British Racing Industry Road Show: A Case of Onwards, Upwards and Occasionally Sideways.

My wife and I were invited to the road show at Cheltenham Racecourse at the beginning of March. It was exceptionally well organised and informative, and well hosted by Lydia Hislop. I don’t think I’ve ever seen quite so many of racing’s leaders at the same venue; I chatted to Steve Harman, Chairman of the BHA, and then listened to Nick Rust (CEO of the BHA), Richard Wayman (COO, BHA), Philip Freedman (Chairman, Horsemen’s Group), Stephen Atkin (CEO, Racecourse Association), Rod Street (CEO, Great British Racing) as well as the leaders of the Professional Jockeys Association and Arena Racing Company. There was also a presentation dedicated to staffing, training and welfare issues with a panel led by the Human Resources Director of the BHA and well supported by other specialists in this field. Those who know me well will know that I was not sufficiently intimidated to refrain from asking questions, which I addressed to Messrs. Rust and Atkin.
Just to summarise the key targets that the tripartite group of the BHA, Horsemen’s Group and Racecourse Association signed up to in 2015, and which still guide the industry:

• 1,000 additional horses in training by 2020;
• Betting participation levels up 5% by 2018;
• Racecourse attendances to reach 7 million by 2020;
• £120m of extra income for the sport per annum by 2018.

At the same time there was open acknowledgement of the challenges that face British Racing, particularly:

• Sole ownership in decline;
• Shortage of skilled stable staff;
• Statutory Levy forecast to drop under £50m in 2017;
• Need to develop a constructive partnership with the British betting sector;
• Low returns to horsemen at grassroots level.

Within the various presentations there was certainly plenty of encouraging news, with good progress including:

• £30-40m potential increase in revenue to be raised by the new Levy; ABP scheme expected to raise more than £10m in extra revenue in 2016/17; 2% growth in total betting activity since 2014; ITV channel.
• £8m prize-money paid to the industry via Plus 10 bonus scheme; ownership decline halted; 505 additional horses in training since 2014; 3% growth in number of syndicates and partnerships.
• In The Paddock web site launched to promote syndicates; 2.9% growth in racecourse attendance since 2014; 12% growth in prize-money to almost £138m since 2014; new approach to the Fixture List under way; 4.7% growth in races with 8+ runners since 2014; 5.4m social media followers.

Phew! Lots of statistics there. Lydia did a show of hands on “optimism” for the industry, and very encouragingly it was skewed positively. There are many initiatives under way or in the pipeline, and there was a definite feeling of momentum for the next couple of years – hence the “onwards and upwards”.

But that doesn’t mean that all will necessarily be plain sailing. The questions I raised were all to do with “Grassroots Racing”. Very encouragingly the leaders of our sport are planning to focus much more effort and money on to the base of the racing pyramid, as they need to, because the most startling figure I heard was that the average cost recovery for those at the bottom of the sport is now only 8p in the £. When you look closely at the various graphs, the horses in training figure over the last five years has barely increased (13,716 to 14,033 in five years) while ownership has actually declined, although apparently that trend has now been halted (8,215 to 7,946 registered owners in five years).

I genuinely believe that this grassroots racing focus is both long overdue and absolutely essential to the long-term sustainability of the sport. If the grassroots owner retires or leaves the sport, the economics and competitiveness crumble. When you look at a race meeting such as the Cheltenham Festival on this week, all looks exciting with prodigious prize-money everywhere, but that is most definitely not how it seems on “normal” racedays. In fact I prefaced my question to Messrs. Rust and Atkin with a statement: “With Owners for Owners involved in 23 horses, I am an archetypal grassroots owner, enjoying 8p in the £ cost recovery, the dubious pleasures of minimum value racing when the total prize-money is only £3,500, endless hassles on badges, over-crowded lounges and nowhere to sit …. and yet I still remain optimistic.” I am just hoping that we see significant improvement over the next few years to 2020 to justify that optimism.

