Stuart S. Janney III: This conference has often featured speakers from other racing jurisdictions around the world. Today we're very pleased to welcome Simon Bazalgette.
Simon is responsible for the strategic direction of The Jockey Club -- not ours, theirs -- which is the leading commercial group in British horse racing. He has held that role since 2008.
The Jockey Club of the U.K. has made the customer experience one of its top priorities, and today Simon is going to share some history of The Jockey Club and some of their customer growth strategies focused on how they have acquired and expanded racetracks that might have otherwise been lost forever.
Simon, thank you.
SIMON BAZALGETTE: Thank you very much, Stuart, and thank you to Stuart and Jim for the invitation today.
One of the things I wanted to start with when I was thinking about today was being introduced as The Jockey Club of England or The Jockey Club U.K. by what I think of as The Jockey Club U.S. But, in fact, we're both called The Jockey Club, so it reminded me of that song you may all know about "You say tomato, I say tomato." †I'm not going to sing it for you, don't worry.
But I did think is this an issue we need to sort out, is this confusing, having two jockey clubs with the same name. So I wondered how we might sort that out.
I looked through The Jockey Club art archive. We have a very old art and photographic archive. And I found this. I found this early picture. And I wondered if this was perhaps the way we could sort things out.
You may know that the history of racing, the history of The Jockey Club, the UK Jockey Club and racing really started with match racing. It wasn't that quite kind of match racing, but effectively where people wanted to have a bet and see whose horse was the best. It wasn't the kind racing we have today.
In fact, just to own up, this is, in fact, a picture from a Warwick Castle, which is a big castle, one of the U.K.'s most popular tourist attractions, which is next to one of our racecourses, Warwick Racecourse.
In fact, my theme today is going to be more about we should work together, not be fighting. Collaboration, we've certainly found it in the U.K., I think now globally, needs to happen to promote racing the best we possibly can.
So I'm going to talk a bit about the history of The Jockey Club and how we got to where we are now, what we do today, and some thoughts about the future and perhaps how -- the kind of things that we should all be thinking about.
So The Jockey Club was founded we say since 1750. The truth is it was probably formed before that. We don't have the records to say exactly when it was formed. But we know it existed by 1750.
It was part of a circuit of the royal court, which used to go around the country racing in different parts of country, but a particular favorite was Newmarket Heath. And in 1752, The Jockey Club existed and formed and built a center in Newmarket and decided, after a couple of years in Pall Mall in London, that Newmarket was the place for it to be. And they started codifying rules for racing, which effectively kicked this whole sport off for all of us.
So this is the coffee rooms that they built in 1752, The Jockey Club rooms in Newmarket. King Charles IIís palace is about two streets away, two blocks away from there, when he used to stay in Newmarket, and about a hundred yards down the road from his palace is a house where Nell Gwyn used to live, who you may know as one of his mistresses when they all came to Newmarket.
But this is our spiritual home. And as you can see, it's a fantastic place with a history of the sport all over the place, on the walls. We have a fantastic art collection including pictures by Stubbs. We have one of Eclipse's hooves, which was turned into a snuff box in the 19th century. We believe it's one of only four or five of his hooves that exists.
So, effectively, from creating the rules, effectively those rules got adopted around the U.K. and eventually around the world. And our role for the next 200 years was really the governing body of the sport in the U.K.
We've been very lucky in the terms of our membership. Many members of the royal family have been members and remain members of The Jockey Club. And we've had six prime ministers as members, including Winston Churchill, whose picture sits in The Jockey Club rooms, and he was very involved in the starting of the tote, which was the first legal betting operation in the U.K.
So that's given us a very high level of influence in British society for the horse and for racing, but let's jump forward to the 1960s. In the 1960s, racing was in a bit of trouble. A number of racecourses closed and were due to close, and there was quite a lot of concern about that.
So some of The Jockey Club members got together and rescuing racecourses, starting with Cheltenham, and over the years created a trust, the Racecourse Holdings Trust, which has now become what we call Jockey Club Racecourses today, which I chair, which is the biggest racecourse group in the U.K., and effectively became a very successful turnaround specialist for commercial businesses that needed help to support but were very important to racing.
Our turnover today is over 200 million pounds. That's doubled in the last ten years as we focus more on the commercial side of the sport. And that's from investment in our facilities, investment in the business, and allows us to put more back into the sport.
So let me just give you a taste of what that looks like, of what we're like today, if we can play the film.
Thank you. So that's how we present ourselves. And one of the really important messages for us, both for ourselves but also for our customers, is that we don't make money for the sake of making money. We don't make money to go back to shareholders. It's all about reinvesting in the sport for the good of the sport. And our mission and vision is all about the long-term sustainability and success of horse racing, and you can see that there.
How do we do that? You can see some of the ways we do that. We invest in prize money. We invest in facilities. We work very much with other stakeholders in the sport. We are the biggest commercial operator in British racing, but still only about a quarter of the racecourse side, and our members, about 150 Jockey Club members who are effectively our owners or, if you like, trustees, are very much horsemen.
