By Ray Paulick TOKYO, Japan–Mirco Demuro had just been punk’d by, of all people, Sir Michael Stoute, and he looked like a deer caught in the headlights.
An Australian journalist wanted to introduce Demuro to the legendary British trainer during the cocktail hour of Friday night’s Welcome Party to the 29th annual Japan Cup. Demuro, Italy’s top jockey and last year’s Japan Cup winner aboard Screen Hero for Teruya Yoshida, said he’d never had the opportunity to meet Stoute, who will be saddling two-time Breeders’ Cup Turf winner Conduit in Sunday’s big event at Tokyo race course.
“Actually you rode for me once at Royal Ascot,” Stoute reminded Demuro (both pictured, left). “Finished second.” Then, with a perfectly timed pause, added, “Moved too soon.” No one enjoyed the good-natured ribbing better than Stoute himself, who let out a big belly laugh at his own joke. Demuro didn’t know what to say. But perhaps he’ll have the last laugh on Sunday as he tries to defend his Japan Cup title aboard Screen Hero.
Stoute is relaxed and confident as he bids for his third Japan Cup victory, having won back-to-back runnings with Singspiel and Pilsudski in 1996 and ’97. The native of Barbados, who has been among the world’s foremost horsemen for more than three decades, has won major races in 10 countries, including five Breeders’ Cups.
I asked which of his international triumphs meant the most to him. “The Dubai World Cup,” Stoute said, without hesitation. “And for that I give a great deal of credit to Jerry Bailey.”
Stoute recalled how the Hall of Fame jockey worked Singspiel before the scheduled running of the 1997 World Cup but returned to the United States when the race was postponed after a deluge flooded the Nad al Sheba racetrack. “He came all the way back a few days later when the race was rescheduled,” Stoute said. “I think that breeze really gave him confidence in the horse.”
Another international visitor to Tokyo commented that Stoute has perfected the art of shipping horses around the world to win big races. “No, no, no,” he said. “No one’s perfected this. But you learn from the mistakes you make and from the things that go right. And no two horses react the same way to travel.”
Among other things, Stoute sends his own horse feed to Japan, well in advance of his horse, allowing the Japan Racing Association plenty of time to test its contents for any prohibited substances. Many other trainers are content to use the feed provided by the JRA. It’s a small detail perhaps, but it’s the kind of thing that adds up and pays off in the end.
I MADE THE MISTAKE OF ASKING PATRICK LAWLEY-WAKELIN whether he’d been to the Japan Cup previously. “Last year,” he said, sadly, “but this is as far as we got.” Lawley-Wakelin, who is representing 2008 Canadian International winner Marsh Side on behalf of owner Robert Evans, was referring to last year’s Welcome Party, which he attended with trainer Neil Drysdale (pictured, left, with Northern Farm’s Katsumi Yoshida). The next day, Marsh Side was scratched from the Japan Cup due to a fever, and Drysdale and Lawley-Wakelin departed immediately for the Tattersalls December sale. Let’s hope they get a chance to stick around and see Marsh Side compete this year.
Drysdale was stunned to hear no American-trained horse had won the Japan Cup since Golden Pheasant captured the 1991 renewal for trainer Charlie Whittingham and jockey Gary Stevens.
“I should have won it in 2002,” said Drysdale, recalling the running held at Nakayama racecourse while the Tokyo track’s grandstand was being rebuilt. Italian-based Falbrav and jockey Frankie Dettori edged the Drysdale-trained Sarafan and survived an inquiry after Falbrav drifted in and brushed Sarafan several times in deep stretch. “He really slammed us,” Drysdale recalled, “but the stewards let the result stand. There was no point in an appeal, since the same officials who looked at the original inquiry would hear the case.”
THE WELCOME PARTY TOOK PLACE at the glitzy Ritz Carlton Hotel in the new midtown development adjacent to Roppongi. The JRA upgraded its host hotel this year to provide owners, trainers and jockeys a better experience during their visit to Tokyo (the international press remains at the Keio Plaza, a fine business hotel but not in the same class as the Ritz). It’s a smart move by the JRA, which has to compete with the Hong Kong Jockey Club for top horses and has lagged a step or two behind the HKJC as a host association and in providing a world-class experience for owners. Connections of Japan Cup Dirt horses will be staying at the Ritz Carlton in Osaka, near Hanshin race course, prior to next Sunday’s race.
The entertainment at this year’s party was quite different than anything I’ve seen in my previous 15 journeys to Tokyo for the Japan Cup. A group of Yabusame (yah-bu-sahmee) archers gave a demonstration of their martial arts skills, which entail riding on horseback at full speed and shooting a bow and arrow and several small targets. It’s a Japanese tradition going back nearly a thousand years to the days of Samurai warriors when the targets were more than wooden squares, and the skill was required to help protect the empire.