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The Growth Strategy for British Racing, Part 2 of 3: Cuts are coming

In the last blog I looked at the overall context of the growth strategy for British racing, as presented by Nick Rust and Rod Street in early May as part of their road show around the UK. While lots of initiatives were outlined, there was also some doom and gloom …. and indeed only a few days later Paul Lee, chairman of the Levy Board, duly announced a £4m reduction in expenditure in 2016 (which is bound to affect prize-money) and more substantial cuts threatened for 2017 – a timely reminder that all the various parties in racing really need to give total commitment to the growth strategy. So in this blog, here is an outline of the recommendations. Doubtless other ideas and activities will be developed as the strategy is implemented, so this is not necessarily a complete list, but the main themes and pillars are as described in the presentation.

1. Racing Structure & Governance

Like it or loathe it, racing does not operate through a conventional integrated structure with clear lines of authority. Consensus and collaboration rule the day, despite the considerable downside that this can lead to lengthy delays in decision-making and also allows stakeholders to exercise negative authority by blocking much-needed changes and reform. Nick Rust emphasised the need for racing to help itself and pursue “one journey: one voice”. Hear, hear! There is going to be a governance change with a tripartite arrangement between the BHA, the Horsemen’s Group and the Racecourse Association. There will be a members’ agreement, a members’ committee to steer strategy, and executive committee to make the key decisions. This is a challenging arrangement which will need “collaboration with teeth”.

2. Critical Success Factors: Transformation vs. Incrementalism

One way of evaluating any strategy is to look at the recommendations which are essentially incremental vs. those which are genuinely transformational. This is not in any way to knock incrementalism, but there is normally a need for significant innovation in a small number of key areas to drive successful change. We will return to that theme in the third blog, with a more critical appraisal.

Four clear, quantifiable targets / CSFs were highlighted: 1,000 new horses in training and racecourse attendances to be at 7 million by 2020 (vs. 5.8m today); betting revenues to rise by 5% and a minimum of £120m of extra income to flow into the sport by 2018.

3. Racing and Betting Pillar

Vital need to reverse negative trends. Incremental recommendations included: connecting better to betting consumers; setting up a Racing and Betting Forum; improving sectional timings; closer alignment in race timings and broadcasts between GB and Ireland; and introducing an “Own Thursday” day, where betting can take place free of many of the other sporting distractions. Transformational recommendations: there weren’t any.

4. Customer Growth Pillar

Incremental recommendations included: developing better customer insight; using customer data more effectively; setting up a national survey; better promotion through social and digital media; seeking more sponsorship. Transformational recommendations: there weren’t any, although the vision of 7m racegoers may well need some.

5. Horse Population, Ownership & Breeding Pillar

Incremental recommendations included: simplifying owner administrative processes to lower the cost and complexity; liberalisation of colours; framing minimum standards for trainers, racecourses and the administrative experience; launching a data project on owner experience and owner churn rates. Transformational recommendations: although there weren’t many specifics, there is a clear intention to put funds behind the goal of 1,000 additional horses in training by 2020. That will be a centrally-led drive.

6. Ultra-High Net Worth Pillar

No real detail here, other than saying there is a need to “integrate and optimise new and existing resources”.

7. Integrity & Regulation

Strong commitment to maintain the world leadership reputation of British racing, and for there to be “impactful, cost-effective targeting of risk areas”. Incremental recommendations such as a plan to simplify and make more transparent the rules of racing; continued targeting of corruption, but making sure that the authorities are aware of “the danger of sledgehammers to crack nuts”.

8. Welfare & Training

Not many specific recommendations, although there will clearly be greater emphasis on integrated recruitment and learning and development; injury rehabilitation and broader education on relevant subjects such as nutrition for jockeys.

9. Funding

Running right through the presentation and discussion were continued references to “Where is the cash going to come from?” Part of that is the “need for fair and sustainable funding between betting and racing on a reasonable basis”; part through the introduction of the Racing Right; and part through the need for racing to be far more open to ideas for investment from outside the sport. A lot of that will have to be transformational.

