The Jockey Club today announced record annual financial results and its greatest-ever contribution to prize money in Britain’s second biggest spectator sport.
The Jockey Club’s Group turnover in 2013 increased 11 percent by £16.6m to a record £166.9m (2012: £150.3m), beating its 8 percent growth achieved the prior year and the 1.9 percent growth in the UK economy1
. Admissions, hospitality and retail catering sales at major racing festivals, media incomes, music nights and non-racing events were particularly important in this performance.
Group operating profits2
increased 11 percent by £2.2m to a record £22.0m (2012: £19.8m), allowing it to contribute an industry record £18.24m (2012: £16.55m) towards funding prize money from its own resources through Jockey Club Racecourses, its 15-strong racecourse arm, which is the UK's largest3
. Total prize money at Jockey Club Racecourses reached a record £41.6m from 361 fixtures.
Five years of record business performance
2013 was the fifth consecutive year of record Group turnover and operating profits. In the last five years, The Jockey Club has grown its Group turnover by 31 percent (2009: £127.6m), Group operating profits by 28 percent (2009: £17.2m) and its contribution to prize money by 47 percent (2009: £12.4m).
A continued industry-leading contribution to prize money
Jockey Club Racecourses, which stages a quarter of the British racing calendar, accounted for 68 percent of the increase in all racecourses’ contribution to prize money in 2013. Prize money is the lifeblood of the sport, providing a return to racehorse owners and vital to the livelihoods of trainers, jockeys and stable staff. In just the last three years, The Jockey Club has contributed more than £50m to prize money from its own resources (£51.1m).
Nicholas Wrigley, who completes his five-year term as Senior Steward (non-executive chairman) of The Jockey Club in July 2014,
“I am pleased we report another excellent year for The Jockey Club enabling us to deliver on our promise to act for the good of British racing. The Jockey Club also takes seriously its wider role in British society. Racing is one of our greatest traditions, enjoyed by millions, with a deep and rich history. The way we operate, with all our profits invested back into our sport, is a reminder that long-term investment leads to long-term results.
“Much has been achieved in recent years, especially when you compare the millions of people enjoying themselves at the races in Britain to several other racing nations. With many of the finest racehorses, trainers and jockeys competing for prestigious races at famous racecourses, and despite its many challenges, British racing can continue to hold its head up as the best in the world. Focusing on constantly improving the experience we offer to all types of customers is very important and we will continue to do so in the years ahead.”
Simon Bazalgette, Group Chief Executive of The Jockey Club
“2013 was a year where The Jockey Club grew our business for the fifth consecutive year and strengthened our balance sheet, allowing us to invest a record amount back into British racing while being in the privileged position of offering millions of visitors, viewers and listeners great experiences in the process.
“Every penny of profit we make we put back into our sport to support its long-term health and prosperity. Racing is a sport that generates more than £3.45bn to the UK economy each year and supports thousands of jobs.
“Looking ahead, I believe it is essential to introduce greater meritocracy within British racing. If we incentivise acts for the good of our sport, such as through a more meritocratic fixture process, Levy funding distribution and other rewards, we will grow the sport for all to benefit.
“Improving the financial equation and experience for horsemen can positively affect the horse population, which will have the biggest impact on competitiveness, runners per race and the overall spectacle our sport offers. That is also in the best interests of the betting industry with whom we are intrinsically-linked and must work together more closely than ever for mutual reward in the years ahead.”
Jockey Club Racecourses drives record Group performance
In 2013, Jockey Club Racecourses welcomed attendances of 1.74m, including more than 235,000 at The Festival at Cheltenham, more than 150,000 for the Grand National Festival and more than 150,000 for The Investec Derby Festival. This was despite long periods of bad weather impacting advanced sales and walk-up crowds, and in some cases forcing the abandonment of fixtures, such as Cheltenham’s New Year’s Day 2013 raceday that attracted a crowd of 32,000 people in 2012. The first full year of operating under its new regional management structure contributed to increased turnover of £158.7m, up by £16.6m year-on-year (2012: £142.1m) and a £2.2m jump in operating profits to £21.0m (2012: £18.8m).
