BHA 2015 FIXTURE LIST INDUSTRY CONSULTATION DOCUMENT

Transcription

1 BHA 2015 FIXTURE LIST INDUSTRY CONSULTATION DOCUMENT Publication Date: 10 June 2014 Closing date for comments: 1 July 2014

2 Subject of this consultation: Scope of this consultation: Who should read this: Initiatives and proposals impacting on the 2015 Fixture List and the distribution of fixtures, specifically: Proposals to address the issue of small field sizes; The size and structure of the 2015 Fixture List; The entry into the fixture process of two new All Weather racecourses and the resulting increase in demand from racecourses for All Weather fixtures; The process for allocation of BHA Fixtures; and The future treatment of Enterprise Fixtures; To gather feedback on BHA proposals regarding each of the above prior to finalisation and implementation of any policy and the commencement of the 2015 Fixture Process. Racecourses; Horsemen; Betting Operators; Media Partners; Racing Consumers. Duration: The consultation will run for 3 weeks, beginning Tuesday 10 June 2014 and closing at noon on Tuesday 1 July Lead contact: Ruth Quinn How to respond Written responses or enquiries should be submitted to: or enquire: Ruth Quinn Fixture List High Holborn London WC1V 6LS Additional ways to be involved: After the consultation: Or by to: fixturelist@britishhorseracing.com Should there be sufficient demand, BHA will facilitate a round-table stakeholder workshop. If you wish to participate in such an event, please fixturelist@britishhorseracing.com. The BHA Board will take into account feedback from the consultation process in determining the size and structure of the 2015 Fixture List, the methodology for allocating BHA Fixtures, and the future treatment of Enterprise Fixtures. 2

3 Contents Glossary of Terms... 6 Foreword... 9 Introduction British Racing s consumers Compelling and Attractive racing Trends Field sizes Horses in training Actual fixtures and races run Betting turnover Developmental Races Field size targets Questions Initiatives to increase field sizes Questions The Fixture List Criteria for the size and structure of the Fixture List Sporting rationale Consumer demand Supply Summary Application of the criteria to the 2015 Fixture List Sporting rationale Consumer demand for fixtures Betting Industry demand for fixtures Supply All Weather Racing Overview Current scale of All Weather racing Field sizes Demand for All Weather racing Consumer demand for All Weather racing Racecourses demand for All Weather racing Betting industry demand for All Weather racing Horsemen demand for All Weather racing

4 6.4.5 Media companies demand for All Weather racing Strategic aspects for an All Weather Track (AWT) in the North Questions Fixture List Flat racing Limiting races at BHA Fixtures (including Twilight Fixtures) pinch point months only Targeting 30% of races with fewer than 8 runners Addition of Northern All Weather Track Additional races (October and November) Summary (Flat) Questions Jump racing Change in Jump fixture numbers Restriction of Racecourse Fixtures to 6 race cards during pinch points Summary (Jump) Questions Conclusion Financial impact Modelling results Summary Questions Options for reductions in supply to manage pinch points Racecourse Fixtures BHA Fixtures Reduction in races Proposal for dealing with pinch points Options for increasing supply in October / November Questions Allocation of fixtures Geographic / code designation for certain BHA Fixtures Question Enterprise Fixtures Self-Funded Fixtures Questions Options for allocation of BHA Fixtures Simple prize money bid

5 8.3.2 Historic racecourse group prize money contribution Historic racecourse prize money contribution Balanced scorecard Questions Conclusion and next steps Summary of questions Appendix A: 2014 Fixture Criteria Appendix B: Modelling assumptions Appendix C: Methodology for modelling horse population Appendix D: Proposed Conditions for participating in BHA Fixture process Appendix E: 2015 Fixture List consultation to date

6 GLOSSARY OF TERMS AFS All Weather Championships AVC Fund AWT Betfair Agreement BHA Average Field Size Launched in 2013, the All Weather Championships incorporates a series of races run on All Weather Tracks between mid-october and Good Friday. The stated aims of the All Weather Championships are to improve the quality and reputation of All Weather racing and encourage owners and trainers to keep their horses in training in Britain during the winter months to compete in one of the six categories, designed to test every horse, jockey and trainer. Additional Voluntary Contribution Fund, an amount of funding agreed as part of the Levy Rollover Arrangement made in October 2013 and which is aimed at, amongst other things, improving field sizes. All Weather Track The Deed of Agreement to Contribute to British Racing between Betfair, BHA, RCA and the Horsemen s Group. British Horseracing Authority Class (of Race) Races are classified in relation to the quality of the race (Class 1 to 7 for Flat and Class 1 to 6 Jumping). The classification of the race indicates the race s minimum value or meritocracy band for prize money. Classic Runners Code (of Fixture) Criteria/Non-Criteria Slots Deloitte Development Fund Developmental Races E&S Exotic Bets Field Size Limit Classic races are a group of historic major races for three-year-olds held during the Flat Turf season. In Britain the five Classics are (in running order) the 2,000 Guineas, the 1,000 Guineas, the Oaks, the Derby and the St Leger. A Classic Runner is any horse to have participated in one of these major events. Either Flat or Jump, although there remain a small number of Mixed meetings. The fixture Criteria is generated and reviewed annually by HBLB. It provides a framework for the Fixture List to aid in the optimal generation of Levy yield, based on the requirements of the off-course betting industry. Fixture slots that receive funding from HBLB are designated Criteria slots. The 2014 Fixture Criteria is included at Appendix A. Refers specifically to Deloitte s Sports Business Group This fund is generated from the allocation of BHA Fixtures. BHA is in charge of its allocation and administration, which has recently been targeted at improving the number of runners in chosen races. Races that aid in the development/progression of horses throughout their racing careers. Developmental Races might include, but are not limited to, Pattern or Listed contests, Maiden and Novice races, as well as Conditions races. Executive and sponsorship contributions made by racecourses to the Total Prize Fund of a race. Bet types that are more complex that simply finding the winner and which generally require more than one selection in a race (such as Trifecta) or for selections to be made across multiple races (such as Scoop6). A limit on the number of runners that can take part in a race. 6

7 Fixtures ~ BHA BHA Fixtures are leased by racecourses on short term contracts. BHA is responsible for the allocation of these fixtures. BHA Fixtures include Twilight Fixtures. ~ Enterprise Introduced in 2008 in order that more commercially attractive slots (from a racegoer perspective) were available to racecourses. The majority of Enterprise Fixtures are surplus to the fixture Criteria and receive no central funding. Some of these fixtures (i.e. Moved Enterprise Fixtures) have been permitted to occupy Criteria slots and are therefore eligible to receive a Raceday Services Grant. ~ Racecourse Racecourse Fixtures make up the bulk of the Fixture List. In 2014 there are 1,219 Racecourse Fixtures. They have previously been recognised as being different from other fixtures due to them being pre-existing, historical fixtures at a particular point in time. ~ Self-Funded Self-Funded Fixtures do not receive any funding from HBLB. The racecourse funds them entirely. Self-Funded Fixtures require the approval of BHA and operate in excess of the Criteria. A very small number are authorised annually. ~ Twilight Twilight Fixtures are BHA Fixtures that are held after the end of August and generally have a late afternoon start (around 4 pm). These fixtures will only apply to racecourses that have floodlit facilities. In recent years, a number of fixtures have been approved as Twilight Fixtures in September and early October (i.e. within British Summer Time). GBI Racing Gross Win Handicapping HBLB ( The Levy Board ) Horsemen s Group Levy Rollover Arrangement Levy Yield A TV broadcast and media service company delivering live racing coverage from Great Britain and Ireland to other jurisdictions. The actual amount of stakes retained by bookmakers after winnings have been paid out. A handicap is a race where each horse is allotted a different weight to carry, according to the official handicap ratings determined by the BHA Handicappers. The theory is that all horses run on a fair and equal basis the perfect' handicap being one where all the runners finish in a dead-heat. Horserace Betting Levy Board A group that includes owners, trainers, jockeys, stable staff and breeders, represented principally by the Racehorse Owners Association (ROA), the National Trainers Federation (NTF), the Professional Jockeys Association (PJA), the National Association of Stable Staff (NASS), and the Thoroughbred Breeders Association (TBA). An agreement signed by the leading four Licenced Betting Offices (LBO) operators (William Hill, Ladbrokes, Coral and Betfred) in October 2013 to make both a minimum guarantee, and an Additional Voluntary Contribution, beginning in the 53 rd Levy Scheme (2014/15) for four years (concludes March 2018). Money raised by HBLB from collecting a statutory Levy from offcourse betting on British horseracing, the Tote successor company and on-course bookmakers. Levy is collected as a percentage of bookmakers gross profits on British horseracing. 7

8 Margin Pinch Points Prize Money Agreement ( PMA ) Raceday Services Grant Replacement fixture RIF Payment RMG Runners Initiatives Small Field Size Races SIS Turnover The percentage of stakes likely to be retained by bookmakers after winnings have been paid out Times of the year with a high prevalence of small field races. Agreements generally signed in 2013 between horsemen, racecourses and BHA that requires racecourses to contribute a percentage of betting related income to prize money. There are two tiers of agreement, Premier and Standard, which relate to the amounts contributed. Funding provided by HBLB to contribute towards racecourses costs in the following areas; - Fixture Fees (includes cost of licensed officials, security, veterinary arrangements etc.) - Camera Patrol and Photo Finish This is a fixture that is put on at late notice by BHA usually to compensate for the loss of fixtures caused by abandonments. Race Incentive Fund payments (formerly Quality Support Fund) made by HBLB to racecourses to support the race programme. Racecourse Media Group Ltd. Predominantly race planning initiatives targeted at increasing numbers of runners. Races which fall below 6 runners are characterised as service failures. Races with fewer than 8 runners are also considered suboptimal. Satellite Information Services The total amount staked with bookmakers on any race 8

9 FOREWORD The British Horseracing Authority (BHA) is the regulatory and governing authority for the sport of horseracing in Great Britain. It is tasked with ensuring the health and successful development of the sport, and seeks to enhance its attraction to customers and its position in the sporting and cultural landscape of the country. Horseracing is an increasingly international sport and the preeminent reputation of British Racing across the globe is also something that the BHA is committed to maintaining. This consultation forms part of the BHA process of compiling the 2015 Fixture List. It aims to establish feedback from the full range of the sport s stakeholders and consumers on a range of proposals being developed. While the consultation relates specifically to the 2015 Fixture List, the questions it raises are deemed critical to ensuring that British Racing is able to thrive in the long-term. The consultation focuses on the impact of the recent and significant decline in field sizes across all codes and the ensuing repercussions on the competitive nature of racing and therefore its attractiveness to the end customer, including racegoers or viewers at home, in the betting shop, or overseas. The consultation seeks feedback on a range of proposals designed to assist in reversing the decline in field sizes. BHA is keen to address the issue in a collaborative and transparent manner, with all stakeholders taking responsibility for the sport s long-term success. The consultation outlines several race planning proposals being developed by BHA with a view to addressing the trend of declining field sizes. However, BHA believes that race planning measures alone will not be sufficient to meet competitive targets, and so the prospect of a reduction in the number of races at certain fixtures during specific times of the year is also being explored as part of a multi-layered approach. Where appropriate and supported by data, these reductions could be offset in part if an undersupply of races exists at specific times of the year. This wider approach also encompasses the industry s Strategy for Growth project, on which work is underway. It involves pillars focussing on increasing the horse population, ownership and breeding in future years, and on investment from targeted UK and foreign high net worth individuals. The average field size in British Racing has fallen from 11.0 in 2005 to 9.0 in 2013 and while in more recent years the number of fixtures has not increased, the number of races run has. Although in 2008 there was virtually the same number of fixtures run as in 2013, there were 652 more races run with 10,146 races in 2013 compared to 9,494 in This increase in races coincided with a significant decline in the horse population of well over 1,500 horses. Consequently, BHA s objective of producing compelling and attractive racing that is consistently amongst the best in the world is being threatened on account of a horse population relative to the size of the Fixture List that struggles to provide consistently competitive fields. While based on the IFHA World Thoroughbred Rankings a majority of the world s best 15 Flat races are held in Britain, the situation with field sizes more generally is one that BHA firmly believes needs to be addressed to ensure a secure platform for developing the sport in the medium and long term. British Racing has to address the issue of small fields. Unless this trend is reversed, we are in danger of continuing to underperform against a number of key targets and losing our competiveness as a betting product, both in Britain and in international markets. An improvement of our performance will position the sport to optimise returns from the principal revenue streams that drive prize money. Importantly, it should be recognised that improved performance in this area will help to sustain and drive the performance of the Betting industry; a key partner and contributor to the sport. This consultation sets out our research findings to date and resulting proposals, and asks a number of questions aimed at refining and finalising the size and structure of the 2015 Fixture List. It also covers proposals for the allocation of up to 200 BHA-controlled fixtures, including whether All 9

