New French Group Looking for Racing Revival

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By John Gilmore

A new racing association formed in mid-April with the goal of leading a "revival of French racing."

Generation Galop, headed by Lady Chrys O'Reilly and Herve Morin, has around 80 members to date who want to see more initiatives to grow racehorse ownership and improve the incentive programs for breeders. O'Reilly is a major breeder in France through her Orne Basse Normandie-based Haras du la Louviere Stud and the owner of approximately 30 horses in training throughout France.

Morin is former co-owner of 2007 French highweight Literato (by Kendor out of La Cibeles, by Cardoun), which led him to start up a small but successful breeding operation at the Ecurie de La Vallée Martigny in Normandie.

The new organization is not a protest against France Galop and its efforts, say supporters, but rather should be seen as a catalyst for change.

"We don't think France Galop is ineffective, but like every organization deeply rooted in tradition, it could definitely do with some fresh creative ideas, and you can't expect such ideas to come from within the institution," said Alix Choppin, secretaire generale of Generation Galop. "In a world where change is happening at an ever-faster pace, the outlook for French racing is worrying and we can't just carry on doing things as we have always done. (Generation Galop) wants to think independently and bring things forward so French racing and breeding becomes prominent again on the international scene."

Generation Galop has start collecting research through owner surveys, which it hopes will identify concrete reasons owners are attracted to Thoroughbred racing and what has turned them away.

"We shall then set up work groups on each of the stumbling blocks identified, and then study successful initiatives taken to address this issue in other countries and come up with creative, yet realistic, ideas," said Choppin.

While French betting and auction markets have held up well, with gains approaching 30% over the past 10 years, Generation Galop founders note an increasing number of professionals are finding it harder to make ends meet and the French customer base is dwindling. The number of owners with horses in training has fallen 10% since 2002. A similar trend has been seen in the breeding ranks, with the overall numbers of breeders down 7% since 2007. The number of annual nominations to French stallions also has been cut by almost a third since 2007.

These declines are occurring at a time when higher tax levels for individuals stand at 45% in France. In addition are expensive social charges for employing labor, meaning the overall French deductions are greater than in Great Britain, which has a similar 45% individual higher tax rate. The French national government is expected soon to increase the top rate tax to 75%, which applies to individuals earning more than €1 million a year. Meanwhile, the value added tax (VAT) on buying racehorses has increased to 19.5% from 7% this year and will be 21% beginning Jan. 1, 2014—a climate, many believe is not conducive to increasing French-based ownership.

"Dwindling interest in ownership and in the sport as a whole are the biggest issues facing French racing, which admittedly won't be helped by the new tax laws," said Choppin. "Unfortunately, the question of the breeders premium was voted by France Galop last year, while tax and VAT changes by the government have been voted in. For the future Generation Galop hopes to be able to put its case forward early in the debate and convince a majority of people in order to influence the outcome of decisions."
 
In Ireland, 22 stallions are priced at €10,000 or above, England has 16, and France just five. It is not surprising 1,000 plus mares, some 20% of the French total, cross the water to be mated with Irish or English based stallions.

"Ten years ago six stallions commanded a fee of €15,000 or higher, today there is only one Redoute's Choice (Danehill—Shantha's Choice, by Canny Lad) standing at the Aga Khan's Bonneval Stud in Normandy," said Choppin. "There are some good stallions around though often not very commercial—meaning commercial breeders don't make much money using them. Yet the success of Redoute's Choice—a leading sire in Australia, shuttling to France for the Northern Hemisphere 2013 breeding season, shows the trend can be reversed. Commanding a fee of €70,000, the stallion has attracted a lot of international mares and will cover a full book."

Leading trainer Criquette Head, president of the French Trainers Association, believes the auction house Arqana should be more adventurous by featuring more French-bred stallions during the first two days of its prestigious yearling August sales at Deauville.

"French stallion prices overall offer good value and quality to both breeders and owners, while offering the chance for the smaller breeder to not be priced out of the market," said Head.

To assist increasing French stallion nominations, France Galop recently announced changes to its €50 million annual breeding and owners funds from 2014. Notably, breeders of horses conceived in France will receive an extra 15% premium from any prize money won during a horse's racing career in open races. For assimilated horses, the mare will have to be based in France for at least seven months a year but will be allowed to leave the country from January 15 through July 15, and the breeder will qualify for a lower premium of 10%. Currently the premium rate for both is 14%. Additionally, France Galop has put in place a short-term loan scheme, to help French breeders buy quality stallions.

"The reform of the breeding scheme has created a two-tiered system with horses by non-French-based stallions having the possibility of receiving 33% less in breeder's premiums during their racing career, than horses by French-based stallions," said Choppin. "We think this is a negative signal to send to ambitious breeders, who try to find the best bloodlines available for their mares wherever they are and this won't help upgrading the quality of the French stallion roster."

Head has a different opinion.

"It's normal that French breeders premiums for foals conceived in France to French-based stallions, should be able to qualify for a higher rate, than by an Irish or English based stallion—when as well, these countries don't even have such a premium system in place," explained Head.

Generation Galop is also critical of the racing system of meetings organized by France Galop that carries national betting.

"This has increased dramatically over the past decade or so by 84% since 2002, through offering more racing to the punter, being the only way the PMU betting arm could find—to keep increasing its turnover, " said Choppin. "Such a trend cannot be sustained forever and we will shortly reach a saturation point. We need to come up with other ways to keep betting figures growing." According to Choppin, the number of provincial races carrying national betting has rocketed by 170% over the past 10 years, which has resulted in increased costs for professionals (extra staff needs) and the institution—as the transportation of runners for these races is paid for by France Galop.

"It is necessary to rationalize the situation," he said.

The French PMU (Paris Mutuel Urbain), to its credit, has been looking to increase turnover by putting on meetings in Germany, Holland, and Belgium in the last couple of years. A number of foreign countries like Belgium and Switzerland can bet directly into the daily French race pari-mutuel pools. The organization also has been innovative during the past few years by introducing types of multiple bets like the pick 5 or any 2 from 4, which have been very successful.
 
Everything considered both Britain and Ireland would like to have France's so-called problems. Both are struggling with a bookmaker betting system that returns not much more than 1% of turnover to the racing industry compared to France's 8%. Put in perspective, for 2012 French racing received €876 million to fund its racing industry, while British received a mere £72 million. To go racing in France will cost a maximum €8. In Britain this is more than the minimum entry to a main ring at a smaller racetrack, with a top course like Ascot costing £60.

British racing beamed into betting shops has been at a saturation point for a number of years and merely serves to fuel bookmakers profits, with no hope in sight for the racing industry to receive anything like the funding levels it truly requires. Fortunately both Great Britain and Ireland have thriving breeding industries that are attractive to foreign buyers and have helped to a certain degree mitigate problems on the racing side.

Considering France offers the advantage of far better prize money than Great Britain and Ireland, plus breeders and owners prize money premiums—which don't exist elsewhere in Europe—it could be doing better in encouraging greater ownership. The high tax system in France, however, is a great handicap for the future of the French racing industry. Unless the tax rate is lowered, then the industry will have to look at expanding French ownership and breeders' benefits to those domiciled abroad, in countries with lower taxes.

"We believe in an open system and in measures that encourage owners and breeders to aim for the top, rather than the contrary," Choppin said.