Since several horse racing organisations are reluctant to take on further debt, the sport will only earn half of the £40 million initially set out by the Department of Digital, Culture, Media, and Sport (DCMS).
Racetracks have been reluctant to take on further loans due to the financial effects of the coronavirus pandemic, according to the Racing Post, preferring instead to “sort out their own credit arrangements” prior to the government’s autumn relief announcement.
Horse racing will earn £21 million, charged directly to the Horse Betting Levy Board (HBLB), instead of the full £40 million – out of a possible £300 million promised to help sports.
The considerable amount would help raceday ethics, health and safety expenses, and encourage the HBLB to continue its financial support of the industry.
Reluctance to recognise full amount
David Armstrong, Chief Executive of the Racecourse Association, explaining the motivation behind many racetracks’ reluctance to recognise the full figure, said: “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.”
The £21 million figure was estimated based on the Levy Board’s spending since October, according to Armstrong, so the DCMS had to ensure that public funds were being used to pay running expenses 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 debt issues, the loan has been well received by the horse racing industry, with Julie Harrington, Chief Executive of the British Horseracing Authority (BHA), stating that the financial assistance would allow horse racing to proceed behind closed doors before visitors could return.
Alan Delmonte, the HBLB’s Chief Executive, also added: “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.”