In this document, OSCAR FOULKES is going to be sharing some observations about the state of horse racing in South Africa. Given that they are observations, their validity is a function of the experience and knowledge of the person doing the observing.
I apologise that the document is opening with a precis of the little bit of personal history that I feel is necessary to lend a semblance of authority to the comments that will follow.
I first sat on a horse’s back, unassisted, when I was four or five years old. Before that, I can recall sitting on my uncle’s shoulders while he was in the saddle. I could recite the male line of Hyperion to seven generations by the time I was ten. To say that I was completely obsessed about the breeding and racing of great Thoroughbreds would be an understatement.
I made my first non-parking lot visit to the races when I was 15, to watch my parents’ future Guineas winner In Camera win her first start (and I won a R1500 place accumulator). My first bloodstock client, while I was still at school, was Danie Le Roux, who came to consult with me in my boarding house study. Until my mid-twenties I was totally immersed in every aspect of breeding and racing, and then left the industry to start a new career in wine.
Marketing was a parallel interest to horses, and I was now marketing to consumers full-time. The first ten years were in retail – which is a daily exercise in surpassing customer experience expectations. Then I built the business (brands, products and sales) of a wine estate. For the past 18 months I have been offering my broader marketing skills and experience through my own consultancy, Slingshot, which has further broadened by base of experience. E-commerce, social media and other online marketing activities are key areas of speciality.
I have also been able to vicariously express my interest in food and consumer events through my wife’s catering company.
In short, my professional life is all about great customer experiences, communication, and strong, sustainable brands.
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Returning to the Races
So, what did I find when I came back to the races? Well, the most obvious thing was that I could no longer go racing at Milnerton, because the asset had been sold to save racing in the Western Cape from financial ruin. Kenilworth racecourse was a lot emptier than I recalled it – even the bookmakers appeared to have deserted the sinking ship.
And, while I wasn’t there for the food, the catering was such that I wouldn’t want to eat there more times than were absolutely necessary.
It was not the kind of environment I’d want to be in on a regular basis. Adding to this feeling was a sense amongst those around me that everything was slowly sliding towards a predictably grim ending.
While my return highlighted a large number of deficiencies in the user experience, I can also see many constructive actions that could be taken to reverse the decline.
Hence, I feel the most enormous sense of frustration seeing how racing is now, knowing that many of the problems aren’t complicated to fix. All it takes is a little imagination, some strong leadership, and commitment from major stakeholders.
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Saving Racing – Who are the Customers?
A business without customers isn’t much of a business. In the case of horse racing, there has been a somewhat schizo attitude to the issue, because most Stewards (i.e. the ones who run race clubs) have been owners of horses. The question is easily answered: the money that pays the prize money, that pays the salaries of the managers, that pays for the upkeep of the racecourse; every single cent of it comes from betting turnover.
When you know who your customers are, you can focus on what you need to do delight them (or, at very least, keep them) and what you need to do to find more like them. Until that point your business is rudderless and doomed for failure. There is no gentle way of making that point. Sorry.
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Saving Racing – The Sport & Athletes
The athletes that stick around racing the longest are the jockeys. The level of athleticism displayed by these guys is nothing short of phenomenal. We all get excited about a 40-something winner of the Open Championship, when there are dozens of jockeys older than Darren Clarke performing at the very top level around the world.
However, racing seems to have had an in-built aversion to the concept of jockeys as heroes of the sport, which goes all the way back to the highly stratified nature of British society in racing’s early days. When a horse loses, the first port of call for dishing out blame is that it must have been the jockey. At best, through incompetence or negligence, and at worst, by pulling it up because he’s been paid off.
Betting turnover pays the bills, and I’ll get to that shortly, but it’s the magnificence of even ordinary Thoroughbreds that is part of the soul of the brand. The great horses – and their exploits – appear to be added as an afterthought.
