Nick Luck: the enormous challenge for racing after Brexit

New British Prime Minister Theresa May: many in racing were keen to claim a piece of ‘the winner’

In his regular TRC blog, Nick Luck, the six-times British racing broadcaster of the year, Channel 4 Racing anchor, and regular on NBC’s coverage of the Breeders’ Cup, examines the implications for the sport of the British public’s vote to leave the European Union.

If confirmation were ever needed that racing was a perfect microcosm of Britain’s aching post-Brexit insecurity, it came with the breathless excitement at the revelation that new Prime Minister Theresa May had once owned a bit of a horse. A long time ago.

Such a giddy thrill became yet more intense when she confirmed this to the Daily Telegraph in answer to the question: “What is the most surprising thing about you?” A cruel observer might have suggested that this said something about her limited capacity to surprise, but this came before she had appointed Boris Johnson to the role of Foreign Secretary.

Anyhow, the racing tribe instantly chose to see this as evidence that, in Mrs May, the sport had an “ally”.

Not to be outdone, the Racehorse Owners’ Association proudly tweeted that Britain’s second female premier was “a winning racehorse owner”.

The Power of Association - however tenuous - has not been lost on racing’s media, nor its stakeholders and their PRs, all keen to claim a piece of the winner.

A sense of jittery urgency

Never mind her record in six years at the Home Office, never mind her studied ambivalence on Britain’s exit from the European Union (Brexit), which ultimately allowed her to glide unchallenged through a leadership election. Never mind the fact she wears leopard print shoes, goddammit, she LIKES RACING. She must be okay?? Right?

Just like John Major, who quite liked a day out at Huntingdon racecourse, which sat slap bang in the middle of his constituency. And David Cameron, who did enjoy the odd day at the sports and whose father owned several racehorses, but was reportedly dissuaded from admitting as much lest he appear too ‘posh’.

But, if there is a sense of jittery urgency about the British racing establishment’s courting of government right now, and a far keener eye on which minister might be responsible for the sport’s financial health than might usually be the case, it is - in fairness - with good reason.

The intertwined transitions represented by Brexit and a new-look government come just as racing is on the cusp of fashioning a long sought-after funding mechanism to replace the Levy Board. The means of extracting what is perceived as a fair deal from the bookmakers laying bets on British racing is now a definitive strategy agreed upon by all major governing bodies and stakeholders.

Disappearing betting revenue

Furthermore, an amendment to the existing Gambling Act has effectively allowed the bypassing of primary legislation. As such, any potential derailment brought about by events beyond the sport’s control could set back the cause by decades.

When Steve Harman, a veteran of the oil industry, took the reins as Chairman of the British Horseracing Authority in 2013, his initial impression was that racing was still dragging its heels in terms of its lobbying efforts: it needed to do much more to persuade the government of its integral role to the rural economy as an employer and custodian of the land, not to mention its contribution to the Exchequer, much of which was largely untapped owing to betting revenue disappearing to offshore tax havens where so many bookmakers have based their online and telephone operations.

In truth, there had been a realisation developing to this end in the years leading up to Harman’s arrival. The idea that any parliamentary cheerleader for the sport was simply a counterproductive patsy to facilitate the more licentious demands of the major bookmakers was no longer entirely valid.

There were now plenty who could appreciate the co-dependency of racing and betting in a fair and nuanced fashion, some of whom advocated the need for a ‘Point (place) of Consumption’ strategy - i.e. that the Treasury - and racing thereafter - could capture taxes and funding for the sport respectively according to where the bet was struck rather than where the operator was based.

Some way down the track

In the thick of it for over a decade has been Will Lambe, now the BHA’s Director of Corporate Affairs with “responsibility for leading and co-ordinating Government Relations and focusing on the work required to implement a sustainable funding mechanism from betting to racing”. As job descriptions in racing go, the burden doesn’t get much heavier, and no-one has been tracking recent developments more closely.

While the longer term implications of the result of the Brexit referendum are as opaque for racing as they are for every fundamental aspect of British life, Lambe is mindful that the key priority is to ensure that the Levy replacement scheme is undermined neither by the resulting change in personnel domestically nor by a febrile relationship with Europe in the coming months.

Is the work done already of sufficient comfort? “It’s fair to say that it is a relief that we’re some way down the track,” says Lambe. “The new scheme will capture a percentage of all betting activity by British-based customers on British racing, be it wholly domestic, online, or offshore, and should be on track as part of continuation of government policy to be effective as of April 2017. There is no obvious reason to doubt that this will get through parliament.”

But what of the new broom? Certainly, early criticism of May’s nascent administration has focused on her appointment of ministers with limited previous interest or experience in their allotted departments. Against that ominous backdrop, racing has probably been dealt as bounteous a hand as could have been expected: first, Sports’ Minister Tracey Crouch - who always coveted that role - is one of only a handful to retain their positions.

Authentic feel for the sport

Lambe describes Crouch’s continuing in her role as “a massive positive”, adding that she has been “instrumental in finding a solution that could be pushed through quickly without the need to redraw entirely new legislation”. Speed, clearly, is of the essence.

