Written by Matthew Sandblom
Cover image courtesy of Ashlea Brennan
I’ve read the just released draft Racing NSW Strategic Plan and it is a very disappointing and lazy document. It is just a cut and paste of their standard annual report with the accounts section deleted. You would have produced a better document if you had asked one of the AI programs like Chat GPT to write it.
It just rehashes the good things that Racing NSW has done in the past and promises to do more of the same in the future. It says little new about some of the key issues that confront the industry such as changing attitudes in society about animal welfare and tighter restrictions on gambling advertising and its effects on revenue.
Matthew Sandblom | Image courtesy of Kingstar Farms
To me these are the twin pincers that will continue to mount pressure on the racing industry in decades to come. If you do not address the animal welfare issues in a more comprehensive way than what Racing NSW currently does, then being involved in horse racing will become less and less socially acceptable.
Owning a share in a horse will no longer be something to tell your friends about and therefore you will have a declining ownership base. Sponsors will not want the blowback from being associated with the industry. The office Melbourne Cup party will also become a thing of the past, I know it has in my non-horse businesses, because it goes against the values of quite a few staff.
“If you do not address the animal welfare issues in a more comprehensive way than what Racing NSW currently does, then being involved in horse racing will become less and less socially acceptable.” - Matthew Sandblom
Australia is one of the biggest gambling markets in the world and this has attracted the biggest bookmakers in the world. This has led to a huge amount of advertising that has intruded onto people's phones and TVs. These companies also have much more sophisticated, some would say predatory, marketing techniques, to extract the maximum amount of money out of each customer.
It is no surprise that there has now been significant community backlash which will lead to much tighter regulation. Racing is seen by most people as a sport put on for gambling purposes, so its reputation has been collateral damage in the war for market share between bookies.
The basic strategy that Racing NSW has pursued, in the Peter V’landys era, has been to focus maximum effort on increasing betting turnover and make sure that you are getting a fair share of this turnover for the racing industry. Once you have this increased revenue you can then afford to increase prizemoney, which increases returns to all participants.
Peter V’landys | Image courtesy of Racing NSW
You can also put on super prizemoney races like The Everest and still have enough money left over to improve infrastructure. This strategy has worked well over the last 15 years, but I think it is not fit for purpose for the next 15 years.
One of the key areas covered right upfront in Racing NSW’s Draft Strategic Plan is the increased return to owners due to increased prizemoney over the last 10 years. By its calculations about 51 per cent of owner's yearly expenses, on average, will be covered by prizemoney. This calculation excludes the actual cost of purchasing the horse in the first place.
The average yearling price, across all sales in 2023/24, was around $154,000 (inc GST). About 85 per cent of horses have depreciated by 90 per cent or more of their value by the time they turn 4 years old. So, most horses are losing about $40-50,000 in value a year on top of training costs.
So effectively owners are paying about 70-75 per cent of all the costs associated with each horse and prizemoney is accounting for 25-30 per cent. Racing NSW has done a good job increasing prizemoney, but this only makes a marginal difference to the total cost of horse ownership. If prizemoney was to increase 30 per cent tomorrow, owners would still be paying 60-65 per cent of the costs of racing horses.
“Racing NSW has done a good job increasing prizemoney, but this only makes a marginal difference to the total cost of horse ownership. If prizemoney was to increase 30 per cent tomorrow, owners would still be paying 60-65 per cent of the costs of racing horses.” - Matthew Sandblom
This brings me back to why the animal welfare issue and the overall image of racing is so important to its long-term future. If animal welfare issues, make racing less socially acceptable, then this decreases the enjoyment of racehorse ownership. Think of a piece of jewellery, it is worth much more than the precious metals and jewels that it is made from, but people are willing to pay high prices as a show of love for people in their lives. How would that show of love be interpreted if the recipient found out that the beautiful diamond on the ring had contributed to the deaths of children in an African diamond mine?
People are willing to pay a lot of money for the hopes and dreams they invest in a horse. Will this still be the case if these dreams are tarnished by bad press about horse welfare issues? While I know there will always be some people who would not be happy unless racing was banned altogether, I think that the majority would not have an issue as long as the industry is proactive in taking action to ensure horse welfare is a top priority in all areas of the industry, not just rehoming. And has the data to back up its claims when challenged.
