This is the third in a series of four articles on the history of British racecourses and their struggle for economic prosperity. It focuses on Newmarket – the headquarters of British racing – and the growth of commercial joint ventures in promoting the sport’s financial well-being.

Newmarket is not just a racecourse – indeed it could be described as three separate courses – the town is the headquarters of racing in the UK. As a racing centre it is the focus for the breeding of horses, the education of potential jockeys, the training and racing of horses, the selling of horses at auction, and is the site of the sport’s major museum for recording and viewing its history.

The town is one of the original centres of the Jockey Club which was founded in circa 1750 amongst the inns of central London. It created its own HQ meeting place in 1752 when certain ‘racing gentlemen seceded from the promiscuous society of the Red Lion, Newmarket’s main inn, to find privacy in their own coffee-room’. The site remains, with various developments, as the Jockey Club Rooms just off the High Street. Primarily the venue for a private members’ club the Rooms are now promoted as a conference centre and accommodation for guests and corporate clients who wish to experience the racing environment.

Currently one in three people in Newmarket is employed in the world of racing either at the 70 training yards, 80 stud farms or in the management of the 70 miles of peat based training gallops where the town’s roughly 2,000 horses are trained. So racing isn’t just a part of the economy of the town, it is central to it. In the future Brexit offers a threat to that economy as many of the lads and lasses who look after the horses come from overseas, and eastern European countries in particular.

The town uniquely features three racecourses – although one, the Round Course founded in about 1665, is only used once a year for the Newmarket Plate run over 3m 6f, the only race to link the other two racecourses – the Rowley Mile and the July Course.

• The Rowley Mile Course, so called due to the nickname of Charles II, who used to ride his horse called Old Rowley on the land, is used in the early and latter parts of the Flat Season. It has a 1 mile 2 furlongs straight featuring minor undulations to ‘The Bushes’, two furlongs out. The penultimate furlong is downhill and the last is uphill, forming ‘The Dip’. Races beyond the distance of 1m 2f start on the ‘Cesarewitch’ or ‘Beacon’ Course which turns right-handed into the straight. The course is peculiar as a race can start in Suffolk and end in Cambridgeshire.
• The July Course, where racing in late June, July and August has been confined since the 1850s, is sometimes called the Summer Course. It covers a distance of just over two miles and features a right hand bend out of the Beacon Course before entering the 1 mile straight, known as ‘The Bunbury Mile’. After 2 furlongs there is a long downhill stretch before the final uphill furlong to the finishing line.

The Jockey Club which had been the regulators of the sport from the late 1700s shed its regulatory role in 2007 to become through its commercial arm, Jockey Club Racecourses (JCR), the largest owner/operator of racecourses in the UK. It owns 14 leading racecourses (counting Newmarket as one) with over 300 fixtures per annum – some 25% of the total fixture list – and invests over £20 million per annum in prize money. Newmarket in its entirety is its largest site and with its two main courses and other profit centres could be expected to contribute significantly to the overall turnover of the group. It does – but it still struggles to match some of the JCR’s more profitable venues. Just because it is racing’s HQ does not insulate Newmarket from the financial pressures of maintaining courses which only open their doors a few times a year. In 2017 there are 18 fixtures on the Rowley Mile and 21 on the July Course. This contrasts with the 83 days Lingfield Park (with the operational benefits of its all-weather track (see article 2)) is open this year. The limitation on the scale of return on assets is obvious.

The fact that Newmarket remains financially successful as a racecourse is largely attributable to the partnerships which JCR have negotiated centrally. By using the size of their estate JCR have used the benefits of scale in driving down costs and establishing favourable corporate purchasing relationships. Gate and entrance money deliver turnover but the real profit drivers for the racecourses are three major centrally negotiated corporate partnerships:

• The Jockey Club Live initiative was launched in 2014 on the back of the significant success of Newmarket’s management in staging concerts at the conclusion of their summer evening fixtures held at the July Course. Live is a joint venture between JCR and two music impresarios, Andrew Wilkinson and Simon Halden. Since its launch 85 concerts have been promoted to a combined audience of over 700,000 at 9 racecourses. In 2015 JCR announced a new partnership with Live Nation UK who assumed the responsibility of booking the artists. JC Live is now classified by Music Week as the UK’s sixth largest music promoter. Making money from music promotion is not a one way street. The greater the artist’s popularity, the greater the potential audience, the greater the profit! But if you are unable to house an audience of sufficient size the majority of costs remain but the potential income is considerably reduced. Choosing the right artist who will sell is a skill. Music promotion therefore is not one of the answers to every independent racecourse’s prayers (witness the recent debacle of Lingfield’s concert). Success is size and selection dependent.
• Jockey Club Catering (JCC) is a joint venture between JCR and the Compass Group which was launched in 2009 to provide racecourse catering for race days, conferences and exhibitions. It has transformed the quality of on-course catering and has seen significant investments in the facilities on offer at all JCR courses. The relationship has driven up corporate catering turnover from roughly £140 million in 2012 to an expected £300 million today. The benefits of scale are particularly relevant in this relationship with the ability of moving teams of qualified staff between courses and the centralised purchasing of food and drink. It drives down costs and significantly improves the customer experience. For any course to prosper financially the quality of the catering is key, but there is a significant profit advantage due to scale to groups such as ARC and JCR over the independent racecourse.
• Racing Media Group (RMG) is not strictly a JCR joint venture as there are 37 British racecourses affiliated to the group. RMG, which collects licence fees for racecourses’ media rights, is roughly 50% owned by JCR. RMG owns Racing UK, a monthly subscription channel, it negotiates the rights for terrestrial coverage of UK racing currently undertaken by ITV, owns 50% of Turf TV which offers the product to groups such as bookmakers, it has a 50-50 joint venture with At The Races (another racing media channel) to distribute pictures to overseas markets, and owns RDC, a joint venture between 58 racecourses for the supply of pre-race data. The formation of the group in 2004 transformed the way racecourses benefit from the financial rights of the data and pictures which they own. Licence fees have been driven up year on year so that by the end of 2015 over £80 million was being returned to racecourses. By 2019 this is forecast by management to extend to more than £100 million. Once again the centralisation of buying rights has seen a transformation in the profitability of the racecourse. These rights are not just central to the profitability of JCR courses, as independents who have signed up to RMG – or indeed At The Races – benefit accordingly. However as a great part of these rights come from bookmakers who are heavily reliant from gaming machines for their profitability – and this is subject to current government scrutiny – there may be a risk to future media rights growth.

Newmarket provides a good example of how racecourses are driving forward their current profitability through group exploitation of media rights and centralised commercial partnerships. It also illustrates how difficult it is for grass based courses to generate reasonable returns on the scale of land and fixed assets which they own – a specific concern for the independent on which the fourth article in this series will focus.