The outbreak of, and the need to response to, the Covid-19 pandemic gave the Horserace Betting Levy Board many new challenges requiring agile solutions.
It was clear by mid-March 2020 that Covid was going to have a significant impact on the ability to stage racing fixtures normally. By the time the decision was taken by the British Horseracing Authority to cease racing from 18 March 2020, the immediate requirement identified was to deal with the hardship that might be facing people in the sport and any knock-on effect on racehorse care as a result of the suspension of racing. Within a few weeks, after a period of intense assessment, the Board and the Racing Foundation had agreed a £28m package which combined assistance to individuals and for horse care, which the Racing Foundation dealt with, and cash flow support for racecourses, which the Board took on.
The Board provided this support in three new ways. It made provision for a working capital loan scheme for racecourses of £7.5m, jointly funded with the Racing Foundation, under which each racecourse was given the option to borrow up to £200,000. In addition, £6m was released to provide early up to eight already-committed raceday services grants, with up to around £100,000 made available for each racecourse. The Board also allowed those racecourses with capital credit balances to convert these back to cash if they so chose, freeing up a further £6.5m in immediate support.
It reflected exceptionally well on the sport that the provision made for racehorse care was not called upon, with racehorse owners, trainers and staff continuing to prioritise the welfare of horses.
These initial cash injections dealt with, the next step was to consider the Board’s ongoing expenditure, mindful that, with racing suspended for an indefinite period, HBLB had no income.
The Board identified three broad stages to its support. First, ensuring the maintenance of infrastructure in the sport, recognising that although racing was suspended for an unknown length of time, substantial work would be required in ensuring that resumption planning was supported with the necessary expertise and resources. The Board therefore maintained funding for the central regulatory functions of the sport. It also decided to continue with its funds for other important committed expenditure, such as stable and stud staff training courses and veterinary science and welfare services and projects, writing to all recipients to ensure that expenditure was focused on areas deemed by the Board as “necessary and essential”. This allowed the Board to make considerable savings and manage its own cash flow appropriately. Nonetheless committed spending still totalled some £2m a month.
The second stage in mind was to ensure that there would be a substantial kick-start to the sport’s funding whenever fixtures resumed. This recognised that, with there being no prospect of paying crowds at racecourses being permissible for a period of time, the ability of racecourses to contribute to prize money levels would be limited.
The third stage was the most difficult to assess at the outset, which was the need to ensure that the Board would be able to provide more than usual support after fixtures resumed. Even in those early stages in spring 2020 there was recognition that over and above normal injections of Levy funds should be available for as long as possible, ideally well into 2021.
It was also fundamental that, once resumed, racing fixtures should be run in a way that demonstrated to Government and the public that there was full compatibility with new Covid-related regulations.
The ability to consider giving assistance over such an extended timeframe was only possible because the Board had sufficient funds in reserve. It had been a particular aim since the Levy reforms of 2017 to ensure proper resources were maintained. The benefits of this prudent policy were apparent at the start of the 2020/21 Levy year when the Board began with reserves of £58 million.
The impact of Covid reinforced that when there are difficult times, the expectation in the sport is that the Board will simply be there, able to help. Holding sufficient reserves provides comfort and security and is a bulwark against unforeseen events.
While racing was not taking place, bookmakers nonetheless generously continued to make their pre-agreed payments on account to the Board. This provided a very welcome inflow of funds to the Board when making its expenditure decisions.
Racing resumed on 1 June 2020. Even with Licensed Betting Offices closed, total betting turnover levels and resultant gross profit held up well, with an increase in remote betting turnover compared to normal partly making up for the loss of retail revenue. Gross win and Levy appeared to be fairly close to usual levels, albeit without making up the loss of income from the two and half months of lost revenue. Trading reports from bookmakers were carefully monitored and this gave the Board the ability to agree in July 2020 a 50% increase in prize money for the four-month period from 1 September.
That 50% injection was perhaps the most important part of the additional prize money in the Covid period. While racehorse owners’ continued generosity and patience were the ultimate key to maintaining the fixture programme in the busy summer months, the promise of the Board’s extra contribution aimed to provide confidence and continuity ahead of the autumn bloodstock sales season.
Overall, for the last six months of 2020, the Board’s contribution to prize money was 42% up on the same period in 2019, drawing on the Board’s reserves.
In addition to the prize money expenditure, the Board agreed in August 2020 an extra £3 million in grants supporting the additional necessary regulatory requirements at racecourses. This included £1.46 million towards costs incurred by racecourses to meet new regulatory standards for participants around social distancing, reconfiguring weighing rooms and putting in place perimeter fencing at certain venues to ensure that there was no unauthorised access, plus £1.5 million for Personal Protective Equipment and face coverings to be used on racedays. These exceptional items all supported the overriding aim which was to be able not just to resume fixtures, but to ensure that these took place repeatedly in a demonstrably safe and compliant way.
The Board then announced substantially enhanced support in the first four months of 2021 including a 46% increase in prize money contributions in that period. By the end of the Levy year on 31 March 2021, reserves stood at £43.5m.
Given all of the circumstances over the year, this was an outcome that the Board was pleased with, Levy funds having been judiciously and sensibly applied while leaving enough headroom for utilisation to support the sport with extra funds in the remainder of 2021 and into 2022.
The additional support in 2021/22 was supplemented further as a result of the Board agreeing to take a £21.5m loan from Government’s Sport Winter Survival Package, a sum plus interest that is repayable in instalments until 2030.
This loan made possible 2021 prize money expenditure of £72m, compared to pre-Covid levels of around £60m.
Further normality returned for 2022 and the underlying HBLB financial position at the end of 2021/22, with reserves of £29m, remained sound. The cash position was better than this but was necessary having in mind the likelihood of a request from Racing during future years for substantial loan funds towards a major racecourse-wide project to develop and improve weighing rooms.
Looking back on the period of Covid-19, the Board spent around half its reserves in putting in place new or enhanced schemes to support the sport, including the provision of significant additional sums for prize money, regulation & integrity and other areas to benefit the sport, as well as making loan funds available. Racing’s overall infrastructure was maintained and although the sport took a substantial financial hit, it was able to navigate the most difficult obstacles in its way.
