Mr. Brian Kavanagh:

On some of the more specific questions and in response to Deputy Ferris, it is not the intention to have a single premises. The two premises will remain. It is not the intention, however, to have one structure for integrity. Ireland is unique in that we have a separate integrity body to look after the refereeing of and the integrity of the sport. That is a valuable concept and a valuable principle but it is different in other jurisdictions. The Turf Club is independently responsible for deciding who can get a licence to train or to ride or what discipline should be imposed on trainers or riders in the event that there is a breach of the rules. As for Deputy Heydon's questions, I will try to hit the main ones and he should revert to me if I have missed something. I agree with him that bookies are not the big bad problem and one welcome element of this legislation is the creation of a forum comprising all the betting industry, including off-course and on-course operators, betting exchanges and the Tote, which will represent the views of bookmakers to the board of Horse Racing Ireland. Many of the issues with which the bookmakers deal have a direct impact on our activities, such as field sizes, which affect the value of races from a betting perspective, the times at which races are run and the dates on which races are run. Consequently, creating a formal statutory body that creates a communications structure between the betting industry and the board of Horse Racing Ireland can only be a good thing.

On the fixtures committee, I understand the Bill proposes to standardise the size of all committees at five people. The fixtures are the single biggest decision of expenditure that the board of Horse Racing Ireland will take. We are due to take a decision next Monday on next year's fixture list at the board meeting next Monday. Effectively, that will determine the budget for the following year because it then leads on to prize money and integrity costs for servicing each of those fixtures. Consequently, the only change to the fixtures committee is that its size will be reduced from seven to five members. I understand that is a standard process across all the committees so, for example, the size of the media rights committee is being increased from three to five. I believe the fixtures and programme structure works well at present. There is a programmes committee that deals with the day-to-day programme of races, that is, the category and type of race that is run at each track.

It is a mirror committee of the fixtures committee and they work together to bring in the best race programme. It is a consultative process and there are working groups working to those committees which are representative of various industry bodies. The committees comprise members of the HRI board.

The media rights committee, which has been one of the successes of HRI, is chaired by the racecourse representative on the HRI board. For the past six years, Mr. John Moloney has chaired it. It negotiates the media rights for Irish racing. The 1994 Act clearly stated that the media rights, the property rights over the sale of pictures or commentaries at a race meeting, belonged to the racecourses. Other parties would dispute that the racecourses have full entitlement to it. Some of the jockeys and owners claim it is akin to a situation in which a musical, show or play is staged in a theatre. Whatever the arguments, the legislation is black and white that the rights belong to the racecourses.

The 2001 Act introduced a new provision whereby a HRI media rights committee would negotiate media rights. Since then, we have doubled the value of the media rights to the racecourses and Irish racing. It works well, and the racecourses would concur. Media rights comprise not only the pictures and commentaries of races but the information on the runners and riders which appears in the daily newspapers. One cannot sell one without the other; in order to sell pictures, one must have details of runners and riders which are the property of HRI. The beauty of the media rights committee is that it binds all the racecourses, small and large, together with HRI in one negotiation. The media rights committee is able to sit across from potential purchasers and negotiate the sale of complete rights to Irish racing.

The value of those rights is maximised by selling them as a package. While an individual racecourse selling its own rights might get a little more, it would be to the detriment of the overall rights because it would diminish the value of the rights for the other racecourses. The figure of €30 million which Ms Sharon Byrne mentioned on Tuesday was for the picture rights to both Irish and British racing. Given that there are four times as many British race meetings as Irish, a significant amount of it goes to the British racing industry. We also sell Irish pictures to the British betting industry, so there is a reverse movement.

The Chairman dealt with the issue of board representation and board size. While it is not for me to comment, a representative board of 14 people comprising different sectors of the industry could be a potential nightmare scenario. However, having observed other racing authorities worldwide, I believe it would be a very effective structure because it would get people around a table to discuss problems. In Britain, there is great fragmentation and much business is done by representatives of organisations shouting at each other across the media. Perhaps Indecon had this view. I support the representative board structure.

Indecon gave 12 pages of its report to the size of the board and who should be on it, examining board structures in other semi-State bodies in Ireland and overseas and in other racing authorities overseas, and concluded that a board size of 12 was right and that other bodies not represented should be represented through these new subsidiary committees. It used the example of the racegoers' consultative forum, which picks up Deputy Lawlor's point, as an effective way of getting the views of those who are not sitting around the board table to the board.