Of course, the originators of Yabusame never envisioned riding their horse into the Ritz Carlton ballroom, so some accommodations had to be made. The “horses” were decorated wooden mounts spun in a circle by an assistant, and the targets were only a few steps away on stage. But I think we got the point: don’t mess around with these fellows.
IT’S BECOME SOMETHING OF A PAULICK REPORT TRADITION to comment on the food we enjoy at various industry gatherings, and the Japan Cup Welcome Party certainly offered a veritable feast, beginning with something called amuse bouche, contuing with a second course of ravioli style shogoin turnip, marinated seafood, crispy pasta, shiso and citrus fruit vinaigrette; followed by pan-friend sea bream, leak, taraba crab, clam sauce, braised savoy cabbage and green vegetable; and then a main course of pot-au-feu style beef fillet, chicken leg, autumn vegetables, truffle flavor white wasabi and seaweed salt. My favorite, though, was the “seasonal dessert sampler” of chestnut, sweet potato, Mont blanc, autumn fruits, apricot sorbet, wasonbon, and green tea sauce. I couldn’t really identify any of it, but it was all good!
After 48 hours of being told horse racing needs newer and younger and more female fans, Ray Paulick is mad as hell and he isn’t going to take it anymore. He wants to know, among other things: Why does racing hate us old men? Ray’s gavel to snooze button coverage of the 32nd Asian Racing Conference takes a diversion today as he offers stream of consciousness (when conscious) coverage of the final programs from Tokyo, which touch on television, wagering, and the dreaded S.S. (synthetic surfaces).
CONFESSION: I’M AN OLD (55) MAN and am feeling a bit lonely. Racing doesn’t want me anymore. It seems more interested in younger people, men with fulls heads of hair, and women who giggle and love horses but have never bet more than $2 to show on a race. What have I done, to borrow from the Aussies, to hack you off? All I and my fellow old men do is go to your tracks, buy your lousy food, bet till our pockets are empty, and fall asleep on the train on the way home. Yet you would rather cater to people who don’t even like your product. Where’s the love, racing?
It’s not just an American problem, this fixation racing has on replacing the dead with people with a heartbeat. It’s going on in Australia, Hong Kong, Japan. Everywhere horses race, the marketers hate us old men.
Just yesterday, a producer from Fuji television, which broadcasts into 90% of Japanese homes, was lamenting that his Sunday racing telecasts have a demographic that is so old that he can only sell advertising time to rocking chair and walking stick manufacturers. Actually, it isn’t quite that bad, but old men were making up such an increasing percentage of the Sunday racing programs’ audience over the past 10 years (from 47% to 63%) to the point that producers decided to shake up the broadcast and bring in people who knew nothing about racing but had some connection with celebrity. There’s hope for David Hasselhoff over here in Japan!
Worse yet, Fuji’s racing telecast ratings declined over those 10 years, from 7.7 (about 3 million households) to 5.0 (about 2 million). Fuji’s metrics people are very clever, measuring their audience segments into eight categories (two youth, and three each by age group for male and female). The "old man" portion of the audience remained the same over those 10 years, with losses coming in the younger and female segment. So Fuji decided to take it out on the old men by providing programming that was irrelevant or irritating to them.
But wait. The Fuji TV producer, Masanari Funaki, said the younger generation is watching all of television less, not just racing telecasts. They have discovered the Internet, video games and mobile phone networking. Nevertheless, Fuji opted to ignore the old men and provide less information about handicapping and gambling (which us old guys like) and show more personality features, make the program more entertaining and focus more on "the sporting aspects of horse racing."
His reason? "We wanted to catch some of those sports fans who might be channel surfing," Funaki said. "We think it’s very important for viewers to see horse racing programs in the same way they see other sports programs, so we don’t overpromote the gambling aspect and get viewers to see the human element. We show more about jockeys, their histories and their background."
What a fool, I thought.
Not so fast, my friend. "This year’s racing telecast ratings are up," Funaki said.
Fuji TV also developed a Saturday night midnight racing telecast that focuses on handicapping the Sunday race, using well-known handicappers from six Tokyo newspapers who scream at each other about how stupid they are.Kind of like the three talking heads on TVG. "Those programs are very popular with younger men," Funaki said.
In my country, Mr. Funaki, old men are asleep by midnight.
SOMEONE ELSE ON THE TELEVISION PANEL SET UP A HORSEY PINATA representing the American racing industry and people took turns whacking it and reminding us of how stupid we are in the United States.
Those guys from the United Kingdom and Australia are so smart, just because they know how to tell time. Smug. They have a 3 o’clock race at Ascot and a 3;15 at Lingfield in the UK, and in Australia (where the clocks are upside down), they manage to televise about 12,000 horse races every day without having any post times overlapping with one another. The reason? Apparently, they can maximize wagering by coordinating post times for the races.
