Trust, Transparency and Integrity in Racing – The Concluding Part 4 of the Series.

It’s been interesting as I’ve written the blog series around the subject of trust, transparency, integrity and corruption that not a single owner I’ve talked to about it has disagreed with anything I’ve raised. As in everything to do with life and commerce, perception really matters and unfortunately the overriding perception is that the breeding supply chain that brings horses through to owners is inherently stacked against the owner. On occasions it is almost certainly corrupt, and almost daily there are practices being perpetrated that while probably not illegal, lack the necessary standards of integrity.

It is clearly very difficult to gauge the overall impact of this on racing and ownership, but I definitely believe that the BHA is taking the right stance by putting a much greater focus on integrity in all aspects of our sport and is prepared to examine breaches of the necessary standards in the context of the whole sales process.

There must be an irony that I’m writing this blog having just bought a foal today at Goffs in Ireland, and when this blog goes live I’ll be attending the Tattersalls Cheltenham sale with some friends who are prepared to invest deeply. Unfortunately I can’t help but feel that owners are receiving inadequate value for money on too many occasions and cumulatively that must be acting as a potential barrier to new owners coming into the sport while discouraging retention of the owners who are already active supporters.

So I thought it timely to reflect on my “top ten” recommendations for addressing these problems. They are not in any priority order but I do believe that if the BHA puts a searchlight on them, it will definitely be to the greater benefit of the whole ownership community.

1. Develop an end to end integrity framework. What I mean by this is to map out every stage in the equine supply chain from breeding through to the eventual retirement of the racehorse. At every step in the chain there is potential for corruption, and this should be mapped out so that the level of risk is made explicit.
2. Set integrity standards. Having mapped out the supply chain, it is then possible to state unambiguously what the necessary personal, professional and commercial standards should be, and what is acceptable or unacceptable behaviour.
3. Monitor and police those standards. Having developed an integrity framework and set the appropriate standards, the BHA then needs to have inspectors who can then monitor and identify the perpetrators of unacceptable practice. The whole industry through the various stakeholder groups to have been warned in advance of what is unacceptable behaviour and for this to be built into the rules of racing.
4. Identify and copy best practice. Other countries, particularly Germany, are determined that the breed is strengthened on an ongoing basis by not allowing substandard mares to produce foals. The performance record of stallions should be tracked and minimum standards set for mares. The recent requirement for horses with first-time wind ops to be reported is a step in the right direction because over time it should be possible which stallions are passing on higher than average wind problems.
5. Give every horse a log book from day one. In the last blog I commented that you wouldn’t buy a £100,000 car without a log book, and I don’t see why you should do the same with horses. The racing authorities in England and Ireland as a minimum should make it a requirement that any veterinary treatment to any racehorse is logged, and that when the horse goes into any sale, a PDF of that document can be accessed online for one month before the sale date.
6. Improve pre-sale veterinary inspections and change the charging policy. All horses being sold at public auctions should be inspected properly and thoroughly once, with the cost of that being paid by the vendor. A full inspection report should be available. Furthermore the vet making that inspection should be held liable for the quality of it. If the report is inaccurate, the vet should be held to account both commercially and professionally.
7. Full declaration of anything performance-enhancing. I know that many trainers argue that owners and the racing public don’t understand the pros and cons and limitations of many veterinary treatments and procedures, but I do believe that they should be declared. It is why I’m in favour of transparency on wind operations, but I would extend that to all major interventions.
8. No limits to transparency. The simple guiding principle should be that if access to a piece of information can provide a trainer, owner or punter with a commercial advantage, then that information should be in the public domain wherever possible. So for example should there be a requirement to disclose when a horse’s tendons have been fired?
9. Fund more evidence-based research. Owners are losing money every day buying horses which are genetically predisposed to certain maladies and conditions that will significantly constrain their performance during their life as racehorses. The BHA should fund research to collect evidence over time that will identify more of these conditions. As they will be recorded in the horse’s log book, then an informed owner can make an appropriate decision not to invest.
10. Have all the information readily available. In the age of social media, all information should be at owners’ and prospective buyers’ fingertips. There may well be an accusation of information overload, but it would be better for the information to be there if an owner wants to access it, than to be left in the unacceptable position of buying horses where there is significantly asymmetrical information, i.e. where the prospective purchaser knows far less than other interested parties upstream in the supply chain.