10 Weather racing should expand as a result of the developments at Chelmsford City Racecourse and Newcastle Racecourse. The data collated clearly shows that the issue of declining field sizes affects all codes of racing and our research has identified the pinch-points during the year which require specific attention. We are advocating a targeted approach to address the problems in the short-term, in order to build a platform from which the sport can grow and which would underpin the wider ranging strategies for growth that are currently under development. The BHA Board is yet to make any final decisions, and in doing so will take into consideration the responses to this consultation document, which we look forward to receiving from a range of stakeholders from right across the industry. We look forward to hearing from you. Yours sincerely Paul Bittar Chief Executive British Horseracing Authority 10

11 INTRODUCTION Racing is one of the purest of all sporting concepts, where the first horse to pass the post wins. Competitive racing with closely matched horses and tight finishes is the essence of the sport, creating drama and excitement for those watching. The regulation and structure of the sport seeks to ensure horses of comparable ability compete against each other, by scheduling developmental races which culminate in championship races, and through a handicapping system to create competitive racing for those below championship level. The range of competitive opportunities provided by different codes of racing and the varying surfaces, going, layout and terrain of racecourses is a key element of British Racing s appeal. Integrity of competition is protected by the Rules of Racing (the Rules ) to ensure that not only is every horse run on its merits but also that the safety and welfare of the participants is protected. The structure of reward through prize money is a meritocratic system which encourages horses to progress through the grades in pursuit of increasing rewards. Ratings, form and bloodlines provide a framework for assessing horses thereby enabling the breed to continue its development. BHA s strategic objectives include: To provide the most compelling and attractive racing in the world The compilation of the Fixture List by BHA, determining how much racing should be staged and where, plays a vital role in the delivery of the objective to provide compelling and attractive, and therefore competitive, racing. The 2015 Fixture List is arguably the most complex that BHA has been tasked with compiling. The significant downward trend in average field sizes and the large number of small field races, combined with the entry of Chelmsford City Racecourse, and the approval of Newcastle Racecourse s application to stage All Weather racing, create significant challenges in terms of determining both the size of the Fixture List and the process for allocating BHA Fixtures. Working with Deloitte s Sports Business Group ( Deloitte ), BHA has undertaken consumer research as set out in this document. BHA has also held discussions with a number of key stakeholders through the Fixture List Consultation Group and on-going correspondence as set out in Appendix E. Given the complexities and the need to address the issue of field sizes in conjunction with the stakeholders in British Racing, BHA has concluded that it is appropriate to undertake a wider and formal consultation on the proposals that have been developed prior to finalising the 2015 Fixture List. This is particularly relevant given the potential need for a targeted reduction in the number of races in the short term to provide a sound base of competitive racing from which to deliver long term sporting and financial returns. This document sets out the research findings and resulting proposals, and asks a number of questions aimed at refining and finalising the size and structure of the 2015 Fixture List. It also covers proposals for the allocation of BHA Fixtures including whether All Weather racing should expand as a result of the developments at Chelmsford City Racecourse and Newcastle Racecourse. The BHA Board is yet to make any final decisions, and in doing so will take into consideration the responses to this consultation document. 11

12 BRITISH RACING S CONSUMERS An important consideration in this consultation is recognition of the varied needs of British Racing s consumers. British Racing has a broad range of consumers, both on the domestic and international front. These vary from off-course media and betting shop customers, to on-course racecourse attendees in Britain, through to high net worth international owners based overseas. Some statistics demonstrating the scale over which British Racing s consumers operate include: c. 8,200 registered owners in 2012, with around 35,000 individuals involved in horse ownership in some way; 5.7m racecourse attendees in 2013, making it Britain s second most popular sport; The highest gross win of any sports betting product in Britain s 8,700 Licensed Betting Offices, generating a gross win of c. 700m in 2013 across Levy paying channels; 70m unique race streams online in 2012; 40 different territories buying British Racing pictures via GBI Racing; and 9m peak 2014 Grand National audience on Channel 4 12

13 COMPELLING AND ATTRACTIVE RACING The system of centrally co-ordinated developmental races, ratings and handicapping are all designed to provide compelling and attractive racing, and are fundamental to the sport. These features are in turn underpinned by high standards of integrity and regulation which ensure that the consumer can trust in the outcome of individual races and the sport as a whole. Compelling racing does not always have to be competitive; as demonstrated in recent years by the domination of horses such as Frankel and Sea The Stars. However, these horses are the exceptions and for the majority of the sport s consumers, compelling racing generally equates to competitive racing. Depending on the consumer, there are a variety of measures for assessing competitive racing, including betting turnover and media viewing figures for the off-course consumer and attendance for the on-course consumer. Competitive racing also provides enhanced options and greater liquidity for betting customers both domestic and international and as such the sporting and betting interests are aligned. Trends Field sizes British Racing considers itself to be among the best in the world. In the last three years, eight of the fifteen best Flat races based on the IFHA World Thoroughbred Rankings have been held in Britain, providing it with evidence to back up this statement. However from a field size perspective, the key driver of generating value through betting, British Racing lags considerably behind and has seen a dramatic worsening of the position in recent years. Fig. 1: International Flat Racing Field Sizes (2012) Country Flat Average Field Size Hong Kong 12.5 South Africa 11.7 France 11.1 Singapore 11.1 Japan 10.9 Ireland 10.6 Australia 9.9 Great Britain 9.6 Falling to 9.0 in 2013 Source: International Racing Federations 13

14 Great Britain is now falling significantly behind its international competitors in terms of field size. Figure 2 below shows the dramatic decline in average number of runners per race in Britain since Fig. 2: Runners per Race (Flat and Jump) 2001 impacted by Foot and Mouth Source: Jennifer Owen, International Federation of Horseracing Authorities One of the key factors in the decline in competitiveness of British Racing is the significant increase in the number of small field races, which is closely correlated to the decline in average field size. 14

15 Figure 3 shows the increase in small field races both for Flat and Jump racing since Races with fewer than 8 runners provide less opportunities for each way betting. As shown in Figure 7, betting turnover declines for races with fewer than 8 runners and then sharply for races with fewer than 6 runners. As a result these can be characterised as service failures. The marked increase in the number of small field size races over time (Figure 3) has been coupled with a significant decline in average field size (Figure 6). Fig. 3: Small field size trends (Jump and Flat) 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% <6 Flat runners <8 Flat runners <6 Jump runners <8 Jump runners Source: BHA analysis Horses in training There has been a decline of well over 1,500 horses in training since the peak in 2008 as shown in the graph below. This significant reduction in the available horse population is one of the key drivers of the rise in small field sizes. Fig. 4: Average number of horses in training in any one month per year 15,500 15,000 14,500 14,000 13,500 13,000 12,500 12, Source: BHA analysis 15

16 3.1.3 Actual fixtures and races run The number of fixtures programmed has been relatively constant since 2008 when the Fixture List was expanded to accommodate both the significant increase in the horse population and the all year round evening opening of betting shops, with the supply of horses ensuring competitive racing while matching the demand for fixtures. The number of actual fixtures run has been impacted by weather in both 2010 and 2012 with the latter year, masking the disconnect between the programmed Fixture List and the current horse population. Even though fixtures have remained relatively constant since 2008, the number of races programmed per fixture has been increased to a point where there is currently an average of 7.1 races per fixture. Since 2008 an additional 617 races have been added to the race programme, which equates to an extra 88 fixtures as shown in orange in Figure 5 below. Fig. 5: Actual fixtures and races run since ,600 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1, Fixtures and Races Fixtures Note: The orange segment represents the number of additional races at programmed fixtures converted to the equivalent number of fixtures Source: BHA analysis 16

17 Indexed Turnover 2015 FIXTURE LIST CONSULTATION The expansion in the number of races at a time when the horse population has been in decline is the driver behind the growth in small field races as illustrated below in Figure 6. Fig. 6: Races run and decline in field size 10,500 10,000 9,500 9,000 8,500 8,000 7,500 7, Races Run Field Size Source: BHA analysis Betting turnover Betting turnover, a key measure of the competitive and compelling nature of a race and its interest to off-course consumers, declines sharply for races with fewer than 6 runners as illustrated in Figure 4 below. Fig. 7: Betting turnover vs. runners Source: Major bookmaker Number of runners Races with fewer than 8 runners reduce the number of betting opportunities available and reduce the attractiveness for each way and exotic bets. As such they are particularly unappealing to an international audience, an area of expansion that British Racing has targeted in recent years, where exotic bets are more prevalent. Small field races generally have both lower turnover and a reduced gross margin. The importance of the issue of small field sizes to the betting customer is supported by field size related requirements under both the recent Levy rollover arrangement and the Betfair Agreement. 17

18 3.1.5 Developmental Races There are certain small field size races which are, and will continue to be, important from a sporting perspective due to the role they play in the development of horses, their progression through the sporting rankings and the future competitiveness of the high profile, championship races. These include, but are not limited to, Pattern or Listed contests, which lead to the championship events, in addition to Maiden and Novice races that are also important in order for horses to obtain a handicap mark. A significant reduction in the number of Maiden races, for instance, could have a potentially negative impact on field sizes in handicaps as there would be fewer opportunities for horses to obtain a rating. BHA recognises that Developmental Races play a vital part in the building blocks of the sport, without which the more high-profile races could not take place, and as such they will continue to be protected. Field size targets Given the trends in declining field sizes and the associated impact on the competitiveness of British Racing, BHA believes that it is appropriate to set long term targets for field size performance, both in terms of average field size and the proportion of races with small fields. These targets are unlikely to be deliverable in the short term, but should provide a benchmark to be reached on a consistent basis before further expansion, or reintroduction of, races or fixtures are considered. Short to medium term targets are considered in Section 7 in light of the current data on small field sizes. Long term targets for field size need to deliver competitive racing. There is a strong relationship between the number of small field races and average field size. As a result the delivery of a material reduction in the number of small field races will increase the average field size. BHA notes there is significant variation in field size performance by racecourse, however at this stage we have sought to deal with the issue at a macro level. As BHA does not control the key levers related to funding, we have sought to focus on race planning and quantity of races to drive enhanced field size performance at an industry level. There may be specific race planning suggestions or other feedback through consultation which assists or supports improving field sizes at specific and consistently underperforming racecourses. These will be considered as part of the consultation process, while additionally BHA recognises that value as a betting product (and hence some revenue streams) will be enhanced for those racecourses which consistently outperform on a relative basis. The targets set out below are proposed for discussion based on returning small field statistics to the historical norms pre These are also in keeping with international trends, reflecting other jurisdiction norms of what constitutes competitive racing. These targets equate to c. 1 race per fixture with less than 8 runners and c. 1 race every 3 fixtures with less than 6 runners. 18