In addition, Matt Hancock - the MP for Newmarket and enthusiastic horseman who was second in this month’s historic Town Plate - also has a role within the Department for Culture, Media and Sport and is one of the few close acolytes of the previous administration politically adroit enough to be spared the axe. It is entirely feasible that his role in digital policy may have a bearing on the online gambling sector.

In a further welcome development - and perhaps lost in the fog of the more sensational appointments - George Freeman, MP for Mid Norfolk, has been appointed to the influential post of Chair of the Prime Minister’s Policy Board. This places at the very heart of government a politician whose recent contribution to the debate on offshore gambling and its relationship with horse racing showed at least an authentic feel for the sport thus:

“This sport is often referred to as the sport of kings - its most glamorous side is often seen by the public - but is it not also a vital part of the wider rural economy? As with so many other industries, its grassroots are essential to its continuation, and in fact the effect on prize money at the bottom is even more severe.”

A pretty decent result

Racing may well be justified, then, in feeling that the Crouch-Hancock-Freeman trifecta is a pretty decent result at a time when it can ill afford any legislation to be thrown off course. Indeed, its position within the corridors of power certainly looks no weaker than it before the Brexit referendum.

Somewhat ironically, the last piece of the levy replacement jigsaw is the approval of Europe, and whether it upholds - as many bookmakers may hope - Article 107 of The Treaty on the Functioning of the European Union (TFEU), governing state aid, or whether it triggers an exemption “to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest.”

Incidentally, my conversation with Lambe took place while he was in Brussels to gauge the current mood of EU officials on said regulation - he indicated that he was “highly encouraged by the meeting”.

So far, so good, perhaps, particularly if it signals the end of the Authorised Betting Partners (ABP) strategy, which has offered preferential treatment to those betting operators that have made a voluntary contribution to British racing based on their offshore/online profits.

Advocates of ABP will doubtless say one day that the end justified the means, but its means have encouraged a binary view of the racing/betting relationship, often morally venerating those companies whose net contribution to the sport’s coffers have been close to nil while encouraging condemnation of the firms whose vast retail businesses still provide plentifully.

Free movement of horses and people

If a post-ABP world is on the horizon, and a rate can be agreed, so much the better. If ...

Nevertheless, the implications for racing post-Brexit remain complex. The key areas for concern involve the free movement of horses and people. In the first instance, the various European racing authorities will be hoping to maintain the latitude currently afforded to Thoroughbred racehorses on the grounds that they are inherently subject to the highest standards of husbandry and veterinary care.

According to Lucy Greayer, a renowned shipping agent with over 20 years’ experience: “There is currently a tripartite agreement between Britain, France and Ireland governing the movement of Thoroughbreds and FEI [International Federation for Equestrian Sports] sport horses - it can only be hoped that this is and can be maintained, but the DOCOM system which governs this is an EU commercial document.

“Between England and Ireland, I would always anticipate free movement, but whether travel to and from France will be subject to more restrictions is entirely possible.”

Greayer, however, conceded the issue is “extremely knotty.” She concedes that it is “even possible that Britain could decide to tighten up its own regulations, though that would be very foolish in my opinion.”

‘Real concern’ in Ireland

While every fibre of your being hopes that pragmatism reigns, there is no denying that the likeliest outcome is a mountain of bureaucracy at the Department of Agriculture, Food and Rural Affairs (DEFRA), which is now headed up by the arch-eurosceptic sometime leadership contender Andrea Leadsom

Even more “knotty”, potentially is the overarching symbiosis between Britain and Ireland: there cannot be one horseman or administrator in Ireland who believed Britain’s exit from the EU was a good idea.

As Charles O'Neill, CEO of Irish Thoroughbred Marketing (ITM), told the Racing Post a few days after the referendum: “It is of real concern to ITM that our biggest trading partner has decided to leave the EU.

“The immediate challenge is the uncertainty that this brings to the Thoroughbred industry in Ireland, not least with the volatility in exchange rates. There is no clear picture as to how trade will be regulated in the coming years; whether we will have border controls, restricted movement and trade tariffs.”

Unexpected positives

As has been pointed out widely elsewhere, there is also the matter of the racing’s huge EU workforce, currently contributing an enormous amount to the British racing economy. Their future - equally - is worryingly uncertain.

Needless to say, there are those who cling to unexpected positives in such circumstances. The weakness of the pound has led many to suggest that British bloodstock has suddenly opened up to more markets, and that there will be increased interest from North America and Australia, in particular.

Doubtless, as with any dramatic currency fluctuation, there will be short-term winners in this respect, but whether this can be used as a fair barometer of a thriving sport is a moot point.

What the sport has always craved is sustainability. However Brexit progresses - for better or worse - racing must find that sustainability in a climate of social, economic and political flux. Given the timescale of its most important funding decision in a generation, it is to its credit that it has cultivated friends in high places with some effect through the last decade.

Who knows? Perhaps Mrs May might even buy another racehorse.

View Comments
blog comments powered by Disqus

More Racing Articles

By the same author