Betfair: British Horseracing: Let market forces work it all out

Today’s update from Betfair:

In his last column before taking a sabbatical from writing about racing, Jack Houghton wonders whether the “bureaucrats” should be the ones deciding who races where and when…

One of my best friends is American. He’s also Republican. As encumbrances to friendship go, these two would - for some - represent immovable obstacles. But as a youngster I was still open-minded and, more importantly, he was supplying work and lodgings to someone otherwise destitute in DC. So it was no time to take a moral stand.

And guess what? He turned out to be a nice guy. And it wasn’t just him; there were other nice Americans too. I came to realise: intelligence, compassion, altruism, stupidity, cruelty and selfishness; all of these existed in the same proportions as they did back home.

Even Republicans seemed okay. Sure, there was the odd gun-toting, fundamentalist nut-job kicking around but, on the whole, the thing that made people Republican was a belief in smaller government. Or as my friend then put it to me: “some things have to be sorted out centrally but, in general, the market is the most efficient way of allocating resources.”

Whether or not you agree with this will depend on where you stand on the economic left-right spectrum. A living example of Jeffrey Bernard’s assertion, I seem to step to my right with each passing year. This probably explains an increasing annoyance at the centrally-planned, protectionist and reactionary set-up of British Racing. As I move irrevocably away; it remains steadfastly stationary. The relationship can’t last.

Take the fixture list. What is the benefit in having bureaucrats centrally determine the fixtures that racecourses can and cannot stage? Wouldn’t it be better to just let racecourses decide?

The obvious objection is that there would be no balance in the calendar. Racecourses would all want to stage meetings on the weekend and, the argument goes, you would constantly have geographical clashes. Ascot, Sandown, Windsor and Kempton would race on the same day, diminishing field sizes and gate receipts to the overall detriment of the sport. Allied to this, bookmakers would complain that feast and famine racing would not meet the demands of their customers. And sporting professionals would have similar objections.

Maybe not. Just because no central planning bureau existed, it doesn’t mean racecourses wouldn’t do it naturally. The big boys, able to put on racing worthy of weekend televised cards, would publish their calendars long in advance, to allow broadcasters to bid on their product. Smaller operators would then have a choice: go head-to-head, or look to operate in niche markets, bolstered by deals with bookmakers and their broadcasting agents. The result would be the same: balance. But in this case the balance would be practically realised by market demand, not by committee theory.

Yes, some racecourses would go to the wall, but so what? Is it better to have a smaller number of successful racecourses offering a product genuinely desired by the racing and betting public, or a larger number of subsidised entities producing something there’s no clear demand for?

As far as it’s possible to determine, according to its 2006/07 Annual Report (financial performance was not reported in 2008), the British Horseracing Authority received £35.5m of income - either directly or indirectly - from punters, owners and racegoers. Of this, around £23m was spent on regulation and the Weatherbys contract. Weatherbys do a phenomenal job; and most would argue that regulation is something that needs to be centrally managed for the sport to run coherently.

That leaves £12.5m - slightly more than the recently announced forecast reduction in the Levy - spent on Directors’ salaries, administration, marketing and the like. On what? Because after writing down and enforcing rules, and putting in place systems to enter horses in races, what else is left for a horseracing sporting body to do? Anything else it tries to do with my money is outside of its jurisdiction. After all, I didn’t vote for any of these people. Did you?

*****

I’m off for three weeks now. Belated honeymoon. And I’ve got a slightly different gig when I’m back, so I won’t be appearing on these racing pages as much, hence the one-last-pop nature of the piece above.

Before I go, King George thoughts. Conduit is very short at [2.76] and should be laid. Although returning a decent time figure in the Eclipse, he benefitted from running a more even pace than his competitors that day and, in my eyes, the bare numbers overestimate his form. The trio of Ask, Look Here and Golden Sword all have strong claims and can be backed at a combined price of around [3.0].

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