In America, experience has shown that it’s much better to have three races from major tracks all start at exactly the same time, so that simulcast or account wagering customers have to choose between races rather than bet on all three. It’s called maximizing stupidity, or something like that. "America’s most famous racetracks have races going off right on top of each other," said Brendan Parnell, chief operating officer for Australia’s Tabcorp. "They are cannibalizing or eating each other’s lunch and missing great opportunities. People are getting shut out."
Whack! Take that, you damned Yankees.
OLD MEN AREN’T THE ONLY ENEMIES OF RACING. So are governments, who set and enforce ominous hurdles that keep the sport from seizing on some great opportunities, such as a "global bet." (Aren’t most governments and racing regulatory bodies run by old men? Yes!)
John Stuart, who carries the creative title "director of international marketing and operations" for the make-believe Phumelela Gaming and Leisure Co. (what, there really is a place called Phumelela?), presented a science fiction video about a global horse bet called the "Universal," where fans in any country pick the first eight finishers of a big international race like the Japan Cup and create a betting pool in excess of a billion dollars. "Had Barack Obama been watching that," Stuart said, "he’d be shouting ‘yes, we can,’ ‘yes, we can.’ So should we be."
Of course, that will never happen because too many governments have protectionist laws prohibiting commingling of betting pools from one country to another. Plus, the American totalizator companies would still be accepting bets after the race is over.
A SERIES OF PRESENTATIONS ON MEDICATION featuring dreadfully boring attorneys and veterinarians has just about everyone in the room nodding off until a snappy Q&A segment near the end when the moderator directed a question about illegal drugs to Brian Stewart, head of veterinary regulation and international liaison to the Hong Kong Jockey Club. Specifically, Stewart was asked by Australian turf editor Bart Sinclair whether blood-doping agents like EPO, which have plagued cycling and some other sports, are being used in racing. Stewart nodded to the affirmative. "How big a problem is EPO?" Sinclair asked. "I’d say it’s widepread," Stewart said. That sent many Asian Racing Federation delegates straight to the bar for a stiff one.
THERE ALSO WAS MUCH DISCUSSION ABOUT HANDICAPPING INFORMATION. What should be given to these young fans who don’t exist yet? How should we deliver information to them? Gift wrapped with local currency, I think.
Howard Wright, senior editor for England’s Racing Post and one of the people in the media who "gets it," had me going there for a minute when he said the racing industry in Great Britain actually wants to make money from newspapers for providing information about horse racing to fans. Good one, Howard. They can’t be that arrogant over there, can they? Seems like the industry should be paying newspapers to promote the sport, not the other way around.
Howard, like me, is a slightly grumpy old man who does see the need for racing to replace those of us who will soon be pushing daisies. He also understands these young kids today don’t know how to read a newspaper, but doesn’t think the traditional ways of providing handicapping information (Racing Post, Daily Racing Form) should be abandoned. "One size fits all no longer applies," he said. "The media has to find ways of satisfying its traditional horse racing audience while also accommodating the PlayStation generation, who want their involvement presented in small pieces and want it now." It’s time for "Racing Form Lite" he said. Tastes great, less filling!
Howard also mentioned the budget cutbacks in most daily newspapers (e.g., they are dying faster than us old men), and suggested that racing isn’t alone in having its editorial space reduced. "Racing will never beat football," he reminded. Someone got out the Pinata again and started talking about how American newspapers have stopped covering horse racing altogether. Whack, whack, whack!
SOMEONE SUGGESTED THIS NEW THING CALLED THE INTERNET might be a good way to deliver information to these newbies. That’s where the kids are hanging out these days, aren’t they? To strategerize about this, the Asian Racing Federation found a really smart kid, Koichi Yamamoto, who must be the youngest senior research director the Dentsu Institute has ever had. (He got his MBA from Columbia University when he was, like, 12 years old.)
Yamamoto outlined how blogs and social networking have changed things and talked about how businsses need to reach "new influencers," people who are constantly communicating online by networking and commenting on blogs and never breathing fresh air. These "new influencers" might not be as informed as us old guys or as opinioned; in fact, they are more easy to influence than us stick in the mud types, Yamamoto said. But don’t inundate these "new influencers" with gibberish, he said, because they are adept at filtering out useless crap. "Only the most attractive and relevant information gets through," he said.
If the message gets through, however, Katy bar the door. Word of mouth is the new king, he said. Social trends spread at lightning speed. "People want to tell friends about things that at least some people know, but not too many people know," Yamamoto said. "The topicality window opens faster and closes faster."
Yamamoto said the newbs are hip to the trick of marketing people. "Increasingly sophisticated consumers can easily see through marketing schemes," he said. "Relationships with these consumers is more important than ever. Strong relationships turn information-filtering consumers into information-hungry consumers."
Can I get a translator please?
"WHAT IF STEVE JOBS WERE TO ENTER THE RACING INDUSTRY? How would Apple innovate the customer experience?" Those questions were asked by Edward Tse, a McKinsey and Co. consultant to the Hong Kong Jockey Club who encouraged racing associations to think more innovatively than they have done in the past. Tse reviewed the depressing statistics that show pari-mutuel handle losing altitude and asked if it is sufficient to simply launch new bet types, which many racing associations have tried. "Or," he asked, "do we need a new approach?"