One never has enough funding for ITM. It does a good job with limited resources and was the first of its kind. As I said in my presentation, Ireland's exports over 65% of its annual output of thoroughbreds. We produce 7,500 foals and export more than 5,000 of them, principally to Britain but also to 36 other countries. Promoting and maximising that is a major task. The horses are of the best advertisement we have. The continued success of Irish horses at major races internationally is a strong marketing tool. New markets that have developed very strongly in recent years include Australia, particularly for staying flat horses. In 2012, the first seven horses in the Melbourne Cup were bred in Ireland. It is remarkable that the first seven finishers in Australia's biggest sporting event were born in Ireland. Last year's winner was also born in Ireland. This year, there has been a major success story for Irish horses in Hong Kong, which is an important market. ITM has had a significant cut in funding, as have all areas of expenditure, and we are trying to manage scarce resources. When we get our funding structure sorted - and, please God, what is happening in the House will accelerate it - the marketing of horses internationally will be a significant area were money needs to be focused.

Deputy Heydon asked about directives. HRI already has directives, and this is clarifying that these are the terms of trade under which HRI engages with its customers or the people with whom it deals. My chairman came into his new remit with a mission to reduce the cost to owners, trainers and participants in the sport. We reduced our charges by 10% last year, and this is just a step along the way. The charges are determined by directives, and this is how the board fulfils its powers under the legislation. I do not foresee a situation in which HRI would issue directives to the Turf Club or that the Turf Club would issue rules with which HRI would comply. It is simply the terms of trade HRI would apply to its customers. The issue of stalls handlers has been resolved satisfactorily.

While a very good horse won the Irish Derby this year, there was a very small field of only five runners. The Irish Derby has been less competitive than we would have liked it to have been in recent years. We have raised this complex issue at international level. A number of factors are at play, going back to the breeding industry and the types of courses certain owners are breeding. There is a school of thought that because some of the major international owners are not breeding enough staying types, the pool of horses to run in a race such as the Irish Derby is more limited. There are issues around the date of the race and the fact that the French Derby's distance was reduced from 12 to 10 furlongs with the winner going on to a 12 furlong race in France which is run on Bastille Day. While previously the Irish Derby was the decider between the winners of the English and French derbies, the French runners now evade the Irish Derby. We have raised this with our international counterparts and I will have a meeting next week in London on the issue.

As much as anyone in the business, HRI has a strong interest in the integrity of the sport. We are selling the pictures of our racing and promoting it to the public and the political system to persuade the Government to fund racing. We are developing the industry and promoting the sale of Irish horses internationally. Confidence in the integrity of the sport is a key element in that. During the past ten years we have had a unique structure whereby there is a separate racing regulatory body, the Turf Club, which regulates the sport, and it has been effective. HRI spends approximately €6 million per year funding the activities of the Turf Club and a further €2.5 million per year on racecourse services, which is the provision of starting stalls, camera facilities for stewards at race meetings and photo finish equipment. It is a strong element of our activity. This Bill does not diminish the integrity role but enhances it by taking away non-core work and allowing us to focus on the integrity of the sport.

In recent years there has been a significant improvement in the quality of pictures available to stewards, which were not up to standard in previous years. HRI has done an investment together with the racecourses.

It was a complicated tender involving 26 racecourses and ourselves. Previously we had a situation whereby two parties filmed the day's racing, one to transmit pictures into the stewards' room in order that the stewards could deliberate on the fairness of a race, and another to transmit through closed-circuit television for the customers at the race meeting. Those pictures were then sold on to the betting industry. We examined this arrangement and proposed a rationalisation of the service. Since the start of this year a single body has been providing both of these services with extra cameras at all race meetings and at a lower cost for the service. To me, that is a perfect example of a win-win situation. The customer at the races get better pictures; SIS, which buys the pictures, gets better pictures; and the stewards get better pictures.

There is another element of integrity, and this is an important check and balance in the system. Only one area of our expenditure in the legislation is subject to a binding third-party arbitration clause. The integrity budget is agreed with the Turf Club every year. If there is no agreement there is a facility under the legislation - this has been the case since the previous Acts - whereby the matter can be referred to binding third-party arbitration. I am pleased to say that clause has never been effected and we have been able to agree an integrity services budget each year. The importance of integrity is reflected in the fact that no other element of our expenditure is subject to binding third-party arbitration.

Reference was made to how we are falling behind France and the United Kingdom. We are, and the committee is aware of that, but essentially that is a decision for a different forum. The French racing industry is between two and a half and three times the size of our industry. The French breeding industry is smaller than ours but the French industry is funded through a tote monopoly. Central funding there amounts to €400 million per year. We are effectively trying to compete with an industry that is slightly bigger than ours but with only 10% of the funding structure of the French industry. Having said that, there are elements of the French funding structure that I would question.

