ASIAN RACING CONFERENCE
11 November 2008
Plenary Session 2 – Marketing and Customer Experience

Speech by Nic Coward, Chief Executive, British Horseracing Authority

Good afternoon, thank you Chairman. It’s a great honour for me to speak at this, my first Asian Racing Conference.

I have been asked to look at some themes from other sports, the challenges other sports are facing, strategies they are adopting to grow their brand, to attract the sponsor’s dollar, or anyone else’s dollar, be it through the live event or media delivery… or even, perhaps, from the growing amount of betting on their events.

Before taking on my current role as the first Chief Executive of British Horseracing’s new governing body, a huge privilege, I was involved for 12 years in English football, and after that also as a consultant to other European sports such as rugby, tennis, cricket – and I will try to draw on what is going on in those and other sports as well. And hopefully create some debate.

So are there any lessons from other sports?

Some would say there are basic problems even with the question.

First, what can other sports teach Racing about the art of training, the fascination of breeding, and the unique challenges of a sport centred around the horse? Well, not much….Except, perhaps, that each and every sport, every part of the entertainment, leisure or luxury markets is unique – football and tennis don’t share many features, but they do see themselves as “sports”.

Second, the view that Racing is not a sport, it’s a betting product – that’s it; or at least that is largely it.

Or maybe even on a different approach, Racing is not a sport, It’s an agricultural activity, supported by betting.

Perhaps it is no surprise that many in the sports marketing world, broadcasting, sponsors even, don’t think of Racing as a sport – but as something different. If people in Racing keep saying we are not a sport, who can blame them?

I argued last year at the IFHA Conference that those of us who have responsibility for, custodianship of, the sport across the world are risking the long-term future of Racing if we don’t take our great sporting qualities and promote them; and even more if instead we take a defensive, and domestic, betting-focussed attitude. I am saying that we have a fantastic opportunity in the sport’s long-standing and – if not in Britain, at least in the rest of the world anyway – fantastic financial return from betting – but I am urging that Racing does not close its mind to the vulnerabilities of that close relationship, and we invest in a future strategy building on that advantage; that we build a leading sport brand which can deliver to commercial partners across the spectrum, including betting.

As Rhian de Plessis of Phumelela said recently – “we have undermarketed ourselves”.

I stand here representing British Horseracing, the “sport of kings”, a sport that is part of British cultural life, never mind our sporting life – with the Grand National and the Derby still two of our nation’s great sports events. So, before looking at other sports, how about some potential lessons closer to home.

I will not go into the complexities of the British experience, and the fact that the returns from betting are way below the levels they should be at. British Racing enjoyed a record direct return from betting last year – £115 million – which turned into a record level of prize money. You can look at the British experience with betting and sigh a huge sigh of relief if you wish – or perhaps you can look at how British horseracing can be the spectacular, enthralling sport that it is, hugely important to the sporting fabric, and see how Racing can thrive and grow in a more market orientated environment. Seeing ourselves as at the heart of an international sport. Sport, first and foremost – yes, with idiosyncrasies and unique features, but a sport business that does look similar to other models around the world with revenues from attendance, hospitality, broadcast, sponsorship – as well as very significantly from betting. This is a sporting model, a sports brand, shaped by competitive pressures. We in British Horseracing are just embarking on a hugely exciting and ambitious branding exercise for the whole sport, building on that basic starting point.

There are lessons close to home in Europe, in Belgium and Germany, where markets were opened up by Governments, and Racing was not prepared for life in a competitive environment. That’s another lesson, Governments change, and Governments change their minds: look at the change that has happened in response to the global financial and banking crisis.

Developments in Australia are alarming – which Bob is at the heart of addressing.

In France, where Racing and the huge rural and agricultural community it supports is financed so magnificently by the PMU monopoly – online betting is to be opened up on other sports with a return to those sports through what looks like a “Sports betting right”. Racing is having to rely on its characterisation as “not sport” to protect its position.

Hong Kong – look at the evidence of the extraordinary success of HKJC’s football business. 2006/7 turnover on Racing was US$8 billion. Soccer, launched in 2003 shows a turnover of approximately US$ 4 billion. Not a penny is going back to the sport on which the bet is made, it can all go to good causes and Racing. Sounds good, great for Racing in Hong Kong, but as a lesson it also shows just how Racing compares when up against competition from other sports. And I suggest this is another lesson – International Racing is just as much a sport as international football – if HKJC can provide a service to their customers through English, Italian etc, football, cannot be any reason not to do so on the sport of English, British or other Racing.

So there is a lesson. Betting on other sports is attractive to punters. Racing is losing global betting share to Basketball, Soccer, Tennis; and that’s without them trying to get it – quite the opposite in some cases.

