The Keep Owners in Racing Campaign Enters the Home Straight – No Sign Yet of a Proper Recovery Plan

Since 12th July, when friend and co-owner Ged Shields and I launched our Blueprint, we’ve been working very hard to apply pressure on all the various leadership groups of British racing to come up with a meaningful Racing Recovery Plan that has the right mix of radical initiatives, short-term survival strategies and urgency of action. Unfortunately, over the last month, the crisis in the sport appears to be increasingly heading towards potential catastrophe, not least because of the government’s decision only to allow racing behind closed doors, possibly for the next six months.

We’ve produced lots of blogs (four of the latest are shown below) and films, and had numerous Zoom conference calls. There is still a considerable amount of work to be done as we head into the end of our campaign on Monday 19th October. We’re no longer convinced that the BHA has the authority or credibility to drive this Recovery Plan, and you’ll see that our major recommendation is for a cross-industry task force to be established and take charge. It really is a most worrying time for the sport, and everyone whose livelihood depends on it. At least Ged and I didn’t stand on the sidelines, and we’ve “done our bit” over the last three months.

IF YOU WANT A PLAN OF ACTION – LEARN FROM A GENERAL (OR MANAGEMENT CONSULTANT)
Have you heard the bells of Peover? All will be revealed.

When Ged Shields and I launched our campaign on 12th July to make the retention and acquisition of owners the number 1 goal of a racing recovery plan, we challenged the industry to produce and implement that plan within 100 days. Fifty days out Nick Rust, CEO of the BHA, announced such a plan but unfortunately the reaction to it has been decidedly muted. While it is encouraging that at least the stakeholders have focused on a number of goals and duly published them, they don’t meet my criteria, as a former management consultant, of an effective and motivating plan of campaign to help the racing industry get back on its feet, bring in significant additional revenue, boost prize-money and do everything possible to keep owners involved in the sport. A plan needs very clear goals and objectives, well-structured and sequenced activities, specific timelines and deliverables, explicit roles, responsibilities and accountabilities and, most importantly, be designed to enthuse everyone connected to the plan so that they are highly motivated to implement it. It should galvanise proactivity with a strong sense of urgency. Anyone in a key position, when asked about a recovery plan, should be able to summarise it clearly and know their own role within it. Sadly this plan doesn’t achieve this (or at least, not yet).

General George S. Patton famously stated that: “A good plan, violently executed now, is better than a perfect plan next week”, or, if applied to racing, next month / quarter / year. There was no misunderstanding Patton’s colourful, and often profane, speeches. The one he made to the Third Army the day before the D-Day landings was immortalised in the film, Patton, starring George C. Scott, which won seven Oscars. Patton favoured strong, decisive action and commanding from the front. He wouldn’t have had much time for the wishy-washy, weasel words of racing’s leadership. Mind you, I don’t know if we need quite the level of exhortation that Patton is most famous for in his comment that: “No bastard ever won a war by dying for his country. He won it by making the other poor, dumb bastard die for his country.” Powerful stuff!

Long before my career led into consultancy, I lived up in Cheshire, not too far from Knutsford and Alderley Edge. One of my favourite pubs was The Bells of Peover, next door to a church. Many years before that, Dwight D. Eisenhower and Patton used to relax there in the evenings while masterminding the Normandy invasion. Maybe I should invite the top brass of the BHA to a planning meeting in this historic setting?

Owners – Our Sport Needs You! But Where Are the Incentives?
In the most recent Perspectives in Racing film, I became a bit carried away towards the end with the military theme that I had woven into Blog 11. This time it was to do with Lord Kitchener and the iconic and most enduring poster and finger-pointing of World War I. This hugely influential image – “Lord Kitchener Needs You” – depicted him as the Secretary of State for War, wearing the cap of a British Field Marshal. Over the decades since, it has inspired numerous imitations (and more than a few parodies).

