Well the middle of this month has been very enjoyable, particularly with a fantastic retirement bash at Windsor Racecourse on Monday. I’ve stepped down from the chairmanship role in my consultancy, Future Purchasing, and was delighted when colleagues organised a celebration (I think for my achievements, rather than pleasure that I was leaving!!) with much merriment, drinks and dinner in a large box in the Royal Grandstand. Even the speeches weren’t too boring. There were a couple of jokes about Champion spark-plugs and melons that certainly wouldn’t pass the spam filters. Even managed to back a few winners. Jack and I staggered off the course loaded down with presents so there was some tremendous generosity. We both resolved to retire every year from now on!
This sort of party definitely illustrates how racecourses can make money and provide lots of entertainment for non-racegoers. The vast majority of our guests had never stepped on to a racecourse before, and wanted to know whether our sport was always like this – fine food, decent wine, private bars, panoramic view of the racecourse and river, etc. It was hard not to smile wryly, thinking about what it will be like as we go through the winter enjoying the facilities at some of the minor jumps tracks, or even more wryly when considering the very dubious delights of the all-weather.
My last blog on owners being treated as “cash cows” triggered much discussion about the crazy economics of racing. Indeed, over a few pints of Donningtons down here in the Cotswolds the Curmudgeon and I developed a whole economic model around ROO (Return on Ownership). Those of you in the business world know that ROCE (Return on Capital Employed) is a very important financial metric, and we believe ROO is the same for racing. At the moment the ROO is about 20%, if you’re lucky. In other words, for every pound that an owner puts into racing, they get about 20p back. This puts us right at the bottom of the league table. In many countries, such as Dubai, Hong Kong, Japan and Australia, the return is massively better. The key question is what to do about it. Now that I’m officially retired and have a bit more time, I’m intending to try to get my mind around that, and also do some digging and delving into the facts and data of actual returns. I’d like to see the BHA and the ROA set a formal target of, say, 50% ROO to be achieved within five years.
When a friend of ours, Ruud van Ruitenbeek, and his wife Di were staying with us a week or two ago, we went to visit the historic church of St. Peter’s in Winchcombe, built in 1468. Right around the sides of the church are gruesome depictions of people, animals and mythical beasts. I’d always thought these were called gargoyles, but Ruud discovered that “gargoyle” comes from the French, gargouiller, which means “to gurgle”, and therefore refers to a water spout. Since the ones at Winchcombe don’t have any water coming out of their mouths, they are apparently called grotesques. The one that I have put into this blog definitely illustrates the likely reaction of anyone who tries to understand the crazy economics of our sport. It equally depicts my reaction to the disgraceful way in which bookmakers are milking our industry and failing to reinvest their profits so as to make an adequate contribution. This is another area that I intend to investigate. I’m going to start by seeking clarity on the BHA’s strategy – is the plan to keep on appeasing the bookies by allowing more and more low-grade racing, or will they be facilitating fundamental levy reform, and if so, how?
Off to Yorkshire now to see the horses at Karl and Elaine Burke’s. Bound to meet a few curmudgeons up at Middleham. I’ll keep you posted.
P.S. If you’d like to see any of Ruud’s photos, do have a look at his web site, www.ruudseye.com - they are excellent. You can even buy his book of photos online.
Having mapped out in the last two blogs my own five “Big Es” and five “Little es” (ten resolutions for the racing industry), I thought I would have a go at tuning in to the more formal strategic intent, goals, priorities and key initiatives for our industry over the next three to five years. Now, you would think that the obvious location for such a strategy would be the British Horseracing Authority, since their web site proudly proclaims that they are “The Official Governing Body of Racing – The First Place for British Horseracing”.
As chairman of a management consultancy I suppose I have become a bit cautious about talking to senior executives about strategy, so I did my preparation, mapped out a number of key open questions and went to the phone expecting a lengthy and searching discussion. The reaction to my opening question, “Could you please tell me where I can find a documented and approved five-year strategy for British racing?” produced an extremely long silence, followed by my being routed around the BHA Holborn office. I chuckled as the general tone of the responses (I never got beyond the first question) went along the lines of: “I’m not sure which department would be in charge of that”; “Since we don’t have any control over racecourses etc., we wouldn’t expect to have a strategy, would we?”; “It’s very difficult, since we have so many stakeholders, so perhaps it would be better if you talked to them first”; “I’m not sure that we’ve got one, or if we have, I haven’t seen it”; and “If it does exist, I don’t think we would release it”.
Not quite sure that this was what I was expecting from a body that sits astride a multi-billion pound industry, with many thousands of dependent employees and a whole infrastructure of breeders, trainers, stable staff, racecourses, bookmakers and owners. I definitely think I’m going to become an investigative journalist in another life. I decided to fire off an email with a more formal request to Paul Bittar, CEO of the BHA, and am awaiting his response with some interest. I’m doing the same with the ROA and Racing for Change.
