Breeding Life Back into Racing

By Sydney-based pro punter Nathan Snow Young horse with mother Recent events in both Sydney and Melbourne have brought the world of horse sales to the attention of the general racing public. Without going into the details of either case, I think it should prompt a discussion about the breeding and sales world and its relationship with the racing industry.

Both the breeding and horse trading industries exist because of the racing industry. But are those industries a net positive or negative for racing as it stands? And what can be done on behalf of the racing industry to maximize its benefit?

Racing is a sport reliant on funding to put the show on the road. Currently, approximately 85% of that funding is derived from taxes on the wagering model. The bookie or totalisator pays the tax and this cost is passed on to the punter in the form of market percentage. The current level of taxation in this sector is at maximum capacity and the marketplace is on a precipice because of it.

Racing is in the early stages of an internal war over differing opinions on how to grow the remaining 15% of industry funding via media and vision rights, because they know the revenue from wagering can’t be grown by increasing the rate of taxation further. Still prizemoney keeps going up, infrastructure keeps falling apart and prized assets look to be sold because racing cannot sustain itself in its current form.

So clearly it is time to discuss how the breeding industry can contribute to the industry off which it thrives. Surely, it’s time for the racing authorities to look to implement some sort of levy on the breeding/sales industry. Currently, bookies are paying between 2-3% of their turnover back to the relevant racing jurisdiction.

What if every service fee or every time a horse is sold in Australia was subject to a similar levy? After all, the current prices of yearlings is due to the prizemoney that the racing industry puts on for them, not to mention the upkeep and improvements on the tracks they race on.

Naturally, there should be some sort of threshold to protect the ‘hobby’ breeders with a couple of horses, but it is well overdue for the rest to start contributing. Imagine what the racing industry could do with the funds? The tracks and facilities could be given the injection of cash so sorely needed.

Warwick Farm could become a place of excellence rather than a trip in a time machine back to 1972. Most importantly, some of the funds could be used to subsidise track fees, box rental and jockey riding fees for owners to make it more enticing for them to get and/or stay involved. That way, any cost of the levy passed on to owners in the sale yard would be more than recouped through the horse’s career, while easing the strain on trainers operating on the breadline.

It would be a net positive for owners if done under these parameters. Those in the breeding industry say racing cannot survive without them and that they contribute enough in other ways. Well it may look different, but Hong Kong has proven a racing industry can not only survive without breeders, it can in fact flourish to the envy of all others. Yes, breeders race a number of horses.

But, one could make the argument that in a pure and fair marketplace, all horses have what is deemed their ‘market’ price. Horses that have been kept to race by their breeders is largely due to a price being artificially set that does not reflect the horse’s true value. They also like to say that they are large sponsors of racing. So do the bookies who currently pay a levy separate to their sponsorship. And like any sponsorship, it’s a form of advertising that also serves to promote their business.

We have just seen two high-profile cases where $70,000 has been allegedly leaked from the racing economy for each transaction. How many times this happens week in, week out is unknown. But, given it is doubtful that this was a one-off, one can only imagine how many dollars that should’ve been reinvested into the industry has instead been siphoned away.

A thoroughly regulated marketplace for all sales, with the relevant racing authorities conducting prudent supervision to ensure all levies are paid, would provide the framework necessary to produce confidence and thereby lead to growth in the marketplace.

After all, more people will get involved if they believe it’s a level playing field. And, given the latest scandal, racing should be doing all it can to remove the stigma that currently exists. What ‘insiders’ treat with a nod and a wink are what most of the general public look upon with disgust.

Strong leaders with a clear vision for the future of racing should embrace these changes to help sustain racing well into the 21st century. Nathan Snow  @snowbet