19 Based on historic performance as shown in Figure 3, as well as the trends pertaining to the international markets, the following are suggested as long term targets. Long Term Target Flat Jump Races with fewer than 8 runners 15% 25% Races with fewer than 6 runners 5% 10% Average field size BHA recognises that these targets may need to be less demanding in the short term to reflect the current horse population see Section 7. Questions 1. Do you agree that field size is important in providing competitive racing? 2. Would a target average field size of 11 for Flat and 10 for Jump in the medium to long term represent an improvement in the competitiveness of British Racing in your view, and if not why not? 3. Should action be taken to minimise the number of non-developmental races with small field sizes? 4. Do you consider the targets set out above to be reasonable? 5. Should differential targets for Jump racing be set, particularly for fields of fewer than 8 runners in light of the historical position shown in Figure 3? 6. What is the likely impact of increasing average field sizes to 10/11 in terms of betting outcomes? Can you provide any evidence or data to support your views? 7. What do you believe would be an optimal average field size for both Flat and Jump, and why? 19

20 INITIATIVES TO INCREASE FIELD SIZES Race planning is currently carried out as a collaborative process by both BHA and racecourses (at individual and group level). While changes are constantly adopted to drive more competitive racing, the impact of these initiatives hasn t gone far enough nor have they driven a significant increase in runners. A number of initiatives to improve field sizes have been identified by BHA (including in discussions with the HBLB) and projects are underway as follows: 1. Race planning improvements to optimise opportunities for horses, including: review of the balance and volume of all race types for horses of different age groups, by Class and distance system developments to understand the horse population better, and in particular those horses who are ready to run review of protocols for determining race divisions 2. Removing at short notice races with few declared/entered runners matching supply to better suit the demand for competitive racing. This will also include a review of the current process for reopening and reoffering races; 3. Better mapping of geographic distribution of the race programme to the horse population; 4. Review of the Northern Jump Racing programme to create a better flow of fixtures; 5. Reducing net cost per run, using AVC Fund as part of the Levy rollover arrangement to improve field sizes; 6. Identifying and introducing initiatives to encourage runners on the Flat in August; 7. Prize money Options to increase prize money with field size were included within Prize Money Agreements and further scope for flexibility is being explored; Increases in the level and distribution of place prize money initially via the AVC Fund but with possible longer term structural changes. These work streams have been assessed and the potential impact on the average field size for 2015 has been estimated and is set out in the tables below. The assumptions which support these figures are set out in Appendix B, and will be tested through consultation with stakeholders. Fig. 8: Impact of existing Flat initiatives Impact on Average Field Size Average Impact on % sub 8 Average Change to Horse Population 0.09 Change to Horse Population (0.97%) AWT Championship second season 0.03 AWT Championship second season (0.31%) Removal of races with poor entries 0.02 Removal of races with poor entries (0.18%) AVC 0.09 AVC (0.97%) Total 0.23 Total (2.44%) Source: BHA analysis 20

21 Fig. 9: Impact of existing Jump initiatives Impact on Average Field Size Average Impact on % sub 8 Average Reduced geographical clashes 0.05 Reduced geographical clashes (0.49%) Removal of races with poor entries 0.03 Removal of races with poor entries (0.28%) AVC 0.09 AVC (0.98%) Total 0.17 Total (1.76%) Source: BHA analysis These initiatives are therefore estimated to deliver only marginal benefits, increasing Flat average field sizes by 0.23 and Jump average field sizes by While the assumptions are based on BHA s initial analysis and may appear conservative, we believe a modest approach to the impact is warranted until they are proven, and it should be noted these forecasts will still generate an additional c. 1,300 runners on the Flat and c. 475 runners for Jump racing. Stakeholders views on the estimated impact of these initiatives will form part of the consultation process. A further alternative under consideration with stakeholders is the centralisation of race programming. Implementing this at Class 3 races and below is estimated to deliver some benefit to field sizes in both codes with little cost. Additional consideration and engagement with stakeholders is needed to understand how this could work, but it would be unlikely to deliver any material field size benefit in 2015 due to time required for implementing a new system. BHA s view is that, if implemented, these initiatives can all contribute to improving small field sizes, but would not, on their own, adequately deal with the problem as demonstrated in Section 7. The underlying issue is the expansion in the number of races compared to the current horse population, particularly at certain times of the year. As illustrated in Section 3, the increase in instances of 7 and 8 race cards compared to 2008 equates to an additional 88 fixtures. The horse population has fallen by over 1,500 horses in training per month in that time. Separately, in 2014 British Racing s stakeholders have collectively and collaboratively agreed upon the need for a strategy for growth, aiming to deliver increased participation and revenues in the sport. Work is underway across a number of pillars vital to the future prosperity of British Racing, including one focussing on horse population, ownership and breeding, and another on investment from targeted UK and foreign high net worth individuals. The horse population, ownership and breeding pillar is looking at a number of key areas, including opportunities to target potential owners with segmented offers, new ownership and breeding models, an enhanced racecourse experience for owners and ways for owners to retain quality stock to race and breed in Britain. A range of recommendations will be produced later in the year, and whilst the overall strategy work should complement other initiatives to increase field sizes and drive a more competitive racing product, for the purposes of the compilation of the 2015 Fixture List it is vital that we work from current horse population data, and trends and projections that we are able to deduce from it. Questions 8. Do you believe the assumptions behind the calculation of the impact of initiatives to increase field size are reasonable and if not what assumptions would you support and why? 9. Do you believe a multi-layered approach could increase the number of runners and, if not, why not? 10. Are there additional initiatives which you think could be beneficial in increasing the number of runners and/or improving field sizes? 21

22 THE FIXTURE LIST There are a number of factors to be taken into account in determining the size and shape of the Fixture List to ensure that it delivers competitive racing. BHA has concluded that the criteria set out below should be used in determining the structure and size of the Fixture List annually. These criteria will be applied to the circumstances in any particular year in order to determine the size and scope of the relevant Fixture List. The financial impacts of proposals on the various stakeholders will be modelled. This work has been undertaken for 2015 as set out in Section 7. Criteria for the size and structure of the Fixture List Sporting rationale Regularity of sporting competitions Delivery of compelling and attractive racing Preservation of racing heritage including iconic festivals Development of horses through a structured programme of races Effectiveness of the handicapping system which underpins competitive racing Variety of opportunities for horses in terms of surface, going and track layout ensuring that horses can maximise their potential Geographic spread of fixtures o Opportunities for fans to attend locally and provision of a variety of racecourse experiences o Opportunities for owners to run horses particularly at lower levels where transport costs can be prohibitive Maintaining a financial and competitive balance to support prize money primarily through Levy and media rights payments Protection of the integrity of sporting competition by ensuring that scheduling is such that officials and regulation can be provided at all fixtures Creating a meritocratic system, rewarding movement through the various classes of race, and stimulating the purchase of bloodstock in pursuit of the pinnacle of the sport, in terms of prize money and breeding value, as well as sporting success Consumer demand On-course o Consumers who attend racing o Horsemen (primarily owners and trainers) who require races in which to run their horses Off-course o Consumers who bet on racing o Consumers who watch racing on a variety of media platforms o Betting company intermediaries o Media company intermediaries Supply Runners/Horses in training Racecourses appetite and ability to stage fixtures 22

23 5.1.4 Summary The development of performance indicators in terms of target field sizes, together with a clear sporting rationale for testing the size and structure of the Fixture List, will enable British Racing to respond to future changes in horse population and consumer demand, developing an annual Fixture List which provides compelling and attractive racing. Application of the criteria to the 2015 Fixture List Sporting rationale The Fixture List and race programme has evolved over decades centuries even through engagement with stakeholders including racecourses, owners, trainers and betting operators in order to deliver an appropriate structure for the sport and allowing it to achieve compelling and attractive racing to consumers both on and off-course. The core structure underpins the sport with a unique heritage as well as providing a framework for development of the breed. However, given the changing environment, there are a number of sporting factors that are a challenge for the 2015 Fixture List: Compelling and attractive racing As set out in Section 3, the decline in average field size and the increase in the number of small field races need to be addressed if the 2015 Fixture List is to deliver competitive racing. The long term targets as set out in Section 3 for average and small field sizes may not be achievable in the short term, but a significant improvement in the current position must be sought. Maintaining a variety of opportunities for horses The increase in the number of AWTs raises a potential challenge to the variety of opportunities for horses. As set out in Section 5.2.2, there are consumer concerns about a further expansion of racing on AWTs, particularly if the diversity of British Racing is affected. In recent years, the Fixture List has been compiled to provide a 40:40:20 division between Jump:Flat Turf:AWT fixtures. A degree of flexibility is now required due to the new entrants, and the construction of a Fixture List that can deliver competitive racing based on the available horse population. The split of prize money between codes is based on Levy generation as opposed to number of fixtures and as such Jump Racing will continue to be supported by the halo effect of the Grand National. Geographic spread of fixtures There are opportunities within the Fixture List to improve the geographic spread of fixtures for the benefit of both owners and racegoers, and to improve field sizes. Furthermore, as set out in Section 6, the potential for a winter All Weather programme in the North from the autumn of 2015, could generate additional runners. Should fixtures and/or races outperform the benchmark targets set out in Section 3 on a consistent and sustained basis, consideration could be given to expanding or reinstating races and/or fixtures, but within the context of maintaining competitive racing, and the sporting rationale for the Fixture List. The introduction of Chelmsford City Racecourse may encourage more horses to stay in training in its catchment area. However there is less evidence for this given the greater accessibility of existing AWTs to Newmarket than is presently the case for the North. 23

24 Maintaining a financial and competitive balance to support prize money The number of fixtures and races, combined with the number of available horses, are the key influences on the number of runners. If field sizes are to be addressed, even in part, through a restriction in the number of races or fixtures, this is likely to have a short term, negative financial impact on racecourses and horsemen, primarily through reduced media rights payments. The extent of the possible financial impact is illustrated in Section Consumer demand for fixtures In addition to asking specific questions about All Weather racing, a recent racing consumer online survey asked about the current level of fixtures in total and by code. Fig. 10: Results from Consumer Online Survey Just over half of consumers considered the current Fixture List to be about the right size, while a net 30% of consumers thought there to be too many fixtures. The category in which there was considered to be an excess number of fixtures was All Weather, and to a much lesser extent, Flat Turf. Notably 48% of respondents believed that there were too many or far too many All Weather fixtures, with only 37% believing the current level of All Weather fixtures to be about right Betting Industry demand for fixtures The Betting Industry sets out its preferred criteria for the number and distribution of fixtures, and its preference for 7 races per fixture, via the Horserace Betting Levy Board ( HBLB ). All of these 1,442 Criteria Slots are currently filled, while 22 fixtures are currently surplus to the Criteria 1. However, the Betfair Agreement also set criteria for the number of runners per race, seeking to limit small field sizes, and the recent Levy rollover arrangement required Racing to improve field sizes. Unless the small field issue can be successfully addressed, Racing is in danger of continuing to oversupply, and underperform against a number of key targets. 1 This includes some Self-Funded and Enterprise Fixtures, 15 third Sunday Fixtures and 2 fifth Saturday Fixtures 24