I’ve now been involved in buying and owning about 100 horses, either on my own or with co-owners. Unfortunately I believe that if I’d had full information I wouldn’t have bought at least 20% of them. Assuming an average total cost of £50,000, that’s £1m of money in effect wasted. This issue is that serious. I hope that in ten years’ time I won’t have to write another series raising the same ten recommendations. I fear that the first horse of the sale today ought to be called “Pigs May Fly” (Apologies to Lot 1, Ilsnepasserontpas, who I hope turns out to be a magnificent horse giving superb pleasure to whoever buys him.)

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.

Trust, Transparency and Teeth: Addressing Corruption in the Sales Ring. Part 2 of a Series.

In the last blog I raised a number of concerns about ethics, integrity and corruption in the equine supply chain, in the context of the launch by the BHA of their first annual Integrity Survey. The BHA quite rightly is determined to ensure that the public and participants in racing are confident that British Racing is run fairly and in accordance with the rules, that crime and corruption are deterred, prevented or penalised and that there is a level playing field for all competitors. The intention of the survey is to measure perceptions and the level of confidence around integrity in British Racing and to identify areas for improvement. The data for the survey will form a baseline against which the industry will be challenged to improve every year, and it will help racing identify where the greatest integrity risks to the sport are perceived to lie.

I completely agree with this emphasis because, without trust and confidence in the sport, it is impossible to grow it and increase the numbers of racegoers, punters and owners.

I also flagged up the review that has been launched by the BHA into the buying and selling of horses, and whether the current sales environment could be deterring existing and potential owners from pursing their involvement in racing. This struck home with a number of readers of the blog, and one comment encapsulated the reaction: “My experience of the sales ring is that it is an absolute snake-pit for the uninitiated. Good luck to the BHA trying to clean it up – the system is open to abuse where collusion between consignors and bloodstock agents is widespread, to the detriment of both the end client and the original seller.”

The reactions to this review have definitely been bipolar. On the one hand the auction houses, agents and a number of senior executives in the industry were complacent in the extreme, with the view being that “our auctions are the fairest and best in the world”, “integrity is our priority”, “we set the best possible standards” and “we’ve received no complaints”. All fine and dandy? At the other end of the scale, not a single owner in my network agrees with those comments and all believe that a tightening up of the sales process is long overdue. So with that in mind, this would be my checklist of areas for the review team to consider.

1. Re-state and reset standards and expectations. Make it clear that illegal, fraudulent and corrupt practices will not be tolerated and will lead to exclusion of guilty parties from racing. To do that, a number of dubious practices need to be made explicit and illustrated with straightforward examples of what is acceptable and unacceptable.
2. Independent scrutiny. The industry cannot be allowed to monitor and police its own practices. There needs to be a proper framework for assessment of bad / illegal practices, reinforced by a clear set of penalties.
3. Require transparency on veterinary treatments and actual ownership. Would you buy a £100,000 car with no service record and no log book, and where your only real insight is a bit of tyre-kicking? From the date of a horse’s birth there should be an equine log book recording every single treatment. This log book should go online one month before the horse is sold so that it can be properly studied. All of the owners of the horse up to and including the date of the sale should be listed so that the prospective purchaser can assess who is actually selling the horse and whether (currently non-disclosed) interested parties are unduly influencing price.
4. Introduce a Crimestoppers line. At the moment no-one is prepared to complain, particularly the consignors. Stallion masters and major agents are such dominant players that if they antagonise them they could be put out of business. To say that there are “no complaints” completely ignores the problem. Topically, that has certainly been the case with sexual harassment as well, in the media world and in politics.
5. Ban luck money. No buyer, trainer or agent should be able to demand a financial reward from a vendor. It should neither be expected nor requested. Any money exchanged beyond the hammer price at an auction should be formally disclosed to the auction house, and recorded.
6. Require immediate disclosure of reserve prices. Anyone who has been to a sale will have seen the bidding charade of “off the wall” bids, which is where the auctioneer reports non-existent bids to get the horse up to the reserve price. If a vendor puts a reserve on the horse, it should come up on the screen the second the horse walks into the ring.
7. Ban the running up of prices by the vendor / connections. Bidding in the ring should only be done by genuine prospective purchasers. At the moment vendors are permitted to bid horses up. If the horse is bought back in, the connection between the person who does that and the vendor should be completely clear. There are dark rumours that a number of vendors are bidding up horses to huge levels and then splitting differences between themselves and agents when bought back in. Easy to do if you’re buying for overseas clients. As part of this, the under-bidder should be recorded to see whether they are connected or not.

That’ll do for the moment. I’m going to be extremely interested to see what the review identifies as unacceptable practices, but even more so, what anyone is prepared to do about them. Indeed it raises the critical question of whether the BHA itself has any regulatory power in this area. Who is going to regulate it, and how? More on that in the third part of this series.

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.