The move of major bookmakers to offshore locations helped contribute to decreased wagering yield as British racing contracted 1.2% compared with four years ago, according to a recent British Horseracing Authority report.
While increased revenue from media rights and a commitment to improved facilities helped prevent a steeper decline, the Economic Impact of British Racing 2013, released the week of June 9 and conducted in conjunction with Deloitte, determined that the sport had a £3.45 billion ($5.41 billion) overall impact in 2012. While that represents a marginal rise since a report published in 2009, after inflation rates are factored the overall result is a 1.2% contraction.
"British racing has faced, and largely come through, a significant test," BHA chief executive Paul Bittar said. "We were never going to be immune to the wider financial difficulties that still prevail, but can all be extremely proud of the scale of our sport's continued contribution to the British economy. Core industry expenditure of over £1.1bn ($1.72 million) and a total economic impact of £3.45bn are just the headline demonstrations of our importance.
"Resilience is a recurring theme throughout. This resilience is however no accident, coming instead as a result of the collective steps taken within the sport over the last decade, which includes over £950m ($1.49 billion) of capital investment."
According to the report, racing remains the second largest sport in Great Britain on most metrics, including attendance, with a total figure of 5.6 million in 2012 despite competition from the London Olympics and the exceptionally wet weather prompting a record number of abandoned summer fixtures. Excluding the London Olympic and Paralympic Games, racing accounted for four of the top 10 attended sporting events in Britain in 2012.
British racing has also performed well in comparison to other racing nations on many metrics, not least in terms of the quality of its top races and bloodstock, despite a lesser return to the sport from betting than many of its international counterparts, the report noted.
The sport employs 17,400 full-time equivalents and more than 22,000 individuals in full-time and part-time roles. The employees were a significant contributory factor in the £275 million ($431 million) in taxes generated by the sport, though it represents an 8% decrease in employment in response to lower activity levels and cost reduction.
Media rights were the area of largest growth in the industry, generating £173 million ($271.1 million), up from £104 million ($163 million) in the 2009 report. Increased media rights contributed heavily to racecourse cash flows being up by 1% overall, despite a marked decline in funds from the levy.
Other headlines include:
• Almost £950 million of capital investment has been made over the last decade in the industry's infrastructure, more than £700 million ($1.1 billion) of which is at racecourses. While the majority of this investment was made in the earlier part of the decade, with only £203 million ($318 million) of the total expenditure during the period directly covered by this report, it has undoubtedly contributed to the sport's overall resilience during the recession.
• Every £1 spent in the racing industry generates an additional spend of £1.53 in the wider, particularly rural, economy through secondary and business-to-business expenditure.
• Owners' gross expenditure was £389 million ($610 million), while they received £85 million ($133 million) through prize money and sponsorship (down from £92 million in 2008).
• Further economic activity generated by British racing means that it helps to sustain a total of more than 85,000 full-time jobs in the British economy.
• More than £14 million ($22 milliion) of horse welfare related investment is estimated to have been made by British racecourses in the past four years.
• Racecourse sponsorship levels have risen from £25 million to £31 million ($49 million) with the industry diversifying its sponsorship offerings with initiatives such as QIPCO's sponsorship of British Champions Series and British Champions Day.
• 2012-13 gross win from betting on British racing was estimated as £710 million ($1.11 billion), consisting of £570 million ($893 million) from licensed betting offices. The gross win has fallen from more than £1 billion or more recorded in the six years up to 2008-09, reflecting competition with other sports, lower margins, and the now offshore location of virtually all major online operations.
"Racing is comfortably the second biggest sport in Britain after football by many measures including revenue generation, attendances, taxation generated, and employment," said Alan Switzer, director in the sport business group of Deloitte. "Top-level sport now transcends national borders. The heritage and reputation of British racing means it continues to attract many of the world's top horses together with investment from an increasingly diverse set of major international partners."