Month: March 2024

If you follow Alan Delmonte on Twitter or X, or whatever they call it these days, you will know him for his offbeat sense of humour. But as chief executive of the Horserace Betting Levy Board (HBLB) for the past 11 years, he has one of the most serious jobs in British racing, overseeing the distribution of around £100m a year. Delmonte is, to some extent, the sport's Chancellor of the Exchequer, but there is an awful lot of important work going on behind the scenes at the Levy Board that make it not just racing's cash machine but also one of its staunchest guardians. 

A recently published progress report on its three-year business plan shone a light on that work, and Delmonte, along with HBLB's chief finance officer Craig Pemberton, gave Emma Berry an overview.

Emma Berry: Racing is facing some serious issues, including the government's proposed affordability checks on punters, which would have an impact on what you do. How are you feeling generally about the state of the racing nation at the moment?

Alan Delmonte: It's a mixed picture, as the recent update set out. And I think from a narrow levy, or financial perspective, we are not in bad shape. Although betting revenue turnover is falling, and the amount bet has fallen, which is a double concern, bookmakers' overall profits seem relatively stable, and that is how the levy is derived.

So that has given some foreseeability and continuity. It is well known that we started the Covid pandemic with quite significant reserves, which we used about half of, but have been able to keep them at around that level. So for us, at least at the moment, it has been a relatively stable background. But we have said to the board that we do need to be cautious, because it won't be sustainable if turnover continues to fall, that bookmakers can't keep making the same amount of money out of declining turnover. And that's why the outcome of the consideration of the risk-based checks process is obviously very important to the sport as a whole, and to us, in terms of long-term security.

EB: At the top end, and even now the middle to top end, things are improving in Britain regarding prize-money. Premier Racing is a new development this year, and there is some extra money at that level. From a more personal position, a particular race won two years ago by a horse in our stable was worth £4,500 to the winner but if he won it this year, it's £3,000 to the winner. That's a 33% drop. At that lower level the pinch is going to be felt, and I wonder about how that will affect ownership numbers and field sizes.

AD: That question of where to put prize-money is financially the biggest question that we have to face every year. On the assumption that we do this from one year to the next, ideally we'd like to have in a lot of these areas a multi-year strategy, not just the prize-money, but for an awful lot of things that we fund, where there is a very clear direction set with a lot of detail, and we set sail with racing on funding that for a longer period.

That doesn't generally exist, which is one of the frustrations and challenges that we have. So we will see how these fixture changes come along. They are part of a two-year trial, but we were explicit in wanting to have a one-year review point for the sort of thing that you're talking about. The board has agreed that we should run the trial, and racing's representative groups have said that it is more important, strategically, to invest more towards these top-end days.

They made the point that the prize-money for the lower-grade races on those days will go up. It's not all money that's going into the top races at the top fixtures. One of the points that we were very keen to make sure was monitored was the effect on core racing. Racing seems to be relatively confident that the effect on those day-to-day cards would be relatively limited. 

We will be doing reports for our board every quarter on what's really going on, with a view to recommending whether we can carry on with this funding structure for next year. But the overall principle has been racing's view, that your best route to growth of the sport is through maximising the profile of the bigger events.

It's an assertion rather than something that's based on hard facts and research, but we've gone with this with our eyes open, but with the need to really assess what's happening on the ground as we go along.

Without preempting the review, it would be an odd outcome if these changes ended up with fewer people wanting to put their money into being owners in the sport. There is nowhere in racing's plan that says the outcome that we are satisfied with is if the total number of people interested in participating in the sport goes down. So if we are seeing that – and one of the pieces won't just be the number of owners, it will be what type of owners, which type of horses are they owning – that will need some proper analysis.

EB: There is a feeling of anxiety among some breeders at the moment, and not just in this country. That could obviously have a knock-on effect on the horse population. What struck me in your report is that one of the first things you mention is improvement of the breed. Can you explain a little more about the HBLB's involvement in the breeding sector?

AD: We have three statutory objectives, which are set out in the business plan, and the requirement is for us to spend the money on one or more of them. The board has always taken a serious view of not just spending money on what might be termed day-to-day horseracing expenditure, but also the other two, improvement of the breed and advancement of veterinary science.

We have been the principal supporter of a series of TBA-driven schemes over the past 30 years or more, with the breeders' prize scheme, and over the last 10 years on Plus 10 and on MOPS, the Elite Mares Scheme that we continue to fund, and now GBB [Great British Bonus], which we provide three-quarters of the funding for. These things are all designed to provide incentive and upwardly-mobile ownership and rewards.

We try to get that mix of short-term funding for things like prize-money and regulation, and then the longer-term investment in other areas.

Craig Pemberton: One thing we've done fairly recently was a confidential survey. Around 200 stakeholders were invited to give an opinion on how well we were doing against our own purpose and vision, and it scored well. Relatively lower was the breeding area of what we do. So the board's actions, from having conducted that survey, are that we will make more prominent what we do around breeding.

We spend £2 million-plus on research in the veterinary science and education spheres each year. We will publish some of the research that comes out of that, and make links to those projects. Some of these things are very slow burns over multiple years.

We absolutely get that part of what makes British racing what it is. It's not the perception of quality, but the reality of quality.

EB: I suppose it's always a balance, deciding whether that £2 million should be going into prize-money when we all know what impact a sudden outbreak of a contagious disease can have. It could bring racing to a standstill…

AD: We were one of the main funders of the work that the Animal Health Trust did, and then worked very hard to try to see whether there was a route to survival for the AHT. But the view that the board came to in the end was that what the sport had to focus on was the preservation of the services that were being provided. 

