Hard Times for the Irish Sweep

THE TINSEL and glitter of the Irish Hospitals Sweepstakes has tarnished a bit in recent years. By Pamela Readhead

The reason? Not so much that the lottery idea no longer works 8rather it is so popular that sweeppstakes are legion and the Irish version has suffered from international commpetition.

The Irish Sweeps was founded in 1930 by Joe McGrath, chiefly as a method of raising money for Irish voluntary hospitals. Since then it has been firmly associated with the McGrath family and is popularly thought of as the fountain of their not inconsiderable fortunes. Sweeps money may have provided some £80m for Irish hospitals, but. it has also helped finance other institutions such as Waterford Glass.

The Sweeps, however, is more complicated than a McGrath family firm, in spite of the aura of paternallism which surrounds it.

In legal terms it involves four bodies.

These are confusingly known as the Hospitals' . Trust Board, a statutory institution which owns the £lOm site and headquarters in Ballsbridge, the Hospitals' Committee, whieh is made up of representatives from member hospitals, and which has a watchdog function, the Hospitals' Commission, which is responsible for allocating money to individual hospitals, and finally the Hospitals' Trust (1940) Ltd, not a trust at all but a private commercial company authorised by the statutory bodies to run and proomote the lottery.

In the beginning, the eight directors of the private company put up £100,000 in cash as guarantee for the first sweeppstake, and they continue to be the only people at financial risk in the whole business.

Under the terms of the Public Hospitals Act 1933, amended in 1975, the lottery must hand over 30 per cent of gross income direct to the hospitals - which then pay 25 per cent stamp duty on it. A further 40 per cent is allowable as running exxpenses and management fees to the promoters, and the remaining balance of not less than 30 per cent is disstributed as prizes.

As a protection for the public who buy the tickets, each Sweep is run

as a separate business proposition. The Hospitals' Committee make a separate application to the Minister of Justice, four times a year, detailing the way the draw will be held, the way it will be managed, the number of free tickets issued to sellers, and so on. When the Minister accepts the scheme, the Hospitals' Committee only then gives the go-ahead to the promooters. In theory the Minister could stop the Sweeps at any time, and, equally, the hospitals could hire a different firm of promoters.

Legally, no deficit or profit may be carried forward from one sweep to the next. Surplus must be handed out as prize money, and losses must be met by the promoters, where neecessary out of private pockets.

In the last two or three years the promoters have been obliged to do just this. Not only have they been forced to forego their management fee of 2'h per cent of income, they have had to dip into their own pockets to make up the deficit on costs.

At worst this has cost them over £lm in a single year, but since the allowable level of expenses was raised from 30 to 40 per cent in 1975, the amount has been much less. On the last race, in October, the deficit was £70,000, and, in addition, the manageement fee was witheld yet again.

Although it is clear that the pro-

moters cannot allow this situation to continue indefinitely, their current losses are meagre compared to their past earnings. To put this into perrspective, in its heyday (which lasted until about 1966) it was not uncommon for a single sweep to sell £30m of tickets, of which 2'h per cent was payable to the promoters in fees, that is, £%m on each of their four operaations per year.

In those same heady days costs represented only 12 per cent of income and the prize money was sometimes as much as 50 per cent.

Why the dramatic reversal of forrtunes? The answer is simply a commbination of competition, plus a slowness to react to the worsening situation.

When it was first started, the Irish Sweeps was a pathfinder. Not only were lotteries illegal in most countries, those that did exist were not tightly controlled, and were open to fraud. One of the controls the Irish Sweeps has always insisted on is that ticket buyers receive a receipt. This is unique; and it means that the onus of findding prize winners lies with the proomoters. In other Sweeps it is usually l;1P to the ticket buyer to realise he has won and to send in the winning ticket. Conseq ently there have been cases of lottery promoters pocketing unclaimed prize money.

The Irish system closed this loophole right from the start and the reesult is that in its 47 year old history there are only £100 of unclaimed prizes.

From the very beginning most of the sweepstake tickets were sold overseas, the largest market being the US and Canada. Only 5 per cent are sold in Ireland. The trouble started when the overseas markets started their own state and province lotteries for local charities. One very significant competitor was the Canadian lottery in aid of the Olympic Games fund.

In the past ten years sales have plummeted from as much as £30m a sweep to £14m a year. Overheads, on the other hand, have been hit by inflation, and the old ratios no longer apply. Wages cost £2m a year, printing is £'!2m and post and distribution costs are now more than £800,000.

At head office, opposite the RDS in Ballsbridge, the great hall which used to house 3,000 women working at high Dickensian desks in lines stretching 50 yards or more, is empty. It is too large to heat. In any case' .the total number of employees is now less than 600, the majority of whom are single women over 50. When the building was opened it was such a significant local source of employment that it had its own entrance from the coastal railway,

Times have changed drastically, but it must be said that the Hospitals Trust Ltd has been slow to keep pace. After years of friendly staff relations - all christian names but no pensions ('We were precluded by the law,' is the management explanation) - the Sweeps was hit by a six week strike in May of this year. The reason nonnpayment of national wage agreement rates, due to financial troubles.

The Workers Union of Ireland, which claims 50 per cent membership of the Sweeps workforce, has only been recognised by the management for two years, but the management has now been forced to accept unionnization as a fact of life,

'We have put the dispute behind us,' said a union official, 'but the way will be long and hard.'

Chief executive of the Hospitals Trust Ltd, Mr Colbert (Coley) O'Farrell, who has served the company as man and boy, acknowledges the necessity for improving staff relations, but his other priority is a 'vigorous new marketing strategy'.

O'Farrell is currently spending £200,000 on pepping up sales by mail order shots and publicity particularly in North America, where he thinks there are still opportunities for recapturing the market.

One question remain-so Has the Sweeps outlived its usefulness? Is it worth making the jump into the 1970s, albeit rather late in the day?

Hospitals no longer depend to the same extent on income from the Sweeps, but they welcome the £2m net it brings in annually. On top of this, employment extends not only to the dwindling group in Ballsbridge, but indirectly to 300 Irish printers, drivers and so on. Of the £14m revenue, O'Farrell calculates that at least 8'!2m stays in Ireland, so a closure would certainly hurt.

At this point, O'Farrell has given himself a year to improve the financial situation. Perhaps it's no accident that he has on his desk the programme of a forthcoming conference entitled Managing for Change.