New research carried out at the London School of Economics has shown that jockeys who are paid huge retainers by horse owners suffer a marked fall-off in the number of races that they win.
Researchers at the LSE's Centre for Economic Performance (CEP), analysed the performance of the top 50 flat-race jockeys over a 10-year period. Leading jockeys - including Willie Carson, Pat Eddery and Steve Cauthen - all slipped down the rankings when owners agreed to pay them hundreds of thousands of pounds a year in retainers to secure their services. By contrast, jockeys Tony Ives and Ray Cochrane have consistently been among the highest-performers without being paid retainers.
David Metcalf, the CEP's deputy director, said that the position of jockeys on large retainers was similar to company bosses, who typically receive around two-thirds of their earnings in a base payment which is not related to performance. "With bosses, very little is actually contingent on performance," he said. "Fat cats would do themselves a great service by making their pay more contingent on share price."
Flat jockeys earn pounds 61.50 as the set fee for each ride, plus a 7 per cent share of their winnings. The retainer system in British racing has now almost broken down - which Professor Metcalf said was evidence that it did not work - and almost all jockeys are paid by performance. "The jockeys provide a real lesson for bosses about how to define a payment system. The jockeys' system has gradually evolved and it serves racing every well. If bosses did the same it would serve our national economy better," he said.
The LSE research, which was funded by the Economic and Social Research Council, uncovered a deterioration in the performance of jockeys on large retainers. According to the study, Carson averaged 27th in the jockey rankings when paid, a retainer compared with 12th when his earnings depended entirely on performance. Steve Cauthen finished seventh on average except when he was paid a retainer when he slipped to an average of twelfth. Pat Eddery fell from 13th to 16th on a retainer, while Walter Swinburn stayed at 16th but earned less prize money when he was on a fixed payment.
The one top jockey who continued to improve despite earning a retainer was the phenomenal Frankie Dettori, who climbed from seventh to fourth in the rankings. Dettori is paid a retainer, believed to be around pounds 500,000 a year, by Sheikh Mohammed of Dubai.
Professor Metcalf said that because of the greater elasticity of their pay, jockeys could improve their earnings by 20 per cent for a 10 per cent increase in performance. By contrast, bosses could only add 3 per cent to their earnings for a similar increase in performance, which offered them little incentive to work harder.
"I have got no problems with fat cats so long as their pay is based on performance, but in most cases it clearly is not," he said.
His co-author, Sue Fernie, said: "The study has shown that paying large sums with insufficient performance incentives built in is inferior to carefully constructed incentive contracts.
"In the spirit of the old song, `it ain't what you pay it's the way that you pay it - and that's what get results'."
Michael Caulfield, secretary of the Jockeys' Association, said that the report made "fascinating reading" and confirmed the view of most jockeys that racing had a fair and effective pay system.