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Is Bob Crow running racing?

I watched the Andrew Marr programme last Sunday morning, and Bob Crow, the man who runs the RMT union and is responsible for calling the tube strikes, was on it. I can’t remember word-for-word what he said, but I remember the gist of it. It was something on the lines of, “we need a fair return to our workers, and we’re going to fight to get one.”

In principle, I had every sympathy with his statement. I think you would have to be hard-hearted not to. A fair return, is – well, fair. But I think that the strike strategy is misguided, and I think that more people out there agree with me on that than don’t. Which must go to show that we have a different idea of what is fair.

I thought of Bob Crow when I received a BHA e-mail about “Racing United – the Campaign for a Fair Levy”, which asks “you all as people that have some degree of affiliation to the sport of horseracing” to “sign the charter” on

It says that “all of us that are involved in the sport have a responsibility to push the message contained within the Charter, relentlessly, to MPs, the Levy Board and indeed the bookmakers, over the next few months. The implications of the government allowing the status quo to continue with the Levy could mean that horseracing receives significantly less than £75m in 2011 from the Levy Scheme. This is off the back of the betting industry making at least £1bn in profits from betting on horseracing EVERY YEAR.”

It goes on, “To those of you involved in the sport that we are all passionate about I would ask that you please spread the sentiments of the Charter.”

I would sign up myself to the basic sentiment that ‘racing should have a fair return’. But racing remains so pitifully cack-handed in the way it is approaching this subject, that this campaign is destined to attract no wider an audience than the obvious signatories in the industry, when what it needs a wide coalition of support. To this extent, it is just like Bob Crow: it starts from a fair and reasonable standpoint, before going off on one and losing any hope of getting wider support.

It also doesn’t help itself by demonstrating in spades that it does not come close to understanding the argument it is trying to make. For example, isn’t it extraordinary that Paul Struthers, the BHA’s communications director, should have been asked to talk about the return to racing on the basis of turnover in justifying racing’s position? He is quoted in the Guardian as saying, “If you look internationally at where racing is and where it is currently going, we are getting the equivalent of less than 1% of [bookmakers’] turnover. In Hong Kong, it’s 2%, in France it is 8%, and there are others that are higher than that.”

And your point, Paul, is what? Tell me: would you prefer to have 8% of turnover of 100, or 1% of turnover of 1000? Let me spell out the numbers, although I am quite aware that you are too bright not to know what a nonsense argument this is: one of them gives you 8, the other gives you 10. So what is the relevance of the percentage of turnover which different countries get, when, unless you put it in the context of other metrics, it doesn’t tell you anything at all?

I know that there are a lot of people in racing still focused on turnover, because until 2001, turnover was the metric by which Racing was paid. But since 2001, it has not been: Racing is paid on the basis of gross profit, and as I have said a million times on this blog, gross profit is the product of turnover and margin. Its introduction allowed price competition (in other words, the cost of betting fell) and as a result, turnover rose. I have explained at length in the past how this works in every retail market in the world, but still it appears that people in Racing cannot let it go. I’m reminded of the physicist Max Planck’s dictum, quoted in last week’s The Week. “A new truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die and a new generation grows up familiar with it”.

So the only question we have before us, agreement over which would allow the whole world to sign Racing’s petition, is ‘what is fair?’ That, it would seem clear, is just a commercial negotiation. All of us want to get paid more; all of our employers pay us as little as they can get away with while still keeping us working for them. All of us want products to be cheap; shops charge us as much as they can while still getting our business. The world is a marketplace.

I have sympathy for Racing if the cost of its product is agreed to be 10% of bookmakers’ gross profit on British horseracing, and actually their return proves to be lower than 7.5% because a lot of the betting on British horseracing takes place overseas and they can’t get at it. That, I can see (and spent much of 2003-2008 telling them, while they told me that it wasn’t an issue and the issue was falling margin), is a frustrating problem; a loophole, even. But this legitimate grievance, easily-enough addressed, is clouded by the fact that they throw it in with a whole load of other nonsense, and cloud it with nebulous figures and half-understood red herrings. Who, seriously, can start a campaign with statements like “at least a billion” and “could mean less than £75m”? Who makes a basis of claim for more money on the back of a 14% fall in overall return (from Racing United’s own website),  not only measured on a timescale that starts before the world economic slump and finishes today (14% down therefore being a remarkably good performance), but also taking as its starting point from which to measure the demise, what Levy Board Chief Executive Douglas Erskine-Crum told Channel 4 from Goodwood in July was “a one-off…as a result of some high rollers”.

