£425,000: how much the Matthew Lohn affair cost the BHA

The financial impact of dealing with the fallout from last year's controversy surrounding the BHA's disciplinary system was laid bare on Wednesday, when it emerged it had cost the governing body £425,000.

The figure came to light as the BHA published its annual report and accounts for 2016.

Last year it emerged that solicitor and former disciplinary panel chairman Matthew Lohn undertook additional and undivulged work for the BHA while also serving on its independent panel, creating a perception of bias that led to two convictions – those of Jim Best and Paul Gilligan – being sent for rehearings and seven others being identified as potentially unsound.

It also resulted in Christopher Quinlan QC being commissioned to produce a report into racing's disciplinary and licensing systems.

BHA chief executive Nick Rust said the progress made on the sport's objectives, especially levy reform, meant there was "good reason to feel optimistic about the future of our sport".

'Ready to move on'

He also said that despite the cost he believed the sport was ready to move on from the Lohn case and that it was "is in a much better place" following Quinlan's review.

Referring to the Lohn case, Rust said: "The BHA is there to be scrutinised. As I have always said, as the chief executive I am accountable for the organisation. I believe as an organisation we dealt with it in the circumstances as best we could."

Rust said he believed the BHA was left with the choice of looking after its reputation or doing "the right thing by the sport".

Asked how he thought the sport would react to the cost of that work, Rust said: "I would like to think the sport would say, 'we understand, it's regrettable, you've learned your lesson but the sport needs to move on'."

Timeline of events: how the controversial Lohn saga unfolded

Tom Kerr: BHA ignoring the rules of racing as it attempts to clear up Lohn mess

A troubled path marked by disastrous Best case

Although there was a six-figure blow to its finances, the BHA reduced its forecast deficit by almost 50 per cent, from an expected £349,000 to £175,000 by offsetting the costs of the Lohn case with savings in other areas.

The BHA said its income was also boosted by an increase in what it received from fees owing to a rise in numbers of owners and horses in training.

Rust said: "Obviously there will be some questions about the number, as there should be, but we mitigated the cost of the £425,000 and actually delivered an improved financial performance versus the budget we published at the beginning of 2016."

Comment: the cost to BHA's reputation might take longer to resolve

He added: "The cost is not being passed through to our participants because we made a saving anyway on the year. That's one of the key points we want to make, that we have been financially responsible and delivered on what we said we would despite the one-off costs incurred here."

Some of those savings included Rust's own remuneration, which fell to £328,000 from £406,000 after he declined a bonus.

"I'm paid very nicely and I appreciate the pay in my role and I didn't think it was appropriate to take any form of bonus in the year," Rust said.

'Shoots of growth'

In the report, the BHA said it had made "significant progress" against nine strategic objectives and that "shoots of growth" were achieved across several key area during 2016, including participation, ownership, betting, viewing, field sizes and horses in training.

Progress towards achieving reform of the levy and raising more than £12 million of additional revenue through the authorised betting partner (ABP) scheme were cited as highlights.

Rust said the scheme was vital in preventing cuts in spending from the levy.

He added: "I would also maintain it did show the value of British racing to bookmakers at a time when it was being talked down."

Having made a surprise surplus of £160,000 in 2015, the BHA said it intended to reach break-even again by 2019, according to its three-year business plan, which includes agreed fee increases with participants and racecourses.

Rust said: "We want to carry on with reform and we have some significant plans around regulation.

"We could get to break even a lot, lot quicker without any progress, but the sport is expecting us to make progress."

BHA annual report in numbers

£31.852m Total income

£32.046m Total costs

£175,000 Deficit after interest

64.7% Percentage of income from racecourses

26% Percentage of income from owners

£1.307m Legal and professional costs, up 28.6% on 2015

221 Total staff, up 11 from 2015

£328,000 Chief executive Nick Rust's remuneration, down 19.2% on 2015