Rating Manual section 6 part 3: valuation of all property classes

Section 500: horse racecourses

This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.

1. Co-ordination

Horse Racecourses are subject to co-ordination as outlined in the relevant practice note.

Point-to-Point racecourses are not covered by this section but by Rating Manual: section 6 part 3 - section 795.

2. Development and present position of the racing industry

The earliest recorded annual race meetings in this country took place more than 400 years ago at the Roodee at Chester. Races for horses belonging to members of the Jockey Club are recorded in 1752 and the development of racing and the influence of the Club grew from that time. Racecourses were established throughout the country but in the latter half of the twentieth century many closed, until in 1968 there were no more than 58 racecourses in England and Wales.

In 2007 there were some 55 courses (there are 5 in Scotland) a figure which had remained relatively static for some years. In May 2008 the number of racecourses increased for the first time in many years, when after much delay, the first new British racecourse since 1927 opened at Great Leighs in Essex, providing an all-weather facility. A further new all-weather course is scheduled to open in the summer of 2009 at Ffos Las in Carmarthenshire. A list of racecourses is shown at Appendix 1. The racing industry is attempting to attract more racegoers and many racecourses have considerably improved their facilities in recent years to achieve this. Such improvements have been in part funded by the racecourses themselves, in some cases by benefactors, but most improvements have been funded out of the income from the Horserace Betting Levy Board. Racegoing remains a popular pastime and certain meetings have a social standing (Royal Ascot, Glorious Goodwood) which enhances patronage.

3. Description and classification of racecourses

Horse racecourses are no doubt sufficiently well known to need no detailed description, although the more famous courses have individual characteristics which are important to those taking part in the sport. From the point of view of attendances the effect of poor amenities has been referred to in Paragraph 2 and the aim today is to improve racecourses with the following points in mind:

a. To enable racegoers to see more of the racing and of the horses in the paddock without overcrowding or congestion.

b. To provide Totalisator windows in sufficient numbers in the right places and to site bookmakers’ pitches so that the view from stands and enclosures is not obstructed.

c. To provide adequate and hygienic catering facilities and toilet accommodation.

d. To provide adequate car parks with good access and egress.

On the racing side adequate accommodation should be provided for stable lads, and good stabling for horses. The track itself should be well cambered and should avoid sharp bends and turns. Some courses, e.g. Lingfield, now have all weather tracks.

A good deal of help in the form of grants and loans is being given by the Levy Board to help to bring courses up to satisfactory standards.

Apart from the question of amenities, and probably even more important in attracting good attendances, is the quality of the sport provided. Good prize money attracts good fields which provide the spectacle in racing and a good betting market. Here again the Levy Board helps, as do firms and interests which sponsor individual races.

4. Bodies concerned with racing

A number of bodies are concerned in one way or another with the administration of conduct of the racing industry and in 1968 a Committee of Inquiry set up by the Stewards of the Jockey Club and the Stewards of the National Hunt Committee recommended that these should be reduced in number and that a new Statutory Authority should be set up to control and develop the racing industry. Eventually in 1993 the Jockey Club handed over its role as racing’s governing body to the British Horseracing Board (BHB). In July 2007 the British Horseracing Authority (BHA) was set up which took over regulation from the Jockey Club and governance from the BHB. The main bodies in British horseracing are:

4.1 British Horseracing Authority (BHA)

The BHA has since July 2007 been the body responsible for the regulation of British Horseracing, flat racing, steeple chasing and hurdling. It is responsible for making and administering the Rules of Racing. Its responsibilities include the allocation of fixtures, the issue of licences to racecourses, officials, trainers and jockeys, the conditions of races, disciplinary matters, anti-doping precautions, security measures and equine welfare.

In the case of point-to-point racing the BHA delegated its governance powers to the new Point-to-Point Authority from 1 October 2008 whilst retaining direct regulatory control. The BHA also regulates Arabian Racing; Pony Racing is governed and regulated by the Pony Racing Authority with the overarching support of the BHA.

4.2 Jockey Club

The Jockey Club was set up under Royal Charter and its role is to secure the best interests of horseracing. It was the recognised Turf Authority for flat racing in England, Scotland and Wales and was responsible for making and administering the Rules of Racing, the code under which flat racing is conducted. The responsibilities of the Executive Stewards included the allocation of fixtures, the issue of licences to racecourses, officials, trainers and jockeys, the conditions of races, disciplinary matters, anti-doping precautions and security measures; all these matters are now the responsibility of the BHA.