25 5.2.4 Supply The expansion of the Fixture List and, as importantly, the number of races in recent years combined with a reduction in the horse population means that there are times of the year when field sizes are such that racing is regularly not competitive, as demonstrated in Section 3. A number of strategies have been identified which, it is estimated, could increase runners by around 0.2 per race, as set out in Section 4. This is subject to further testing as part of the consultation process. Early 2014 horse population data shows signs of a very mild recovery with an increase in the numbers of Flat horses registered in training of around 0.5%. It is accepted that the Jump horse population is subject to longer time lags in adjusting to macro-economic factors and the number of horses in training is at best static, with actual horses in training for 2014 showing a year on year decline, although this may have been impacted by the very wet conditions. There are also times in the year when horses can struggle for opportunities to run, particularly on the Flat in September, October and November. Further detailed analysis of the pinch points in terms of small field sizes across the calendar year, and by code, is set out in Section 7. Despite this context and the limited availability of horses to run there is appetite from racecourses to increase the supply of fixtures, particularly on the All Weather, primarily in response to media rights payments. Further details are set out in Section 6. 25

26 ALL WEATHER RACING Overview Deloitte s Sports Business Group was commissioned to assist BHA in its consideration of the current position and potential developments of All Weather racing in Britain ( All Weather Review ). Newcastle and Chelmsford City made applications to BHA respectively to convert the existing Flat Turf track to All Weather (announced by Arena Racing Company as Tapeta) and to re-open as an All Weather racecourse. Both applications have been approved by BHA and hence both racecourses will be entitled to participate in the 2015 fixture allocation process. British Racing is therefore set for six AWTs in Catterick is also considering a conversion of its Flat Turf track to All Weather but has not applied for Current scale of All Weather racing In 2014, 296 All Weather fixtures have been scheduled, equating to 20% of total fixtures. However, All Weathers fixtures actually form a greater proportion of fixtures run, due to the impact of Turf abandonments. By including replacement races, All Weather races accounted for 24% of all races run in While All Weather fixtures scheduled have declined over the last five years, partly due to a declining horse population, the number of All Weather races run has actually increased slightly with 2,394 run in 2013 and 2,322 in 2009, reflecting the move to 7+ race cards. The large majority of All Weather races are of a lower class and prize money is relatively low, comprising only 10% of the total paid in the year (versus 24% of actual races). However, some All Weather races do still cater for higher quality horses and by illustration 18% of Classic runners since 2011 had previously run on a British AWT. In addition, the All Weather Championships were introduced for the 2013/14 All Weather season in an attempt to boost prize money and improve the quality of runners. Comparison of a number of key performance indicators for the All Weather season in 2013/14 against 2012/13 shows that the number of Class 2 races has increased from 17 to 61, at the expense of Class 6 races which have reduced from 648 to 568, while the average rating of horses running in All Weather races has increased marginally (2.3%), and there has also been a 71% increase in the number of runners rated over

27 Field sizes Average All Weather field sizes are close to 0.5 runners less than Flat Turf. All Weather field sizes have, in common with all racing, fallen markedly in the last five years (down from 9.6 in 2009 to 8.70 in 2013) and the number of races with fewer than 6 runners has increased from 167 in 2009 (7%) to 321 in 2013 (13%). Field sizes on the All Weather in the early part of the year have been an increasing cause for concern in recent years. In March 2014, the average field size on the Flat was January and February also perform poorly, with the number of service failures (i.e. races with fewer than 6 runners) being 97 races (16%). A number of initiatives are in place to reverse this decline, as outlined above. The All Weather Championships have provided an improvement in the quality of the racing on All Weather. The success seen in 2013/14 is anticipated to encourage more horses to stay in training for the 2014/15 winter, in turn helping to improve field sizes. Demand for All Weather racing The demand for All Weather racing (as with racing in general) is complex, coming from different sectors of the industry, but with strong linkages between many of these sectors. The ultimate demand comes from Racing s consumers who wish to bet on, watch and/or attend All Weather racing in person. However, much of that demand is filtered through the intermediaries of betting and media companies, who effectively form a demand chain, with racecourses at the end of the chain. The racecourses therefore do not directly interact with many of Racing s ultimate consumers. A survey of Racing s consumers was therefore conducted, with results described below. It is also important to note that horsemen (primarily in this case owners and trainers) contribute to the demand side (being demand for races to run their horses in), but they are also the critical supplier, via supply of horses. 27

28 6.4.1 Consumer demand for All Weather racing An online survey of Racing s consumers (subscribers to racing channels and BHA database contacts) was completed by over 1,100 respondents, representing a robust sample size from which to draw conclusions. Fig. 11: Views on All Weather racing In the same survey, 37% expressed that they were very interested in All Weather racing compared to 78% for Flat Turf and 73% for Jump racing. Whilst All Weather racing is significantly less popular than Turf racing, there is still therefore a proportion of Racing s consumers who value All Weather racing. The general low quality was the most common reason given by those to whom All Weather racing did not appeal. A preference for Turf racecourses and a lack of appetite for the high volume of fixtures at the same All Weather racecourses were also key factors. When asked for their opinions on a number of issues around All Weather racing the most positive comments concerned: the importance of All Weather racing in periods of bad weather the introduction of the All Weather Championships support for a Northern AWT with the most negative comments on: the general low quality integrity challenges Respondents also saw All Weather racing as significantly different from Flat Turf, and distinguished between the two. 28

29 6.4.2 Racecourses demand for All Weather racing AWT racecourses commercial model, hence their demand for All Weather fixtures, is driven by payment for media rights which make up a large majority of revenue for these fixtures. Levy funding for integrity and prize money is typically the next largest revenue stream. Low attendances mean other raceday revenues are modest, and are significantly less than comparable Flat Turf and Jump fixtures. Attendances at comparable Flat Turf fixtures are at least 2-4 times more than the average All Weather attendance (c. 800 in 2013) in part due to the time of year at which the majority of All Weather fixtures are staged. All Weather attendances also declined significantly in With six All Weather racecourses likely to be participating in the 2015 Fixture List, racecourses demand for fixtures on the All Weather is likely to be significantly in excess of the current level of All Weather fixtures Betting industry demand for All Weather racing A high proportion of the All Weather fixtures deliver additional trading benefits to betting shops as they provide near-guaranteed British Racing and/or are staged at times intended to attract/retain customers in the shops notably through Twilight Fixtures. However in order to achieve this goal the racing must be competitive with field sizes that attract greater betting turnover Horsemen demand for All Weather racing Total All Weather prize money paid is only modestly above the direct racing costs of the horsemen. However, it should be noted that this will not be unique to All Weather fixtures, as it would also apply to a number of Flat Turf and Jump fixtures comprised of lower grade races. Despite the limited prize money, a large percentage of Flat horses run on All Weather. In 2013, of the 10,600 Flat horses that ran, 6,800 ran at least once on the All Weather, although the lack of suitable opportunities on Turf will mean a proportion of these horses have limited, or no, alternative options at certain times of year Media companies demand for All Weather racing Turf TV and SIS, and separately RMG and At The Races, compete strongly with one another, with the current primary means of competition being through the number of fixtures broadcast (hence building broadcaster value to bookmaker customers). This competition creates pressure for more fixtures; with All Weather fixtures having the most potential for expansion given they face no turf management issues. All Weather racing is a key part of the international sale of British Racing by GBI Racing. It plays a vital role outside the Flat Turf season, as Jump racing is not as attractive in many markets. The international market is increasingly competitive, with British Racing currently reliant on several major territories. British Racing already has lower field sizes than its major international competitors which places it at a significant competitive disadvantage. Small field races are less attractive from a sporting perspective and are not appropriate for exotic bets which are more popular internationally. 29

30 Strategic aspects for an All Weather Track (AWT) in the North Fig. 12: Map of Britain showing training centres and All Weather racecourses Source: BHA, Deloitte Analysis The absence of an All Weather Track means that the North has a skewed Flat fixture list compared to the Midlands and South, with no Flat fixtures between early November and late March. Northern based horses therefore currently have to travel long distances to AWTs which, given the low prize money available, makes it uneconomical for many Northern trainers and owners to race at AWTs, particularly at Kempton Park and Lingfield Park, which stage the majority of higher quality All Weather races. Discussions with Northern trainers confirmed a clear demand for a Northern AWT, albeit with concerns raised about the potential loss of the Newcastle turf track. Trainers stated they would support such a development by both re-directing existing All Weather runners and through keeping more horses in training in the winter period, given the much lower transport and other direct racing costs. 30

31 Examination of existing patterns of All Weather runners supports this assertion. It is estimated that an additional 900 All Weather runners annually could be generated by a Northern AWT if: The number of Northern-trained individual horses that run on the All Weather in the winter period increased by 10% (the current drop in Northern trained horses between June and December is higher than that experienced in other regions with AWTs); and Northern based horses run the same number of times per All Weather season as the national average (an extra 0.5 runs). On the basis that additional runners are generated, and making assumptions on how current runners would be redistributed to a Northern AWT from Southern AWTs, it is estimated that the current horse population could support Northern All Weather fixtures (including the conversion of existing Flat Turf fixtures). The interaction of this opportunity with the current All Weather programme is examined in Section 7. A Northern AWT has the potential to boost the Northern racing industry through reduction of owners racing costs (e.g. transport) making horse ownership more appealing in the region, providing a training facility and the ability to support the Northern Jump industry in periods of poor weather. Questions 11. Do you believe an AWT in the North could increase the number of runners and support additional races and fixtures in the winter period, and if not why not? 12. Do you support the conversion of the Newcastle flat turf course to AWT? 13. If the choice was between converting the flat turf to AWT or no AWT in the north for the foreseeable future, which would you prefer. 31

32 FIXTURE LIST 2015 A forecast of 2015 horse population and average field sizes has been produced based on seven years of historical horses in training data. Pinch points have been identified where a high proportion of small field races are likely to occur. Moreover, areas of the year where there is an under supply of races for a certain code have also been identified. Further details on the methodology for forecasting the number of runners is set out in Appendix C. We have set out in Section 3 a number of possible aspirational targets for field sizes and the sport over the longer term. It is recognised that progression to such targets needs to be gradual. Hence, the following section outlines a number of measures which could be implemented in the short term, impacting on the 2015 Fixture List, in order to start to move towards achieving long term targets for field sizes. Short term targets of 30% of races with fewer than 8 runners and 10% of races with fewer than 6 runners are used in this section. This would balance performance throughout the year, minimising the current pinch points. Short Term Target Flat & Jump Races with fewer than 8 runners 30% Races with fewer than 6 runners 10% Flat racing The graphs below show in blue the anticipated proportion of small field races in 2015 based on the forecast horse population and 2014 race programme. The red bars show the impact of initiatives to improve the number of runners without fundamentally altering the number of races. These include the second season of the All Weather Championships, removal of certain race types with poor entries or declarations, a 1% increase in the number of runners as a result of the AVC fund and a general 1% growth in the horse population between 2013 and 2015 as set out in Section 4. A field size limit of 12 across all races from Class 3 and below has been modelled but excluded from the analysis on the basis that it causes a reduction in average field size through increased eliminations, only some of which will be redeployed. Fig. 13: Impact of Runners initiatives (Flat) 32

