Course to Course - Issue 54
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This article appeared in - European Trainer - issue 54
Will You Be Getting Less Bang For Your Buck If The UK Decides On A Brexit?
Before being re-elected into parliament last year, one of David Cameron’s promises if he won the 2016 General Election, was to hold a referendum on whether Britain should remain as a member of the European Union. Cameron was successful in his re-election campaign and now, consequently, on 23rd June, Britain will decide whether or not it will ‘leave’ or ‘remain’ in the European Union.
From both sides of the debate, some fairly extreme arguments have been put forward and accusations of scaremongering have been made against both sides of the coin. Many of us though, still find ourselves in no-mans-land, surrounded by politically charged hot air, waffle and propaganda. As we approach the deciding day, many people want to see the potential pros and cons of each argument, so they can make a rational and informed opinion before they go to the ballots.
“Since the start of the debate last year, GBP has fallen by 12.5% against the Euro, 6.8% against the US Dollar and has weakened by 11.4% versus the Australian Dollar.”
For the majority of people, the way in which they decide to vote will come down to money: how will staying ‘In’ or ‘Out’ affect their mortgage repayments? Will their investments or pensions appreciate or depreciate? Some will simply be more concerned with whether or not the country’s decision will make ventures abroad more expensive.
A major concern for many people and businesses in the Racing and Equine Industry is the effect a Brexit would have on the Pound. Since the start of the debate last year, GBP has fallen by 12.5% against the Euro, 6.8% against the US Dollar and has weakened by 11.4% versus the Australian Dollar. Economists’ indicate that interest rates will not be increased until at least the middle of next year, which has had some part to play in the weakening of Sterling, but what is fairly certain is that Foreign Exchange markets have been pricing in a potential Brexit and the knock on effects that leaving the EU would have.
In the short term, it has been argued that if the UK were to leave, trade would be negatively affected due to the re-negotiation of trade deals which would be a lengthy process as talks would need to take place with both EU members and other non-EU countries who the UK currently trades with.
Although this short term wound may heal over, there is a general consensus that if there was a Brexit, there would be some hurt. This being said though, various economists have spoken about the UK becoming a cheaper destination for overseas visitors and in the long term this could make exports more competitive, which, it is thought, could strengthen the Pound.
“A vote to leave the EU could have material economic effects…on the exchange rate, on demand and on the economy’s supply potential”
In May, Mark Carney, the Governor of the Bank of England said that if Britain quits the European Union, it could result in "material slowdown in growth and notable increase in inflation" and that there would be a very real chance a Brexit could lead to "technical recession".
In a letter to George Osborne, Carney also stated that: "A vote to leave the EU could have material economic effects…on the exchange rate, on demand and on the economy's supply potential".
In racing terms, purchasing a horse in Ireland or France, for example would become more expensive for British buyers, as they’d get less EUR for their GBP if Sterling were to weaken off the back of a victory for the ‘Leave’ campaigners. European owners, Trainers and Jockeys would also be affected when converting prize money if Sterling were to weaken, particularly this month at Royal Ascot and the Epsom meeting, where they may well see less EUR on the other side of their conversions, if the UK were to leave.
On the other hand, at meetings such as the Belmont Stakes and the Irish Derby, with a weaker pound, British Owners, Trainers and Jockeys would see a larger sum when they convert their funds from Euros or Dollars back into Pounds. So if the British currency does follow forecasts on the back of a Brexit, British Owners, Trainers and Jockeys may look further afield when entering their horses in big races.
There is still much to be decided between now and when Britain decides to retain or reject their membership of the EU and no doubt we’ll see more exaggerated possibilities and potential disaster stories from both sides, in an effort to get the undecided voters on board. One thing that is for certain though, is that everything from the conversion of prize money to international horse transportation will be affected if Sterling takes a pounding as a result of a Brexit.
For more information as to how you can save money on your next currency transfer, please visit www.racingfx.co.uk
Joint Injections - Which medications give the best results?
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Punching above their weight - How Liz Doyle and Evanna McCutcheon fare against the big hitters
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Metabolomics - The key to understanding equine gut health
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COURSE TO COURSE A look at stories in the news from racecourses across Europe.