So we represent the wide breadth of racing, but we need to work with all of the stakeholders for the long-term good of British racing.
That's our driving vision. So what is our structure? The core of it really is Jockey Club racecourses, 15 racecourses in the U.K. We run four of the British Classics, four of the five British Classics, plus two of the biggest jumps racing festivals in the Grand National and Cheltenham Festival.
About two million people a year come through our racecourses, and about six million go racing in the U.K. every year. That's the second most attended sport in Britain, so that puts us in a very strong position, but there are challenges around that as well, which I'll come to.
We run several of the really important training grounds and training facilities in British racing -- Newmarket, Lambourn, Epsom, and we have about 3,000 acres of training land. We own The National Stud in Newmarket, which is also a very important educational establishment for stud and stable staff around the world. We have our charitable arm, Racing Welfare, which is really focused on people looking after racing's people.
But also very importantly, we work in joint ventures in a number of things, which are very important to us. Racing U.K., a racecourse media group which manages all of our media and data rights for us, and about another 20 courses or so.
British Champion Series, which was something we created really to try to compete with the big end-of-season flat meetings around the world, like the Breeders' Cup, and theArc, and create a British Championship day.
And Jockey Club Live, which is our music promotion arm. We put on about 30 big summer concerts every year alongside racing. We think that makes us the third or fourth biggest concert promoter in the U.K. Thatís not something people would normally associate with The Jockey Club.
And I was just looking at one of our directors dancing onstage with Chic and Rodgers at Newmarket on Friday, so I know he had a good time. It was sold out, so that was a very positive night for us.
So how have we gotten through that over the last 10 years? 10 years ago is when -- or 11 years ago now is when The Jockey Club finally gave up the last vestiges of being the regulator in the U.K. It gave up being the governing body in the '90s, and we became a purely commercial body at that stage.
And that was very important point for us and for, I think, British racing, because effectively we decided that we needed a modern governing body, which we created in the British Horseracing Authority. But we also decided that The Jockey Club needed to bring its commercial assets together for the good of the sport, because, as we know, if you really want to drive sustainability, commercial sustainability is the most important part of that. If you're not making enough money to survive, you're always going to have problems.
So that was what really led to our commercial growth over the last ten years. And, really, it's not rocket science, but I think it was something that† needed saying in the U.K., and I think maybe around the world still does in many places.
We have to keep reminding ourselves that at the heart of it is the customer. Who are our customers? We have to work out who they are. There is a whole range of them. It's not just racegoers. About 40% of people in the U.K. watch racing on television at some stage of the year. Obviously you have a lot of people who bet on racing who may never actually go, because these days you can bet on your phone in the U.K. And that's all coming here, I know, in the near future.
So these are the kind of things that we have to focus on to really understand the customer and then invest in the experience that they get to make sure that they have a great time and they want to engage with racing and come back.
So I'll show you another film. This is the way that we try to bring that alive for our customers.
One of the things you'll notice in there is that we talk about a lot of brands we work with, and we're increasingly working on The Jockey Club as a brand and British racing as a brand. We have to bring brand thinking to what we're doing, and I'm going to talk a bit more about that in a minute.
One of our real challenges, though, is although we get lots of people that come racing each year in terms of numbers, a small number of people come a lot, but most people come once or less than once a year.
So we have to work on a model of where do we find people, where do we acquire them, how do we retain them, and how often can we make them come, and we have to work out where we're going to put our resources in terms of this pyramid, and that's something that changes depending on different types of events and different race meetings. But this is a model, again, that I'm sure everybody has to use in the consumer world.
But the key to it is we have to engage people in the events and in the sport. And I think this is a theme that I'll come back to, because I think it's something that we all, in the end, in the long run, need to be doing. We have to be doing it in a way that's not too technical or too dry, but we are now competing for customers' time and money and interest.
There are other sports. There are other leisure, entertainment events. There are other things they can bet on now. In the U.K. that's been true for a long time, and that's coming here as well. That means you can't lead with have a bet, come racing. That's not good enough anymore. It's got to be the other way around. Enjoy racing and have a bet on it.
So as you'd imagine, there is a huge amount of data analysis and research that goes into this area. I'm not going to go through it in a lot of detail. But it becomes increasingly important.
How do you engage people? First thing, you have to understand them. Not just the people that come racing, but the people that don't come racing. Why don't they come? Do they have any interest? Are we hitting the right people? Are we hitting the same people over and over again? How do we do it?
Digital content is a big growth area, as I think we've already heard. If we can get people more engaged in the sport, more of them will come racing, more of them will watch it on television, more of them will own horses and syndicates, in particular is a big area that we're focused on in the U.K. to grow the horse population, horses in training.
More commercial partners want to be involved, and more betting on the sport. So we have to now go back to first principles and say let's engage people in, if I was a consumer, marketing the product, i.e. racing, and then everything else would grow from that. If you try to jump in one of these levels, you'll be missing a fundamental building block that's very important in the competitive market.