33 Source: BHA Analysis For the December to March period without any intervention over 15% of races are expected to have fewer than 6 runners and over 40% of races per month for the same period have fewer than 8 runners. August is an additional pinch point with small field sizes mainly due to the large number of races in customer friendly slots compared to the available horse population. Equally the modelling demonstrates that there is potentially scope for additional Flat races and/or fixtures in October and November. The proposed runner initiatives to address small field races improve the position marginally, as shown in red, however the seasonal peaks remain without action on the number of races and/or a significant increase in the number of runners during the winter period as a result of a Northern AWT Limiting races at BHA Fixtures (including Twilight Fixtures) pinch point months only A targeted approach to limiting the number of races that can take place at BHA Fixtures (including Twilights) during periods that will suffer from poor field sizes can deliver significant benefit, whilst limiting any reduction in race numbers at other fixtures. This would apply to the pinch points of December, January, February, March and August. The effect of this would be a reduction of 84 races, or the equivalent of 12 fixtures and the improvement in field sizes is shown in green in the table below. Fig. 14: Impact on race numbers of limiting BHA Fixtures to 6 races 33

34 Fig. 15: Impact on field sizes of limiting BHA Fixtures to 6 races Source: BHA Analysis The reduction of 84 races reduces the proportion of races with fewer than 6 runners closer to 10% or below. The proportion of races with fewer than 8 runners falls to c. 35% in the pinch point months. Illustrative financial modelling of reducing fixtures and races is set out in Section Targeting 30% of races with fewer than 8 runners In order to achieve a short term target of less than 30% of races being run with fewer than 8 runners during the December to March period, it is necessary to deliver a greater reduction in the number of races than provided by limiting BHA Fixtures alone. The chart below shows the number of races that would need to be removed each month in order to achieve the above field size target. The total reduction is 152 races or c. 22 fixtures including the 84 races at BHA Fixtures identified in Section and another 68 races that would need to be removed from Racecourse Fixtures. In addition August is a further pinch point with over 30% of races having small fields. However, the modelling does not currently include further restrictions on race numbers in August as there would need to be a significant reduction in racegoer friendly, summer race slots. To reach the target of 30% of races with less than 8 runners, 48 races would have to be removed across 126 Racecourse Fixtures. The majority of these fixtures have 7 races. 34

35 Fig. 16: Impact on race numbers of limiting BHA Fixtures to 6 races and implementing further race reduction in Racecourse Fixtures Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Total BHA (5) (4) (6) (15) (5) (35) BHA Twilight (14) (12) (13) (10) (49) Sub-total (19) (16) (19) (15) (15) (84) Further reduction (18) (8) (28) (14) (68) Total (37) (24) (47) (15) (29) (152) The resulting field sizes are shown in purple on the graph below. Fig. 17: Race Reductions to deliver 30% of races with less than 8 runners (excluding August) Source: BHA Analysis The additional reduction of 68 races delivers the target of no more than 30% of races having fewer than 8 runners, barring in August where, for the reasons detailed above, some flexibility should be shown at least in the short term. 35

36 7.1.3 Addition of Northern All Weather Track Based on research conducted this year by Deloitte the addition of an AWT in the North would have a further beneficial impact in terms of increasing available runners particularly in the December to March period. Despite the fact that any effect on 2015 field sizes will not be apparent until late in the year, it is expected that on a full year basis there would be a positive effect as modelled below and shown in orange. Fig. 18: Impact on field sizes of the addition of a Northern AWT to the Fixture List Source: BHA Analysis The positive effect that a Northern AWT is likely to have on field sizes will provide progress towards longer term field size goals as set out in Section Additional races (October and November) Up to 56 additional Flat races could be added in the October to November period while still meeting the long term 15% target for fewer than 8 runners. This is based on the assumption that all other measures are successfully put in place as above. 36

37 7.1.5 Summary (Flat) The number of interventions that would need to be made to deliver performance targets is summarised below: Fig. 19: Impact of proposed Flat interventions Source: BHA Analysis Optimising the use of the horse population in October and November in addition to a limited approach to managing August could deliver the target performance with a net reduction of 111 races Questions 14. Do you agree that the prevalence of small field races suggests that a further expansion of the Fixture List without a material change in runners would result in uncompetitive and unattractive racing, and, if not, why not? 15. Do you agree that, given the proportion of races with fewer than 6 runners in December to March action is required in terms of the number of races/fixtures, and, if not, why not? 16. Given the surplus of horses available to race on the Flat in October/November should additional races and/or fixtures be programmed? If so, should this be up to the long term target levels, and, if not, why not? 17. Are there factors which you can identify which contribute to the high number of small field races in August? Do you think that the some intervention should be made to address this summer pinch point and, if so, would this include restricting a proportion of fixtures to 6 races? 18. Do you agree that a short term target of 30% of Flat races with fewer than 8 runners is reasonable? If not, what would you view as an acceptable? 19. Assuming that measures were put in place for 2015, and were successful in achieving the short term target of no more than 30% of races with fewer than 8 runners, how should the field size benefits of a Northern AWT track be treated? a. Should races be added back in until the long term target of 15% races with fewer than 8 runners is reached? 37

38 Jump racing A similar exercise has been undertaken for Jump racing with the forecast outcome without intervention shown below in blue and the runners initiatives set out in Section 4 shown in red. Fig. 20: Impact of runner initiatives Source: BHA Analysis The pinch points for Jump racing are predominantly July, September and October where the proportion of races with fewer than 6 runners exceeds 20% (1.4 races per card) and the proportion with fewer than 8 runners is more than 40% (3 races per card) Change in Jump fixture numbers The ratio between Jump and Flat fixtures is generally 60/40 in favour of Flat with some small annual variations around this ratio caused by the outcome of the BHA Fixture allocation. In order to seek to address the issue of small Jump fields that are particularly prevalent in September and October, for 2015 any BHA Fixtures that are not already allocated on a longer term lease could be ringfenced as Flat fixtures. This would account for six fixtures and is likely to create a very small swing towards Flat racing. This change to the number of Jump races has been modelled below with the green bar indicating the number of instances of races below both 6 and 8 runners. Fig. 21: Reduction in BHA Jumps fixtures/races 38

39 Fig. 22: Field Size effect of reduction in BHA Jump Fixtures Source: BHA Analysis Although this intervention has a significant effect for a fairly small reduction in Jump races it is not possible to extend any further in September and October, or into November, as there are no more BHA Jump Fixtures available to ring-fence for Flat racing. It is important to note that Northern Jump fixtures throughout these periods are likely to continue to be protected for race planning reasons Restriction of Racecourse Fixtures to 6 race cards during pinch points In order to address the large number of small field size races that will take place through the pinch points of May, July and September to October a more significant intervention is needed. The restriction of all Racecourse Fixtures, excluding Saturdays, to 6 races could be expected to bring about the following reduction in race numbers. Fig. 23: Number of jumps fixtures to be limited to 6 race cards Note: Figures shown for fixtures indicate the likely number of fixtures to be affected by this proposal. Figures for races are the number of races to be removed (i.e. 1 per fixture). The majority of these are Racecourse Fixtures as BHA Fixtures in September and October have already been removed in Section above with the exception of those granted on longer term leases and those retained for race planning reasons. This is forecast to produce the below outcome where the purple bar shows the position with this restriction in place. 39

40 Fig. 24: Effect on field sizes of limiting selected fixtures to 6 race cards Source: BHA Analysis This restriction brings all months between October and April to below or near the target of 30% of races with fewer than 8 runners. Although still significantly in excess of the long term target of 15%, pinch point months through summer are much improved albeit from a low base number of fixtures Summary (Jump) The number of races which would need to be removed / added to deliver performance targets is summarised below. Fig. 25: Impact of proposed jumps interventions Source: BHA Analysis 40

41 7.2.4 Questions 20. In terms of Jump racing, are there other interventions that you can identify to assist with the management of pinch points? 21. Should fixtures be limited to 6 races during the summer pinch points, and if not why not? 22. Do you think an improvement in the competitiveness of Jump Racing is worth the removal of races? Conclusion Fig. 26: Combined impact of proposed interventions (Flat and Jump) Incremental Cumulative Races Impact AFS <6 <8 Flat Jumps Flat Jumps Flat Jumps Flat Jumps No action % 13.7% 31.0% 35.6% Runner initiatives (including small field race removal) (15) (13) % 12.7% 28.2% 33.8% Targeted restriction on BHA fixtures (flat) (84) % % - Additional race reduction (flat) (68) % % - Reduced BHA fixtures (jumps) - (45) % % Race Limits (jumps) - (176) % % Add back of fixtures (flat from jumps) % % - Total of all above interventions (111) (234) % 10.5% 26.8% 28.7% Long term target % 10.0% 15.0% 25.0% Source: BHA Analysis There is an opportunity to improve the competitiveness and attractiveness of British Racing by reducing small field sizes particularly in the pinch point months through a series of targeted measures. A reduction of c. 350 races would reduce the number of small field races with less than 8 runners to 29% for Jump Racing (currently 36%) and 27% for Flat Racing (currently 31%). Furthermore the graphs above demonstrate the potential for a significant improvement in the balance of field sizes throughout the course of the year. The reduction in the number of races needed to deliver this improvement in competitiveness can be regarded as a necessary measure to protect the long term future of the sport, and would underpin the wide ranging strategies for growth that are currently under development. 41

42 Financial impact Financial modelling has been performed to consider the potential financial impact on the various stakeholders of increasing or decreasing the size of the Fixture List. An illustrative number of possible scenarios have been separately modelled. This work provides some measure of the financial impact of measures to improve the sport and create a product which is more attractive and which has potential for long term growth. The table below sets out the forecast impact in 2015 in absolute and relative terms for: 1. An expanded Fixture List with additional 42 fixtures; 2. Reducing the Fixture List by 42 fixtures; and 3. Removing 300 races, being equivalent to 42 fixtures (assuming one each at 300 fixtures). The table shows the estimated financial impact on key stakeholders, them being the racecourses staging the fixtures, Levy generation (hence wider Racing) and horsemen. Whilst the impact on the Betting industry is acknowledged as an important factor, it is not shown as the Betting industry is best placed to estimate the impact of the potential scenarios on its performance, given the lack of data available to BHA, and the complexity surrounding the impact on gross win from the displacement of runners from cancelled races to boost field sizes elsewhere. In addition to showing the estimated absolute 2015 impact on each stakeholder/area, the percentages shown represent estimates of the proportion of the incremental movement over the forecast 2015 totals for British Racing. 42

43 Fig. 27: Financial Modelling Notes on Fig. 27: (1) Racecourses revenues consist of all revenues including Levy funding, media rights and attendance driven revenues. (2) Contribution represents profit after all raceday revenues, raceday costs and prize money but excludes overheads. (3) Levy generated/(lost) is estimated based on comparable fixtures and takes account of estimated substitution to/from other British racing fixtures and other betting products. Only Levy paying betting operators are considered. (4) Displacement of runners it is assumed that given a static horse population the majority (80%) of horses that would have run at the removed fixtures/races find suitable substitute alternative opportunities. Similarly, it is assumed that for additional fixtures only 20% of horses are additional runners, with the remainder being diverted from other races. The operation of an All Weather track in the North is expected to result in more horses being kept in training over the winter and hence will make a significant contribution to these additional runners. (5) Relationship between gross win and number of runners there is a strong relationship between number of runners and gross win on any given race. The forecasts in the table therefore reflect this relationship by modelling an increase in gross win (hence Levy generated) from the remaining Fixture List in the scenarios of removing races given an assumed increase in AFS. Conversely, an expansion of the Fixture List is modelled to lead to further reductions in AFS; hence gross win from the existing races is reduced. There is limited detailed data available to BHA on the exact strength of the relationship between runners and gross win but based on discussions a prudent estimate of an increase of 5% for an increase in AFS of one runner has been assumed. (6) Horsemen - gross prize money earned from additional fixtures or lost from removal of fixtures/races is shown. In addition the net benefit after the deduction of direct racing expenses (primarily travel, race entry and jockey costs are shown). An average cost of 500 per runner has been assumed but note these are the incremental costs (or saving), as if a horse has been diverted from elsewhere it is not an additional cost. (7) Minimum prize money of 30,000 per fixture would be required and that Levy funding is limited to the funding of integrity for all fixtures (8) Any excess/deficit between Levy generated/lost after marginal integrity costs incurred/saved is assumed to be deducted/paid from/to prize money for other fixtures. (9) The expansion or contraction of the Fixture List would be assumed to be dealt with through Enterprise Fixtures and BHA Fixtures. Source: BHA, Deloitte analysis 43