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The UK’s first Equine Flu Awareness Month (EFAM) set for April
The UK’s first Equine Flu Awareness Month (EFAM) is being launched in April with the aim of raising awareness, understanding and virus surveillance of this highly contagious evolving disease, say the organisers.
The Animal Health Trust (AHT) and Merial Animal Health have joined forces to create the initiative. The AHT’s head of epidemiology and disease surveillance, Dr Richard Newton, believes that the campaign is a significant step in the battle against equine flu: “The creation of Equine Flu Awareness Month is an important step forward for the equine industry.
“There have been 52 recorded outbreaks of equine influenza in the last two years, and whilst this may sound considerable, we believe it’s actually just the tip of the iceberg,” he says.
“An equine influenza surveillance scheme at the AHT provides ongoing free sampling to all practices registered to the service, funded by The Horserace Betting Levy Board (HBLB).
“We are fortunate that the HBLB invests in this important scheme which also benefits the industry as a whole. We know that approximately just 40% of the total UK herd is vaccinated, so when you consider that all racehorses and many other competing and performance horses are vaccinated under compulsory rules, that leaves the remainder of the herd even less protected and the total percentage well short of the 70% required in order to prevent an epidemic¹,²,” he adds.
“Many horses that don’t travel are still at risk of equine influenza, but frequently go unvaccinated. These animals are not only at risk of contracting and amplifying virus from their stable-mates that do travel, but are also at risk of airborne infection as equine flu is capable of travelling over a mile as an aerosol on the wind,” he concludes.
For more information on Equine Flu Awareness Month visit www.equinefluawareness.com
References
1. Baker D. Equine Vet J 1986;18(2):93–96.
2. Merial Proactive Insight benchmarking 2015.
About Merial
Merial is a world-leading, innovation-driven animal health company, providing a comprehensive range of products to enhance the health, well-being and performance of a wide range of animals. Merial employs 6,200 people and operates in more than 150 countries worldwide with close to €2 billion of sales. Merial is a Sanofi company. www.merial.com
Slovak Classic Races 2016 to close on Friday 11th March!
Turf Direktorium Bratislava invites all trainers to Slovakia's Classic races in 2016.
Our Classic programme is held at Bratislava racetrack and contains the usual mix of quality races:
15th May 2016
Slovak 1000 Guineas (SVK Listed) – 1700 m
€23 000 (11 500 - 5290 - 3450 - 1610 - 1150)
For 3yo fillies. Weight: 58 kg.
22nd May 2016
Slovak 2000 Guineas (SVK Listed) – 1700 m
€25 000 (12 500 - 5750 - 3750 - 1750 - 1250)
For 3yo colts and fillies. Weight: 58 kg, filly allowance 1.5 kg.
17th July 2016
Slovak Derby (SVK Gd-3) – 2400 m
€64 000 (32 000 - 14 720 - 9600 - 4480 - 3200)
For 3yo colts and fillies. Weight: 58 kg, filly allowance 1.5 kg.
11th September 2016
Slovak Oaks (SVK Listed) – 2000 m
€23 000 (11 500 - 5290 - 3450 - 1610 - 1150)
For 3yo fillies. Weight: 58 kg.
25th September 2016
Slovak St. Leger (SVK Listed) – 2800 m
€19 000 (9500 - 4370 - 2850 - 1330 - 950)
For 3yo colts and fillies. Weight: 58 kg, filly allowance 1.5 kg.
The deadline to enter to all Classic races is Friday, 11th March 2016 at 2.00pm
Please also note the important highlight of the season - the XXXVIII Turf Gala meeting on 5th June, at Bratislava racetrack - includes five top international races:
1. Grand Prix of Slovakia (SVK Gd-3) – 2400 m
€30 000 (15 000 - 6900 - 4500 - 2100 - 1500)
For 4yo+ horses. Weight: 58 kg. Filly and mare allowance 1.5 kg.
