Mr. Paddy Walsh:

I am the chief executive of the Association of Irish Racecourses and have held that position for just over ten years. I do not propose to read through the whole submission but a very brief synopsis of it might be appropriate. We have confined our comments in our submission to the issues directly affecting racecourses as we believe it is more appropriate for other sectors within the industry to comment on aspects of the proposed legislation that might affect their areas of operation and expertise. We note, however, that a significant amount of proposed legislation relates to the Racing Regulatory Body, and while not wishing to comment specifically on such proposals, we would like to stress the importance of the overall funding of the industry for the integrity of racing to be, and to be seen to be, both independent and meeting the highest international standards.

Turning to our submission, initially we have outlined the role of the AIR within the racing industry and its importance thereto. We also circulated copies of a report prepared by Petrus Consulting last year that showed the financial contribution racecourses make to the overall racing industry and commented on the financial status and standing of those racecourses. The key points to take from that report are that the racing industry is a very capital intensive one and racecourses have invested appropriately €270 million in the business during the past 15 years. Racecourses also contribute to rural employment and contribute approximately €5 million in annual taxes, rates and local authority charges.

Our income during recent years has remained collectively reasonably static at about €42 million per annum. While we have been quite successful in achieving increases in income from media rights, other areas of income have fallen, reflecting the general economic recession and so on, with the net result that our overall income has remained reasonably static. Petrus Consulting estimates that this level of profit represents a return on capital employed of about 1.75%. Essentially, that is insufficient to fund the capital development costs of about €116 million that we believe will be required over the next 15 years to maintain the current standard of facilities. The key point to be taken from that is that racecourses reinvest all their profits back into the business, and even by doing so, unless we maintain the current levels of income and cap the current level of costs at their existing levels, the net infrastructure that racecourses provide for the rest of the industry will suffer over the next few years.

We move on in our submission to deal with the specific heads of agreement that have been circulated and I will go through those briefly and comment on them in the order in which they appear in the heads rather than in any order of importance. The first head I would comment on is head 4 where it covers membership of the HRI board. We believe because of our importance to the industry that the racecourses should have at least one seat on that board. Our only other comment in that respect is that in the event of our having only one seat, we believe - this would perhaps apply also to other bodies which only have one seat on the board - that there should be some provision for a proxy to attend on days when people cannot be present. That would be very important where a particular issue that might be relevant to their area may be being discussed.

Under head 5, where we comment on the amendment of the general functions of Horse Racing Ireland, there was a proposal concluded therein to include among the general functions of HRI the financial management of all aspects of Irish horse racing.