When we published the Blueprint on 12th July, we emphasised to racing’s leadership that it was vital to do everything possible throughout Q3 / Q4 2020 to encourage owners to remain in the sport. In particular we felt that, as the main sales season progressed through to its culmination in the Tattersalls Yearling Sales at Newmarket, there would be a clear indication of the readiness of owners to reinvest, and so far they appear to be cutting back by 25%+ apart from at the very top. This is exceptionally worrying and we fear that it will deteriorate further.

In any other industry, serious attempts would be made to retain customers through various types of incentive. Any chief executive knows that it is far easier to retain customers than to acquire new ones. With owners we are talking about customers that spend £527m annually, and with the contraction that has already started, we forecast an immediate financial loss to racing of £124m but with the multiplier effect of 1:7 that means, in turn, a significantly more damaging £868m.

So where are the incentives? Has any owner received any communication from any racing body to encourage them to remain in the sport? Are you aware of reductions on any fees or charges? Does racing have a plan to reduce costs and reinvest the savings with owners? Are stallion masters going to reduce significantly the stallion fees? Are sales houses going to slash their charges? Are trainers and racecourses trying to provide any additional benefits to compensate for a sub-par raceday experience? If you are aware of any initiatives such as these, do please let me know. Unfortunately I’m not expecting too many emails.

So who will be the modern Kitchener to recruit and retain the next generation of owners? Somehow I’m not convinced on the evidence of the announcement of the Recovery Plan that Nick Rust, in his natty blue suit, is going to put fire in the belly of the ownership army. Bring on the new generals!

The Three Pillars – Not the EU or Zen Buddhism, but Our Critical Priorities for British Racing
Sean Boyce kindly invited me to take part in The Racing Debate on Sky Sports Racing last Sunday, and I concentrated on the need for an urgent focus by British Racing on three critical priorities, together with a task force based change model comprising industry leaders and influencers rather than bureaucrats. The KOIR campaign is designed to keep pressure on racing’s leadership to adopt a series of radical initiatives capable of transforming the sport’s funding in a way that makes it sustainable. Increasingly we believe a stretch goal of £250m+ p.a. of incremental revenue through a five-stream funding model should be driving the recovery plan. It also has to secure short-term financial support for the industry together with meaningful incentives for owners to stay in the sport. Finally, it is vital to persuade government and local public health officials of the need for owners and racegoers to be brought back on to the racecourse as quickly as possible through pragmatic solutions balancing economic need with public safety.

The £250m+ can be delivered through five initiatives: Levy development, phase 2 (£70m); betting innovation and international pool gambling (£100m); expansion of shared ownership (£50m); leveraging racing’s assets more effectively (£20m); and media rights pooling (TBD). In addition racing should set a £50m cost reduction target. Metrics such as these are vital to drive action, prioritisation of resources and ultimately accountability. Precisely who is responsible for the success of these initiatives?

Interestingly, when I came off the TV programme I saw in the Racing Post that both John Gosden and Mark Johnston had been similarly forceful. On Levy development, John commented: “We cannot let this drift. We don’t have six months to start floating about and having committee meetings and chitting and chatting, we need to get our heads together.” Mark, as he did in our Perspectives film, emphasised: “At the end of the day, owners accept that they are racing for poor returns in Britain, but when it gets so low and they are not getting pleasure going racing, the concern is it will focus their minds on what it is costing them.”

We’ve started to refer to the framework as “the three pillars”. You may know that the phrase has been much used, not least by the EU as it was their guiding legal framework adopted after the Treaty of Maastricht. Three columns also underpin Zen Buddhism and its view of the Tree of Life. That is not a bad metaphor to guide racing’s future.

Oliver Twist Asked for More – The Begging Bowl Comes Out Again for Sport and British Racing
There have been a number of metaphors recently about British Racing, the Recovery Plan and the funding crisis, and doubtless there will be many more over subsequent weeks. Take your pick from rudderless ships, the Titanic heading towards icebergs, baking larger pies, splitting bigger cakes and now it’s time for the magic money tree and the begging bowl. With the Prime Minister’s announcement this week of more pandemic restrictions and the disappointing news that there is a distinct possibility of no racegoers returning to British racecourses for six months, it really feels as though we’re sinking deeper into crisis. Indeed, increasingly, our view is that the Recovery Plan now has three elements within it: survival, rebuilding and then growth.