Doubtless you will have your own views about the coverage and relevance of all these various ideas and recommendations …. together with key elements that you may feel have been neglected. More about that in the next blog.

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.

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.

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.

Mahmood al-Zarooni: Summary Execution in High Holborn

In my more erudite days, before reading Timeform annuals took over, I used to enjoy the Penguin Modern Classics. A novel that had a big impact on me as a student was Arthur Koestler’s Darkness at Noon, about a Bolshevik prisoner, Rubashov, as he awaits death in a GPU prison. Darkness and the whiff of cordite definitely descended over the British Horseracing Authority’s offices in High Holborn throughout the last ten days. With almost indecent haste, the BHA investigation panel summarily terminated Mahmood al-Zarooni’s training career, at least for the next eight years, following the sensational disclosures that eleven out of 45 Godolphin horses tested positive for steroids on 9th April. If there were volunteers to man the firing squad, I’m sure that Sheikh Mohammed, Paul Bittar (CEO of the BHA), Rod Street (CEO of Racing Enterprises Limited and leader of Great British Racing), Chris McFadden (Chairman of REL) and Simon Bazalgette (Group CEO of the Jockey Club) would definitely have taken a big stride forward. Indeed, the dazed look on Godolphin racing manager Simon Crisford’s face during TV interviews tempted one to think he was already loading the bullets into the Smith & Wesson. Whether that was to use on al-Zarooni or himself is only conjecture. As the wrath of Sheikh Moh is felt across racing, there are bound to be others in the firing line.

First reports indicated a clear, open-and-shut breach of the rules, with al-Zarooni admitting that he had made a “catastrophic error” by administering steroids. Traces of ethylstranol (a steroid often used by body-builders) and stanozolol (which cost Ben Johnson his Olympic gold medal) were found in the horses (including Certify, one of the favourites for the 1000 Guineas), and they have now been ruled out of competition until 9th October. Both steroids are prohibited substances under British rules of racing and cannot be used at any time on licensed premises for horses in full-time training or out of competition. Within the space of a week, al-Zarooni was investigated, sentenced and banished, with the BHA deciding that it was very much in the best interests of racing to sort out the matter as quickly as possible. Full marks to them on that, even though there are inevitably many questions still to be answered.

Alas though, only a couple of days later another bombshell dropped when it was announced that Gerard Butler had been medicating the injured joints of some of his horses with Sungate, which also contains stanozolol. That was discovered on a BHA sampling visit to his yard on 20th February. Butler himself spoke to the press about this, and made a highly controversial assertion, now being investigated, that over 100 horses across various yards in Newmarket had been similarly treated. The firing squad rifles could soon be overheating.

In the next blog I will examine a number of the questions and issues in more detail. But where does all this leave “brand racing”? One of the jargon words often bandied around by those of a marketing bent is the creation of “narratives”. There are probably three that can be readily identified, and which have certainly been well aired at the various parish pumps of racing over the last week.

1.   Straightest racing in the world: no-one applies a zero tolerance policy like the Brits. We have the best and cleanest racing in the world. Doping doesn’t exist. Inevitably a few accidents occur, and we punish the guilty parties with a ruthlessness that other countries ought to be applying.

2.   It’s all a muddle: how on earth can trainers be expected to know what chemical actives are in sophisticated veterinary compounds, or what the precise regulations are in different countries? If they act on the advice of their vets, then who is accountable for mistakes? It is all too confusing. We need much clearer guidelines and global harmonisation.

3.   We’re no different to cycling: scratch the surface of racing and you will find that doping is endemic. The old adage that “good trainers don’t change their methods, they just change their vets” is as true now as it has ever been. It is just that everyone has become more sophisticated in keeping ahead of the regulator.

I fear that the public view sits squarely with the third narrative. So to lighten the gloom: I heard a joke that the BHA should have known what was going on when one of al-Zarooni’s horses won the Tour de France.

Ethics and integrity have always been a strategic priority. It has rocketed back to the top of the agenda. More on this subject next time.