Jockey Club Racecourses (the Racecourse Holdings Trust until 2007) run 14 racecourses including Aintree, Cheltenham, Epsom and Newmarket. They are also part of Racing UK which is a partner in Turf TV. Jockey Club Estates provides training facilities at Newmarket and Lambourn. From 2008 the Jockey Club will take on responsibility for the National Stud at Newmarket.

4.3 National Hunt Committee

The National Hunt Committee, which was in effect incorporated in the Jockey Club, was the recognised Turf Authority for steeple chasing and hurdle racing until these roles were taken on by the BHA.

4.4 Horserace Betting Levy Board

The Horserace Betting Levy Board (HBLB) established by the Betting Levy Act, 1961 and now operates under the Betting, Gaming and Lotteries Act 1963 (as amended) which consolidated previous betting legislation. It is charged with the duty of assessing and collecting contributions from bookmakers and the Horserace Totalisator Board (the Tote) and applying this money towards:

a. the improvement of breeds of horses;

b. the advancement or encouragement of veterinary science or veterinary education;

c. the improvement of horse racing.

The HBLB currently funds over 50% of the total prize money in racing and provides grants to racecourses to help cover the British Horseracing Authority’s costs of providing integrity services. It has a £51 million capital fund with which it supports the improvement of racecourses by the way of interest-free loans.

4.5 RaceTech (formerly Racecourse Technical Services Ltd)

Racecourse Technical Services Ltd was originally formed in 1946. Since 1998 it has been wholly owned by the Racecourse Association which meets the cost of services supplied. It provides such technical services as the photo finish, starting stalls, the camera patrol, race timing service, the public address system & communications facilities and provision of Outside Broadcast facilities.

4.6 Racecourse Association Ltd

The Racecourse Association Ltd. is a trade association incorporated in 1907 for the purpose of representing racecourses in discussions with the Turf Authorities and with other bodies in the racing industry. All racecourses are required to belong to the Association.

5. Background to Valuation and Method of Valuation

For many years it has been customary to value racecourses having regard to receipts and expenditure (R & E) and in the Sandown Park case Sandown Park Ltd. v Esher U.D.C. and Castle (VO) - (1954 R&IT 351), it was accepted by the parties that this method was appropriate. However, an R & E valuation is not considered to be mandatory and rental evidence in respect of a limited number of racecourses does exist. The case of Garton v Hunter (1969RA11) underlines the fact that all relevant evidence of value is admissible and this is important in the case of racecourses where, in the absence of support by the Horserace Betting Levy Board, many would not be economically viable.

As to the application of receipts and expenditure valuations reference should be made to Rating Manual: section 4 part 2. Complications can arise over Levy Board contributions and care should be taken to distinguish between elements, if any, which are attributable to capital improvements, and not to be included in gross receipts, and amounts for the reduction of entrance fees, augmentation of prize money etc. which could properly be included. Sometimes racecourse accounts are kept in such a way as to separate prize money from other income and expenditure and it is necessary that care should be taken in considering comparisons of percentages of gross receipts. Also, of course, the amount of tenant’s share (where a formal R & E valuation is undertaken and tenant’s share is calculated as a percentage of gross receipts) requires careful consideration, having regard to the elements comprised in the receipts.

Where the valuer is confronted with an R & E valuation of a racecourse producing an unrealistic assessment a satisfactory valuation will often be achieved only as the result of negotiations involving the help of the limited rental evidence available.

Consideration of all available evidence has led to the practice of looking at racecourse assessments in terms of a percentage of gross receipts but it is emphasised that this can be done only after examining in these terms the assessments deduced from rents, or the results of R & E valuations of viable racecourses, or ultimately assessments negotiated by Valuation Officers.

Racing in this country has a history extending over more than four hundred years and long ago became an industry, as well as a sport, in which thousands of people are involved. It enjoys the most distinguished patronage and support and it is probably fair to argue that the factors influencing the mind of an occupier of a racecourse are often not wholly economic.

6. Valuation by Percentage of Gross Receipts

6.1 Racecourse Incomes

Where a valuation is carried out on the basis of a percentage of Gross Receipts care should be taken that only normal racecourse incomes are included in the gross receipts. These will be race day incomes including admissions, race cards, advertising, royalties and payments from satellite and bookmakers’ systems, car parking, bookmakers’ badges, catering, betting shop income, abandonment payments; fixed income from racing including membership, subscriptions, media income, advertising, catering and box rentals; other operating income including caravan sites and rallies, room hire fees for function rooms and other short-term ”letting” fees.

