Cheltenham Festival horse racing in crisis Charles Allen resigns

This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe here.

Yesterday saw the start of the Cheltenham Festival, the jump racing calendar’s biggest annual event.

The four-day festival — it was extended from three days in 2005 — will attract more than 160,000 racegoers in a champagne and Guinness-fueled celebration of Britain’s second-most-popular spectator sport.

The festival draws a unique crowd to the rolling Cotswolds hills. Streetwise lads from Liverpool, Manchester and nearby Birmingham, many of the latter dressed like characters from the cult Birmingham-based TV drama Peaky Blinders, rub shoulders with the landed gentry, business leaders and City types, showbusiness personalities and the farming community from Gloucestershire and neighbouring counties.

Above all, there’s the Irish attendees — making up roughly one-third of the crowd. The festival usually coincides with St Patrick’s Day — although not this year — and has become a showcase for Irish racing.

Irish trainers, most notably the great Willie Mullins, have trained the most festival winners in 14 of the last 15 years. And, in 17 of the last 18 years, Irish jockeys have dominated, most famously the brilliant Ruby Walsh, whose record of riding the most winners at 11 festivals is unlikely to be beaten.

Yet this year’s festival comes at a time of crisis in British racing.

Charles Allen, the respected former chief executive of broadcaster ITV, resigned last week as chairman of the British Horseracing Authority (BHA), the sport’s governing body, which licences participants, oversees disciplinary procedures and enforces the rules.

His departure after just six months, due to what the Guardian called “horse racing’s intractable politics,” underscored the difficulty of reconciling the industry’s stakeholders: racehorse owners and breeders, jockeys, trainers, racecourse owners and bookmakers.

Allen’s distinguished business career and close ties to the government made him an ideal candidate to bring unity and deliver a strategy to grow the sport.

Unfortunately, this proved impossible.

What looks to have caused his downfall was a refusal by smaller racecourse owners — and in particular Arena Racing Company (ARC), whose 16 courses include Chepstow, Newcastle and Wolverhampton — to support the idea of an independent BHA board.

This is said to have been driven by ARC’s demand that the BHA continue charging a relatively low sum for so-called “race-day data” — mainly information on non-runners and off-times — which the racecourses then sell onto bookmakers bundled in with other information and footage from the races that can be screened in betting shops.

ARC and its allies have already fallen out with bookies, most notably Betfred, after seeking to raise the price of this footage.

Allen is said to have reluctantly acquiesced to ARC’s demands and, in the process, alienated others.

The Jockey Club, owner of Britain’s most prestigious courses, including Aintree, Newmarket, Epsom and Cheltenham itself, responded to Allen’s resignation by demanding a corporate governance review at the Racecourse Association (one of the bodies currently represented on the BHA board). Other leading courses — Ascot, Goodwood, Newbury and York — joined its call.

With civil war having broken out among the racecourse owners, it is hard to see how their differences can be reconciled. The Jockey Club operates under a royal charter — the King and Queen are its joint patrons — and all of its profits are reinvested in the sport. By contrast, ARC, which is owned by the billionaire brothers David and Simon Reuben, is renowned for being aggressively commercial.

In the meantime, racecourse attendances remain below pre-pandemic levels and the industry’s costs are rising, while betting revenue is falling. This latter point is crucial as 10% of returns made by bookmakers from horse racing bets are returned to the sport via a government levy.

Never has unity been more needed. But never have the competing interests within the sport been more destructive.

— Ian King

The Iran war has put the brakes on the next Bank of England rate cut. The central bank was widely predicted to be set to cut interest rates in March or April. Don’t count on it now, economists say. 

Nvidia backs AI data center startup Nscale as it hits $14.6 billion valuation. U.K.-based startup Nscale has emerged as a key player in the AI infrastructure buildout, developing data centers and operating cloud computing services.

The regional situation in the Middle East is becoming more volatile, says Cypriot Foreign Minister Constantinos Kombos. He discussed the regional impact of the U.S.-Iran conflict as well as the U.K. and EU’s response.

— Holly Ellyatt

MAR 12: Bank of England Governor Andrew Bailey speech

MAR 13: UK monthly GDP data

MAR 19: UK unemployment rate for January