a chartered accountant at KPMG, rising to become managing director of the company’s media consulting department.
FACT | HOW MUCH MONEY DOES CHELTENHAM MAKE?
Betting: About £600m is staked on the outcome of the festival’s 26 races. In 2010, punters drew almost £1.4m from the site’s 20 cash points.
Ticket sales: Total gate receipts net an estimated £7m.
Hotels and B&Bs: About 10,000 beds are filled during the festival week, ranging from four-star hotels to local B&Bs. The value to the local Gloucestershire economy is estimated at £50m.
Sponsorship: Overall sponsorship money raised by the festival is £1.8m, with the main sponsorship deals all worth more than £250,000. Sponsors range from bookmakers to financial services, construction, beverage and media companies.
Prize money: The total prize money for 2011 is £3.4m, an average of £125,000 per race. About half this total comes from the races’ sponsors, with prize money for the Totesport Cheltenham Gold Cup at £500,000 and prize money for the Stan James Champion Hurdle at £370,000.
Broadcast rights: The broadcast rights are owned by Racecourse Media Group with Channel 4.