Standing in the stallion yard at Kildangan Stud in County Kildare, Casamento is an imposing sight. The five-year-old thoroughbred has a muscular physique that made him very successful on the racetrack. Recently retired, he has been put out to stud.
“In his first season he has covered 160 mares,” says Joe Osborne, managing director of Kildangan, which is part of Darley, a global breeding group owned by Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum. “He is enthusiastic about his job,” he adds.
But Casamento’s enthusiasm is not reflected in the fortunes of the Irish bloodstock and racing industries, hit hard by a five-year recession sparked by the country’s financial crisis.
Stud fees and prices at auction have fallen by about 30 per cent from peak, says Mr. Osborne. “Prize money has dropped, some sponsors have disappeared and government funding has been reduced.”
Ireland has long been a dominant operator in the European thoroughbred equine industry, attracting good crowds to its race meetings and wealthy investors into breeding and training. It is the biggest producer of thoroughbred foals in Europe and fourth in the world overall.
But the scale of the downturn and cuts to government support for the €1-billion a year industry are increasing concerns that it risks losing its crown.
“Competition from other countries is at an all-time high,” warned Horse Racing Ireland (HRI), the governing body of racing, in January. “Ireland cannot be complacent about its position.”
Figures compiled by HRI show the value of bloodstock sales in Ireland has halved since peaking in 2006, while the number of owners has fallen by a quarter. Attendances at racetracks are down 25 per cent over the same period, while on-course betting has almost halved. Falling wages and rising unemployment in Ireland are key factors.
“A good few of the horses that have been taken out of training were owned by people in property,” says Pat Keogh, chief executive of Leopardstown racecourse. “Horses were the often the first thing to go when the recession struck.”
To survive the recession racecourses are diversifying their marketing strategies to pull in new spectators and sponsors.
Last week Leopardstown held its first British-Irish race day, aimed at tempting more British race goers to Ireland. The event, which featured jockeys Frankie Dettori and Johnny Murtagh, saw the relaunch of the King George V cup, last competed for in 1911.
“We attracted four new sponsors for the event and are hoping it will bring more U.K. visitors to the Leopardstown festival later this year,” says Mr. Keogh.
The Irish bloodstock industry is also adapting its strategy and seeking new markets to cope with the downturn. Coolmore, owned by Irish tycoon John Magnier, last year struck a deal with Chinese authorities to help establish a $2-billion (U.S.) national equine centre in the country’s fourth-largest city of Tianjin. Coolmore expects to generate $50-million within three years from its Chinese deal.
“This is a really ambitious project. We are talking about setting up a very sophisticated breeding, racing and training industry in China on a greenfield site,” says Simon Coveney, Ireland’s agriculture minister. “They are looking to do in three years what we did in 50.”
This month Dublin signed a deal to allow the first direct exports of Irish thoroughbreds to China.
State support for the Irish bloodstock and racing industry has been pivotal to its global success. A controversial tax break introduced in 1969 exempted owners from income and corporation tax on profits arising from stud fees – estimated by the industry at €188-million ($250-million U.S.) in 2008.
Following a complaint to the European Commission, Irish authorities were forced to remove the tax break in mid-2008 and replace it with a generous transition scheme that offers tax writeoffs on stud fees to owners.
The racing industry has benefited from €584-million in public funding between 2001 and 2011 for marketing, administration and prize money. But the economic crisis has forced Dublin to cut the annual state subvention to racing to €45-million in 2012, down from €61-million in 2008, and to look at new ways to raise cash for the industry.
Later this year Dublin plans to extend an existing 1-per-cent tax on bookmakers to offshore betting websites, a move it hopes will raise an extra €15-million a year for the racing industry.
The new tax, which could prove difficult to collect as most online operators are based offshore, might help to “set a floor” on what the state should be spending on the horse racing industry, Mr. Coveney says.
“There needs to be a minimum spend to ensure we can maintain prize money,” he says. “This is a billion-euro a year industry employing 17,000 people, and we need to maintain it as an internationally competitive standard bearer.”