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Tuesday, 20 November, 2018

Owners hit by rate rise as BHA seeks to wipe out deficit

Nick Rust: racing and betting have "interdependent relationship"
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Owners' fees to the BHA will rise by 7.5 per cent over the next three years as the regulator seeks to eliminate a £645,000 budget deficit that emerged in 2016, driven in part by a sharp increase in legal costs.

Legal and professional costs surged more than 25 per cent, costing the BHA £1.285m in a year in which the regulator was burdened by significant additional spending due to rehearings and costs associated with cases chaired by former disciplinary panel member Matthew Lohn. 

In another move that will forever change the appearance of British racing, the BHA also announced owners will be able to design their own colours as part of a new "premium option", while all will have access to a wider range of designs and shades.

The BHA will also invest in numerous new initiatives including the Racing Authority, the body that will manage funds from the forthcoming levy replacement, a complete rewrite of the rules of racing, new video technology for stewards' rooms and the implementation of reviews into integrity and disciplinary processes.

The moves were revealed in the BHA's three-year business plan and budget report published yesterday. It also contained confirmation that, subsequent to the levy replacement scheduled to arrive in April 2017, racing will seek to "ensure a smooth transition from the authorised betting partners model to a level playing field".

In theory this could mean the current restrictions on non-ABP bookmakers sponsoring at many tracks being lifted in a matter of months, although potential legal challenges to the new levy system from bookies may, in practice, delay the transition.

Chief executive Nick Rust said the increases to fees – principally paid by owners and racecourses, who together provide approximately 90 per cent of BHA income – would be phased in at an annual rate of two per cent in 2017 and 2.75 per cent in both 2018 and 2019.

"We have sought to limit fee increases over this period, and to phase them in to reflect the fact that we do not expect increases in levy funding to flow through to participants until 2018," he said.

"I appreciate any increase is unwelcome and I want to be clear we have done what we can to limit the scale of the increase. For example, our budget is based on the BHA delivering total annual savings of £1.1 million by 2019 compared to 2016.

"Our budget has to reflect our current financial situation. Over the past six years, the BHA's income has fallen by 9.5 per cent in real terms, due to a reduction in fee income as registrations have declined, but also as a result of our decision not to increase fees in 2013 and 2014."

Expenditure at the BHA is forecast to have risen just over four per cent in 2016 to £31.8m and outgoings will jump again by 2.7 per cent, close to £900,000, in 2017.  

One area where expenditure is expected to fall, however, is in legal and professional costs. From £1.285m in 2016 they will fall to just £780,000 in 2018. The BHA acknowledged in its report it spent "significant sums" in this area, but stressed that as well as legal fees and costs relating to disciplinary cases originally chaired by Lohn, including the Jim Best case set to be decided on Monday, it also incurred costs setting up the levy replacement. A spokesman for the regulator said it would provide more detailed expenditure, but not while cases related to Lohn were ongoing.

Other plans announced include developing a new equine welfare strategy with a new position of director of equine health and welfare, increasing the volume of dope testing and reforming the administrative processes of racehorse ownership. A new system for "developing and assessing potential racehorse trainers" before they apply for a licence will also be introduced.

I appreciate any increase is unwelcome and I want to be clear we have done what we can to limit the scale of the increase
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