Only last weekend, during a discussion on Sky Sports Racing’s Debate, I argued that one of the three critical priorities for British racing was to bring racegoers and owners back on to the racecourses in significant numbers as soon as possible in order to stem the huge losses of income for the tracks, estimated at £300m. It is said that a week is a long time in politics, but my exhortation barely survived four days. Clearly it is a major blow, not least because such a considerable percentage of racecourse income derives from spectators and non-racing social gatherings. It is certainly at least 50% and, for some of the larger tracks, as high as 70%, which is four times greater than for a stadium sport such as football. This loss unfortunately will have a considerable knock-on effect on prize-money.

When Ged Shields and I ran a Zoom forum with MPs, we encouraged them to examine racing through the prism of a business sector making a £4bn contribution to the British economy, direct / indirect employment in excess of 80,000 jobs and a considerable ecosystem of small and medium-sized enterprises dependent on it. They responded positively and were sympathetic to supporting our sport. Following Rishi Sunak’s announcements yesterday of a new job support scheme, and the ongoing discussions that have been taking place between various sports bodies, including racing, and DCMS, it is most important that the case for additional funding for racing is positioned as part of a broader initiative led by the £250m+ of self-help projects that we have been advocating for the past month. Furthermore, rather than racing doing an Oliver Twist and asking for more on its own, it would be more effective to link closely with these bodies and to lobby government for emergency support over the next six months on a united basis.

I had to study a number of texts of Charles Dickens at school. I disliked his maudlin sentimentality and found it heavy going. Maybe I should go back and re-read Oliver Twist ….. and definitely another volume more relevant for racing, Hard Times.

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.

Half Way in the 100-Day Campaign and we Already have a Result – BHA Announces a Recovery of Racing Plan …. But There is Still a Chasm to Cross

On 12th July, Ged Shields and I launched our Blueprint for Racehorse Ownership in the UK: Making retention and acquisition of owners the number 1 goal of a racing recovery plan, and since then we’ve been lobbying all the key stakeholders across the sport to design, launch and implement one. An enormous amount of time has been spent on Zoom conference calls as well as successfully launching a micro web site, www.keepownersinracing.com, where we’re building up a bank of Zoom videos and blogs in pursuit of our cause. The whole motivation is to encourage the top table of racing to work collaboratively and kick on with urgency to launch major initiatives designed to retain owners in the sport. At the heart of that is a requirement for substantially improved funding of the sport, not least to boost prize-money and radical reform to capitalise on the opportunity presented by the pandemic. A major milestone was reached on 25th August when Nick Rust, the outgoing CEO of the BHA, announced the launch of a Recovery Plan. While this was an encouraging step forward, there is still a huge amount of work to be done and, indeed, many owners and pundits, such as the Racing Post, were less than complimentary because it seemed to be more a “plan for a plan” rather than a robust set of initiatives and actions. We’ll doubtless see the evolution of the plan through the autumn.

If you haven’t already done so, please sign up on www.keepownersinracing.com and you’ll receive all the blogs before they are publicly released. Here are four from the collection that clearly show where Ged and I are coming from.

SIGNING THE PLEDGE – AND WE’RE NOT TALKING ABOUT GOING TEETOTAL

At the heart of our Campaign to Keep Owners in Racing we have advocated a strongly collaborative approach to be adopted by all the leaders of British racing. Maintaining unity and common purpose is vital, but poses a considerable challenge. Racing has never been more fractured; vested interests and protectionism prevail; trust and transparency are noticeable by their absence; frustrations are building rapidly and threaten to blow strained relationships apart. The very last thing that racing needs after the damage already done by the pandemic is a self-inflicted wound of its own creation.

