Racing industry trouble will last 10 years
Thursday, November 1, 2007/
The race that stops the nation will be a shadow of its former self, and the racing industry will take a decade to recover from equine influenza, say business analysts.
Small and medium businesses, which are those hardest hit by equine influenza (EI), will continue to suffer, says IBISWorld industry analyst Toon van Beeck.
IBISWorld estimates the horse and racing industry as a whole has lost $500 million this financial year alone and predicts it will take the horseracing, harness racing, dog racing, training and associated businesses 10 years to rebound to the success of early 2007.
Poorer quality horses are likely to decrease attendance numbers, diminish prize money and lower the number of overseas tourists and international horses, adding to the pain for industry players, from breeders, jockeys and trainers to bookmakers and the TAB.
Many SMEs may be forced to exit the industry altogether. “As horses are not going to be run in New South Wales and Queensland, a lot of clubs and people involved with racing will be unable to generate revenue, and have no source of income,” says van Beeck.
The total number of establishments in the industry has declined by 16.3% this financial year to around 950, with employment dropping in tandem to 24.2% of last year’s total of 13,000.
Those states hardest hit by EI, Queensland and New South Wales, plan to restart racing in December but van Beeck says Victorians still won’t want to send their horses interstate. IBISWorld expects racing industry revenue to fall by 31.5% this financial year, with a turnover of $1.21 billion. If EI reaches Victoria, revenue loss could hit 80%.
The next financial year won’t be a whole lot better, with IBISWorld forecasting a decline in enterprises of 11.1% and a 15.4% decrease in employment. A return to positive revenue growth in the horse racing industry isn’t expected until the 2010-11 financial year and even then it will be a matter of small steps, initially around 0.3%.
Given the tough nature of the industry, van Beeck isn’t sure what will happen to industry players during the downturn, but says it could be a good thing in the long run for those who survive because they will become more efficient.
There is a silver lining in the EI cloud, but not for SMEs associated with racing. Gaming is predicted to be a growth industry, with pokies and casinos seeing an increase in revenue as people adjust from betting at the races.