And there is another important lesson perhaps: many of our potential competitors don’t want to compete with Racing for betting dollars – the NFL are so concerned that they excluded the Racing Post from accreditation at their Wembley game. But they are at the extreme, and how long can a sport generating billions of dollars of business for others stay quiet, and not work to get a slice of it? For other sports, the negative associations with betting are long gone and they do want a fair return – and, frankly, why shouldn’t they?

Those sports are already getting active in looking at the threats from betting – the challenge of potential competition – and we in Britain are helping them. Is it conceivable that they will stay silent about receiving a fair return?

So what are those other sports up to?

A few weeks ago, the Economist magazine organised a major Conference, held to coincide with the NFL regular season game in London. At this Global Sport Summit it was interesting that no-one from Racing was on the platform for the 2nd year running, although it was great to see Princess Haya on the programme, even if there as FEI President.

It was all about “the next step” : the NFL and the English Premier League dominated the debate. Their stories were very similar: both are looking at sports brands and events which they both see as very conservative, deeply traditional, but both are driven to conclude that they need to take them to a new audience.

Let’s not underestimate how seismic a change it is for NFL Franchise owners to take a game to Wembley; or to China, and put it out free on TV to reach 330 million homes, and even to begin to contemplate the Super Bowl taking place outside the States. The English Premier League Club Chairmen see competitive games taking place in other countries. And these are sports that consider themselves tied to a very local fan base.

Take the Premier League as example; since 1992 the top 20 clubs in English professional football. Professional football started in 1888, but restructured to create a focussed committed driving force.

In 1986, no TV deal in the home country.

…. In 2008/9, approaching US$2 billion: with a huge international following. Numbers were based on May 2008, so rates have changed, but you get the idea.

In the 1980s / 1990s what was English football’s biggest external income? Pool Betting: the money that effectively rebuilt the stadia. It peaked at around US$60 million in the early 90s – within 15 years had gone down to less than US$500,000. There’s a lesson many in Racing are only too well aware of – the reason – introduction of a National Lottery.

So what is their strategy?

What does the English Premier League see at as its challenges?

Opportunity and threat of globalisation.

– Piracy : need to protect IP and copyright globally.

– Make the event as great as can be and maximise what cannot be pirated – the live stadium experience. An experience, a destination. Learning from music industry where live show is more and more the driver of growth. Why, because of the second threat….

For Tennis and the ATP, they are reshaping and rebranding existing tournaments.

For Cricket, it’s about a new fast form of the sport, 20/20, with the Indian Premier ague creating a breathtakingly successful new competition which is revolutionising a sport seen as hidebound in the past.

Rugby Union is looking at its own global strategy, with the publication recently of “Putting Rugby First”, which echoes the Tennis conclusions.

All are looking for something different.

I mentioned in the EPL slide that IP/Piracy is a major threat. Look at that in a bit more detail; I chair a coalition of some of the major sports organisations including F1, IRB, FIFA, ATP/Grand Slams, PGA European Tour.

It spells out their major issues but number one threat is Digital Piracy: P2P, illegal streaming

The Indian Premier League is now joining the coalition.

Many members have linked up with NBA, NFL, MLB, to highlight to international law makers the huge impact of pirates.

Lessons here perhaps – Racing’s current model not apparently under threat – an advantage of our relationship with betting.

One thought – the impact of piracy, huge growth in betting, and uncertain markets for sports’ TV dollars, ad sales, subscriptions and sponsorship. Maybe, just maybe, sports will look at those betting revenues around the world (and perhaps with their Governments) and think that now is a time for change, now is the time for those sports to receive a fair return from that betting. Changes in France could signal a major shift in that area.

Sports are having the debate about growth and innovation. ARC should be congratulated on providing the platform for what I hope can be the start of something. We all have local issues, but have to come together to recognise and build on our global strength.

Lesson is for racing authorities to be working on genuine, legitimate, coordinated global racing and betting on the sport of racing, with relentless, joined-up promotion. Also the lesson from comingling of pools. Call it a global marketing strategy, call it a rebrand, call it what you like….

More and more you look at experiences, challenges and lessons of others, see that, with real concerted work across nations, Racing can win out. It’s all about the “Sport” – Athleticism, Competition, Occasion, Spectacle, Thrills, Winning and Losing, Big Names, Big Personalities, Absurdity, Unpredictability, Passion – just don’t tell me that is not Racing. Build on success as betting product, build on the fact so much a part of rural life, now, build on our already stunning global events, tell their stories and the stories of the horses and the people, invest in truly global promotion – build on the profile of stars at great events. Stop talking ourselves down, stop talking just to ourselves; yes there are challenges, but also real opportunities for our truly great sport.

November 2008