44 7.4.1 Modelling results In the case of an expansion of the Fixture List, the forecast additional contribution of 1.4m (0.7% of industry total) for those racecourses staging the fixtures (driven by media rights values) is comparable to the net benefit to the horsemen of 1.4m (1.7% of industry total) after their direct incremental costs are deducted. The scenario of reducing 42 fixtures returns comparable negative results with racecourses contribution down by 1.7m (0.8% of industry total). Horsemen incur a net reduction of 1.6m (2.0% of industry total) prize money less direct costs. The financial impact to racecourses from a reduction in 42 fixtures compared to 300 races is not significantly different. Removing fixtures means all revenues are forgone but raceday costs saved, while removing races means the majority of revenue is retained from a fixture with one less race other than the media rights from one race (in some cases an element is retained) but the large majority of raceday costs remain the same. While removing fixtures has a marginally lower forgone contribution compared to removing races there is less flexibility with taking out fixtures, and removing races has greater potential to spread any financial impact across more racecourses. The limited data available to BHA means that there is a lack of clarity on the impact of small field sizes on gross win and thus Levy Summary Racing which is not compelling and attractive will impact on the level of interest from both oncourse and off-course consumers and, as such, it will damage revenues and the sport in the medium to long term. A restriction in the number of races at key times of the year could help to address the number of small field races and improve the competitiveness of British Racing. The illustrative financial modelling considers a number of scenarios and demonstrates that a targeted reduction of c. 300 races (3% of races programmed) could reduce prize money by c. 1.6% and contribution to Racecourses by c. 0.9% on a short term basis. The lack of clarity on the impact of small field sizes on gross win, and the potential for the redeployment of runners to increase field sizes and hence gross win on remaining races, make it difficult for BHA to assess the impact on the Betting industry and the Levy of a targeted reduction in the number of races. The financial impact model will be updated for specific proposals developed through consultation in terms of the proposals for changes to race numbers. Any feedback on the impact of small field sizes on gross win will also be used to refine the model prior to any decisions being made by the BHA Board. BHA believes a targeted reduction in the number of races in the short-term will help address the issue of small fields, delivering more competitive racing in order to build a platform for the sport to grow. An increase in field sizes, which would allow future growth, should also be underpinned by the longer term strategies to increase participation and investment in the sport. The improvement in the product would position the sport to best optimise returns from the key revenue streams for prize money of Levy and media rights. In the event that long term field size are outperforming the targets on a consistent and sustained basis, there could be an opportunity reinstate races, subject to the sporting rationale for the size and structure of the Fixture List as set out in Section

45 7.4.3 Questions 23. Do you believe that the benefit of removing races in terms of creating competitive racing which is attractive to customers is worthwhile and, if not, why not? 24. Can you comment on whether the assumption of an increase in gross win of 5% per additional runner as set out in Note 5 to Figure 27 above is optimistic or pessimistic and provide evidence and/or data to support this which you would share with BHA on a confidential basis? 45

46 Options for reductions in supply to manage pinch points There are a number of options for reduction in supply to manage pinch points where there are a significant number of races with small field sizes Racecourse Fixtures There are 1,219 Racecourse Fixtures in the Fixture List. These fixtures have previously been recognised as being different from other fixtures due to them being pre-existing, historical, fixtures at a particular point in time. Given the flexibility for the 2015 Fixture List provided by the BHA Fixtures, BHA does not believe reducing the number of fixtures by focussing on Racecourse Fixtures is necessary at this time BHA Fixtures BHA Fixtures are those fixtures made available each year to enable the sport (subject to horse population constraints) to satisfy the Levy Board Criteria (they include Twilight Fixtures). In 2014 there were 201 BHA Fixtures 2, of which 98 were held in Twilight slots. The advantages and disadvantages of removing these fixtures are set out below. Pros Short term leasehold fixtures whose purpose is to provide flexibility in terms of the size and structure of the Fixture List control rests with BHA Only Twilight Fixtures receive Levy prize money funding. Cons Lack of flexibility for responding to changes in horse population harder to replace a fixture than adding back a race to an existing card Impacts on betting consumer as betting opportunities are less regular than the optimal spacing Generally in least attractive slots Marginally beneficial financially compared to reduction of 1 race at 7 fixtures due to cost savings 2 Excludes Newmarket s Future Champions Day fixture and the two Good Friday fixtures held at Lingfield Park and Musselburgh Racecourse 46

47 7.5.3 Reduction in races As an alternative, or complement to removing fixtures, racecourses could be limited to 6 races per card, increasing to 7 races if a race divides, for BHA Fixtures and potentially some Racecourse Fixtures in the pinch point months. Pros Fixtures remain providing option for reinstatement of races to meet consumer demand if horse population warrants it Cons Marginally more expensive than reducing fixtures as no marginal cost savings from reduction in number of races yet media rights income foregone. Opportunities per hour remain at optimum level for compelling experience for betting customer Easier to maintain geographic spread of fixtures for benefit of on-course consumer and owners/runners Proposal for dealing with pinch points To the extent that there are interventions to deal with the pinch points BHA s preference is to limit the number of races as opposed to reducing fixtures for the reasons set out above Options for increasing supply in October / November Additional Flat races or BHA Fixtures (Flat racing) could be added to the Fixture List in October and November to deal with the additional supply of horses subject to the willingness of racecourses to stage these fixtures. The potential ring-fencing of BHA Fixtures for Flat in this period could assist with providing opportunities for Flat horses as well as improving field sizes for Jump racing at this time, which is a pinch point for Jump Racing Questions 25. Do you agree that it is preferable to deal with pinch points by limiting the number of races per fixture as opposed to reducing the number of BHA Fixtures if interventions are to be made, and if not why not? 26. Should Racecourse Fixtures be considered for race limitations in the pinch point months? Are there any other options you believe are preferable? 27. Do you have a preference for whether any additional Flat fixtures in October and November are on Turf or All Weather given the time of year and the unpredictable ground conditions, and if so why? 47

48 ALLOCATION OF FIXTURES Depending on the final decision as to the size of the 2015 Fixture List, up to 200 BHA Fixtures 3 (including Twilights) will be allocated between racecourses. In recent years these fixtures have been granted to racecourses on a short term basis and, given the on-going uncertainty over the horse population, this will continue. For 2015 a number of these fixture slots will be allocated to Chelmsford City Racecourse as funded fixtures. This is currently being discussed with the racecourse s executive and will be determined by the BHA Board prior to the start of the 2015 fixture allocation process. These fixtures can be used as a supporting mechanism to drive improvements in field size, for the good of the sport and the end consumer. The fixture allocation process will be open, transparent and provide a competitive basis for the allocation of fixtures. The process will be managed by BHA with independent verification of any bids and/or calculations. All of the options considered below have these characteristics. In order to support the goal of improving field sizes the allocation process needs to: 1. Optimise the geographical spread of fixtures Potential to reduce travel cost per run and increase runs per horse, particularly at lower levels including Twilight All Weather Provide a range of opportunities for on-course customers paying public and owners From autumn 2015, potentially increase number of runners through sufficient Northern All Weather winter programme to justify increased retention of horses in training 2. Incentivise and reward courses for behaviour which is likely to increase numbers of runners in the short and long term and retain high quality horses in Britain including: Investment in prize money across all fixture Investment in and commitment to owners experience Race programming to deliver competitive racing 3. Creation of regular trading opportunities for racecourses where possible in order to provide a consistent appointment to view/attend for the consumer, particularly in relation to Twilight meetings where there is a strong international market. 3 This number excludes Newmarket s Future Champions Day fixture and the two Good Friday fixtures at Lingfield Park and Musselburgh. 48

49 Geographic / code designation for certain BHA Fixtures In order to ensure that the 2015 Fixture List has a geographically balanced spread of fixtures by code for the benefit of both the on-course consumer, and to minimise travel costs, thus potentially increasing the number of runners, it is proposed that BHA Fixtures and bundles of fixtures will have a geographic and/or code designation attached to them. Specifically: Twilight Fixture allocation will include a core bundle designated for North (autumn only), East (CCR), Midlands (Wolverhampton) and South (Kempton). Hosting racecourses will have to meet minimum prize money criteria, and the remaining packages of Twilights will be subject to bidding. Non-bundled fixtures allocation of a small proportion of non-twilight Fixtures to specific code and/or geographic area. In the first instance only, those courses of the relevant code in the appropriate geographic area will be permitted to bid for these fixtures. The fixtures may be re-offered to other courses if not allocated to a racecourse that meets with the required code/geographic designator Question 28. Do you believe that a geographical spread of fixtures aligned to the horse population could potentially assist in providing additional opportunities for owners, additional runners and competitive racing; are you supportive of the ambition, and if not why not? 29. Do you agree that travel costs are a significant factor in determining whether a horse runs, particularly at lower levels? Enterprise Fixtures Enterprise Fixtures were first introduced into the Fixture List in 2008, at a time of rising horse population. They provided opportunities for racecourses to improve their fixture lists when field sizes were strong and the sport was able to absorb additional fixtures with negligible impact on its competitiveness. They sat outside of the HBLB Criteria and did not receive any Levy funding. When introduced, the intention was that Enterprise Fixtures would be reclassified as Racecourse Fixtures as they attained full Levy Board funding. The sharp decline in Levy yield, and concerns around horse population and field sizes, has meant that this change in categorisation never occurred. This original intention will not be fulfilled and Enterprise Fixtures will not be converted to Racecourse Fixture status. For 2014 racecourses have been able to move Enterprise Fixtures into Criteria slots, with the aim of minimising the number of fixtures in excess of Criteria, a policy driven largely by concerns regarding field sizes. There are currently 27 Enterprise Fixtures, 16 of which have moved into Criteria slots. 11 Enterprise Fixtures therefore continue to operate in excess of Criteria. The total number has reduced from 34 in In 2013, the Enterprise Fixtures in non-criteria slots produced an average field size of Those that operated in Criteria slots produced average field sizes that were better than average, at