While waiting to hear more, I’ve been grappling with some of the issues of registering the Owners for Owners racehorses, one element of which is naming them. For any of you who have tried this, you will know that it can be incredibly difficult, since nearly every name you can think of seems already to have been registered. Well, I can say with confidence that one name that no-one has ever used is “UKRacingStratPlan” (that’s even inside the 18 characters maximum limit). Not the catchiest of names, I grant you. I wonder what the breeding would be. How about, by Machiavellian out of Bureaucracy (by Jobsworth).
I’m hoping to be proved wrong, but my fear is that no-one in the racing hierarchy believes that they are accountable for developing a strategic plan that tries to address the huge opportunities but also the great structural weaknesses that currently exist across our sport.
On much less weighty (but far more enjoyable) matters, we held the first Owners for Owners’ “Meet the Trainer” morning with Jamie Snowden at Lambourn last Saturday (pictures on the Latest News page). We had a really enjoyable time, despite Arctic conditions, and saw our Houndscourt put in a sterling performance alongside one of Jamie’s best horses, Present View. There will be other, similar sessions later in the year with Philip Hobbs, Charlie Longsdon and Elaine Burke. Finally, Quick Decisson, our bumper horse with Philip Hobbs, put in a really brave performance in atrocious conditions at Exeter on Sunday. He was just run out of 2nd place and beaten by a decent horse from David Pipe’s, in Vieux Lion Rouge. We’ve had three runs so far and all three have been in the money; long may that continue!
Apologies that the blog is a day late. I went to Ffos Las yesterday and underestimated how long it would take. As Jamie Snowden said to me – it’s easy to get there, just head towards Ireland and turn left!
Years ago when working in a huge global company, the CEO told me that every year he made a distinction between “big E” and “little e” projects. I received a pretty withering look when I asked him what that meant. “All that really matters is that you focus on the biggies”. So what would be your “big E” and “little e” resolutions? In this blog I’ll share my views on some of the big ones.
“Big E” racing projects – the ones that would really make a difference
1. The racing industry needs to know exactly what their “big E” projects are, and how on earth they can achieve them. At the moment the industry is in a complete strategic mess. The BHA, in particular, has a dismal track record with a long list of failures and weak leadership. Some sort of strategic coalition is needed to weld together all the major parties in order to frame that strategy.
2. The starting point of the strategy must be far more clarity on precisely how racing should address its deep-seated funding and, in turn, revenue maximisation issues. Yes, you can spend a lot of time bickering and fighting over how to divide a pot, but it is far more constructive to have a strategy that builds a bigger one. Without that, prize money remains on a downward spiral.
3. Long term (3-5 years +), our greatest asset is the quality, variety and (despite a few high-publicity incidents and the belief of some punters) extremely high level of integrity. The “big E” challenge is how to leverage that asset. One strategy is about capturing a bigger slice of the global betting market and for the profits from that to be channelled into racing, rather than just the pockets of the bookmakers. The industry could set up its own bookmaking venture in conjunction with racecourses (after all, if the BHA hadn’t been so useless, we would have owned the Tote), and then actively compete with bookmakers who continually tell us that racing is no longer that central to their business. We would soon find out whether it is or not. Don’t argue with them, just take them on.
4. Medium term (1-3 years), levy funding is well past its sell-by date and definitely no longer fit for purpose. It should be scrapped. Equally, the way in which funds are allocated is not meeting the strategic goals of racing, nor the day-to-day requirements of trainers, owners, breeders, customers and bookmakers. One option would be for race meetings to be put into three bands. Group A would consist of the highest quality meetings, on which the brand of racing and the quality of the breed depend. Prize money for all races at these meetings to be well above tariff. Group B, the next tier of meetings, should have prize money at a tariff level agreed with the Horsemen’s Group. Group C fixtures, with the lowliest races acting as betting fodder, should receive no funding at all and be sponsored by the racecourses and bookmakers themselves.
5. Short term (2013), BHA to drive a strategic planning exercise to a successful conclusion. If they prove incapable of doing that, then heads should roll. One important aspect of the review must also be a fundamental assessment of the costs of running the BHA and the woeful inefficiencies that exist within the transactional side of racing. Anyone who has ever tried to register a racehorse knows what this means in practice. Administration is not joined up, needlessly laborious and the process cost of it is huge. Racing’s bureaucracy needs a wake-up call.
As you can see, a long journey to Ffos Las and back gave me time to think quite deeply about racing. The fact that our horse didn’t run particularly well, and probably has a serious underlying physical problem, put me into a gloomy mood. In the next blog I’ll come back to some of the less weighty issues.
