The Jockey Club Racecourse Bond

Diamond Geezer

Diamond Geezer

Gone But Not Forgotten
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May 2, 2003
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Being touted as the first retail bond in British sport..

The Jockey Club Racecourse Bond is designed to be a simple investment opportunity offering an attractive fixed-rate return.
The bond at a glance:

Offering 7.75% gross interest per annum made up of:
4.75% gross interest payable in cash; and
3% gross interest payable in Rewards4Racing Points, which can be redeemed to purchase in full or to gain a discount against any online transaction through The Jockey Club Racecourses’ websites including tickets, restaurant packages, hospitality packages and racecards.

Five-year initial fixed term
Open to subscriptions between £2,000 and £100,000
Non-transferable
The Jockey Club Racecourse Bond will be live for application for a limited time period from 24 April 2013. Applications are not accepted before 24 April 2013.
 
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If I understand this correctly, £1k would return £77.50 per annum in cash and entitlements, in other words something close to the price of admission to the Club enclosure during the Cheltenham festival.

Therefore £4k would cover admission costs for each of the four days of the festival for five years, at which point you get your money back, minus whatever value it has lost through inflation, say 12.5% or about £500.

To that has to be added the interest that could have been gained by putting £4k elsewhere for five years - does £800 sound reasonable? - giving a total cost of around £1300, as compared with the 5 x £300 per year one would otherwise pay.

So it sounds fair enough as long as you wouldn't miss the money too much in the short term?

On the other hand, why make it non-transferable? Does that mean if you fall ill and can't go racing you lose out on the non cash prt of the dividend?
 
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Posted elsewhere by an accountant

It's a 5 year bond so 4.75% might not look so good by the end of the five years. However, I don't think that shareholder perks are taxable in which case the free tickets etc could be quite valuable, as you'd normally have to pay for these out of taxed income, so the effective rate or return might be nearer 10% gross in some cases.
 
Racecourse Bond has achieved its £15m target so they have extended the application deadline by 10 days due to demand.
 
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