When the Springboks host a British Lions tour we aren’t only watching a contest between current legends. Also on the park, if only in a metaphysical sense, are giants of the sport, like Willie John McBride, JPR Williams, Morné du Plessis and Jan Ellis, who were on opposing sides in 1974.
Politician and Horse Chestnut are as relevant to the spectacle of the J&B Met as Pocket Power, and it’s interesting to discover what Moonlit did in the same race in the 1930s when ridden by Stanley Amos (who carried on riding until three months short of his 65th birthday).
These all contribute to the rich patina of racing. Without the horses and their jockeys we may as well replace the tote windows with slot machines.
Experience without context does not have the same value.
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Saving Racing – The Maths
Horse racing is different to other forms of gambling, not only because of the great athletes that decide the outcome of each wager. Allowing, of course, for luck in the running and the fitness of the horse, there is a degree of mathematical predictability to the outcome.
The weight the horse carries has a measurable drag effect, which changes depending upon the length of the race. Savvy punters use this knowledge to their benefit, but barring oblique references to “at the weights” there is no sensible explanation available for use by ordinary racegoers. I am willing to wager a large sum of money that the majority of those administering and managing racing (and probably most trainers and jockeys as well) don’t know the drag effect of 1kg over 1200m, 1600m, 2000m and 2400m.
I have known jockeys to be slagged off by a horse’s owner for losing – to be accused of cheating – when in fact the horse ran to the limit of its ability, at the weights.
The maths of a horse race may not be used by many racegoers, but knowing its impact and validity does a great deal to reinforce the position of horse racing as “the intelligent bet”. Furthermore, there is also less opportunity for the integrity of the sport to be challenged when there is an element (however limited at times) of predictability to the outcome.
Bringing maths to the fore also gives racing the opportunity of drawing in people who day trade equities, or who trade forex using the various technical tools available (e.g. Fibonacci, moving averages, stochastics etc).
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Saving Racing – The User Experience
It takes more than a great steak sandwich, or the best macaroons, to get someone onto a racecourse, but messing those things up, badly, gives that person yet another reason to stay away. There is no shortage of fabulous entertainment experiences for consumers these days. These options are not only competitors, but they set the benchmark for the minimum standard required.
Here’s what I experienced (at great cost, I’m sure) as a guest in one of the premium dining areas at the July. The steamed/blanced lobsters were very well cooked. These were surrounded by an abundance of other options on the seafood/salad buffet, the rest of which was not nearly as well executed as the lobster.
Main courses were served from the type of bain-marie last seen at smart occasions decades ago. Within, the featureless curries were covered by a layer of fat at least an inch deep. The wine list offered less interest than the most remote outpost. Holding pole position was a 2009 Buiten Blanc, which was a year beyond its best-by date.
The key issue here, is what’s being communicated to the racegoer, by being served greasy food in an unsophisticated manner, and washing it down with ordinary, old white wine.
There are many interventions that can improve the food & beverage offering at racecourses, if only to bring it up to the minimum standards customers experience elsewhere. First prize would be for it to achieve excellence.
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Saving Racing – The Glamour Opportunity
In this time, of hoodies, jeans and slops, it’s striking how much trouble people go to, in dressing up for big days at the races. If one thinks about it, there are very few dressing-up opportunities; perhaps this is something that racing can build on.
It also ties in with the historical positioning of racing as being an elite sport. Using this is certainly an opportunity, depending – of course – upon how it’s done.
Going the glamour route has the further opportunity of creating a niche market for the fashion industry, which could result in sponsorship from the large clothing brands and retailers.
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Saving Racing – The Take-Out
The size of the take-out is determined in absolute terms by the size of the pools, and in percentage terms by the stakes paid to owners, as well as the taxes withheld on behalf of the government.
I believe there’s certainly a lot that can be done to grow the pools. I understand that approaches have been made to government, but this could be a long-shot. Or, are owners willing to take an even greater haircut by having stakes reduced?
It is striking that French racing – where there is a tote monopoly – is in much better shape than British racing, which suffers from the dual impact of bookmakers and betting exchanges. Japan and Hong Kong both exist on the basis of tote monopolies.
