Former minister Lord Donoughue this afternoon stressed that the racing
industry could find itself in an "Armageddon" situation if it fails to
unite behind the findings of the Future Financing Review of Racing Group.
Donoughue, who chaired the Group, was guest speaker at the Thoroughbred
Breeders' Association's Annual General Meeting in London today, Tuesday,
January 10, 2006.
His Group delivered their findings, which are still confidential, to Sports
Minister Richard Caborn before Christmas having been set the task of
finding an alternative to the Levy Board to fund the sport which would not
involve statutory intervention.
"I'm not sure that everyone appreciates the acute financial crisis facing
racing which arose because the government agreed to abolish the Levy," said
Donoughue. "The government wanted to get rid of the Levy and was persuaded
by the BHB that it had a replacement in data rights. But they did things
the wrong way round - they got rid of the Levy before they introduced the
replacement, which it turned out doesn't fly legally.
"We agreed a three-year extension of the Levy until 2009 but unless there
is a secure, sustainable replacement it is a kind of Armageddon - the
industry will be minus £100 million from the Levy.
It will be a disaster for everyone, not just the racing industry but also
"My message to all in racing and breeding is that we must unite to find a
sustainable funding system for the industry. We need consensus in the
industry, especially over the next two months when each party considers its
Donoughue added that press reports of his committee's findings had been
accurate and that the solution he had found was the sale of picture and
"We examined lots of options - licences to bet, mandates to bet etc and
found that without government statutory intervention none of them would
work," he continued. "The only one that would fly without government
intervention was the sale of pictures and associated data to bookies and
the media. It was the only solution we could find that would produce the
necessary revenue and not require government statutory intervention, which
the government stated quite firmly to us was our term of reference.
"We think it will raise a sum broadly in line with that which was produced
by the Levy. It requires the whole industry to unite and support the
proposal - if there is dissent that will kill the scheme and the financial
future would be bleak. Breeding can contribute and I'm delighted to hear
Philip's intention to join the new Horsemens' Group - all the actors should
Donoughue admitted that his proposals were not yet legally watertight and
this could be the only other sticking point.
"Our proposal is not yet legally secure, we think it can be and over the
next two months the legalities must be looked at. I'm not pessimistic about
the legal side although as the BHB found out, you can take all the legal
advice you want but you are never sure until someone takes a test case to
court. But the more legally robust it looks, the less likely someone will
want to incur the costs of going to court.
"If this fails and there's no commercial option that's legally robust it
seems to me that what remains is going into Armageddon - an industry
without subsidy that will be much smaller than the present one or there
will have to be a statutory intervention by government."
Donoughue felt it unlikely that government would be willing to revive the
Levy Board, having announced its abolition.
"Legally the government has abolished the Levy and if we wanted to revert
to that we'd be asking the government to do the biggest U-Turn I've known
after 40 years in politics. It would be a very difficult thing to persuade
ministers to do.
"If a different version of the Levy was introduced, Europe could come down
and say it is State Aid, I think the previous Levy only survived because it
was introduced pre-Europe."