You only have to consider TLAs – the curse of three-letter acronyms – to understand the cat’s cradle complexity of our sport: BHA, RCA, THG, ROA, (HR)BLB, NTF, GBR, JCR, ARC, TBA, ABB, TRF, RSA, PJA. Corralling this lot is a complete nightmare and raises the question of whether it is even achievable, and whether racing needs fundamental restructuring of its governance: which we will revisit in the blog soon.

In the immediate future, Q3 / Q4 2020, our recommendation is for top leaders in the sport to produce a one-page Pledge summarising the way forward for British Racing, a statement on required collaboration and ten key actions, which all stakeholders must sign up to. Such a pledge provides much-needed vision and focus, and will be a real spur to leadership endeavour. The actions must be bold enough to enable our sport to recover from the crisis. We fear that many owners are already leaving the sport, or planning to do so, and this will cause real damage. Our call to arms is for a Racing Recovery Plan – RRP. Let’s get on with it – PDQ.

“MONEY, MONEY, MONEY” – IT’S A HORSEMEN’S WORLD

Our 100-day campaign to apply pressure on British Racing to develop a highly practical Recovery of Racing Plan broadly coincides with the first 100 days in office of the new Chairman of the Horsemen’s Group and President of the Racehorse Owners Association, Charlie Parker. Without any doubt he has the hottest seat in the sport, and we wish him well. What he achieves (or doesn’t) during Q3 / Q4, particularly on media rights transparency and apportionment, will have a huge impact on racing and ownership.

All roads, inevitably, lead back to the dire, unsustainable state of racing’s finances and the urgent need for cross-industry agreement on the most effective ways of harnessing new income streams. Without that, we all flounder. Mark Johnston, in our Perspectives in Racing film, argues that applying sticking-plaster to the problem has minimal impact and that we now need to be coming up with financial initiatives that “cross the gaping chasm”.

We believe that there is a need to generate £200m+ of annual income and that there are three principal ways of achieving that goal. Firstly, work with government at ministerial level on a second round of Levy development and reform. That was on the table in 2018 and some of racing’s leadership, for whatever reason, made a disastrous decision not to pursue it. Secondly, devise a much fairer revenue-sharing deal with the racecourses on media rights by the end of this year and then extend it into a much stronger media pooling operation. Thirdly, develop a betting strategy that targets the global gambling market through betting innovation and Tote co-mingling with other countries. And, of course, do everything possible to retain owners with the promise of more prize-money.

There is no shortage of income to be picked up – as we say, “Money, money, money”. Racing’s leadership needs to stop falling out over dividing cakes and get on with producing a radical new funding plan that bakes an altogether bigger and different one.

THE BASE OF THE PYRAMID CRUMBLES – IGNORE AT YOUR PERIL

British racing is a big industry, and at the top tier of the sport a considerable amount of money can be made. In the Blueprint we examined the profitability of all the stakeholders. In 2019, the aggregate of the top five yearling sales in England, France and Ireland made £250m for their consignors. The annual income earned from the top stallions at Coolmore, Godolphin and Juddmonte exceeded £200m. Despite all the aggressive noises being made by certain Flat trainers, the top 20 trainers in the UK make significantly more profit than the bottom 20 racecourses. It would be easy to conclude, perhaps unfairly, that the most vociferous members of the training community wish to maximise their returns even further. The platinum layer of the sport is being run by the few, for the few, with an over-concentration of income in the hands of those who don’t just make significant money every week of the year but also sit astride the downstream value chain that accrues from breeding rights.

How different it is at the bottom of the pyramid. The grass roots of our sport cover the vast majority of trainers, breeders, owners and horses. If the financial returns were terrible pre-pandemic, then they are nothing short of catastrophic now and the situation is only going to get worse. The majority of trainers and breeders are either technically insolvent or teetering on the edge of it unless they have other sources of income, and of course the vast majority of owners whose horses are running primarily at classes 4, 5 or 6 are losing on average 93p in the £ every year, with the returns not even covering the raceday costs of getting horses to the track.