We set up the process to ensure the continuity of AHT people that were related to racing. We oversaw the tender process that has seen Rossdale's and Cambridge University take on the functions that were previously carried out by AHT. And those organisations now work under contract, effectively, to the sport, but through us.

And I think that is a good example of where people probably just think things happen, but these extracurricular things do sometimes occur, and it did require quite a lot of extra time and resource to get that over the line. But that's not to say it was all us. Sometimes in these areas there are things that the Levy Board runs itself, and other times, it's a much more collaborative effort.

We work with the ROA and TBA as co-funders of these services, and through the BHA. So it does go on behind the scenes to some extent, but there is quite a lot of thinking that goes on about a disease prevention plan.

It was absolutely essential that the continuity of service was maintained. Obviously it was a great shame that the AHT, as an institution that was supported for 40 years, couldn't go on, but in the end, the bullet had to be bitten. And the priority became, 'Well, how is the sport going to get its disease surveillance and diagnostic service done elsewhere?'

And we've ended up with a more transparent process that has clearer reporting, clearer measurement about who's doing what, and our own committee that we chair, that monitors how those two institutions are doing against the contract.

EB: Are you still able to enjoy going racing? Or do you get ground down by all the politics of it all?

AD: I do, very much so. I don't even find that difficult to say. I think it's still the sport that gets my heart racing, just the way it always has. Work is work, and then the pleasure of seeing the horses actually racing is a different thing, and that's something that I think will always be absolutely at the core of my love of the sport. I'm just incredibly fortunate to be able to do something that's in the sport, but also to be involved in a job and an organisation that covers such a wide range of bases.

CP: I'm just in my fifth year [at the HBLB], and part of the motivation for joining was that I was really interested in the sector. Previously I'd worked at the construction industry training board, another levy organisation, getting apprentices into construction. It was principally about young people and life chances, and that struck me as having a very big parallel with racing. 

The CFO role is not just about the numbers, it's a lot more than that. If you can do the role and try and bring some balance and help, particularly for young people, that was part of the motivation for me, as well as finding out about a new sport and a new sector. And it's probably the most complex group ecosystem I've ever come across, but therein lies the challenge, of getting a lot of stakeholders to agree on what can get done, the AHT being a fantastic example. That was literally in my first few months here, and then we had Covid. So it was an interesting start.

EB: It's been a time of fighting plenty of fires, but the cyclical nature of racing and breeding means there's always something to look forward to, albeit in what is a tempestuous business at times.

AD: It's not a job where you can sit there, just making judgements and decisions, and then never having to see anyone again. It is by its nature an environment where you are, in a sense, always accountable for what you're doing, because you're seeing people quite a lot of the time all around the place. You've just got to accept that there is a lot of to-ing and fro-ing with the stakeholders. Yes, we want to try and be clear and open about how we're going to make decisions, or why we've said yes, or why we've said no. But part of that process is an ongoing dialogue. 

It's obviously a very fragmented structure, but that structure does manage to come together every day to produce racing at racecourses, and it produces a breeding operation, and all the other infrastructure. So it works. It may not be perfect, but I don't think it's realistic for anyone to keep blaming the structure for things not being done. You just have to work with what you've got, and try and find a way through.

EB: And while acknowledging those pressures, do you feel that it's still aspirational for people from various parts of the word to race and breed in Britain?

AD: It is for that reason, to go back to the Premier Racing point, that we absolutely get that part of what makes British racing what it is. It's not the perception of quality, but the reality of quality that is matched by the people perceiving it.

We want to be encouraging the sport where we can, to take Craig's point, to provide the most professional positive environment for people to come into the sport and work in. We're very supportive of the initiatives that racing has put in place around code of conduct, and all these other associated positive developments that should be necessary in a modern industry.

EB:  The Levy Board has been in existence since the 1960s, and at one stage it looked like it would be discontinued. What's the situation now?

AD: There are no plans to abolish the Levy Board. There have been a few attempts over the years. Probably the closest one to abolition was the most recent one, which would have culminated in 2019. The fundamental point there, which is my summary rather than anyone else's, is that if you are going to have a statutory levy, which we do based on an act of parliament, then parliament wants to see that there is a public body accountable for that levy.

And what would have happened under the proposed arrangement was that the responsibility for the levy would have passed over to a private sector racing body. And when push came to shove, parliament wasn't satisfied that that gave the necessary oversight. So maybe a way will be found, or somebody will have the desire to revisit it again and find a way through that. But at the moment, here we are five years on from non-abolition, we have got on with modernising what we do, getting our own systems and processes up to going concern standards, and we are not thinking at all about anything other than long-term continuity.

One thing I'd say about the business plan and the update is that a lot of the things in there have been generated by the Levy Board. They are designed by us, but what we would ideally like to see is the equivalent of those produced by racing so that racing has its own clear aims, objectives, targets, measurements for the sport, over a period of time. 

Ideally, our measures become racing's measures. Racing's strategy has been announced as something that will be produced, and the first fruit of that was the 2024 fixture programme. But there are all of these other major areas where we're expecting that there will be a very detailed underpinning strategy and ideally an overarching piece of work that says, 'This is what it all means for the sport.' 

It's not easy, but that's what BHA, on behalf of the sport, committed themselves to doing in 2022. And if we can get to a position where we're all working on the same major objectives, which are very transparent, it should help everybody be clear about where the direction of travel is.

 

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