click to edit master subtitle style 11/25/11 horse racing industry submission to the trade &...

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11/25/11

Horse Racing Industry Submission to the Trade & Industry Parliamentary Portfolio Committee

Presentation by Phindi Kema


11/25/11


Is horse racing a hobby or a sport?• It is both:

• From a government perspective:• It is a national industry• It is a major employer• It is regulated• It is forms part of an international community of major sporting events

that attract international owners, tourism and is a facilitator of nation building and pride

• From a historical perspective, stakeholders are divided by race and economic capacity

• The breeders, owners, trainers and jockeys are mainly white• The race goers and grooms are black• Race courses have been provided by local government authorities

• From an owner perspective, it is a business• It generates an attractive return on investment

IN DEVELOPED COUNTRIES, HORSE RACING IS A MAJOR SPORT AT THE LEVEL OF SOCCER, CRICKET, RUGBY AND GOLF, etc


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Best practice examples: UK, Australia, Hong Kong

• Has generated more than £1 billion in tax revenueover 5 years

• Has seen capital investment of more than £700 million

• Employs more than 100 000 people directly and indirectly

• No of people attending horse racing in 2008 in the UK: 5,7 million

• Horse racing is now second biggest sport in terms of annual attendance, second to soccer

• Stakeholders: Racegoers, Owners, Trainers, Breeders, Betting operators, Employees, Broadcasting companies (Local and international), International horse racing community, Government (National and local)


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• No of horse racing tracks:• UK: 60• Australia: More than 300 • Hong Kong: More than 10

• Components of economic impact of horse racing

CORE INDUSTRY OTHER DIRECT IMPACTS - RACEDAYINDIRECT IMPACT - MULTIPLIERS


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• Direct, indirect and associated employment:• British horse racing example

100 000 people employed

Secondary employment 26 000

Construction 700

Core industry 18600

Directly related 2800

Betting 52000


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• The racing industry capital expenditureUK in the 5 years to 2008

Capital Expenditure £706 Million

Race courses £556M

Trainers £60M

Breeders £50M

Others £40M


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The business case for horse racing: Economic impact

• Race courses• Racegoers admission fees, catering spend,

Corporate attendees• Sponsors and advertisers, on course betting

non raceday attendees, conferences, banquets, hotels

• Media: Broadcaster payments, overseas television broadcast

• Owners: Ongoing expenditure on horses and trainers, capital cost of buying horses

• Breeders: Stud farms, commission for auctioneers of horses

• Off course betting: Betting industry revenues and tax collection

• Off course expenditure: Accommodation, food and drinks, etc

• Secondary expenditure: Business to business transactions, consumer expenditure• http://racingandsports.tv/viewVideo.asp?vid=1L9&type=0


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Racing’s position within the sports market: UK

• Top four attended sporting events in the UK in 2008:Tennis, Horseracing, Motorsport, Golf,

Total Attendances in UK for Selected Sports 2008 in '000

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Soccer Horse racing Rugby Greyhound racing Cricket


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The importance of regulation in horse racing:

• Fair competition

• Entry of new players, local and international

• Structural change of racial mix , i.e. entry of HDI into ownership, training, betting operations, etc

• Raising the level of horse racing in South Africa to international best in class

• National horse racing authority, like SARB and SAFA, to have accountability to Minister of Sports

• Promotion and development of the sport in all provinces and creation of employment


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The state of horse racing in South Africa

• Horse racing corporatization

• Vertical sector with a dominant monopoly

• Horse racing is deteriorating because of old ways of doing things

• Race courses, betting operators are all in the same private hands

• South Africa does not have centre stage status in horse racing unlike Australia, UK, Hung Kong, Dubai, USA, France, etc

• Very long ago, horse racing was a hobby for the wealthy, now it is a national sport that creates employment, attracts large sponsorships and prizes, and promotes tourism

• Horse racing in South Africa can be the anchor for the industry in Africa and take advantage of weather and time zone differences with the USA, Europe and Australasia


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The state of horse racing in South Africacompared to other countries

Leading horse racing nations:1= Ireland, 2 = France, 3 = Britain, 4 = Japan, 5 = Australia, 6 =

USA

1, 3000

2, 6000

3, 11000

4, 13000

5, 5000

6, 7000

0

2000

4000

6000

8000

10000

12000

14000

16000

0 1 2 3 4 5 6 7

No of different runners x 10 000

Betti

ng tu

rnov

er in

£N

illio

ns


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Recommendations:

• Enquiry into horse racing industry

• Resolve existing monopoly in industry

• Horse racing authority to fall under Ministry of Sport

• Reconstitute the horse racing authority

• Ministerial cluster for horse racing to be set up and map strategy together with stake holders how to raise the industry to an international standard and become the hub for Africa


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Questions and Answers:


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THANK YOU

click to edit master subtitle style 11/25/11 horse racing industry submission to the trade &...

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