Prize money surge hits ARC earnings in 2018
Arena Racing Corporation (ARC) and its subsidiaries said increased prize money and labour costs were responsible for earnings being slashed in 2018.
In figures filed for the calendar year to 31 December 2018, the UK racetrack owner and operator said it achieved earnings before interest, tax, deprecitation and amortisation of £7.9m during the period, which was exactly 50.0% down on £15.8m in 2017. Including its full range of divisions and business interests, ARC saw combined EBITDA fall by 47.1% to £10.1m.
ARC and its subsidiaries saw turnover increase from £100.5m in 2017 to £137.5m, with the group increasing its turnover in 2018 through the acquisition of horse racing media rights for Australia and the US together with the expansion of greyhound media rights. The group also acquired Ffos Las racecourse in May 2018.
The increase in revenue was driven by the growth of The Racing Partnership, ARC's media arm, which saw turnover surge by 156% from £24.1m to £61.9m. The subsidiary, which broadcasts racing coverage to licensed betting offices, added coverage from 13 racecourses at the start of 2018 including Bath, Newcastle, and Uttoxeter.
ARC’s racecourses and a few other small subsidiaries saw revenue remain flat despite the increased rights payments, while its two greyhound stadia saw revenue fall by 3%. Total turnover for the group and its associated businesses grew by 25.2% to £190.7m in 2018.
ARC said the decline in profit on ordinary activities before interest and taxation and EBITDA was principally driven by an increased prize money contribution and increased overheads, particularly labour costs, where the group has seen a further increase in the national minimum wage. ARC gave away £17.7m in prize money in its more than 500 fixtures in 2018, which was up 56% on the £11.3m figure of 2011.
Administrative expenses grew by 14.7% to £39.5m.
“The directors are satisfied with the results for the year and the year end position of the group,” ARC said.
In December 2018, ARC announced it would be reducing its executive contribution to prize-money by £3m in 2019, blaming the cuts on the prospect of reduced media rights income.
A boycott of ARC fixtures took place in March, leading to an agreement being reached between ARC and the National Trainers Federation.