The reluctance of many horse racing bodies to take on more debt has led to the sport receiving only half of the £40 million originally earmarked by the Department of Digital, Culture, Media and Sport (DCMS).
According to the Racing Post, racetracks have been unwilling to take on more debt due to the financial impacts of the coronavirus pandemic, instead opting to ‘sort out their own credit arrangements’ prior to the government’s autumn relief announcement.
Instead of the full £40 million – out of a total £300 million pledged to prop up sports – horse racing will instead receive £21 million, paid directly to the Horse Betting Levy Board (HBLB), announced yesterday.
The significant sum will provide financial support for raceday integrity, health and safety costs, and enable the HBLB to continue its monetary backing of the industry.
Explaining the motivation behind many racetracks’ reluctance to accept the full figure, David Armstrong, Chief Executive of the Racecourse Association, remarked: “There were structural challenges that in particular meant it was very difficult for racecourses to borrow the money. Racecourses were being asked to borrow money that would effectively be used to fund prize-money from which they don’t generate returns to pay it back.
“However, the biggest problem was that many racecourses did not want to take funding because they already have significant debt on their balance sheet and they have added to that debt during COVID quite extensively to help them survive.
“What they didn’t want to do was to take on more debt with more repayment obligations in the future which would have made life very difficult for them. In some cases they couldn’t, there were restrictions within their existing borrowing rules that meant they could not take on new loans.”
Armstrong also explained that the figure of £21 million was calculated based on the Levy Board’s expenditure since October, as the DCMS wanted to ensure that public funds would only cover operational costs, and not prize money.
“One aspect was that the government was not too keen on the idea of distributing funds from this pot that went straight into prize-money,” he concluded. “It’s about replenishing the Levy Board for the amount of money they have spent since the start of October.”
Despite concerns regarding debt, the loan has been well received by the horse racing industry, with Julie Harrington, Chief Executive of the British Horseracing Authority (BHA), noting that the financial support would enable horse racing to continue behind closed doors until spectators can return.
Chief Executive of the HBLB, Alan Delmonte, also commented: “The loan provides additional flexibility and a cushion for the Levy Board. This short-term benefit outweighed the cost of the interest of the loan which will be incurred and need to be repaid alongside the loan sum in future years.”