2. Grand Prix of Ministry of Agriculture (SVK Gd-3) – 1200 m
€29 000 (14 500 - 6670 - 4350 - 2030 - 1450)
For 3yo+ horses. Weight: 3yo 57 kg, 4+ 60.5 kg. Filly and mare allowance 1.5 kg.
3. Stary Haj Criterium (SVK Listed) – 2000 m
€15 000 (7500 - 3450 - 2250 - 1050 - 750)
For 3yo horses. Weight: 58 kg. Filly allowance 1.5 kg.
4. Arva Trophy (SVK Listed) – 1800 m
€15 000 (7500 - 3450 - 2250 - 1050 - 750)
For 3yo fillies. Weight: 58 kg.
5. Scottish Rifle Trophy (SVK Listed) – 1800 m
€15 000 (7500 - 3450 - 2250 - 1050 - 750)
For 4yo+ horses. Weight: 58 kg. Filly and mare allowance 1.5 kg.
The deadline to enter to the Turf-Gala meeting is Friday 22nd April 2016 at 2.00 pm
For more details, please visit our website www.dostihy.sk or contact us by e-mail on: valtyni@zavodisko.sk or pfefferova@zavodisko.sk
"We look forward to meeting you at our modest but charming racetrack in the heart of Central Europe"
FOR MORE INFORMATION, PLEASE VISIT: www.dostihy.sk
Steer clear of banks in international prize money stakes
Since Cheltenham last year, over £317 billion has been wiped from the FTSE100, with major contributors being a 38% slide in the price of oil as well as the dramatic speed at which China’s economy is slowing down. As we rapidly approach this year’s festival, the economic outlook is even less predictable and currency markets are no more immune to volatility than anywhere else.
With an ever growing Irish dominance, the conversion of Cheltenham prize money from Sterling to Euro is likely to be a popular activity in the weeks following on from the festival, and bearing in mind the current fickleness of the global economy, Owners, Trainers and Jockeys will want to get the best exchange rate possible.
An example of how rapidly the GBPEUR rate can change came at the end of 2015; at the start of October, the exchange rate was around 1.3500, then moved to 1.4300 in mid-November. At the end of December, the price went back to 1.3500, where we saw a maximum change of 6%. So, when buying €100,000, there would a difference of €6,000, depending on the date of purchase. If the same were to happen over the coming months, for foreign winners at Cheltenham, victory would be somewhat dampened by receiving fewer Euros on the other side of their conversions.
“Once you move away from your regular bank to an independent currency provider, you
immediately notice how much more prize money you receive on the other side of the conversion.”
On top of this, Owners, Trainers and Jockeys should also be aware of the provider they use to convert their winnings. Typically, High Street Banks will charge 3%-5% on the interbank exchange rate, compared to independent currency and payment providers, who have the advantage of being able to offer clients more flexible rates, with some bespoke companies presenting their racing and equine clients with prices around 0.3%-0.5%.
To put this into perspective, if for argument’s sake, the interbank exchange rate for GBPEUR was 1.3500 and a client was charged 3% by their bank when converting £100,000 worth of prize money, the client’s rate would be 1.3095 and the amount of Euros they’d receive would be €130,950. If the same person converted their money with an independent provider instead, they are more likely to be charged around 0.5% on the mid-market rate, receiving a quote of 1.3432 and would obtain €134,320 on the other side of the conversion, saving them €3,370.
“I frequently have horses racing around the world, and you’d be surprised how significantly the market can affect the exchange rate you receive and, effectively, how much it costs you to convert your winnings.””
A mouth-watering total of $30 million will also be up for grabs at the Dubai World Cup at the end of the month and with competitors travelling from Japan, France, Australia and everywhere in between, the sums of currency being converted are likely to dwarf those of Cheltenham, with the difference in returns for connections using independent providers compared to a bank, being huge.
With over £4 million in prize money at Cheltenham and $30 million from the Dubai World Cup, the number of currency transactions within the racing industry this month looks set to be phenomenal, and the potential savings that could be made are unquestionable. As always, there’ll be winners and losers throughout the week, but by moving away from the banks, those who gain festival glory could be even more victorious.
For more information as to how you can save money on your next currency transfer, please visit www.racingfx.co.uk