He then listed six building blocks needed for innovation: 1) tax reform and product pricing; 2) customer segment expansion; 3) channel innovation and expansion; 4) product and service innovation; 5) image or brand building; 6) customer relationship management/loyalty.
Savvy guys like Tse do all sorts of analytics, and he said the most valuable ones are predictive in nature: in other words, get a swami to crunch your numbers. Short of that, he said, try and get predictive analytics that answer the following questions: What’s the best thing that can happen? What will happen next? If these trends continue, why?
Tse said companies that do this well include Capital One, the annoying credit card company that fills your mailbox with junk every day, the consumer electronics store Best Buy (news of their current problems hadn’t reached Tse yet), and the Harrah’s casino company, which he said "revolutionized the casino industry by adopting highly analytic customer focused innovation."
Harrah’s, he said, separates all of its customers into segments by profit potential, drives those customers to aspire to a higher level, optimizes placement of its slot machines in the best locations, and uses customer satisfaction measurements to shape their business plan. The whole point of this is to separate the customers from their money, and Harrah’s is extremely good at that.
Back to racing. Tse insisted that new approaches to the customer experience are required to modernize the industry. Following Harrah’s lead, racing associations must use deep customer segmentation and analytics as the foundation for innovation. "For most racing organizations," Tse said, "this will require a different mindset and new skills."
Unfortunately, many people with those skills end up working at a company like Apple.
DO LOWER PRICES INCREASE SALES? The Hong Kong Jockey Club was curious to see if the cost of a bet could affect how much is wagered, so they tried something foreign to most horseplayers: they lowered prices. Specifically, the HKJC offered rebates for losing bets made by some of their highest-rolling customers. The net result: players who received rebates, thereby effectively lowering their takeout, wagered more.
It wasn’t that easy, though. To give rebates, the HKJC had to cut a deal with government that gave them the flexibility to offer innovative programs like rebates. The agreement worked both ways, with the HKJC guaranteeing HK$8 billion in annual revenue to the government, more than they’d gotten the previous year. The HKJC wanted to expand the number of race days from 78 a year and the number of commingled simulcasts from 10. The government didn’t budge on those requests.
The rebates were for losing bets of HK$10,000 and up (about US$1,200) on win, place, quinella and quinella place wagers. To coincide with the introduction of the bets, the HKJC convinced 500 bettors from different wagering segments (frequent, occasional, big bettors, small bettors) to allow their betting to be tracked for analytical purposes. Not surprisingly, big, frequent players took advantage of the rebates the most, effectively lowering takeout from 18.7% to 16.9% and increasing the volume of their bets by having more money to churn. For the occasional and smaller players, the rebate and lure of lower takeout made little or no difference.
The rebates were funded by the HKJC, which looked at them as a marketing investment in their future. Handle increased, but not to the extent that it paid for itself. Bill Nader, the former New York Racing Association chief operating officer who is now executive director of the HKJC, said the organization hopes it will pay dividends in the long run.
MR. SEKIGUCHI, WHERE ARE YOU? Fusaro Sekiguchi, the flamboyant Japanese businessman who raced Fusaichi Sekuguchi to victory in the 2000 Kentucky Derby and has been a major buyer at foal and yearling sales around the world over the last decade, has been keeping a very low profile in his native Japan recently.
Some Japanese racing insiders have said he has sold most of his horses and others have suggested the global credit crunch may have dealt him a severe blow. Last time I saw him was in the paddock of the Tokyo Race Course at the Japan Cup a couple of year ago, where he was nattily dressed as usual. Sekiguchi has had some ups and downs in his racing and business career (famously failing to pay Keeneland on some yearling purchases prior to buying FuPeg for $4 million, and later getting fired by the company he started), and he always seems to land on his feet.
Here’s hoping we see him in the winner’s circle again real soon.
DARLEY JAPAN FARM EXPANDING: Darley Japan Farm, the Japanese breeding entity on Hokkaido owned by Ken Mishima, has expanded with the purchase of Nishiyama Farm, whose previous owner raced Paradise Creek, winner of the Eclipse Award as outstanding turf male in 1994. Though it’s a bit confusing, Darley Japan Farm and Darley Japan (which stands stallions) are separate entities, in part because of the licensing peculiarities of the JRA that require Japanese owners of breeding farms.
FINALLY, THE GRAND FINALE THAT WE HAVE BEEN LOOKING FORWARD TO…the "cage match" discussion arguing the merits of synthetic surfaces.
Ian Pearse of Pro-Ride surfaces of Australia, bragged on the results of the Breeders’ Cup at Santa Anita while Michael Dickinson, waiting for his turn to speak about his creation, Tapeta Footings, sat patiently onstage sticking pins into a voodoo doll that resembled Ron Charles, who chose Pro-Ride over Tapeta for Santa Anita, host of the 2008 and 2009 world championships.