50 Betting performance of Enterprise Fixtures as a category is 8% below that of comparable meetings. Only 7 performed better than average. Regardless of the individual fixtures performance, the existence of Enterprise Fixtures creates two primary issues in the construction of a fixture list, compromised by a limited horse population. These issues are: those that choose to move to criteria slots have priority on selecting BHA Fixture slots, compromising the intended fair and competitive policy regarding the allocation of such fixtures; and some of those that continue to exist in excess of Criteria do so at a level below previous criteria for Self-Funded Fixtures, whilst impacting on field sizes at meetings taking place in criteria slots. In order to simplify the range of fixture categories and address the issues above, Enterprise Fixtures could be dealt with as follows in the medium term: All Enterprise Fixtures revert to the slots originally allocated to them at the introduction of this fixture type; Enterprise Fixtures cease to be a fixture category, meaning all such fixtures are now in excess of Criteria and should therefore be assessed under the Self-Funded Fixture Criteria; All previous Enterprise Fixtures wishing to operate in the slots originally allocated will be entitled to apply to operate in that slot as a Self-Funded Fixture; Those that satisfy the Self-Funded Criteria will be authorised to race; and All other fixtures will not be authorised to take place, but racecourses may of course bid for the vacant BHA Fixture slot Self-Funded Fixtures Below is the policy that applied to Self-Funded Fixtures in Self-Funded Fixture policy: Self-Funded Fixtures previously allocated by the BHA Board fell into the category of Bank Holiday, Special Occasion or High Value self-funders. In 2014 all Self-Funded Fixtures will be considered on their individual merits, with an emphasis on the individual racecourse setting out its case as to why any such fixture would be of significant benefit to the industry. There is no specific prize money requirement to be met to apply to stage such a fixture, but it should be borne in mind that the BHA Board will need to approve all such applications and will be considering the following factors: BHA Racecourse Inspectorate Approval; Horse Population; Prize Money; Geography; The overall balance of the Fixture List; and Other fixtures taking place on the day in question 50

51 Self-Funded Fixtures were also previously considered if the application showed that they coincided with special occasions or local initiatives. Previous policies on Self-Funded Fixtures had also indicated a minimum prize money level, with 125,000 indicated as the required level in In essence, Self-Funded Fixtures were intended to be the exception, recognising that they would remove runners from meetings taking place in Criteria slots. Although no prize money threshold was set in 2014, and may not be set for 2015, the Board will be mindful of previous amounts set and the field size position. The number of Self-Funded Fixtures for 2015 is therefore likely to be low Questions 30. Should the number of fixtures outside of Criteria slots be minimised and, if not, why not? 31. If fixtures outside the Criteria slots remain do you believe they could impact on field sizes and the attractiveness of the sport to the end consumer and, if not, why not? 32. Should the proposal be implemented immediately, or gradually introduced? If the latter, what transitional arrangements do you believe are appropriate and why? Options for allocation of BHA Fixtures A number of options for allocating BHA Fixtures have been identified following engagement with stakeholders and research by Deloitte into practices in other sports. General conditions will once again apply to the staging of these fixtures, full details of which are contained in Appendix D. In order to take part in the process for allocation of any BHA Fixture in 2015, racecourses must: have signed a Prize Money Agreement commit to maintaining E&S contributions of at least 33% of media rights revenue for all Racecourse Fixtures in line with a Standard Tier Prize Money Agreement It is suggested that each BHA Fixture will offer average prize money of at least 5,000 per race for a minimum of 6 races (i.e. 2015; 30,000 for 6 races, 2014; 30,000 for 7 races), except for Jump fixtures in January and February that will offer on average 4,600 per race. For Twilight Fixtures only, the average prize money at each fixture shall not be less than 4,000 per race with a minimum average across the year of 30,000 per fixture. Whilst there is no upper limit to prize money, for any element of the bid in excess of the 30,000 threshold a contribution of 50p for each pound to the Development Fund will be required. These funds will be used for the improvement of racing at BHA s discretion and the funds will not necessarily be used at the same racecourse or within the same racecourse group. For certain fixture slots, however, the 30,000 threshold may be raised to encourage feature meetings on days on when the quality of racing is lower than desired. By raising the threshold, is it intended that more of the money bid by a racecourse will go directly into prize money at that fixture. 51

52 8.3.1 Simple prize money bid Under this option fixture slots would be auctioned with bids being in the form of prize money to be committed to the fixture. Pros Open, transparent and simple to administer highest bidder wins Cons Not always in the best interests of the sport that highest bidder wins every time, notably: Risk e.g. risk of poor geographic spread of fixtures impacting negatively on horsemen and limited opportunities for on-course customers. Greater challenges to develop a race programme that delivers competitive racing Encourages competition between racecourses, rather than those with strong historical records and/or with advantage of major fixtures/festivals relying on the status of these to win BHA Fixtures No direct account taken of average field sizes, hence risking undermining the incentives to address falling AFS. Potential to increase prize money at BHA fixtures through bid process Concentration of high number of fixtures at a small number of racecourses purely based on their financial bid, negatively impacting the diversity of British Racing No incentive to consider on-course consumer or owner experience No long term incentive for racecourses to improve prize money position if historic data not assessed at all fixtures 52

53 8.3.2 Historic racecourse group prize money contribution Given the importance of prize money to the creation of competitive and compelling racing it has been suggested that historic E&S contribution, either on a group or racecourse basis, should determine the number of fixtures which are allocated to a particular group or racecourse. The benefits and disadvantages of using E&S on a group basis to allocate fixtures are set out below: Pros Rewards those groups that have consistently paid high levels of prize money across their portfolio of racecourses. Long term incentive for racecourses to improve prize money position of their group as puts them in a stronger bidding position in future years. Cons Those racecourses/groups hosting iconic fixtures that have been built up over long periods of time will have a significant advantage over smaller racecourses without such fixtures. Could potentially be remedied by iconic fixtures being removed from group data, thus levelling the playing field and comparing like with like. Weaker racecourses within strong groups could therefore outcompete racecourses with better metrics than them individually, but not as a group c. 50% of racecourses are independent (not part of a group) therefore this metric is irrelevant to them. Backward looking racecourse management/structure may now be improved but this is not taken into account. 53

54 8.3.3 Historic racecourse prize money contribution The benefits and disadvantages of using E&S on a racecourse basis to allocate fixtures are set out below: Pros Rewards racecourses that have consistently paid competitive levels of prize money but prevents smaller group racecourses getting the benefit of larger group racecourses with iconic fixtures Cons Backward looking racecourse management/structure may now be improved but this is not taken into account Long term incentive for racecourses to improve prize money position as puts them in a stronger bidding position in future years No incentive to consider on-course consumer or owner experience Unlike for group E&S is a meaningful measure for independent racecourses Greater challenges to develop a race programme that delivers competitive and compelling racing Racecourses with iconic fixtures will be in a strong bidding position if competing for leasehold fixtures, but is good for the sport if these iconic racecourses are willing to hold leasehold fixtures Balanced scorecard A number of other sporting governing bodies have used a balanced scorecard approach to allocate matches and/or fixtures. For Racing this approach would involve the use of a range of measures to determine the allocation fixtures. The criteria would be chosen to encourage behaviours that assist with the delivery of competitive and compelling racing, thus incentivising courses to act in the best interests of the sport. In an ideal world, the following elements are those behaviours we would want to encourage across the industry by all racecourses, however we recognise that for BHA Fixtures it is not always appropriate/relevant to drive these for certain fixtures or at specific times of the year. Examples could include criteria such as; Total contribution to prize money and owner returns; Average field sizes; Betting turnover; Improving the ownership experience (when an appropriate, statistically robust, data set could be created); Driving attendance and the customer experience; and Supporting industry-first outcomes or initiatives, including flexibility on geographic clashes and other issues. 54

55 The possible methodology and criteria are set out below: Step 1: Racecourses will be invited to submit a financial bid for each fixture slot ( 30,000 minimum), which will be the total amount of prize money to be offered at the fixture (less any Development Fund contribution or RIF payment). Step 2: A bid will be treated as an indication of that racecourse s desire to stage the fixture. Applications will then be assessed against a number of criteria including the bid itself, but also historical prize money contributions and sporting performance metrics. Each of the criteria has been assigned a number of points (out of a total of 100) which determines their weighting in the allocation process. A worked example including the proposed criteria and weighting is as follows: CRITERIA FOR ALLOCATION Criteria Points Total Prize Money bid 40.0 E&S (by group) 7.5 E&S (by racecourse) 10.0 Premier PMA 2.5 Total Historic Prize Money Criteria 20.0 Average Field Size (by race) 20.0 Betting Indicator (by race) 15.0 Average Attendance (by fixture) 5.0 Total Sporting Criteria 40.0 TOTAL POINTS AVAILABLE Step 3: Racecourses will be provided with their performance metrics (split Flat Turf/Flat AWT/Jump) against each of the criteria ahead of making a financial bid and will have an opportunity to engage on these metrics. Performance metrics will be calculated on a per racecourse basis (except in the instance of E&S contribution by group) and will relate to the racecourse s performance across all Racecourse Fixtures for 2013 (with regard to average field size, betting performance and attendance) or 2014 (for group and individual E&S). Independent racecourses will have their 2014 E&S contributions applied for both the by group and by racecourse elements. In instances where no prior data is available, such as for new market entrants, BHA will engage with the relevant course to determine an appropriate performance metric until such time as there is sufficient relevant data. Step 4: Where two or more applications are received for any one fixture, points will be awarded subject to each applicant s relative performance against the highest challenger. For example, Racecourse A makes a bid of 40,000 and is awarded the maximum number of points available for this criterion (40 points). Racecourse B submits a bid of 30,000, which is 25% less than Racecourse A (the highest bidder), hence the points allocated to Racecourse B are scaled back. 75% of 40 points = 30 points Step 5: Having determined the number of points to be awarded for each criteria, the racecourse with the most points overall is granted the fixture. A worked example of what the balanced scorecard may look like for two fictitious racecourses and how it will operate it shown below. 55

56 Fig. 28: Balanced scorecard Date 01/01/15 Performance Multiplier Points Racecourse A B A B A B Code Points Flat Turf Jump Flat Turf Jump Flat Turf Jump Prize Money Bid ,000 40, % 100.0% E&S (by group) ,000 21, % 46.7% E&S (by racecourse) ,337 30, % 100.0% Premier PMA 2.5 Yes No 100.0% 0.0% Total Historic Criteria Average Field Size % 94.0% Betting Indicator % 91.7% Attendance 5.0 4,566 2, % 55.2% Total Sporting Critieria TOTAL POINTS Step 6: All calculations used in the allocation of BHA Fixtures will be independently verified and the final scores published. Pros Open and transparent use of clear, numerical metrics to determine the allocation of fixtures Competitive both in terms of the financial bid, but also with regard to performance criteria. Cons Relative weighting of elements is subjective but will be based on feedback from public consultation process Partly based on prior year performance however bid element and E&S contributions are current Rewards and incentivises historic contribution to prize money on both a group and racecourse basis rewarding those committed to Premier Tier prize money agreements Incentive to ensure race programme is competitive and compelling in order to drive betting consumer interest and turnover Incentive to improve owners experience from 2016 when appropriate data is available For the reasons set out in the table above the balanced scorecard is BHA s preferred approach for the allocation of BHA Fixtures in BHA believes that by rewarding courses for behaviours and attributes which are of benefit to the sport as a whole there is an opportunity to materially improve the competitive and compelling nature of British Racing. 56

57 8.3.5 Questions 33. Do you believe that a balanced scorecard approach could incentivise courses to act in the best interests of the sport as a whole? 34. Do you think that the illustrative balanced scorecard as set out above incorporates the appropriate performance categories and is the weighting between categories reasonable? If not, what other categories would you include and how would you weight them? 35. Do you think that different metrics or weighting should be used for Twilight Fixtures compared to other BHA Fixtures? 36. Could the inclusion of a grading system for the owners experience for the 2016 Fixture List be a positive enhancement? 37. Do you agree that the balanced scorecard is the preferable method of allocating BHA Fixtures for 2015 and beyond? If not, which methodology would you prefer and why? CONCLUSION AND NEXT STEPS Competitive field sizes are a key driver of compelling racing. BHA s objective of producing compelling and attractive racing that is the envy of the world is being threatened by a horse population which is inadequate to provide competitive racing at the number of races currently supplied. It is a situation that BHA firmly believes needs to be addressed to provide a secure basis for developing the sport in the medium and long term. This document has set out a number of initiatives and proposals that could begin to address the small field issue. The responses to the questions will be used to assist the BHA Board in determining the size, structure, and allocation process for the 2015 Fixture List in the best interests of the sport. BHA recognises that there may be other issues raised which necessarily fall outside the scope of this current process, but which will be noted and will remain under review. Your feedback on the questions set out in this document would be appreciated together with any data you might provide or further points that you would like to make. The BHA Board will consider all responses in finalising the 2015 Fixture List and will publish a summary of those responses together with its conclusions. Please set out details of the parties whose views are represented in your submission, and make clear which elements, if any, of your response you regard as confidential. 57

