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Page last updated at 10:15 GMT, Monday, 25 October 2010 11:15 UK

Racing uncertainty over levy funding

Horses on the gallops
Horse racing is split over its funding

By Tim Franks
Sports news correspondent

A ferocious battle is swirling through horse racing. And it is fast approaching the deadline for resolution.

For the past 50 years, the sport has been funded, in large part, by a levy - a tax - on bookmakers' profits. The two sides are supposed to sort out between them the level of that subsidy.

But this year, they are poles apart. And if they are unable to agree by the end of the week, the Secretary of State at the Department of Culture, Media and Sport, Jeremy Hunt, will have to intervene and take the decision for them.

Mr Hunt has already announced that he is dismayed by the prospect and that this will be the last year the government will be prepared to step in, to sort out the bickering.

There are also plenty of people within horse racing, warning that the fight over the levy belies wider problems for the sport.

Outwardly, the signs are healthy. Attendances are not just holding steady, they are "up four per cent year on year", according to Nic Coward, chief executive of the British Horseracing Association (BHA).

But even at marquee events, such as Breeders' Day at Newmarket, there are long faces.

Mark Tompkins is Chairman of the Newmarket Trainers' Federation. "People are going out of business all the time," he says.

Of the approximately 85 trainers in Newmarket, he predicts that just 20 will survive, and the rest "will really struggle".

Tompkins is one of those who ascribes the fault, in large part, to the bookmakers. He has joined the 'Racing United' campaign, at the behest of the BHA.

The BHA says the case is clear-cut. The amount bookmakers have contributed has collapsed since 2008, to about £65m this year. The BHA wants about double that amount to be secured for next year's settlement.

The people who were supposed to pay us that fair return are exploiting loophole after loophole after loophole

Nic Coward, chief executive of the British Horseracing Association

Nic Coward, the chief executive of the BHA, may be quietly spoken, but his tone is unbending.

Yes, he says, it is true that racing is unique in demanding a specific subsidy from the bookies. But then racing is the only sport, he argues, which shapes its rules in an open acknowledgment that it is "betting content".

Horse racing, he says, expects a "fair return". But rather, he points to the decision, for example, of several big bookies to move online and telephone operations offshore.

"The people who were supposed to pay us that fair return are exploiting loophole after loophole after loophole. Enough is enough."

On this day, at Newmarket, a 'Racing United' banner is unfurled, and the jockeys who are swishing in and out of the weighing room are enlisted to sign up to the campaign.

Among them is Frankie Dettori. "The sport itself is great," he says. "We still have the best horses in the world. We just don't want the bookmakers to take all the money away from the races."

It is a strange argument that the less popular your product becomes, the more you have to pay for it

Patrick Nixon, Association of British bookmakers

The bookmakers are themselves standing firm.

In the headquarters of the Association of British Bookmakers, opposite the Royal Mews in London, the ABB's chairman, Patrick Nixon, has a colour-coded spreadsheet before him. It displays, he says, the cold reality that racing is providing an ever smaller slice of income for his members, both in relative and absolute terms.

His figures show a decline from just under 80% of "gross win contribution" 20 years ago, to 29% in 2007, to 23% now. That translates to a decrease from more than £900m revenue two years ago, to "the mid seven hundreds".

"It is a strange argument," Nixon says, "that the less popular your product becomes, the more you have to pay for it." Nor, he says, is it simply a matter that people are betting on a greater range of pursuits, from football to the X-Factor.

Racing is by far the most expensive "product" in a betting shop, he argues, taking into account not just the levy, but the amount of retail space it consumes, with page upon page of the Racing Post covering the walls, and with bookmakers "paying twice as much for pictures (TV feeds) of racing, as we were two years ago."

Racing is a sport which builds itself on a deep foundation of tradition. Just outside Newmarket, sit the grand grounds of Tattersalls, "Bloodstock Auctioneers since 1766".

Yearlings are paraded around the handsome sales ring while the machine-gun patter and unmistakeable cadences of the auctioneers try to wring top dollar, or rather top guinea, from the weather-beaten faces on the green benches.

Among those in attendance is one of the country's top trainers, Mark Johnston. He warns, in stark terms, that many of these young horses will end up running in races which are simply pointless: there is not enough prize money to go around.

Honest Frank

"Most of us in the racing industry would firmly agree," he says, "that there needs to be a reduction of up to 20% in the number of fixtures."

At Worcester, on a cold Wednesday afternoon, there is a reasonable gate: 1,395 punters have turned out, according to the official attendance. It certainly compares well to, say, an unglamorous county cricket fixture.

But some of the prize money is puny: for the seventh race, only £1,049. Even for the winner, that will barely cover costs. And among the more experienced faces at the course, talk is less of a larky day out, and more of a ritual under trial.

Dave Smith is a bookmaker who has been working his pitch at Worcester for 27 years. Takings are, he says, down to a third of what they were even five years ago.

"It's in a rut at the moment. With 24 hour-a day gambling, the money's spread so thin. I don't know whether it will ever come back, or whether it will just be a general decline."

Some of the older punters agree, talking of shock and pity at how the atmosphere has flattened, the crowds on the "cheap side" have thinned.

John Swinson has been coming for 50 years. "We used to come here, and it was a jolly old time," he says. "In recent years, not least this season, it seems to have dwindled down, and the crowds are abysmal."

Coward, from the BHA, says that he is championing reform: changes to the racing calendar have been met with hostility from some of the ruddier faces around the winners' enclosure.

But his warning, earlier this year, that racing may have to shed 150 of its roughly 1,500 annual fixtures proved to be a false alarm. The BHA decided only to cut the number of races by 23.

Racing is taking its place in the queue of sports wrestling with money and with image. And some of its most ardent supporters are warning that without deep change, the sport of kings may become just that esoteric.

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