There are two benefits to a tote monopoly:
– bookmakers do not make the same contribution to take-out
– fixed-odds offer the opportunity of various forms of dishonesty that harm horse racing
I belong to the school of thought that one is more likely to build a good balance sheet by consistently having a good income statement, than the other way around. Racecourses’ income statements record the relationship between betting turnover, the take-out, prize money paid out, and the costs of running the racecourse. Doing this successfully will result in capital accumulation. As it is, fixed assets have been sold to sustain operating expenses. It doesn’t take a Warren Buffett to realise that this is not a sustainable course of action.
Racing’s most likely way out is to grow its customer base, to take control of the take-out (through a tote monopoly), and to seek to grow its sponsorship base. A reduction in betting taxes would be a huge bonus.
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Saving Racing – Image
When Christine Lagarde was appointed head of the IMF, her employment contract included the stipulation: “You shall strive to avoid even the appearance of impropriety in your conduct.”
I have no doubt that the policing of horse racing is above reproach, and that very few untoward activities are taking place. However, the sport does not have a squeaky-clean reputation. Even if it’s a perception, rather than reality, and even if the actions that tarnished racing’s reputation happened decades ago, there is public money involved. Perception is reality.
Horse racing needs to build the trust of its customers, and its non-customers. As with the other areas highlighted above, there are actions that can be taken to remedy the situation.
There are many definitions of ‘brand’, and almost all of them incorporate the word ‘trust’, or its synonyms.
The main thrust of what I’m referring to as far as image is concerned is perceived sleaze, but the poor quality of the on-course offering furthermore contributes to a generally down-market and undesirable positioning.
This is also why it’s so important to build the sport on the basis of its athletes (both human and equine). Anton Marcus is not the same kind of jockey as the abused apprentices who decades ago would ‘pull’ any horse their ‘guv’ told them to. He, along with Felix Coetzee, Dougie Whyte, Anthony Delpech and others, have flown our flag internationally.
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Saving Racing – Transparency & Communication
These issues are closely related to image, but they are so important that I’ve given them their own header. Tellytrack, with its interviews (pre- and post-race), is a useful resource. However, getting exposed to this information means that customers have to spend all day watching TV. The same information needs to be repeated in various electronic media (including social media).
Mainstream media has cut the space devoted to horse racing down to the bare minimum. However, given the opportunities provided by the internet, this is not as huge a problem as it may have been 20 years ago.
Horse racing absolutely has to up its game online. And, the amount of public money in betting markets requires a ‘best-practise’ kind of transparency.
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Saving Racing – Sponsorship
Unlike other sports, very little of horse racing’s funding comes from sponsorship. The two main reason for this are:
– its customer base is not a sufficiently interesting niche market
– its image is not good
As the various interventions aimed at growing the customer base, and cleaning up the image, start to take effect, sponsors will become more interested in including horse racing in their marketing budgets. This will become a virtuous circle.
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Saving Racing – Brand Vocabulary
Once the correct interventions have been put into place, it’s important that a unified message be spread. Whether it’s an announcer on Tellytrack, a press release, or a website, it’s critical that the stream of communication be seeded with the desired brand message.
Ultimately, consumers will use the same vocabulary in talking to others about racing. This is a key part of the process, and it’s absolutely imperative that it be done well.
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Saving Racing – Summary
The problems are broader than the picture I’ve presented over the past few pages. And, I have no doubt that the de-mergers and mergers taking place at a corporate level are for the better.
However, this doesn’t really change the business at the coal face. One still needs to be delighting existing customers, finding new ones, and making profitable sales. This requires a certain kind of attitude, which I didn’t see in racing 20 years ago, and I’m certainly not seeing it now.
Once this attitude is aligned for the benefit of horse racing’s long term future, many other positive changes will happen.
All it takes, as I said a few pages ago, is a little imagination, some strong leadership, and commitment from major stakeholders.
– by Oscar Foulkes