Deputy Lawlor asked about savings. The likely savings areas are all in administration and information technology. There are two separate IT departments and two separate finance departments. The savings are in these areas as well as human resources and payroll - in other words, back-of-house services. The intention is to realise them through a voluntary rationalisation scheme, as we have done in recent years.

Reference was made to the question of a potential conflict in the allocation of grants or fixtures between courses owned by Horse Racing Ireland and independent courses. This is not dissimilar to another situation. I am not exactly familiar with Bord na gCon but, as I understand it, Bord na gCon controls or owns 12 of the 17 greyhound stadiums in the country. The GAA authorities own Croke Park. Likewise, the soccer and rugby authorities own the Aviva Stadium. Horse Racing Ireland got into ownership of racecourses to protect them for racing. There are two principal examples, one being Leopardstown. Undoubtedly, were it not owned by a racing authority, it would now be a combined residential and industrial development because the land is so valuable. This is the case for several racecourses throughout the country which sit on valuable land banks. Sometimes the racecourses do not get sufficient credit for the value of the land they put at the disposal of the industry.

Some Deputies raised the issue of fixtures. There are sufficient checks and balances in the system. I believe that in some cases we are harder on the HRI-owned tracks when it comes to fixtures because of the need to be seen to be transparent. There is an appeals process in respect of fixtures, if necessary. Again, that has seldom if ever been used.

Deputy Lawlor asked about the subsidiaries we manage. We manage four racecourses and a holding company for racecourses. HRI Racecourses Limited is the holding company. The subsidiaries include Leopardstown, Navan, Fairyhouse and Tipperary racecourses. There is also a Leopardstown golf subsidiary, because Leopardstown develops non-racing commercial activities in golf and on the property side of the business. Tote Ireland is a commercial subsidiary and Irish Thoroughbred Marketing is a commercial subsidiary as well.

I dispute Deputy Lawlor's assertion about the tote losing money. In the past three years the tote has put a new management team in place. This year, fingers crossed and given a good Galway race week, it is on target for a cash profit of €1 million. The tote turnover was up 5.5% last year and 11.3% in the first half of this year. It made a profit of €500,000 last year and a profit of €150,000 the previous year and, as I said, it is likely to be €1 million this year. It is moving in a positive direction.

It is difficult to compare the horse racing tote with other tote operations in countries such as France or in Hong Kong, which have a tote monopoly. Comparison with the greyhound tote is also difficult because the betting options on greyhound racing are limited, whereas the betting options on horse racing are plentiful. If a person wants to have a bet on the greyhounds, he bets either with the tote at the track or with one of the small number of on-course bookmakers on the track. Essentially, it is difficult to get a bet on a betting exchange or with an off-course bookmaker. The tote is moving in the right direction.

There is another point about the tote. Through the media rights committee we have generated extra income streams for racecourses of €2 million per year from the sale of pictures of Irish racing to some of the most obscure parts of the world. Let us consider the tote turnover after a race meeting, such as that which took place in Killarney today. There is a significant increase on last year. This is down to the fact that betting on the racing is taking place in the United Kingdom, Cyprus and Israel, believe it or not. The rights have been sold to At the Races and it sells on the rights, comprised of a combined package of betting into the tote pools and the pictures of the races. Under the split, a total of 75% of the revenue goes to the racecourses and 25% to the tote. A figure of approximately €2 million is going back to racecourses through that vehicle. It has been a positive development through the media rights arrangement.

There was a question about the fees collected by the Turf Club. The legislation intends that those fees would be returned to the Turf Club. The Turf Club will determine what is to be charged for licences and point-to-point registrations. HRI will transfer that money, having processed it through a single administrative structure, back to the Turf Club. Then each year there will be an annual budget discussion about the integrity budget. In that discussion, other income will have to be considered or taken into account. It will not necessarily be deducted from it, but there would have to be a single debate about the budget for racing. It would not be reasonable to have two separate budgets for racing. As I noted earlier, there is a catch-all arbitration clause in the event that agreement cannot be reached.

Deputy Lawlor made a point about the customer and I agree with him. At times the industry can be production-led as opposed to consumer-led. Much of the time when we are around the table we are dealing with breeders, trainers, racecourse people and people who are putting the show on. There is a significant racegoers' consultative forum which is a statutory sub-committee of Horse Racing Ireland. The forum is made up of 12 racegoers from throughout the country who represent the views of racegoers back to the board of Horse Racing Ireland. Indecon suggested this was a good template for the new statutory sub-committee on betting and the new statutory sub-committee for staff or persons employed in the industry. Certainly, if properly managed and resourced, those committees, the betting sub-committee and the racegoers' forum, could represent the views of customers to the main board. As an industry, racing can and should become more customer-focused.

I am sure I have missed some questions.