HRI rejects claim spending is ‘out of control’
The IBA issued a statement yesterday morning in the wake of what they termed “a forensic assessment of HRI spending by KMPG” demanding a review of how HRI conducts its business.
Chairperson of the IBA, Sharon Byrne, claimed spending at HRI was “out of control” - a charge with Kavanagh ‘completely’ rejected.
Byrne added: “In all departments and divisions, spending at HRI – and HRI’s predecessor organisation – has mushroomed between 1998 and 2008. However, the huge increases in spending that have been uncovered by the IBA have not delivered any proportional benefit to Ireland’s racing and betting sector.”
The IBA statement contained eight areas of concern for the association.
1. HRI’s contribution to prize money, which includes prize money contributed by owners and sponsors, increased by almost 600% between 1998 and 2008. However, the number of race fixtures increased by only 33% over this period.
2. HRI’s expenditure has increased by 40% more than its total income between 1998 and 2008.
3. HRI’s administration costs (including pension and payroll) increased by over 660% between 1998 and 2008, representing an increase of €5.6 million.
4. The salary of the chief executive of the HRI increased by 56.6% between 2002 and 2008. Between 2007 and 2008 alone the Chief Executive’s salary increased by 22%.
5. HRI’s marketing expenditure increased by 112% between 1998 and 2008, an increase of €2.1 million. However, the number of people attending race meetings was only 14% higher in 2008 compared with 1998.
6. HRI’s integrity and racecourse services expenditure increased by 241% over the period from 1998 to 2008, amounting to an increase of €7.5 million. This is significantly in excess of the increase in the number of race fixtures, or the numbers attending race meetings.
7. HRI Racecourses Group’s operating costs increased by 216% between 1998 and 2008. Between 2005 and 2008 alone these operating costs increased by 73%.
8. Even with all of these additional costs, Ireland’s only all-weather track at Dundalk still remains closed in the winter.
Byrne also revealed that the IBA’s Freedom of Information request to HRI to gain access to accounts, budgets and business plans at the organisation was refused.
However, Kavanagh last night issued a stinging rebuke to the claims, saying they IBA either misunderstands or misrepresents the way in which the administration of Irish racing has changed since 1998.
“The IBA statement contains a series of financial and other comparisons covering the period 1998 – 2008 and presumably the 1998 figures are those of the Irish Horse Racing Authority, as HRI was not established until 2001.
“It is effectively comparing figures across different organisations and thus the comparisons are fundamentally flawed and misleading. It is a smokescreen designed to deflect attention from the real issue which needs to be investigated, namely the declining tax contribution from betting to the Exchequer, despite rapid and sustained growth in the sector.
Continuing Kavanagh said: “The key figures are: Ireland has the lowest rate of betting tax in the world – 1% of turnover, compared to 15% in France, 7.7% in Australia, and approximately 3% in Britain. Betting is not subject to VAT and is a tax free activity to the punter – for every €1,000 spent on betting, the Exchequer receives €10, compared to €580 for an equivalent spend on petrol or €240 for an equivalent spend on beer.
“In the last ten years, betting in Ireland has increased from circa €1.3 billion to circa €4.5 billion, yet the take to the Exchequer has fallen from €68m in 2001 to €31m in 2009.
“It is estimated that one third of all betting in Ireland (approx €1.5 billion) is now routed offshore out of Ireland to avoid the payment of betting duty.
“Since HRI was established, it took over all of the functions of the Irish Horseracing Authority, many of the functions of the Turf Club, and Tipperary and Fairyhouse have been added to its racecourse division greatly increasing its responsibilities and workload. Furthermore, fixtures increased by 33% from 258 in 1998 to 342 in 2008 as did all other activity measures within the industry.
“HRI has not seen, or been asked to contribute to the KPMG analysis and so cannot comment in detail on its figures. However, on the prize money issue, it is worth noting that for the top five flat races in Ireland this year (i.e. the Classics), HRI’s contribution to the total prize fund of €2.5m was €20,000 with the balance funded entirely by owners and sponsors.
“I completely reject the statement that HRI spending is ‘out of control’. HRI is subject to annual audit by the Comptroller and Auditor General and at no time has its efficiency or effectiveness been called into question. Our administrative costs have reduced by 28% since 2008 and the number of permanent employees in the HRI group has been cut from 176 to 143 in the same period.
“The (Freedom of Information) request sought thousands of documents and reports from HRI and its subsidiaries covering 12 years, and was rejected as it represented an unreasonable interference with the work of HRI, a rejection which is allowed for in the FOI legislation. The IBA’s revised application is being considered.”
