CEO update 14/04/2020
Jude Matthews, BE CEO update 14/04/2020
I hope that you and your families are all safe and well. It looks like these unprecedented and uncertain times are to continue for some time yet and so I will continue to keep you informed of the decisions and progress we are making across all aspects of our beloved sport.
As I read some of the social media comments I realise that as well as keeping everyone up to date that there is a need to ensure that everyone understands the facts which provide essential context that will enhance your understanding of the operation of the sport and the actions my team and I have to take.
Find the latest status of event refunds HERE.
So, to start, here are six key facts about how BE is funded and the financial position we are in:
1) BE is funded by memberships and horse registrations. The season started with poor weather which understandably meant that some members delayed renewing their membership and horse registrations. The impact of this is that income from membership and horse registration were lower than the same point last year. With COVID-19 and the resulting suspension of the sport so early in the season means, the impact is significant.
2) We do have reserves. Per the 2018 (last published) set of accounts, the cash reserves were at £1.3M. We will need to use this to keep the company afloat through this situation.
3) There is an element of fixed costs each month, e.g. rent & service charges and public liability insurance.
4) Costs which would ordinarily have been fixed, i.e. salaries and associated costs, have been mitigated by the Government’s Coronovirus Job Retention Scheme, and we have so far furloughed 28 out of our 44 staff. The portal for this relief is not yet available, so the costs of paying staff still lies with BE, even though we will be able to obtain the equivalent costs back.
5) CASH FLOW is tight! We have little or no income currently, but some costs still exist and must be paid. We have been through all spend to either remove it or delay it where we can.
6) We do not know when sport will restart, and therefore when membership income may start to come back in.
Next, I’d like to provide five facts about Abandonment Insurance
I am aware there has been a lot of comment about the abandonment insurance and the dispute with our insurers so it’s important we all understand how this insurance works and then I will explain what we are doing about the insurance claim itself:
1) The insurance cover is brokered by KBIS via a London broker, and the policy is for the benefit of Member’s entry fees.
2) The policy only covers events abandoned/cancelled post ballot date and is designed to cover the cost of the entry fee to the Member, it does not cover the costs of running the event for the Organiser.
3) The insurance premium is collected as part of the entry fee and is paid to the underwriters post event once all the withdrawals are completed and the entries reconciled.
4) Where an event is cancelled or abandoned prior to the ballot date, the Organiser is responsible for the costs of refunding entries. After this date, the Organiser retains the entry fees paid, and the insurance cover is in place to cover entry fees.
5) Cancellation or Abandonment is covered by Rule 4.12 in the Rulebook, and the Organiser aspects are covered in their Affiliation Agreement with BE.
So, what is the basis of the insurers refusal to pay? At a basic level, the dispute relates to whether or not cancellation due to the government restrictions are covered. Our legal advisers believe that we are covered and we are in the process of challenging the insurers.
It is important to understand that BE does not retain the monies collected for the Abandonment insurance – these are passed to the insurers (in the same way as, say, car insurance would be paid over). We do not have the entry fees paid by Members – these have been paid over to our Organisers, in line with our agreement with them and to cover the costs they had already incurred in the setup of their events.
At the 16th March Board meeting we discussed the impact of COVID-19 and our ability to continue to run the sport. We had already reached out to the insurance company to request confirmation of cover if the government restrictions on freedom of movement were to be put in place. That evening the government instigated restrictions, effectively taking the decision of whether events could continue to run out of the hands of BE.
I hope that the facts I’ve set out give you a better understanding and provide context. There are two other points I’d like to finish this communication on.
Under the Companies Act 2006, the directors have certain legal responsibilities to the company and because one of these is a primary duty to protect the company these may be directly contradictory to the moral pressures from the membership, such as refund of membership and entry fees. This is an uncomfortable situation for us all. Until we know when we can restart the sport we will not know our financial outturn and only then can we model financial options for membership refunds/credits etc. - I can assure you we will do what we can. And as for the entry fees, we will fight the decision by the insurers to get the money you are owed.
And lastly, we have a rolling event plan, which identifies how long each event in our calendar will take to get going, plus a number of organisers who can put events on at short notice if required. We are considering scenarios where an element of social distancing remains in place, and where numbers of people attending one site (mass gatherings) are restricted, amongst others. We all want to be able to resume sport as quickly as possible, as soon as we are able, and I will continue to update you as circumstances change.
Thank you for taking the time to read all of this. Take care.