Saturday 1 June 2019

Welcome to Annamarie Phelps, New Chair of the BHA. Top of the In-Tray – Finances, Funding and the Levy. Oh Yes, and Racing’s Leadership Behaviour and the Need to Curtail the In-Fighting.

Annamarie Phelps commences her new role today as Chair of the BHA. I’m sure everyone in British Racing wishes her well and is hoping for a really successful new phase for British Racing under her stewardship. She is a former Olympic rower, current Vice-Chair of the British Olympic Association, and replaces the temporary incumbent, Athol Duncan. She is a recognised UK sports figurehead and, when she was appointed, the BHA underlined her main expertise “in dealing with complex political, regulatory and multi-stakeholder projects and initiatives” through her “impressive leadership skills and astute grasp of the issues facing major sports, including their engagement with government”.

I’m sure she doesn’t need me to teach her anything about leadership, but I’ve never forgotten the chairman of a major pharmaceutical company who raised his left hand in front of me one day in my consulting career and explained that you never need more than five fingers to prioritise the key strategies for any business. His view was that the challenge in a new chair’s first 100 days was to identify the three critical strategies that would really make a difference to the organisation, and then to drive them forward through the two main enablers of leadership and any necessary changes to the operating model. Rather menacingly, he then raised his right hand and said that over the 100 days you always discover the five leaders who are the blockers, robber barons and doom merchants. Indeed, I can still remember one hapless individual at this chairman’s leadership conference who, during a plenary discussion, announced that there was no way he was going to support a particular initiative: “over my dead body”. The chairman gave him a withering look and proclaimed, “It can be arranged!”

So I’ll be very interested indeed to follow the impact of the new chair during this initial 100-day period. I’ll be even more interested to find out whether any changes occur in the leadership of our sport. Unfortunately over the last 12 months there has been a shocking outbreak of in-fighting and negative behaviour within the top echelons. Although the chair of the BHA has limited authority over most of the stakeholder groups, there is certainly a need to knock a number of heads together and focus on the key priorities and opportunities.

Two very interesting articles appeared recently in the Racing Post, one by the former chairman of the BHA, Steve Harman, entitled Time to talk up racing’s future and kick on with levy development, and the second from trainer Jamie Osborne, Funding farce underlines urgent need for racing to conduct a radical re-think. Steve’s article was both optimistic and a notable call for action with regard to the next stage of levy development, while Jamie advocated the need to “stop the blame game and start thinking radically”. I’m sure both were designed to coincide with the arrival of the new BHA chair.

Steve’s article was persuasive and compelling. While some pundits in racing have dwelt on the “black hole” of the cut in FOBT stakes and its impact on media rights, his focus was on the need for racing to concentrate on £115m of funding that can readily be secured through self-help opportunities exceeding £50m per year and levy development worth a further £65m+. It certainly convinced me, and is definitely one of the fingers on the strategy hand. It is worth examining in more detail.

Without doubt, one of Steve’s most important contributions as BHA chair was the development of excellent relationships with the many politicians who are now key advocates of racing, both inside and close to Westminster. These include prime ministerial candidate Matt Hancock; Jeremy Wright, his successor as culture secretary; Mims Davies, Sports Minister; former Sports Minister Tracy Crouch; Helen Grant, Vice-Chair of the Conservative Party; and George Freeman, ex-Head of the Prime Minister’s Policy Unit. In particular, Matt Hancock had assured Steve that racing would not suffer as a result of FOBT changes, and gave a strong commitment to examine further levy development once the FOBT changes had bedded in. However, and crucially, to trigger the next stage of that development there were conditions that had to be met. In particular racing had to show self-help in a number of designated areas: building a strong global Tote, making further progress in industry recruitment and retention, further developing the equine welfare and staff welfare agenda, improving the balance of British-bred horses, pooling media rights, growing participation in the sport and meeting good governance standards.

Throughout Steve’s piece there was frustration that racing isn’t delivering on what is required to trigger further developments to the levy. It is almost as if racing doesn’t believe that Westminster will keep its word and ensure that racing doesn’t suffer financially from the changes made to FOBT stakes. The need for speed and leadership came through strongly if racing is not to stumble into a crisis of its own creation: “ …. we should be talking opportunities and growth. This industry has proved what it can do regarding levy reform. Racing needs to articulate a compelling message about growth and jobs, with great campaigning supported by quiet lobbying with our influencers.” Furthermore, “The clock has been ticking. Jobs in this industry depend on this. Anyone doubting the promises, prospects or scale of levy development needs to be corrected.”

Jamie Osborne’s concern was the lack of transparency and finger-pointing between racecourses, bookmakers, owners, horsemen and regulators. Without any doubt the financials of racing are far too opaque, and opening them up to scrutiny in a more coherent manner would be one heading in the operating model of a new racing strategy. Jamie also argued for “a radical re-think on the balance of commercial power”, which is code, I’m assuming, for scrutiny of the amount of money taken out of the sport by bookmakers and racecourses, leaving so many at the grass roots of the industry impoverished. The key message was that our funding model isn’t working well and there is a tremendous need to make the “revenue pie” bigger - another initiative for the strategy hand.

In the next blog I’ll examine a number of other priorities for British Racing, as well as the constraints that may severely limit the new chair’s freedom to act. This will also examine how the commercial value of racing is created, and the tensions that now exist in the way in which it is apportioned – definitely subjects for the left hand of strategy.

So as one former rower (indeed, having won the Mays bumping races at Cambridge and rowed for the Varsity) to another, I wish Annamarie well.

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