Raji Jayaraju then sang the praises of the synthetic surface installed at the Singapore Turf Club track where he is senior manager. Singapore’s new track has been very useful because of the heavy rain they get in Singapore that often leaves the turf course extremely soggy. Jockeys and trainers said in a video that the synthetic track was terrific (under threat of a caning?).
Dr. Toshiyushi Takahashi, a representative of the JRA, presented some scientific research that showed why synthetic tracks might be safer than Japanese dirt tracks. The JRA installed synthetic material on one of its training tracks and compared hoof impact between dirt and synthetic tracks, measuring the velocity of impact and time of hoof stabilization at impact. Dr. Takahashi summarized by saying that synthetic tracks are more stable and provide more traction than dirt or wood chip tracks, and are more constant at the time of hoof landing.
But that science is meaningless in the face of comments from turf writers and horse players who are more concerned with tradition and form than the safety of horses.
"To those of you who train, for those of you who’ve got sand and dirt tracks, please switch to synthetics," Dickinson said. when asked about safety. "Whether you go with Tapeta, Pro-Ride or my good friend Martin Collins’ Polytrack, please change. It’s much safer for the horses." Apparently, someone "got to" the panelists and said no name calling. Cage match cancelled.
That’s it from the Asian Racing Conference. I’ll summarize what I’ve learned over these last few days in a forthcoming commentary.
The Paulick Report caught up with former New York Racing Association chief operating officer Bill Nader, who since April 2007 has served as executive director of racing for the Hong Kong Jockey Club. Nader is attending the 32nd Asian Racing Conference in Tokyo, where he gave a presentation on the Asian Racing Federation’s International Circuit.
Ray Paulick: Bill, can you briefly describe your responsibilities at the Hong Kong Jockey Club? Bill Nader: As executive director, I oversee all racing operations, and that extends to the laboratories, veterinarians, farriers, grooms, work riders, handicappers, racing stewards, racing registry, marketing, public affairs and also the international races. It’s a big operation. There are about 1,800 people reporting directly or indirectly to me, and we have tremendous people in the key positions from all over the world, from Hong Kong, Great Britain, Australia and New Zealand.
What’s the best part of your job? The popularity of the sport makes it contagious and gives you a reason to want to get up every day. There’s never a dull day. It’s the major sport in Hong Kong. There are single events that may be bigger, but in terms of something sustainable over the course of the year racing is the only game in town. One example: circulation of a daily newspaper increases by 30% on a race day.
Your biggest challenge? The ability for us to grow. It’s one thing to get where we are and sustain our position, but to take it to the next level. We think we can do that, but we need government support. We have 78 race meetings and we have to guarantee HK$8 billion (about US$1 billion) in revenue to the government. My two years have been lucky, we’ve been up in turnover. We’ve been able to grow from HK$60 billion in handle to HK$68 billion last year. Tax rate effectively is 73% of gross margin, before we pay prize money or overhead. We can only simulcast 10 single races per season and want to expand that but have been unsuccessful so far. There’s limited stabling and no breeding industry, so no room to expand. We have an active population of just over 1,100 horses. To get through 735 races, 90% of the races on turf, with those horses, it’s a challenging process.
What is the major difference between working at NYRA and working for the Hong Kong Jockey Club? Resources. Not just money but the depth of personnel at top levels all the way down. The Hong Kong Jockey Club is arguably the most professionally run racing organization in the world. It’s a finely tuned machine. Its can-do spirit is really evident day by day taking tough assignments and meeting the challenge, whether it’s working on the Olympic Games or the international races. The work ethic here, too, is amazing. Our employees work 11 or 12 hour days and won’t go home until they feel their job is done.
What do you miss the most about the U.S.? I miss a lot. Italian restaurants, sports, Broadway shows. There are no major league sports here. Overall there’s a lot of good things about Hong Kong, so it’s a trade-off.
How do you spend your leisure time?
I don’t have a lot of it. During the 10 months of the racing season, we’re fortunate to get one day off a month.
What do you know today you didn’t know before you came to Hong Kong?
It’s been amazing. It opens your eyes to come and see racing presented in a different system. The whole approach is different. You learn by just opening your eyes. I learned early on not to jump to any conclusions and get a feel for the methodology that’s employed in this part of the world. A lot of things done here we can’t duplicate back in America.
Are there things that we can do better in America? The position on medication is interesting. Talking to our vets, all of the countries in the Asian Racing Federation with the exception of Saudi Arabia have no medication. We have horses that run back in a week, sometimes in three days, no Bute, no Lasix, no medication. Even 2-year-olds in the States that run on Bute and Lasix, I wonder now if any of that is necessary. In this part of the world the climate can be tough, yet horses run as often or more often as they do in the states. America needs to take a hard look at medication policies.