6.2 Non-racecourse Facilities

Where there is an hotel, golf course or similar facility which is part of the racecourse hereditament where the income is not dependent on racing this facility should be valued by the appropriate method for that type of hereditament bearing in mind that some of the income streams (such as catering) may be shown together with the racecourse income.

6.3 Licences and Concessions

Where the valuation is carried out on the basis of a percentage of gross receipts and a concession remains part of the hereditament, rental or licence payments should be considered separately from the trading turnover. Concession income should be valued at a percentage within the range of 25% – 50% depending on the level of the occupier’s expenditure. This will be at the higher end where receipts involve the landlord in minimal expense, and at the lower end where the rateable occupier is responsible for all repairing liabilities, provision of services or significant non-rateable items. The resultant figure should then be added to the rateable value calculated on the main part of the hereditament.

7. Totalisators

Totalisators are separately assessed see Rating Manual: section 6 part 3 - section 1080. Care should be exercised to exclude elements of receipts for totalisator rents from racecourse accounts for the purposes of valuation or analysis.

Appendix 1 : List of Racecourses

List of Racecourses * Aintree – Jump

  • Ascot - Mixed

  • Bangor on Dee - Jump

  • Bath - Flat

  • Beverley - Flat

  • Brighton - Flat

  • Carlisle - Mixed

  • Cartmel - Jump

  • Catterick Bridge - Mixed

  • Cheltenham - Jump

  • Chepstow - Mixed

  • Chester - Flat

  • Doncaster - Mixed

  • Epsom Downs - Flat

  • Exeter - Jump

  • Fakenham - Jump

  • Ffos Las – Mixed

  • Folkestone - Mixed

  • Fontwell Park - Jump

  • Goodwood - Flat

  • Great Leighs – Flat All Weather

  • Great Yarmouth - Flat

  • Haydock Park - Mixed

  • Hereford - Jump

  • Hexham - Jump

  • Huntingdon - Jump

  • Kempton Park – Mixed All Weather

  • Leicester - Mixed

  • Lingfield Park – Mixed All Weather

  • Ludlow - Jump

  • Market Rasen - Jump

  • Newbury - Mixed

  • Newcastle - Mixed

  • Newmarket – July Course - Flat

  • Newmarket – Rowley Mile - Flat

  • Newton Abbott - Jump

  • Nottingham - Flat

  • Plumpton - Jump

  • Pontefract - Flat

  • Redcar - Flat

  • Ripon - Flat

  • Salisbury - Flat

  • Sandown Park - Mixed

  • Sedgefield - Jump

  • Southwell - Mixed All Weather

  • Stratford upon Avon - Jump

  • Taunton - Jump

  • Thirsk - Flat

  • Towcester - Jump

  • Uttoxeter -Jump

  • Warwick - Mixed

  • Wetherby - Jump

  • Wincanton - Jump

  • Windsor - Flat

  • Wolverhampton – Flat All Weather

  • Worcester - Jump

  • York - Flat

Appendix 2 : Factors affecting profitability

Horse Racecourses Factors affecting profitability

Factors that may affect the profitability of Racecourses and therefore the rental value.

Factors likely to increase profitability

  1. Good quality racing.

  2. Few abandoned days racing.

  3. The majority of racing days in Spring, Summer or Autumn rather than Winter.

  4. A greater proportion of Flat racing days rather than National Hunt.

  5. A large number of racing days on Friday, Saturdays or Mondays especially Bank Holidays.

  6. A few days racing only in a year

  7. A relatively high proportion of adjusted gross receipts attributable to net income from non-racing activities and including catering.

  8. Regularly featured on the television and radio.

  9. Modern buildings with hospitality suites, good stabling, secure car parking and fully utilised.

Factors likely to reduce profitability

  1. Poor quality racing.

  2. Frequent abandoned days racing.

  3. A relatively large number of racing days in January and February.

  4. A greater proportion of National Hunt days rather than Flat racing. Jump meetings being more costly to operate.

  5. A large number of racing days mid week, evening meetings, or Sunday meetings.

  6. Many days racing in a year.

  7. A relatively small proportion of adjusted gross receipts attributable to net income from non-racing activities and catering.

  8. Rarely covered by television and radio.

  9. Old buildings under utilised in poor condition, poor stabling and car parking subject to vandalism.

Many of the above factors are interconnected and the quality of the racing may also tend to over-rule some of the other factors.