Prize money and high-quality racing surfaces help to drive field size numbers
The prize money levels at Jockey Club Racecourses, coupled with its investment in racing surfaces and the experience it provides to horsemen, continues to have a material impact on average field sizes (runners per race) at its racecourses.
In 2013, average field sizes across Jockey Club Racecourses’ Jumps programme were 9.4 runners per race. This compares to an average of 8.7 for the rest of the industry4
. Similarly, its Flat fixtures attracted 9.3 runners per race compared to 8.9 elsewhere.
Media continues to generate essential returns
Racecourse Media Group (RMG) manages the media and data rights for 33 British racecourses (34 when Ascot joins in June 2014), including all 15 of The Jockey Club’s racecourses. RMG also manages its racecourse shareholders’ stake in betting shop TV service, Turf TV. Combined total returns from RMG and Turf TV to British racing increased by 41 percent.
‘Racing plus music’ events make The Jockey Club the UK’s 6th largest promoter
In 2013, Jockey Club Racecourses welcomed more than 200,000 people to 23 'racing plus music' events, where six races were followed by a performance from a major music artist, including Madness, Kaiser Chiefs, McFly and Meat Loaf. This scale made Jockey Club Racecourses the UK’s sixth largest music promoter, according to Pollstar. These events generated significant profits for the Group and introduced many new customers visiting its venues around the country for the first time.
In 2014, Jockey Club Racecourses has entered into a joint venture partnership – Jockey Club Live – to stage future live music and entertainment events. Acts lined up to play at the Group's venues nationwide include Sir Tom Jones, Jessie J, Kaiser Chiefs, James Blunt, The Beach Boys and Dizzee Rascal.
First retail bond in British sport raised nearly £25m
The Jockey Club launched the first retail bond in British sport in 2013, surpassing its target by nearly £10m to successfully raise almost £25m towards the funding of its £45m grandstand development project at its flagship Cheltenham Racecourse. This was the second-largest unlisted retail bond issue ever, after John Lewis’ offer in 2011.
Industry commentators noted the success of the offer demonstrated a high level of trust in The Jockey Club’s historic brand and the modern, commercial approach it takes today to achieve strong financial performance. The communications campaign to raise the desired capital and build The Jockey Club’s reputation was awarded with both a PR Week and a PRCA Award and has been shortlisted at the Sport Industry Awards in May 2014.
Major investments to drive the business
In 2013, The Jockey Club invested £7.7m of capital into new and upgraded facilities across The Jockey Club’s racecourse estate. In 2014, this will increase significantly with the main works underway to develop a £45m state-of-the-art new grandstand at Cheltenham Racecourse in line with its status as a world-class sports venue. Expenditure will be spread through until 2016, when the project is completed ahead of The Festival that year, while financing for the development will be spread over several years.
Prior to The Festival 2014, The Jockey Club announced the full funding was in place for its Cheltenham development project, which amounts to the largest single investment in its history. This capital was raised through a combination of The Jockey Club Racecourse Bond, bank financing via The Jockey Club’s syndicate banks – HSBC, AIB and RBS, a Levy Board capital fund loan and the Group’s available cashflow from trading.
While more than £175m of capital projects have been completed across The Jockey Club’s estate over the last 10 years, the Group recognises the importance of continuing investment to provide customers and participants with the best experience and to ensure its ability to generate revenues for reinvestment back into British racing.
In line with this, in 2014 a range of capital projects are being funded in addition to Cheltenham. In addition to investments in facilities and new initiatives to promote British racing, The Jockey Club is continuing to invest in unlocking new and increased brand-related revenues, and realising returns from this during 2014.
New operational structure working well
2013 was the first full year of Jockey Club Racecourses operating under a regional management structure, supported by Group functions, after introducing the approach in 2012. This more efficient structure, which groups racecourses into four clusters – the East, South West, North West and London – directly contributed to Jockey Club Racecourses’ record business performance both through revenue generation and reducing and controlling costs.
Rewards4Racing builds on its initial popularity
By the end of 2013, The Jockey Club’s loyalty programme, Rewards4Racing, had more than 310,000 members, up from just over 200,000 in 2012. Members earned more than £1m of rewards in 2013, which was an increase of 100 percent year-on-year, and spent £18m on tickets to events at Jockey Club Racecourses.