Have you made any cultural faux pas in your new home? I’ve been very careful, though I was a little sloppy with my chopsticks at first. I have learned some customs. The number 8 is lucky, 28 is lucky. Four is death. In fact in a lot of office buildings if you get on a lift there is no fourth floor.
Any message for the racing public in the United States? The message would be that they try to open up and appreciate racing from this part of the world, much like I wish Asian people would appreciate American racing. When I got here in late April 2007, there was very little interest in the Kentucky Derby. It was a major event, and this is a horse loving part of the world, yet the biggest interest was that the queen was going to attend the Derby. There was no interest in the horses.
The challenges that confront racing seem to be the sport’s universal language, and potential solutions, it seems, are similar from one continent to another. Winfried Englebrecht-Bresges, CEO of the Hong Kong Jockey Club and chairman of the Asian Racing Federation, outlined those challenges and proposed some solutions during his opening address of the 32nd Asian Racing Conference in Tokyo on Tuesday morning.
Looking back on the last conference, held in Dubai in January 2007, Englebrecht-Bresges referred to the “racing without borders” theme that required a strategic plan to deal with the harmonization of regulatory issues and business strategies. Some progress has been made on the regulatory front, he said, but many hurdles remain before international commingling of pari-mutuel wagers becomes commonplace. “It must be a winning proposition for all stakesholders,” Englebrecht-Bresges said, including customers, governments and operators. "Currently," he said, "we are not structured correctly to deal with the challenge."
Among the hurdles are laws in some countries, most notably Hong Kong and Japan, that prohibit or restrict commingled betting; double taxation on commingled bets; marketing and sponsorship issues; TV and data rights questions, and software challenges among tote companies that will require investment and commitment by the various stakeholders. “We will struggle if we won’t change,” he said.
Englebrecht-Bresges outlined what he called “three guiding principles” to address the challenges. Racing must exert influence on the regulatory side, he said, because “the integrity of the sport is a fundamental issue. Drugs will bring the sport to its knees if we don’t proactively fight this problem.” He referenced cycling and how the burden of doping could cost the sport dearly in lost television rights if not addressed.
Secondly, Englebrecht-Bresges said, the industry must facilitate the sharing of best practices in racing and in other outside industries by bringing together stakeholders who have common interests.
Finally, he said, bigger organizations must mentor smaller organizations, especially those countries who are in the early stages of expanding their racing and/or breeding industries.
While some countries are in that early stage, Englebrecht-Bresges said, overall there is stagnancy for the Asian Racing Federation members, with six-year projections that show pari-mutuel wagering turnover declining while other forms of gambling enjoy moderate growth. “We will be a dinosaur,” he said, adding, “it’s not that we are unattractive. But we have to offer different value propositions.”
Not surprisingly, those value propositions are predicated on knowing what customers want, especially new customers that racing needs if it is to survive. He called for all jurisdictions to conduct strategic assessments, and outlined some of the findings the Hong Kong Jockey Club discovered in its own research. Non-racing fans see no relevance in the current racing schedule/fixtures, programs and bet types; much of the activities are not appealing to young people, women, families, and the middle class. Racing lacks innovation, and has a poor approach to its “channel strategy” and customer loyalty programs. Furthermore, he said, industry fragmentation is a key reason for slow response to the challenges.
Regarding channel strategy, Englebrecht-Bresges said racing is “catering to its current customers” through its web sites, where new customers “get lost. We need an integrated channel strategy” that will appeal to existing, new and potential customers, he added.
Englebrecht-Bresges said racing must reach the next generation, but that the strategy of attack must be powered by customers, especially the new customers with which the industry must learn how to better communicate.
“We are in a race,” said the German native who has been with the Hong Kong Jockey Club for 10 years. “Is it a race we can win?”
Englebrecht-Bresges then showed a slide of America’s new president-elect, Barack Obama, featuring the campaign theme of change that stated “Yes, we can.”
“I say," Englebrecht-Bresges concluded, "‘Yes, we must.’"
THE REST OF TUESDAY MORNING’S conference program was baffling. Following Engelbrecht-Bresges was Hiroshi Okuda, who rose through the ranks of the Toyota Motor Corporation to become president and later chairman and is now chairman of the board of governors for the Japan Racing Association.
It’s possible Okuda brought the wrong speech to the Asian Racing Conference, for he devoted his entire talk to "global warming issues." I guess if we all rode horses instead of automobiles, we could help develop a low carbon society, as Okuda said is necessary. But I’m not sure what major impact racing executives could have on global warming.
If that talk didn’t cause the conference focus to jump the tracks, the next two certainly did. Robyn Williams (no, not that one), described as a "mad cap science presenter" from Australia, enlightened (?) the audience about how the world will be changing due to technology. You know, robotics, energy and transportation. Hell, I learned that from watching too many episodes of "The Jetsons" as a kid. In truth, Williams was at least entertaining, and would have made a good lunch-time speaker. But he added little to the serious issues at hand among the Asian Racing Federation delegates.
