The Jockey Club in Britain has launched a sporting investment bond which aims to raise £15 million towards the cost of developing new facilities at Cheltenham Racecourse, and which will pay interest at a rate of 7.75% per annum. Could this be a new way to raise money from a loyal customer base that will be cheaper than other finance options and work on other levels too?
The ‘Cheltenham’ Bond will, if successful, cover around one third of the cost of a new grandstand development at the venue which each march becomes the central focus of the Irish sporting world.
It was launched off the back of record operating turnover at the Group which runs 15 racecourses, the English National Stud and valuable training grounds in Newmarket, the English equivalent of the Curragh.
Despite the Olympics and England competing in the Euro 2012 Finals, the Jockey Club enjoyed a 7% increase in turnover last year and operating profits of just under £20 million.
It has manageable debt of just over £80 million after a 10 year investment programme in facilities that amounted to twice that sum and saw record crowds at each of it’s main Festival fixtures at Cheltenham, Aintree and Epsom.
‘The Jockey Club Racecourse Bond’ is a five-year initial term investment opportunity. It is open to the general public who can invest sums of between £2,000 and £100,000. Interest payments will be worth 7.75% gross per annum and will be split between cash and a racing rewards programme.
4.75 % will be in the former while the balance can be used can be used to purchase a range of services and goods including tickets, food and drink, hospitality packages, racecards and unique experiences at the Group’s 15 racecourses nationwide.
The cash sum is less than the group would pay in terms of loan finance and the extra loyalty and turnover the second element generates will boost the business’ connection to its core support base.
The Jockey Club has a database of over one million to whom it is now actively promoting the bond. Many of those interested may well be Irish, depending on the tax treatment of the investment but there should be no obstacle to Irish sporting organisations part funding developments of the future in a similar fashion.
There is of course an element of risk with any financial investment but returns of 7.75% look good in the current climate and investment in an area where you have an interest and a long term commitment provides a double win for sport and investors.
For more analysis on Sports Funding click here.
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