58 SUMMARY OF QUESTIONS Compelling and attractive racing 1. Do you agree that field size is important in providing competitive racing? 2. Would a target average field size of 11 for Flat and 10 for Jump in the medium to long term represent an improvement in the competitiveness of British Racing in your view, and if not why not? 3. Should action be taken to minimise the number of non-developmental races with small field sizes? 4. Do you consider the targets set out above to be reasonable? 5. Should differential targets for Jump racing be set, particularly for fields of fewer than 8 runners in light of the historical position shown in Figure 3? 6. What is the likely impact of increasing average field sizes to 10/11 in terms of betting outcomes? Can you provide any evidence or data to support your views? 7. What do you believe would be an optimal average field size for both Flat and Jump, and why? Initiatives to increase field sizes 8. Do you believe the assumptions behind the calculation of the impact of initiatives to increase field size are reasonable and if not what assumptions would you support and why? 9. Do you believe a multi-layered approach could increase the number of runners and, if not, why not? 10. Are there additional initiatives which you think could be beneficial in increasing the number of runners and/or improving field sizes? All Weather Racing 11. Do you believe an AWT in the North could increase the number of runners and support additional races and fixtures in the winter period, and if not why not? 12. Do you support the conversion of the Newcastle flat turf course to AWT? 13. If the choice was between converting the flat turf to AWT or no AWT in the north for the foreseeable future, which would you prefer. 58

59 Fixture List 2015 Flat 14. Do you agree that the prevalence of small field races suggests that a further expansion of the Fixture List without a material change in runners would result in uncompetitive and unattractive racing, and, if not, why not? 15. Do you agree that, given the proportion of races with fewer than 6 runners in December to March action is required in terms of the number of races/fixtures, and, if not, why not? 16. Given the surplus of horses available to race on the Flat in October/November should additional races and/or fixtures be programmed? If so should this be up to the long term target levels, and, if not, why not? 17. Are there factors which you can identify which contribute to the high number of small field races in August? Do you think that the some intervention should be made to address this summer pinch point and, if so, would this include restricting fixtures to 6 races? 18. Do you agree that a short term target of 30% of Flat races with fewer than 8 runners is reasonable? If not, what would you view as an acceptable? 19. Assuming that measures were put in place for 2015, and were successful in achieving the short term target of no more than 30% of races with fewer than 8 runners, how should the field size benefits of a Northern AWT track be treated? a. Should races be added back in until the long term target of 15% races with fewer than 8 runners is reached? Fixture List Jump 20. In terms of Jump racing, are there other interventions that you can identify to assist with the management of pinch points? 21. Should fixtures be limited to 6 races during the summer pinch points, and if not why not? 22. Do you think an improvement in the competitiveness of Jump Racing is worth the removal of races? Financial 23. Do you believe that the benefit of removing races in terms of creating competitive racing which is attractive to customers is worthwhile and, if not, why not? 24. Can you comment on whether the assumption of an increase in gross win of 5% per additional runner as set out in Note 5 to Figure 27 above is optimistic or pessimistic and provide evidence and/or data to support this which you would share with BHA on a confidential basis? 59

60 Options for reduction in supply 25. Do you agree that it is preferable to deal with pinch points by limiting the number of races per fixture as opposed to reducing the number of BHA Fixtures if interventions are to be made, and if not why not? 26. Should Racecourse Fixtures be considered for race limitations in the pinch point months? Are there any other options you believe are preferable? 27. Do you have a preference for whether any additional Flat fixtures in October and November are on Turf or All Weather given the time of year and the unpredictable ground conditions, and if so why? Allocation of fixtures geographic spread 28. Do you believe that a geographical spread of fixtures aligned to the horse population could potentially assist in providing additional opportunities for owners, additional runners and competitive racing; are you supportive of the ambition, and if not why not? 29. Do you agree that travel costs are a significant factor in determining whether a horse runs, particularly at lower levels? Enterprise and Self-Funded Fixtures 30. Should the number of fixtures outside of Criteria slots be minimised and, if not, why not? 31. If fixtures outside the Criteria slots remain do you believe they could impact on field sizes and the attractiveness of the sport to the end consumer and, if not, why not? 32. Should the proposal be implemented immediately, or gradually introduced? If the latter, what transitional arrangements do you believe are appropriate and why? 60

61 Allocation of fixtures balanced scorecard 33. Do you believe that a balanced scorecard approach could incentivise courses to act in the best interests of the sport as a whole? 34. Do you think that the illustrative balanced scorecard as set out above incorporates the appropriate performance categories and is the weighting between categories reasonable? If not, what other categories would you include and how would you weight them? 35. Do you think that different metrics or weighting should be used for Twilight Fixtures compared to other BHA Fixtures? 36. Could the inclusion of a grading system for the owners experience for the 2016 Fixture List be a positive enhancement? 37. Do you agree that the balanced scorecard is the preferable method of allocating BHA Fixtures for 2015 and beyond? If not, which methodology would you prefer and why? Conclusion 38. Are there any further points you would like BHA to consider in relation to the 2015 fixture list? Please set out details of the parties whose views are represented in your submission, and make clear which elements, if any, of your response you regard as confidential. 61

62 APPENDIX A: 2014 FIXTURE CRITERIA 1. In compiling the Fixture List account will be taken of the requirements of the cost and return to the Levy Board and the Board s view as to how best to apply its funds for the improvement of horseracing. 2. Prize money funding and grants towards Raceday Services (regulation) to be provided for up to a maximum of 1,219 Racecourse Fixtures subject to section 6 below. 3. Prize money funding and grants towards Raceday Services to be provided for BHA twilight fixtures to be scheduled during the periods between January to mid-april and December on four days per week, and between September to November on up to five days per week (where possible, including a Friday), on the basis of one fixture per session. 4. Raceday Services grants to be provided for the Leasehold fixtures ratified by the BHA. 5. Raceday Services grants to be provided for Enterprise fixtures taking place in slots within section 6 below. 6. Within the constraints of the total number of funded fixtures, the following criteria will be followed as far as possible, the level of funding dependent on the designation of the fixture as in paras 2-4 above. (a) (b) (c) (d) (e) (f) (g) Three afternoon fixtures on Monday to Friday (with the third fixture on Mondays and Tuesdays in June, July and August subject to horse population consideration). Fixtures must take place at staggered times throughout the duration of the day, with a maximum of five fixtures on any one day between Monday and Friday, of which no more than three may be afternoon fixtures. Four afternoon AWT fixtures between 26th December and 31st December inclusive. During the Turf Flat season there should be at least one afternoon Flat fixture each day. During the core National Hunt (NH) season of January and February, there should be two NH fixtures per afternoon where possible. On Saturday afternoons, up to four fixtures to receive full prize money funding subject to reaching a prize money threshold; for Flat fixtures it is 135,000 in April to October inclusive and 115,000 in other months. For Jump fixtures it is 135,000 in April and May and 115,000 in other months. On days when fewer than four fixtures reach this threshold, the remainder (up to a total maximum of four funded fixtures) must reach a prize money threshold of 40,000 for Jump fixtures, 45,000 for Flat fixtures in April to October inclusive and 40,000 for Flat fixtures in other months to receive 50%. All four to receive Raceday Services grants. On Bank Holiday afternoons (including, for the avoidance of doubt, Good Friday), three fixtures to receive full prize money funding with the remainder to receive 50%. All fixtures to receive Raceday Services grants. Funding to be provided for a maximum of two summer evening fixtures on Mondays to Saturdays between April and August. Two afternoon fixtures on Sundays to receive full prize money funding, subject to reaching a prize money threshold of 40,000 for Jump fixtures, 45,000 for Flat fixtures in April to October inclusive and 40,000 for Flat fixtures in other months. Both fixtures to receive Raceday Services grants, along with any third fixture. 62

63 APPENDIX B: MODELLING ASSUMPTIONS The modelling of the effect of initiatives that is detailed in Section 7 is based on the generation of a base position as explained in Appendix C, plus the impact of each initiative as it is implemented. It has been necessary to make some assumptions to quantify these effects which are laid out below. Horses in training Flat 1% increase between 2013 and Current 2014 data shows an uplift of around 0.4% to May. Jump No change to horse population between 2013 and Current data shows a small decline between 2012 and 2013 but the level of volatility of Jump racing figures caused by the weather mean that the assumption of a stable horse population is a fair one. AVC Proposals for the allocation of the bookmakers Additional Voluntary Contribution fund are aimed at increasing the number of runners through frequency of run. This is captured in the model as a 1% increase to runners across all months of 2015, accepting that the fund will be reviewed after August and allocation may change. All Weather Championships second season Although the first season delivered improvements in the quality of All Weather racing the actual number of runners did not show a year on year increase. There were a number of factors that impacted this including lack of notice to trainers of the intention to improve the programme and the need for a surface replacement at Wolverhampton. On the basis of the above the estimated impact in 2015 is a 1% increase in the number of runners between October and March. Removing small field size races at short notice This assumes that 2% of races with fewer than 5 runners will be removed and that races that are removed will not be added back in. As a consequence of this short notice removal it is anticipated that 2 runners per race will be lost as they will not be redeployed. Limits to races In all cases where the number of races per fixture is limited it is assumed that 90% of runners will be redeployed. The basis for this assumption is that it is expected that the races in question can be removed without significantly impacting the programme and that there is no short notice element to this; races are simply never included in the programme and alternative races will benefit. Reduced geographic clashes Improvements to the balance of the Fixture List have been estimated to bring about an increase of 0.5% of runners. This initiative only applies to Jump racing where it is believed there is some scope for improvement of fixture distribution. Northern All Weather track Deloitte research shows that it is reasonable to assume an increase of around 900 horses through the All Weather season with the addition of a Northern All Weather Track. These are allocated to Flat across the period October to March at a rate of 150 each month. 63

64 APPENDIX C: METHODOLOGY FOR MODELLING HORSE POPULATION 1. Generating Runners Forecast 1.1 Use data to determine an average spread of runners across the year. This provides the following table. Both mean and median provide similar results for this distribution with mean being used in analysis. 1.2 This is then used to derive a forecast number of runners on the basis of an unchanged number of horses in training and a normal distribution of runners across the year. This is shown below. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total This runners forecast can be projected one year further forward to provide a forecast of how 2015 would look with an unchanged horse population. This assumption can be managed later in the analysis when horse in training numbers can be adjusted. 2. Generating Races Forecast 2.1 In order to calculate the anticipated number of races per month in 2014 the 2014 fixture list is used to provide a monthly planned number of fixtures. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec This number is then converted to a number of races on the basis of the monthly average number of races per fixture that actually took place in the 2013 fixture list. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Giving the below number of races: Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (Jumps only) As jumps racing is heavily affected by the weather it is the necessary to make an estimate of the number of races that are abandoned in any year and the likely distribution of these races as this has a significant impact on the jumps programme. In order to do so the last seven years abandonments have been reviewed and the below table produced: 64