Andrew Main, the morning’s final speaker, likewise, had little to say linking racing to his area of expertise as business editor of The Australian newspaper.
Filling the opening morning with three speakers who had little relevance to racing left many in the audience scratching their heads and wondering who thought this was a good idea.
The world’s biggest purses have never been available to racehorse owners from around the globe, but that all may be changing soon when the Japan Racing Association makes an anticipated announcement later this month that it will begin licensing foreign owners as early as 2009.
News of the JRA’s expected policy change was a hot “hallway topic” at the Asian Racing Conference, which officially began in Tokyo on Monday night with opening ceremonies that featured a traditional lion dance, Japanese music, and a handful of speeches from Asian Racing Federation officers, JRA officials and the minister of Japan’s department of agriculture, forestry and fisheries, under whose umbrella the JRA falls.
Presentations and panel discussions on a host of subjects begin on Tuesday. The conference, the world’s largest international gathering of its kind, will attract more than 800 people from as many as 35 countries. The Asian Racing Federation, which organizes the conference, has 22 member nations, including two new members, the Saigon Racing Club of the Socialist Republic of Vietnam and the Jockey Club of Russia.
Winfried Engelbrecht-Bresges, chairman of the Asian Racing Federation and CEO of the Hong Kong Jockey Club, warned the gathering of the ominous problems the racing industry faces in light of the current global economic crisis and the growing competition in the gambling market. “This is not a gentle breeze that we face,” Engelbrecht-Bresges said. “In Hong Kong it’s what we would call a typhoon.”
The licensing of foreign owners became a big issue two years ago when Sheikh Mohammed was originally denied a license for Darley Japan, which operates a stallion and breeding farm on the Japanese island of Hokkaido. Eventually, Darley was awarded a JRA owner’s license in the name of its Japanese manager, veterinarian Riki Takahashi (a former JRA employee), but it was relinquished in December 2007 when Takahashi abruptly left Darley after 15 years.
Details of the new licensing rules are not confirmed, but it is expected that foreign applicants will be required to meet the same financial and personal wealth standards the JRA sets for Japanese owners who compete for the racing world’s highest purse structure. Owners will not be required to have a Japanese base for breeding, however.
It is likely those foreigners approved for a JRA owner’s license will have to buy or breed five Japanese foals to fill their initial stable, and thereafter maintain a minimum percentage of Japanese-bred horses within the stable. That rule, which some may see as a continuation of the JRA’s historic protectionist policies favoring Japanese breeders, could be a boon to the foal sale held annually in July by the Japan Race Horse Association. The sale was launched by the Yoshida family, which for decades has dominated Japanese racing and breeding.
Darley, almost certainly will be issued a JRA owner’s license, but it will be interesting to see which other large-scale international Thoroughbred operations will apply. According to Teruya Yoshida of Shadai Farm, the Niarchos and Wertheimer families have been breeding mares in Japan for a number of years and could be among the early entities to apply for a JRA license.
The rule change is not expected to allow horses that began their careers outside of Japan to participate in JRA races, with the exception of graded stakes, which are now open to foreign competitors. It wasn’t so long ago that the only graded stakes open to international horses was the Japan Cup.
UPDATE: Louis Romanet of France, who chairs the International Federation of Horseracing Authorities, reminded me that the JRA’s agreement to open up the licensing of owners to non-Japanese was part of the agreement that allowed JRA races to be recognized in Part 1 of the International Catalogue Standards book published by the International Catalogue Standards Committee. That means JRA graded and stakes races are recognized for black-type in Thoroughbred auction catalogues around the world.
SPEAKING OF TERUYA YOSHIDA, the master of Shadai Farm said the recent turnabout by the once-shy stallion War Emblem is nothing short of a “miracle.” War Emblem, the 2002 Kentucky Derby winner who was purchased for $17 million by Shadai from the late Prince Ahmed’s Thoroughbred Corp., barely had 40 foals from his first three crops, and produced no foals in 2007 or 2008.
This year, with the help of horse behavior specialist Sue McDonnell of the University of Pennsylvania’s New Bolton Center, War Emblem appears to have overcome his breeding shyness, and now has about 30 mares in foal, according to Yoshida. “We are breeding him every month, at least one mare per month,” Yoshida told the Paulick Report. “We hope to breed him to as many as 60 or 70 mares next year.”
The improvement in War Emblem’s attitude (the problem was never infertility, but disinterest in breeding) could not have come at a better time. Just last month, War Emblem was represented by his first Grade 1 winner when Black Emblem won the Shuka Sho at Kyoto Racecourse.
“War Emblem’s best horses are just like he was,” Yoshida said. “They are very fast early and are dangerous if they are on the lead by themselves.”