Established in 2011, Rewards4Racing aims to increase the frequency of visit and spend among Jockey Club Racecourses customers, rewarding those who are regular visitors to one of its racecourses nationwide. Rewards4Racing points can be earned on advanced purchases at any of the Group’s 15 racecourses and from everyday spending online and in-store at more than 3,500 retailers in the UK. These can be redeemed for rewards including free or discounted tickets, restaurant packages, hospitality, annual memberships and a range of unique experiences.
Non-racing revenues growing
The Jockey Club’s investment in facilities continues to allow its teams to drive revenues from non-racing events and activities, such as conferences, launches, exhibitions, meetings and other events, with further business generated from leisure pursuits available at some locations within the estate, including golf, karting, dry slope skiing and equestrian sports.
In 2013, non-racing revenues increased to £23.7m from £22.2m in 2012, with growth driven by the Group’s hotel in Epsom and the Jockey Club Rooms. This equates to 15 percent of The Jockey Club’s turnover and helped to drive an increase in operating profits, despite challenging conditions in this marketplace.
Jockey Club Estates welcomes record horse numbers to Newmarket and Lambourn
Jockey Club Estates, the Group's property and land management arm whose assets include more than 3,000 acres of world-class training grounds, grew its turnover in 2013 by 5.3 percent year-on-year to £5.8m and increased operating profits to £0.6m from £0.2m in 2012. This was largely as a result of welcoming more horses to its training grounds, despite the number of horses in training remaining flat year-on-year and prolonged periods of bad weather.
This performance enabled further investment into its facilities, especially in all-weather tracks and horsewalks. As extreme weather patterns have made use of turf gallops more erratic, all-weather facilities have become even more important to the 110 regular trainers and many day visitors who use them.
A new record number of horses used the Training Grounds at Newmarket in 2013 (2,365 average per month) for the second year in a row, growing 3.9 percent on 2012 (2,276). Between 2009 and 2013, 26 new trainers and pre-trainers have set up in Newmarket and are now training more than 400 horses between them. Investment in facilities at Lambourn continues to bear fruit as horse numbers in Lambourn (562 average per month) grew by 7.7 percent on the previous year (522), augmented by an increasing number of daily visitors, both from the surrounding area and further afield. From January 2014, Epsom Training Grounds are now being managed by Jockey Club Estates.
The National Stud returns a profit for 6th year under Jockey Club ownership
While times remain challenging for breeders and boarding studs alike, 2013 saw The National Stud return a profit for the sixth consecutive year since being acquired by The Jockey Club from state-ownership in 2008, after being loss-making previously. The National Stud generated turnover of £2.3m (2012: £2.0m) and operating profits of £0.3m (2012: £0.7m).
The National Stud planned for 2013 to be a year of change and investment. In addition to taking steps to ensure its stallions remained attractive in an ever-changing bloodstock industry, the opportunity was identified to expand its high-quality offering of competitively-priced boarding services to its clients, which it achieved successfully.
Despite the testing operating environment, 2013 saw The National Stud achieve results far beyond budgeted performance in several areas. In particular, income from boarding mares outside of the breeding season surpassed targeted performance budget by 93 percent and, across the year, boarding income grew by 25 percent year-on-year. Revenue streams from The National Stud’s world-class training and education department were also strong. Income from public access and tours of the stud was also a contributing factor to the business’ successful 2013, with more than 18,000 public visitors welcomed to enjoy the stud in operation.
Racing Welfare provides important support to British racing’s people in need
2013 was another important year for The Jockey Club’s charity for racing’s people in need, Racing Welfare. In raising more than £880,000 in funding it significantly exceeded its previous fundraising achievements and was able to support almost 800 beneficiaries. Its activities included Welfare Officers providing 5,774 sessions of counselling or assistance and the distribution of individual support grants totalling almost £100,000.
Managed debt position
In the last 10 years, The Jockey Club has invested more than £175m in capital expenditure projects. In 2013, the Group reduced its bank debt by £13.3m. Its year-end total debt position increased by £10.9m to £97.1m, reflecting the addition of The Jockey Club Racecourse Bond issued in May 2013, but partly balanced by the repayment of some bank facilities as the Group continues to repay its debt obligations in line with, and in some case ahead of, contracted timescales.