Friday 15 May 2015

The Growth Strategy for British Racing, Part 1 of 3: “Proud History : Bright Future”

Last week I went along to the BHA presentation and discussion at Newbury Racecourse on the growth strategy for British racing. Nick Rust. CEO of the BHA, led the discussion, supported by Rod Street of Great British Racing. It was a lengthy morning in front of 150+ attendees, a number of whom it has to be said are fully paid-up members of the cynical brigade. Personally I think it is really important to give credit to the BHA for setting up these briefing sessions. The leaders of racing are extremely committed to getting everyone in the industry behind the growth strategy in a really collaborative and positive way. One of Nick’s key messages was that this must be a “self-help initiative”, since no-one is going to bail out British racing and we’re certainly heading into a difficult five years. It is the first time I have had contact with him, and you couldn’t help but be impressed by his open style.

Because of the importance of the growth strategy, I am going to cover it in some detail in this and the next two blogs. Part 1 looks at the overall context of the strategy (I didn’t detect anyone disagreeing with the BHA’s analysis); Part 2 summarises the proposed initiatives and road-map (based on the work of the pillar strategy teams launched by Steve Harman last year, which consulted with over 300 key stakeholders); and then Part 3 will be a critical appraisal of the overall approach, the areas which are relatively non-contentious, those which are much more likely to be challenged and also the areas I felt were seriously neglected.

Both presenters were determined to show that a lot of work has been under way, and that racing is a really important industry. 85,000 jobs are dependent on it; there is a £1.1bn core annual expenditure; on-shore and off-shore betting turnover is £10bn+; there were 1,429 fixtures in 2014, with 5.8m racegoers attending; prize-money was a record £130m, and we are the second-best attended sport after football. Great British Racing (admittedly with a paltry £1.2m budget per annum) has done a lot of work to raise the exposure of racing to the public; the British Champions series is a real success; 10-year sponsorship has been secured for the Derby; and an international network of ambassadors is encouraging inward investment. Not everyone at Newbury was comfortable with the “marketing jargon”, but a lot is clearly being achieved. Without any doubt the relationship with government is probably at an all-time high, as evidenced by the cross-party support for the “racing right” that was announced by the Chancellor in March. Having “one voice to government” really matters, and this is a notable success. Equally the work of the Horsemen’s Group / ROA in obtaining prize-money agreements with 56 courses has injected much-needed cash in a sustainable manner.

Unfortunately though, significant storm clouds are building on the horizon, and Nick Rust in particular made no attempt to conceal these. Horses in training, owners, betting and the traditional racecourse audience are all in decline. The return on ownership, which I have often emphasised in these blogs (and I put a question to Nick on that subject), is at a miserable 26p in the £, and is unlikely to move much. That poor return has disillusioned many owners. Not surprisingly there were 7% fewer horses in training over the last five years, and 15% fewer sole owners. Over the last ten years, there has been a persistent decline of £400m in the betting gross margin. Some racecourses are struggling with profitability, while virtually all trainers, breeders and jockeys outside the top tier are securing an inadequate return for their efforts. If that is not enough doom and gloom, the levy income may well drop to just £50m by 2017.

In effect, therefore, the growth strategy for British racing is a turnaround one. These trends must be reversed, with a clear requirement that the sport, through its own efforts and tapping new sources of funds, needs to generate at least an extra £100m over the next few years.

An explicit strategic framework was outlined, with four clear aims: improve the number attending racing and the quality of the experience; boost racehorse ownership; revitalise and innovate betting; improve media consumption of the sport in order to “make racing part of the nation’s fabric”. Based on the work in 2014, there are four growth pillars: customer growth; horse population, owning and breeding; racing and betting; ultra-high net worth individuals. In turn there are two foundation pillars: integrity and recognition; participant welfare and training. Finally there are five key enablers: government relations; the racing programme; racing’s future financial model; a community engagement strategy; and communications. The initiatives connected with these will be examined in Part 2 of this series on 1st June.

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