YESTERDAY’S REPORT FROM THE TOKYO RACE COURSE mentioned an encounter with Michael Dickinson, the former trainer and founder of Tapeta Footings who is exhibiting his product at the Asian Racing Conference and appearing in a panel discussion focused on synthetic tracks. Dickinson, in his first visit to Japan, is notorious for walking turf and dirt courses to get a feel for their composition, and was eyeing the Tokyo Race Course grass surface in hopes of taking a stroll after the races were completed on Sunday.
The "mad genius" did, indeed, test the grass surface, calling it a "very firm" course. Did anyone really think he would come this far without walking the course?
By Ray PaulickI knew I wasn’t in Kentucky anymore when I went out for an early morning walk and came across a group of about 20 people standing at a nearby intersection. It was only a two-lane road, and there wasn’t a car in sight in any direction, yet everyone stood patiently for what seemed an eternity, waiting for the crosswalk light to change from red to green.
I resisted the temptation that any American who’s ever jaywalked across a city street surely would have had.
When the light changed, everyone broke into a brisk walk, as if, all of a sudden, they were in a hurry. It is one of the strange idiosyncrasies of the people of Japan, this nation of talking elevators, American fast-food, on-time trains and silly television commercials. Its natives honor Japanese laws, yet many of them complain privately about the nature of their traditions.
I’ve come to Tokyo ostensibly to cover the 32nd Asian Racing Conference, which began on Sunday with a trip to the Tokyo Race Course and runs through Thursday. (The time frame of some of my reports may seem a bit odd since I’ll be writing in the past tense about days that haven’t yet arrived in most of the U.S., since Tokyo is plus 14 hours from Eastern Standard Time.)
In truth, however, I’ve decided to cash in some frequent flier miles and come to Japan to meet and hear from officials representing racing countries that have faced challenges, worked cooperatively and developed strategies they hope will succeed and help them grow and prosper. I’ve come for a shot of optimism after nearly drowning in the sea of pessimism that saturates American racing these days, where the efforts seem to focus on stopping the bleeding and the only strategy relies on subsidies from other forms of gambling. Most American tracks have given up on the idea that they can be competitive anymore.
One example: In Hong Kong, where the stock market has fallen by nearly 50% in the current financial crisis, betting is off by about 6%. But the Hong Kong Jockey Club, instead of wringing their hands over the dreadful economy, has developed a new program to give bettors a 10% rebate on individual losing bets that exceed a certain amount.
Another story: When on-track business peaked at Japan Racing Association tracks in the mid 1990s, the JRA looked at its aging flagship track, Tokyo Race Course, and rebuilt the main grandstand, giving it a much more inviting design, one that in some ways resembles the Forum Shops of Caesars Palace in Las Vegas. When they began losing fans, their strategy was fixed on giving on-track customers a better experience.
There are more than 600 delegates here from at least 30 countries. The Asian Racing Federation, which presents the conference, consists of racing nations from Asia, Australia/New Zealand, Africa and the Persian Gulf. These countries represent 36% of the world’s prize money, 32% of the international foal crops and 47% of global wagering on pari-mutuel racing. Europeans and Americans are welcome to attend the conference, though only a handful of them do. Only five Americans are scheduled to be here, two of whom are journalists.
Among those I ran into at the track was Michael Dickinson and his partner, Joan Wakefield, who are here as exhibitors for Tapeta Footings, the synthetic surface developed by Dickinson that has been used so successfully at, among other places, Golden Gate Fields, Presque Isle Downs and the Fair Hill Training Center in the U.S., and as a training track in Dubai. Dickinson, of course, is hoping to find new clients among the Asian Racing Federation’s membership.
It was the couple’s first visit to Japan, and as someone who’s been to Tokyo a number of times for the Japan Cup and other major races, I gave them a walking tour of the massive, yet elegant new building. They were amazed at the cleanliness and bright, friendly design, the variety of comfort levels, and the size and length of the nine-story main structure, which is nearly a quarter-mile long.
In the bowels of the grandstand, there is a maze of tunnels for horses to use as they leave the paddock, go onto one of the three tracks, or return to the stable area. We took one tunnel up to the winner’s circle, where Dickinson gazed wistfully out onto the main turf course and dirt track, desperately wanting to walk the courses to get a feel for them. The former trainer is a man long obsessed with the conditions and safety of racing surfaces, and his new calling as a proponent of synthetic tracks comes to him naturally.
“Do you think it would be okay for me to walk out there, after all the races have run, just to see what the dirt and grass tracks are like?” Dickinson asked. And he wasn’t kidding.
I’ll try to find out tomorrow whether the man known as the “mad genius” found his way out there to sample the footing of the Tokyo turf and dirt. I’ll be reporting from inside the meeting and presentation rooms of the conference, and working the unofficial meetings and break rooms for the latest news and gossip throughout the racing world.
I’ve come here in search of some optimism for our sport, to learn more about how other countries have achieved their success. I’ll be disappointed if I return home empty handed.