We consider that to be a little broad. Perhaps it would be possible to interpret it as giving control to HRI over some or all aspects of the independent finances of racecourses. In view of the sensitivities of same, as outlined in the Petrus report, we would suggest that racecourse finances should be excluded from that definition.
The proposed section 10(1)(g) includes among the functions of HRI the operation of racecourses which are owned or leased by companies under the control of HRI. We accept this largely reflects the status quoand we simply highlight the need for HRI to ensure there is no conflict of interest when it comes to allocating fixtures, programmes, grants, and racecourse authorisation when it is dealing with its own racecourses.
The next section, namely, section 10(1)(m), concerns one of the more serious points we have. There is reference to including in the general functions of HRI the right to the negotiation of all income from media rights. We have always had some concern over the legality of Horse Racing Ireland being empowered to negotiate income from rights that are clearly owned by a third party, namely, the racecourses themselves, but in practice, to date the negotiation of such rights has been jointly done by representatives of both HRI and the AIR on behalf of its racecourses. However, our legal advisers have informed us that while it is obviously acceptable that HRI should number among its functions the negotiation of rights owned by itself, it is not appropriate for it to have a legal right to negotiate income from rights owned by AIR. Section 61(2) of the IHA Act 1994 states that the property rights in relation to any broadcast of a race fixture or any photograph of it or sound recording taken or made for commercial purpose at a race fixture shall vest in the executive of the authorised racecourse concerned.
Since we made our original submission we have also obtained further legal advice on both the existing and proposed legislation in so far as it affects media rights in particular. The advice has indicated that there are some grey areas in both the current and proposed legislation as regards the specific definition of media rights. We have also been advised that, as the current-proposed legislation allows HRI to effectively negotiate income from media rights owned by racecourses it might be unconstitutional on the basis that the statutory provisions constitute disproportionate limitations on the property rights of racecourse owners which are protected under Articles 40.3.2° and 43 of the Constitution. We ask that the committee would recommend that prior to the finalisation of the relevant legislation this area might be revisited to clarify any anomalies to ensure that racecourses have the legal right to collectively negotiate income from media rights that they own and to avoid any possibility of a constitutional challenge. In particular, we would like to see that media rights are clearly defined and confirmed as property rights of HRI in the case of data and of racecourses in the case of all other media rights. We would like to see a specific right for racecourses to negotiate collectively in order to maximise income from their media rights and we would like to see that if all such rights are to be negotiated through the HRI media rights committee it is essential that racecourses are adequately represented on the committee. We would be happy to provide, through our legal advisers, suggested wording for proposed legislation if it was agreed to give effect to those points.
On head 6 of the legislation which deals with committees, the first one is the proposed section 19(6 )that deals with the race fixtures committee. In practice, that would mean the size of the committee would be reduced from seven members to five members. The racecourses currently have two representatives on the committee. We have two members out of seven and the proposal would essentially mean that the racecourse representatives would be down to one out of five. Our proportionate representation would be reduced from 30% down to 20%. The reason for that is at the moment membership of the race fixtures committee is open to non-members of HRI but under the proposed legislation that would not be the case and therefore as we only have one representative on the HRI board we could only have one representative on the fixtures committee.

Fixtures are the lifeblood of every racecourse and any changes to those fixtures would have a significant effect on the finances of a particular racecourse. Most racecourses only race 12 or fewer times per annum so the loss of even one fixture to a racecourse can have a significant effect on its economic performance and obviously is of great concern to it. It is on that basis, therefore, that we seek to have our representation on that committee maintained at least at its current percentage level.

On the proposed substitution of section 20 of the 1994 Act, we believe that may result, whether intended or otherwise, in the race programme committee established by the 1994 Act ceasing to exist. The race programme overseen by the committee deals with the category prizes, conditions and the number of races at each race fixture, so it is clear that it has a very important role in the compilation of the race programme. I think all parties would agree that the current programmes committee has worked extremely well, with input from all the relevant groups, and we would like to see that committee continue to be provided for in the legislation.

To go back to the role of the media rights committee, the suggestion is that its membership would increase from three to five people. Currently, we have one representative, who is the chairman of that three-man committee. The proposal is to make it a five-man committee and we suggest that we should maintain at least our percentage representation on that. To do so, we would have to have a situation in which people other than those members of the Horse Racing Ireland board could be appointed to that committee. We would like to see that happen. That would then make all the committees of the new body the same in so far as the composition could encompass people who are not members of the HRI board.

Head 14 refers to the rules of racing, and section 14(8) states that the racing regulatory body shall establish and publish procedures with regard to granting of racecourse licences. While we respect that power and are happy enough with it, we believe it might be helpful to the overall process if the racing regulatory body were required to consult with racecourses in advance of establishing and publishing any such procedures. We believe that might help in the overall scheme of things.

To refer briefly to overall industry funding, the Bill does not really deal with that, but we believe the separate legislation being processed in regard to betting tax and so on will be very helpful to the industry. The long-term funding of the industry is of major concern to us, because without a definitive funding mechanism in place it is very difficult for us to do any long-term planning. That will apply whether it is Horse Racing Ireland, the Turf Club or any of the other bodies and sectors within the industry.

Essentially, that is our submission. We simply request that the committee give its support to the suggested amendments to the legislation that I outlined in section 3 of our submission. If I can answer any questions that members might have in due course, I will be more than happy to.