These owners are spending £527m a year, to lose a collective £428m. If our forecast is correct, there will be a 20% contraction in the owner base over the next five years, which will lead to an immediate loss of £124m. But the far bigger damage is the 1:7 multiplier that leads to a much greater financial hit of £868m as the ownership contraction ripples through bloodstock, levy yield, media rights, racecourse attendance and the whole ecosystem of suppliers connected to training and racing.

Racing ignores the grass roots at its peril. This is where the contraction will be most felt, and hit hardest. We implore the leadership of the sport to produce, with urgency, a Racing Recovery Plan. Without that, the pyramid crumbles.

9-POINT RECOVERY PLAN FOR BRITISH RACING – A BIT OF A CURATE’S EGG

In the 1890s, Punch magazine ran a series of cartoons about a timid curate eating breakfast with his bishop. On being told by the bishop that he seemed to have a bad egg, the curate piped up: “Oh no, my lord, I assure you! Parts of it are excellent!” Seems an appropriate comment for British racing’s recovery plan, which made its appearance on Tuesday 25th August.

When we launched the blueprint in mid-July we challenged the top table of racing to produce a post-pandemic recovery plan, with retention and acquisition of owners as its #1 goal. Behaviourally we wanted the stakeholders to work collaboratively, proactively and urgently on it; analytically they needed to create a comprehensive, wide-ranging, multi-faceted plan of action with two clear phases of immediate initiatives in Q3-Q4 2020, and then longer-term, more transformational change in 2021-2025; and most importantly, it had to be operationally deliverable through practical, robust, well-defined projects. It couldn’t just be about papering over the cracks – there is a chasm to cross, because the only way in which British racing can be properly sustainable is through securing at least £250m of additional income while fundamentally reforming the sport. The pandemic presents a one-off opportunity to reimagine the future and embrace the “next normal”.

That the key stakeholders, within 50 days of our challenge, have produced a recovery plan is commendable and we applaud their efforts. However, rather than a set of very practical actions, Nick Rust, outgoing CEO of the BHA, launched nine broad goals, which unfortunately disappointed a lot of owners and certainly the pundits of the Racing Post, the editor Tom Kerr being quite caustic in his comment that: “as with Coronavirus itself it is not the diagnosis but the cure that is of utmost significance. For that, the wait continues.” To be fair to the stakeholders, while the nine goals seem to be “a plan for a plan”, there will doubtless be more specific recommendations for action soon – not least the publication of the long-awaited Ownership Strategy, under development since 2017. It had better be good!

We will scrutinise these ongoing developments and fervently hope that we don’t have to echo Punch, in the final issue in 1992 before it went under, when the cartoon was updated with a considerably more emboldened curate, who replied to the bishop: “This f***ing egg’s bad!” For racing’s sake, it can’t be.

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.

Join the Hundred-Day Campaign and Make the Racing Industry Produce, Publish and Implement a Racing Recovery Plan to Retain Owners in the Sport

Please download the Blueprint
for a Racing Recovery Plan

One of the few plus-points of lockdown was that it gave a friend and owner, Ged Shields, and me time to research and write A Blueprint for Racehorse Ownership in the UK: Making retention and acquisition of owners the number 1 goal of a Racing Recovery Plan. It was launched in the Racing Post on 12th July and is now being driven forward by a campaign with a web site, video interviews, blogs and social media. Full details are on www.keepownersinracing.com and @keepownersinra1. This was our launch press release:

Please join the campaign and encourage
friends to do so as well

A hard rain is about to fall on our sport from the economic storm, triggered by the pandemic, and will continue for several years. It will rip through the weakest parts of the racing pyramid and sink without trace many trainers, breeders, owners, syndicators, betting shops and some racecourses. The pandemic is acting as a kind of “time machine” rushing racing’s outmoded business models to the end phase of a process that was always likely to happen.

Many staff will lose their jobs and equine welfare challenges increase as racehorses are retired, sold or “moved on”. No part of the industry will go untouched and the only question to be answered, in time, is the scale of contraction.

