THE VALUE of the Irish horse-racing industry has fallen by close to €500 million over the last two years, according to some calculations as the recession has hit both commercial breeders and training yards around the country.
The number of racehorses in training in Ireland has been declining sharply over the last three years and the trend is expected to continue. About one in every 10 racehorses born in the world is foaled here, and Ireland is one of the leading European producers of thoroughbred foals.
In 2009, 10,617 thoroughbreds were foaled here out of a world total of just over 100,000.
But according to a recently published report by Colm McCarthy for the racing and breeding industries, that number was down from a peak of 12,633 in 2007, and a further fall is expected when the figures for this year are calculated.
Brian Kavanagh, chief executive of Horse Racing Ireland (HRI), says the number could be down by as much as 15 per cent. “The number of horses in training is tied to the numbers that are foaled,” he said. There were about 7,500 in training at the end of November, and HRI expects this to drop in 2011.
Shane O’Dwyer, chief executive of the Irish Thoroughbred Breeders’ Association, said the overall value of the racing industry has fallen from €1.4 billion to less than €1 billion since 2008.
Demand for racehorses is falling. Mr O’Dwyer said sales at bloodstock auctions fell 60 per cent between 2008 and 2010.
The effect of this initially hits breeders and stallion owners, who produce the horses, but then also impacts on trainers, jockeys and stable staff.
The number of jobs in the industry fell to 17,000 from 22,000 in 2008, said Mr O’Dwyer.
Breeding is also an important export business and €175 million worth of Irish racehorses were exported last year, according to Mr McCarthy. A share of this goes straight to the exchequer.
Mr McCarthy stated in his report that it is difficult to find a country where racehorse production survives without a parallel racing industry. Racing has a number of revenue streams, one is the owners themselves, who contributed €275 million in training fees, prize money contributions and other costs last year.
Owners range from large, commercial stallion and breeding operations – such as Coolmore, Aga Khan and Darley – to small-scale owners, many of whom form syndicates to share the cost. Syndicates were plentiful during the Celtic Tiger years but they are now waning.
Another source of funding is betting, but this has become mired in controversy. When the area was restructured in 2001, the State-administered horse and dog racing fund was paid for through betting tax, which was then 2 per cent. It was cut to 1 per cent in 2005, and applied only to bookmakers’ turnover and not to punters’ bets.
The State made up the shortfall between the money raised from the tax and total due to the fund. This has meant cuts of almost €20 million in three years – €57 million next year down from €76 million in 2008. HRI wants the tax doubled and extended to online betting. The Government is committed to taxing internet betting, but has yet to work out how to do it.
Individual tracks sell sponsorship rights to the races they stage, but this spending has fallen down the list of priorities for many ailing businesses. Liam Holton, director of marketing at Punchestown, said the environment is tough, but that where sponsors feel there is a relatively quick payback, they can still be interested.
Punchestown has recruited new backers such as Boylesports and Ryanair, both of which benefit directly from the festival and racing generally.
Under an umbrella agreement with SIS, which provides television pictures to bookmakers and specialist racing channels, each course receives €37,500 for every meeting that it stages.
This is due to be renegotiated in 2013, and talks are likely to begin soon. However, according to Mr Kavanagh, there is unlikely to be a dramatic increase in the fee. The golden age of sporting media rights is over, he said, and many sports, including racing, are finding it harder to get into new markets, further broaden their appeal and boost the value of their rights.
“There is room for growth,” he said, regarding new audiences for Irish outside the traditional pool of Ireland, Britain and France. “But there’s no pot of gold out there,” he said.