Success a racing certainty for Irish industry

As the flat season gets under way, Horse Racing Ireland's chief executive Brian Kavanagh tells Barry O'Halloran things have never looked better for horse racing

Given the week that's in it, it seems almost heretical to point out that the white flag goes up on the Irish flat racing season at 2.15p.m. next Sunday at the Curragh.

It's an event that some people maintain has lost the profile it once had. With this in mind, the sport's governing body, Horse Racing Ireland (HRI), held a bells-and-whistles launch to promote the occasion in Dublin last week.

According to HRI's chief executive, Mr Brian Kavanagh, marketing and promoting the sport is one of HRI's key functions. And on the face of it, things have never looked better for Irish racing. Irish bred and trained horses have won three of the last four English derbies, as well as numerous other group one races on the flat here, in England, the US, Australia and France.

Over the jumps, we have taken three of the last five Aintree Grand Nationals, the world's best known steeplechase. In short, Ireland is the equine equivalent of Brazil. At home, the sport had its most successful year in 2003, with 1.4 million people turning up at the State's 26 racecourses, over 100,000 more than the previous year.

Including Down Royal and Downpatrick in Northern Ireland, there are 27, but Dundalk's race track is closed pending its redevelopment, (but a dog track at the same course is open). Significantly, on-course betting rose 14 per cent in 2002 to €237 million.

In all, it seems that HRI is on the way to meeting the objectives set out in a five-year strategic plan set out in 2002 and which officially began last year. "What we are trying to do is to create a situation where racecourses' objectives coincide with our objectives," says Mr Kavanagh.

"As set out in the strategic plan, they would be to grow our attendances by 200,000 per annum across all 27 racecourses over the period of five years. To increase overall betting by 50 per cent from €200 million to €300 million over the five years, and to grow the Tote [HRI's pooled betting system\] from €40 million to €100 million.

"So they are significant goals, and in year one of the five, we've taken a significant step towards that, and the signs so far in year two have been positive."

Gambling, through the Tote and levies on off-course and on-course bookmakers, effectively funds Irish racing. Of HRI's €118.9 million budget for the year, €52.6 million comes from the Horse and Greyhound Racing Fund. The bulk of this is raised from the punters in the form of a 2 per cent tax levied on off-course betting (that is bookmakers' shops).

The Tote contributes €50 million, with on-course bookmakers and other sources contributing the rest. HRI's two tracks, Leopardstown and Navan, add over €9 million.

A portion of the Horse and Greyhound Fund still comes from the Government, but Mr Kavanagh says this subvention will be eliminated within about 18 months. To critics of the fact that racing gets Government support, he argues that the indigenous and mainly rural industry around it is recognised as a world leader. Ireland produces 8,000 thoroughbred foals a-year, ranking first in Europe and third in the world, behind two continents, the US and Australia.

But raising money for the sport is not easy either. HRI wanted to impose a levy of 1 per cent on on-course bookies' turnover this year. This would have gone directly into funding the development of the Republic's racecourses. But the bookmakers were adamantly opposed to this proposal, and after protracted negotiations, the bookies agreed to 0.5 per cent. The Association of Irish Racecourses (AIR) publicly made its disappointment known when the deal was done at the end of January. But Mr Kavanagh maintains that the dispute was resolved to the satisfaction of all sides.

"The issue of bringing back on-course betting tax was not something that we could go along with," he says. "Since the start of this year, we will be returning 0.5 per cent of the on-course bookie's betting levy to tracks, that sounds like a small number, but in a year that will return €1.1 million in extra revenue to race tracks.

"The commitment is to change the business model for race tracks, we're looking at other ways of getting money into tracks as well in terms of centralising some of the costs which they are encountering to put the show on the road."

He is also adamant that tracks will have to generate other sources of income - many of them have golf courses on their in-fields - run conferences and other corporate events.

But the overall success of racing stems from its appeal to the public. And not for the first time, recent events have made the sport of kings look shady. The high-profile controversy surrounding multiple champion jockey Mr Kieren Fallon (one of a slew of Irish horsemen who dominate English racing) and the less well-known Mr Sean Fox were connected with unusual activities on internet betting exchanges. Mr Fallon has since made it clear that he made a stupid mistake, and there's no evidence connecting either man to any skullduggery.

The problem of the exchanges remains, however. They allow people to "lay" a horse, or back it to lose rather than to win.

Before their arrival, the only people who could do this were bookmakers. Mr Kavanagh argues that the exchanges need to be regulated, and says that is a job for governments and legislatures.

He points out that there have been no such incidents in Irish racing, and stresses that trainers and jockeys in the Republic are concerned only with winning.

On the track, the bookmakers are licensed, and risk losing this if they are involved in any chicanery.

HRI has the authority to look at their books for unusual betting patterns or other evidence of wrongdoing.

"There is strong regulation of racing on track," he says. "The races are policed from every possible angle, every horse that wins a race in Ireland, and we would be exceptional in this, is dope tested, whereas they have random dope testing in most other jurisdictions, and every poor performing favourite is tested."

Asked if the punters at Irish race meetings can be confident they are getting a run for their money, he says "yes". It should be pointed out that Mr Kavanagh is himself one of those punters (though he cheerfully admits to being a poor tipster).

Another high-profile row - the dispute between Coolmore Stud supremo Mr John Magnier and Manchester United manager Sir Alex Ferguson over the ownership of stallion Rock of Gibraltar - served as a reminder of the fact that stallion stud fees are tax free here.

HRI is primarily concerned with racing rather than breeding, but the bloodstock industry does have representatives on the body's 14-person board. Mr Kavanagh says the industry pays tax, including a levy on foals, on its primary activity, which is the sale of stock.

"Decisions on taxation policy are a matter for the Government and the Revenue Commissioners," he says. "It's a sensitive industry, these commodities, stallions, are mobile, they can be moved to America and they can be moved to Australia."

He says there are fears for the future of the industry in Kentucky, the US capital of thoroughbred breeding, and a world centre for the industry, because other US states have introduced a more favourable tax regime for racing and breeding. The Irish Thoroughbred Breeders' Association has commissioned a report on the Irish industry, and that is due for publication soon.

In the meantime, the breeding industry is now entering its busiest period, not unlike both Mr Kavanagh, and the racing world, which is just embarking on a new flat season, just as the old jumping season reaches its climax.

FACTFILE

Name:

Brian Kavanagh.

Title:

Chief executive, Horse Racing Ireland (HRI).

Family:

Married to Diana, he has two children, Bill and Laura.

Background:

He qualified as an accountant with Stokes Kennedy Crowley (now KPMG), but a passion for racing led him to work as the Turf Club's accountant at the Curragh in 1989. In 1995, he became general manager of the Curragh and then chief executive of the Turf Club. He was appointed to his present job at the sport's newly constituted governing body in December 2001.

Hobbies:

While his main hobby is his life's work, racing, he enjoys all sports and says he plays golf badly.

Why he is in the news:

This is Cheltenham week, one of the high points of national hunt racing. The flat season kicks off this weekend at the Curragh, and HRI completed the first year of a strategic five-year plan in 2003.