Mr. Brian Kavanagh:

I thank the Chairman for the opportunity to speak to the committee today. This is not a bad day to be addressing the committee, following a fantastic first day at the Punchestown festival, where we had a record crowd and the pleasure of watching a fantastic horse, Sprinter Sacre, the highest unofficial ratings horse over jumps since Arkle 50 years ago.

I am Brian Kavanagh, chief executive of Horse Racing Ireland, which is the commercial semi-State body responsible for the development and promotion of the thoroughbred horse racing and breeding industry in Ireland. Horse racing is, arguably, Ireland’s most successful international sport and contributes almost €1 billion annually to the economy. Ireland breeds more thoroughbred horses than Britain or France and is the fourth largest producer in the world. Horse breeding is primarily an agricultural industry, sustaining up to 16,000 jobs, mostly in rural Ireland. Last year thoroughbred exports from Ireland to more than 35 countries were worth in excess of €174 million and bloodstock sales are one of the few positives in the wider economy, having grown in each of the past three years. It is exactly the sort of industry that will help Ireland’s recovery. It is labour-intensive, rural-based, export-led, environmentally friendly and one in which Ireland has significant natural advantages in terms of both human resources and our environment.

Much of the demand for our horses is driven by overseas buyers as a result of the winning performances of Irish horses at the top level across the globe. In the past month we have seen Irish horses win at group one level in Cheltenham, Aintree, Japan and Dubai. This success encourages owners to have horses in training here or to keep their breeding stock here, generating significant rural employment. It is said that three horses equate to one job in our industry. This is a fiercely competitive area and we must use every advantage to stay ahead. Ireland is struggling to compete with better-funded countries who can offer bigger prize money to attract the best horses into their racing industries. In some areas of the industry, many participants, including some racecourses, struggle to survive as reduced disposable income has an inevitable effect.

Sponsorship of races is one of the key components of keeping our prize money at an internationally competitive level. Sponsorship of racing by the drinks industry has always been a feature of our sport. It represents approximately 10% of the total commercial sponsorship pool for racing. Sponsors spend a great deal more in marketing race meetings and in entertaining customers and staff at the races than just the sponsorship fee. The total value of drinks industry sponsorship to racing is in excess of €1 million a year. Racing has a culture of responsibility around it. We do not permit inappropriate sponsorships and racecourses work with their drink company sponsors in applying codes of practice. Racing is demonstrably aimed at an older rather than an under-age audience. Research shows that the typical racegoer in Ireland is aged 35 or over and experience shows that race meetings are good-natured and convivial events, perhaps the very place where younger adults might observe how to drink and socialise in a responsible manner.

Let me be clear. Racing supports the regulation of alcohol promotion, with an emphasis on the protection of younger people. However, that is not what is being proposed. What is being proposed is a ban, a blunt and crude instrument which takes no account of the likelihood of actually achieving the desired result on a case-by-case basis. Advertising is permitted under strict regulation and the same should be done for sponsorship. It would be wrong to imagine that racing can find alternative sponsors. Commercial sponsorship in racing has halved since 2007, and even in good times, it is the toughest of sales to make. In addition, our famous Irish drinks brands are the product of marketing expertise, which adds greatly to the development of our major festivals and brings an international audience to Irish racing. For example, if sponsorship were banned, while Irish racing fans would have the Hennessy Gold Cup from Newbury beamed to their living rooms, computers and mobile phones, Leopardstown would have to drop one of Irish racing’s most loyal sponsors. Hennessy has been sponsoring the Hennessy Gold Cup for 22 years, coming to Leopardstown in February every year and bringing senior executives and customers from the world’s largest luxury brand groups to Dublin. Hennessy uses the Leopardstown meeting not just for sponsorship but to entertain key business contacts, media people and friends at the races. The public face of the Hennessy brand is Maurice Hennessy, an eighth-generation descendant of Cork man Richard Hennessy, who founded the firm in 1765.

There are other sponsorships. The Powers Gold Cup at Fairyhouse is one of our sport's oldest sponsorships, unbroken since 1960. Today at Punchestown we will see the running of the Guinness Handicap Chase. Guinness support for the Punchestown festival over many years has helped that meeting to grow, to the extent that it now delivers a €60 million annual stimulus to the local economy in Kildare. A similar scenario applies to festival meetings at Galway, Listowel and other courses throughout the country. This is achieved in combination with the expertise of sponsors, including drinks sponsorship companies. This expertise and ability to promote race meetings goes far beyond the financial contribution made and all of these festivals would be at a significant loss without this expertise. Festival meetings are also a significant boost for our tourism industry. It is estimated that we will have 18,000 UK visitors at Punchestown this week and race meetings in Ireland attract 80,000 overseas visitors a year to the country.

Two things stand out in the debate on this subject so far. There seems to be an illusion that sponsorship imagery can somehow be contained in the borderless digital age we are now in, and an assumption that sporting rights holders can handle the removal of this sponsorship. It seems that a basic error is being made in the recommendation to ban sports sponsorship by the drinks industry. The error is the assumption that a ban will actually work. We hear advocates of a ban describing the problem of alcohol abuse in society, without sustaining the case that a sponsorship ban will solve it. We hear, in effect, the case for prohibition. Where does that end? Racing asks for regulation in place of a ban. We ask for a case-by-case approach, only taking action where there is a clear risk of harm. We ask that racing’s unique role in Irish society be seen as an example of responsible and social drinking in a regulated environment, in place of harmful drinking, which takes place largely in anti-social contexts. Our drinks industry sponsors and our racegoers have added significantly to the social and cultural life of Ireland for generations and continue do so.

In conclusion, a ban of sponsorship in Ireland would mean that it would be okay for Irish racegoers to watch and bet on the John Smith’s Grand National in Aintree, the Hennessy Gold Cup in Newbury and the Grey Goose Breeders' Cup in America, but not on the Powers Gold Cup in Fairyhouse or the Guinness Galway Hurdle. It would be okay for racegoers to be exposed to advertising on the way to a race meeting or during the TV coverage of the meeting, but not for sponsorship of races at that meeting. It would also mean a loss of at least €1 million a year to Irish racing and would hand a significant advantage to our competitors in the industry.