Equally, it comes as no surprise that the Racing press release should also claim that betting exchanges, for which read Betfair, somehow don’t pay the right number (at 10% of their gross profits), on the claimed basis that there are lots of people on betting exchanges who do things that they shouldn’t and don’t pay when they should. No matter that in ten years, no-one has ever managed to find these people, nor that Racing has failed to convince any independent authority of the reality of such a group’s existence. But who cares? It sounds plausible; it’ll get a lot of people in Racing who want to believe it signing up; and on that basis, let’s keep banging on about it. Sadly, this fixation not only will not advance Racing’s fair quest so much as a single centimetre, but it will set it back. Like the boy who cried wolf, no-one in authority will believe them for any of the things that they say with justification, when they say so much that is so easy to knock down and demonstrate as false.

I told Nic Coward in Japan in late 2008 that racing deserved better leadership than it was getting. If anything demonstrates that that remains true, this Racing United campaign does. It is a worthy cause which ought to have significant support; but it is framed in terms which pull the rug from under it, arguing on an emotional rather than factual and empirical basis, as is Racing’s way. The solutions for Racing is far simpler than its management is making them out to be, and would be visible to all if they stopped spending their lives railing at the wrong target.

The detail of that would over-extend this post far too much. I shall return to it, perhaps, another time. As things stand for this one, this is a campaign much like that run by the RMT. Racing insists that the price it gets is not fair, while the bookmakers think it is. No-one’s arguing against fairness as a concept. There’s just a difference of view about where fairness lies, and Racing is making a hash of arguing that the line is currently drawn in the wrong place.

Posted in Betting industry, Regulation.

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9 Responses

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  1. Trigger Happy says

    The lack of support for racingunited seems quite telling. I’d guess a lot of people who follow racing have no idea about the site because they have hardly managed to publicise it. If you google “racing united” it asks did you mean A totally different site! Signing it would seem like a vote for the current leadership I feel.

    Your stuff about Greece is a little hardcore for most us I would imagine… but from what I read that is quite an interesting tale going on. The hypocrisy of the big bookmakers knows no bounds.

  2. Trigger Happy says

    When I said of ‘most of us’ I should have said for me personally. Just meant it is a real gritty subject for industry insiders especially.

  3. PPBox says

    What are you supposed to do if you think that bookies in Gibraltar not contributing to the sport is a problem, but “unlicensed layers” on exchanges is total bollocks fabricated ironically by levy-dodging William Hill? I’d quite happily sign their charter if there was some way of showing support for the bit that’s perfectly valid, as long as I could make it clear that the utter bobbins about layers on Betfair is just that.

    I just read William Hill’s submission to the Levy Consultation. It appears that they’ve worked out that every pound Betfair made on horseracing (£60m) is premium charge (they reckon leviable businesses made £300m last year on Betfair LOL). What do you think about that Mark?

  4. MD says

    PPB – precisely my point. There is valid stuff in the campaign but they mix it with stuff that is so absurd to anyone who actually bothers to look rather than speculate, and so they limit their support dramatically. Even people who sign up to it would change their minds about what constitutes ‘fair’, and would accept that Betfair’s 10% of GP is the right number, the minute they saw the numbers. But WH bandy around these absurd figures on the basis of absolutely nothing at all and it gives the argument legs for a while. That’s why we have had this merry-go-round for ten years.

    TH – you’re probably right that the Greece stuff is too detailed for many tastes; but it is a major issue affecting the industry, so ultimately it affects punters too. And I know some readers are specifically focused on the detail of the issue.

Continuing the Discussion

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