IF you accept that public money will be scarce in the years ahead, the central plank in Horse Racing Ireland’s strategic plan published in early March – a sizeable increase in the annual grant from the Department of Agriculture– has become unstuck.

This year’s grant is €67 million, and the plan sought €98 million by 2024. .

The Government will borrow at least €20 billion this year, another big shortfall is unavoidable for 2021 and it will be difficult to right the ship even from 2022 onwards.

Racing competes with more urgent priorities – 800,000 are relying entirely on the state for income support and 400,000 more are having their pay part-paid by the government. The number supported by public funds exceeds half the private sector workforce and is utterly unsustainable.

The extra spending coincides with collapsing tax revenue and the inherited debt from th financial crash limits how much new borrowing can be added. The politicians may have forgotten that Ireland cannot print euros, but the Department of Finance will remind them that we ended up in an International Monetary Fund programme in 2010, the last time the borrowing ceiling was located.

If income support and health spending take priority there will be a search for economies all round, including non-critical current spending and the capital programme.

Betting tax

At the launch of the HRI plan, chairman Nicky Hartery remarked: “Following a series of changes in betting tax arrangements, off course betting duty collected by the Government in the year amounted to €94 million in 2019. This figure comfortably exceeds Exchequer funding provided to horse racing and a projected growth in these receipts in the coming years will allow for a progressive increase in funding to €98 million by 2024 at a reduced cost to the Exchequer.”

The revenue from the betting tax does not insulate horseracing. If the revenue exceeds what goes to racing, there are plenty of claimants, including other sports which have become substantial vehicles for gambling.

The current arrangement, where the annual allocation from the Department of Agriculture is voted by the Oireachtas, resulted in allocations to racing which exceeded betting tax revenue prior to the changes to which Nicky Hartery referred.

World leader

Horse racing makes the claim, echoing numerous lobby groups in Ireland, that their sector is world-leading, a credit to the country and accordingly deserving of generous treatment. In most sectors this is PR spoofery but in the case of racing, the claim is demonstrably credible. Ireland really does do horse racing and breeding remarkably well, and the industry truly does employ close to 10,000 directly in parts of the country where alternative employment is scarce.

The ‘brand’ of Irish racing is compelling without adornment, a traditional Irish pursuit which has been turned into a world leader and no need for spoofing it up.

The Department of Agriculture spend for 2020 is €1.65 billion, HRI receives €67 million or 6.4% and with direct employment on farms down to 106,000, it is not difficult to make a case for state support to racing.

The connection to revenue from the betting tax is tenuous and delivers reflected glory more to the bookmaking industry than to racing, which has the stronger brand. The image of the betting industry has been tarnished with public concern about gambling addiction.

There will be legislation in the new Dáil to impose controls on the gambling industry, which has been land-grabbing through online promotion in recent years. Two years ago, the GAA decided to end all commercial sponsorship from gambling companies.

Many soccer clubs around the world take their money but the top clubs do not. A few years back Barcelona gave a season’s shirt sponsorship free to the United Nations Children’s Fund, and the top six Premier League teams in England have the logos of banks, airlines and auto companies on their shirts. They also have professional brand managers.

Manchester United would not sell 1.75 million shirts per annum, at up to €80 a pop, with a gambling logo on the front.

FC Barcelona is now a fashion brand – in-house merchandising of male, female and kids clothing brings in almost €100 million per annum.

Last year total prize money in Ireland was €66 million, of which owners contributed €15 million, so the net return to owners was €51 million. HRI contributed €42.6 million, or 84%, breeders €2.2 million through the European Breeders’ Fund, and a further €6.1 million, some of it also from breeders, came under the heading of commercial sponsorship. Whatever the bookmakers contribute to racing is a portion of this modest number and is all they pay for the privilege of sharing the superior brand.

Prize money

The perception that taxpayers’ money goes to rich owners via HRI’s distribution of prize money is a perennial communications problem. It provides ammunition for critics when owners face reputational challenges and it happens in football too.

Studies have shown that owners as a group lose money and are patrons rather than beneficiaries. Prize money flows through racecourses to support training costs and employment.

Racing needs to generate more of its own revenue. The HRI target for attendance five years hence would bring it up to 1.5 million, a figure almost reached 20 years ago. And this with the Curragh completed, by a distance the finest spectator facility at any Irish sporting venue.

The Oaks meeting last summer attracted under 8,000 to view an outstanding card by world standards. In comparison the FAI cup final between Shamrock Rovers and Dundalk drew 34,000 to the Aviva, an inferior venue, to watch two local teams with no world-beaters on view.

It could be argue that tere are too many racecourses and too few fixtures at the marketable venues. ParisLongchamp had 30 fixtures last year, Newmarket 38, Ascot 26. Belmont Park in New York had 85, Leopardstown just 23. It will never be possible to upgrade enough key venues, and keep them busy, until this issue is addressed.

Colm McCarthy is a lecturer in Economics at University College Dublin. He has worked for the Economic and Social Research Institute, and the Central Bank of Ireland. In 2009 he chaired the group which produced the Report of the Special Group on Public Service Numbers and Expenditure Programmes, known as ‘An Bord Snip Nua’.