Regulus Partners begins its week of industry observations by analysing Arena Racing Company’s (ARC) decision to overhaul its prize-pool structure and points system of its UK racing fixtures.
Should ARC’s strategy be executed correctly, the changes adopted may prove to be beneficial for all UK racing stakeholders battling the heritage sport’s visible declines…
Arena Racing Company (ARC) has announced some important changes to its summer prize money pool which warrant wider observation and analysis as they play through and progress
As well as increasing the value of winning lower tier races in what is typically a relatively quiet part of the season, ARC is also paying material sums to horses which accumulate wins over months of racing and the flat season overall via a points system leading to ‘bonuses’ at its All Weather Courses (Lingfield, Wolverhampton, Newcastle, Southwell) for both the Summer and Winter Season.
While the cash injection is relatively minor in the scheme of things, if the test conditions are properly carried out and monitored, we believe that this could be one of the most important changes to the GB racing ecosystem since Media Rights solved for Levy atrophy (to no obvious benefit to engagement).
Horsemen (usually trainers) in many jurisdictions complain that the prize money on offer is not enough, wherever it is set. ARC has suffered particularly from militant trainers seeking to boycott its courses over ‘pay and conditions’, so more money should be a welcome emollient to a fraught if vital relationship.
Due to the nature of their product and the lack of attendance (which drives ticket sales, corporate sponsor opportunities and is a good proxy for TV viewing), ARC’s prize money is low by international standards, so perhaps more can be justified in its own terms as a fairer incentive and transfer of value.
ARC is also one of the few racecourse groups which is explicitly run for profit, meaning it is dangerously easy to criticise by people who expect to be paid more without thinking too hard about where the more should come from or about what impact ‘more’ might have on fragile ecosystems without structural changes.
Structural changes are critical to providing more money, however, since it must come from ‘somewhere’ and ARC seems to have captured this with its bonus structure. Even a cursory analysis of global prize money levels reveals that there is no meaningful correlation between the level of prize money on offer and the number runners a race attracts.
There is, however, a very high correlation between the number of (good) runners and competitiveness, and especially between competitiveness and betting revenue per race. Giving more prize money to runners without reforming the ecosystem has merely created a spiral of unproductive inflation: in the case of horseracing this is most acutely seen in the cost of bloodstock, which also prices out many potential owners outside the typically unsatisfying world of syndicates.
An obvious way to improve the ecosystem for all participants (or nearly all), is to get horses to run more, which represents a basic productivity gain and so avoids inflation. If the horses which are running more are also relatively good within their class and discipline, then this will also produce a much better betting product, thereby generating the additional revenue necessary to fund higher levels of prize money.
Whoever thought that KPI-based bonuses might provide an effective incentive tool so long as they were managed properly…
____________________
Featured article edited by SBC from ‘Winning Post’ Sunday 26 June 2022 (click on the below logo to access the full unedited analysis of Winning Post).