Practice Note 1 : 2010 : Horse Racecourses

1. Co-ordination Arrangements

Horse racecourses are a Specialist Rating Unit (SRU) class and responsibility for ensuring that appropriate co-ordination takes place lies with the SRUs. For more information see RM : V2 : S1.

Special Category code 132 should be adopted and as an SRU class the appropriate suffix letter should be S.

Point-to-Point racecourses are Special Category code 214 and as an Group class the appropriate suffix letter should be G; guidance for these will be found at RM: V5: s795.

2. Background

At 1 April 2008, the antecedent valuation date (AVD) the outlook for racing was reasonably good with 2008 year operating at the highest level of activity ever with record numbers of fixtures, races, horses in training and prize money at £106 million. However the industry still faced many challenges. The British Horseracing Authority (BHA) had only been in existence at AVD for 9 months. During 2008 they overhauled their integrity operations against corruption guided by an independent review commissioned in October 2007 to cut down bureaucracy in licensing, revised rule making and disciplinary processes and the Stewarding system.

The main review in 2008 was of the fixture list, which will impact on the fixture list for 2009. It was principally concerned with looking at the profile & profitability of meetings and geographical imbalances – the review will result in a change of status of some meetings together with reduced Sunday and winter evening programmes.

In 2008 5.7 million people went racing at the 61 racecourses, licensed trainers were at their highest level for 5 years although professional jockey numbers remained static. Over the five years 2004-2008 horses in training, number of fixtures and the number of runners all increased but attendances were gently declining.

The uncertainty over the Horserace Betting Levy Board and the Tote was also eased in 2008.

Since before AVD for the 2005 Revaluation and for a considerable period after the television rights and income situation was in turmoil. In January 2004 At The Races terminated its television rights deal with 49 of the UK racecourses saying it would negotiate rights with individual racecourses. Subsequently Racing UK – a dedicated horseracing channel owned by the racecourses - was set up; in 2008 it had thirty shareholding racecourses including Aintree, Cheltenham and Newmarket. At The Races a partnership including Arena Leisure and 30 UK racecourses broadcasts from racecourses including Ascot, Doncaster and Windsor. Channel Four also broadcast racing, mainly from Racing UK racecourses, on a contract running until December 2009. Any media incomes over this period may fluctuate and should be given careful consideration. In 2007 Turf TV was set up as a rival to SIS (Satellite Information Services) in providing television pictures to betting shops. Racing UK and Ascot are partners in this business.

In May 2008 the first new racecourse for 82 years opened, after delays, at Great Leighs in Essex. However, in January 2009 Great Leighs entered administration following the rejection of its application for an annual licence to race and its temporary licence was not renewed. A further new all-weather racecourse is in development and due to open in the summer of 2009 at Ffos Las in Southwest Wales.

3. Valuation Guidance

The VO approach in this class has been discussed with representatives of a large section of the operators and agreement on approach has been reached based on that accepted in previous Rating Lists.

A percentage will be applied to Gross Receipts from racing dependent on the level of receipts achieved from racing and associated activities. Within these Gross Receipts it is accepted that catering and liquor sales for racedays will be net of the cost of sales. The range of percentages set out below reflects that this is the case for the majority of racecourses. A percentage should be adopted for a particular level of receipts within the range shown to reflect the relative profitability/level of costs for the streams of income for the racecourse being considered.

Any income streams not directly arising from the running of the racecourse should be valued separately, e.g. hotels, income from car boot sales. Where there is a concession letting then it would be usual for this to be taken at 25% -50% of the income received to reflect the services provided by the landlord.

The range of percentages is set out below for the valuation of racecourse income.

Adjusted Gross Receipts Min Max
£1 1% 3%
£1,000,000 3% 5%
£2,000,000 4.5% 6%
£3,000,000 5% 6.5%
£4,000,000 5.5% 7%
£5,000,000 6% 7.5%
£6,000,000 6.5% 8%
£7,000,000 7% 8.25%
£8,000,000 7.5% 8.5%
£9,000,000 7.75% 8.75%
£10,000,000 and above 8% 9%

Interpolate on a straight-line basis between points on the min and max to obtain range at any level of gross receipts.

This property is valued using the non-bulk server. The manual can be accessed here.

4. IT Support

Valuations for this class should be carried out on the specific spreadsheet that enables input of factual data to achieve valuations that follow the recommended approach for horse racecourses. In due course the facility to carry out valuations on the Non Bulk Server (NBS) will be developed.