Why are we so depressingly confident in this assertion? Since the Resumption of Racing on 1st June we have spent five weeks researching the sport’s economic map and the financial interconnections of the supply chain from breeders to bookmakers. We’ve reflected on our own investment in the sport and the way we are currently being treated. We have been committed owners since 2004 with 132 winners so far and a current involvement in 39 horses covering everything from Flat to jumps, sole ownership to syndicates and foals to veterans. We use ten trainers across the country and ownership is by far the major drain on our discretionary expenditure. We will inevitably be part of the contraction that is coming but will do everything possible to mitigate its impact.

How far we personally retrench will be determined by how well racing’s leadership handles the next phase of the crisis and whether they are prepared to drive through a number of long overdue changes to the sport. We’ve highlighted our own Agenda for Action, as a blueprint for racing recovery, containing five strategies and twenty specific recommendations reflecting our data-driven analysis of the sport. It can be downloaded from the www.keepownersinracing.com home page.

Why did we produce it? Because of our deepening concern that the post-pandemic economic impact, racing’s tendency for stakeholders to fall out and fight each other rather than focus on the task ahead and the frustration of owners at how they are treated will lead to a significant contraction in ownership with a hugely damaging impact on the industry.

Encouragingly, we were impressed by the 100-day stakeholder truce and the collaborative approach adopted by the Resumption of Racing Work Group before normal hostilities returned. Huge changes to the pattern, fixture list, prize-money allocation and safety procedures were adopted. We applaud their efforts and feel it is vital that racing extends this endeavour to a new Recovery of Racing Group focused on the retention and acquisition of owners as the top priority. They should consider carefully our Blueprint’s headline messages:

1. Learn from the last financial crisis: without a Recovery of Racing Plan, contraction in ownership and horses in training will be far worse than after 2008 / 09 when there was a straight decline in numbers for seven years. We predict a loss of 20% of owners (2,244) and 15% of horses (3,531): an immediate financial impact of £124m.
2. The damage is done by the multiplier: for every £1 spent by owners, £7 is generated across the industry for bookmakers, breeders, sales houses, trainers and racecourses. This multiplier amplifies the £124m loss to racing to a significantly more damaging £868m.
3. Owners bankroll the sport: in 2019 / 20 they spent £527m on training fees and lost a collective £428m. This excludes the £145m spent (and mostly lost) on bloodstock (excluding Horses in Training sales). For every pound spent on training fees the median return was 8p on the Flat and 6p for National Hunt. It will be even worse in 2020 as prize-money declines further. This is unsustainable and increasingly drives owners out of the sport.
4. The trend is not racing’s friend: racing faces strong headwinds this decade due to economic contraction, owner demographics and the need to rebuild personal and company balance sheets. The average age of owners is over 60 with substantial numbers over 70. Most are extremely concerned about Covid-19 and wary of going racing. This inhibits further any desire to continue investing in racehorses.
5. Be radical in response: racing needs a recovery plan that retains and attracts owners as the prime goal for the next five years. There is no time to lose. Racing can address this in one of two ways. Option one is to deny the scale of the challenge, massively underestimate its impact, muddle through with divided leadership, claim that it is already doing things and avoid making difficult decisions, keeping fingers crossed and hoping the “old normal” returns soon. It won’t. Option two is to embrace radical change, form a coalition of all the stakeholders and drive forward wide-ranging responses that create the “next normal”. We urge British Racing to adopt option two. It is not short of the talent to do this, but they tend to operate in isolation and seem focused on narrow stakeholder interests that are often in competition with the others.

Stakeholders need to come together, put their disputed issues on the table and find sufficient common ground to implement the necessary initiatives, such as those outlined in this Blueprint. We have made our “call to arms” and now challenge the industry to develop and communicate a Recovery of Racing Plan within the next 100 days.

I am always interested to hear your views so please do leave a comment. If you can't see the comment box at the bottom of this post then navigate to the post using the right hand navigation or click here > and scroll to the bottom of the page. Look forward to hearing your views. Thanks very much for sharing them.