The more profits that we can create, the more we can put back into the sport, and we do that at all levels of the sport. This is not just about the top end, though that is very important for the promotion of the sport, but also in the grassroots.
So I just want to canter through some of the successes and challenges that we face at the moment. This isn't intended to be an exhaustive list, but it's a mix of some things that are specific to the U.K., but also, I think, have some wider relevance.
It's always nice to talk about successes first. One area where we've been successful over the last ten years, both in The Jockey Club and in British racing, is in the financing of the sport and the way we use media, media rights, data, and the way we've done marketing and presented the sport. We've solved some fundamental structural issues, regulatory issues around how the betting industry helps to fund British racing. We had some issues there. It's called the Levy in the U.K. And that was resolved last year by the government after years of lobbying. And that's allowed prize money in the U.K. to get to record levels this year.
Another area which I think is really important, and we've been focused on working with our stakeholder partners in the sport in the U.K., is structure in lots of ways. But at the highest level, how is the sport governed?
And effectively the model we use in the U.K., which I think is really going to stand us in good stead over the next few years, is this tripartite structure between the stakeholders in the sport, racecourses, really, the commercial engines of the sport and the venues, the participants, the horsemen, all the elements of the horsemen's group that effectively need to be involved there, the people providing the athletes, if you like, that allows us to put on the show, with the support of the governing body to make sure you don't end up into a deadlock between the two.
There is always a way of resolving issues, and we formalize the structure in a way that's still -- we're still working through some of the details of that, but I think that's a really important element.
In any business, governance is really important. When you look at sport in general on the whole, I would say sport is not a great example of good governance. But in the U.K., certainly this is a model that would really work well for us. But also other areas of structure -- creating British Champions Day, moving things around in a way that still preserves the heritage and the excitement and the things that really matter but make a more compelling proposition for the customer.
Another area for us which is really important, again, I think this is really fundamental to any business and any racing business around the world over time as we all have to compete in a more open market, is reach. How do we get to people? We're very lucky in the U.K. We've always had very good media reach, and we're in very good shape at the moment. There are about almost 100 days covered by probably our most significant commercial broadcaster, ITV.
These days it's not just about a channel. They have a package of channels, four channels. So between their main channel and one of their other channels, they reach, as I say, about 40% of the U.K. population with racing. And they put a lot of impetus in the last year or so since they took over the contract to really promote racing and promote on screen but also to their wider audience on ITV.
As a channel, they reach about 90-something percent of the population. So that's very important for us and something that we really have to protect and make sure we keep because if you lose that reach, then the top of your funnel starts reducing.
For challenges, I think one that we all have to face is equine welfare. Welfare itself, but also the perception of welfare. It's very easy for us to say, actually, we're very good at looking after the horses. We get better every year about how we look after them, the medical side, and looking after injuries.
But the truth is the 80 or 90% of the population that don't really engage, they don't know that, and they have a very simplistic view. If we don't deal with them, they're the ones who end up changing laws and getting things banned and those kind of things.
So if we don't get out there and get the message out to that wider group and we just speak to people who already know about racing, we could have a major problem coming down the line.
That is an area, again, which we're putting more and more resources in the U.K. I still don't think we put enough in as a sport, but I think we're building up on that, because this is probably our number one risk factor in the sport.
I said funding and finances were one of our successes; it's also one of our big challenges. Because having resolved what we thought was our big structural problem, the government then started cracking down on betting terminals in bookmaker shops, betting shops in the U.K. And we under our media rights deals get paid under the number of shops that exist. This is going to reduce the number of shops, reduce the amount of revenue that we get from the betting industry through our media rights, and that's going to be a significant problem.
So having hit a high in prize money, my expectation is over the next two or three years prize money will go backwards in the U.K., and we'll have to deal with that. Luckily at least we have the benefit of the changes that happened last year. But still, going backwards is never easy to deal with.
Then coming back really to the main theme of all of this is we have to be relevant. How do we get people interested? It's not just about having nice pictures and good events. People have to feel this is something they want to be part of and they want to engage with. That's what every other sport, every other leisure and entertainment business is doing.
You have to speak to people emotionally. That's why I talk about branding. We can talk about the experience. We can try to sell people why they should come racing. But the winners in any competitive environment were those with the strongest brand. Because what they're able to do is encapsulate something very simply and emotionally that people want to be part of without having to explain every step of what it is you're buying.
And that's the way we need to think. From a brand point of view, we can think about it from a U.K. point of view or individual country point of view, but we're in the global world now. So when we deal with people who have any kind of particularly commercial brands outside the U.K., they're not just interested in the brand of racing in the U.K., they want to know what the brand of racing is across the world. So that starts to give us all a bit of a challenge.
The good news for us is we've done some omnibus research over the last few years. In 2010 -- this is the general public in the U.K. -- we asked them which sports they were interested in -- well, we didn't. It was what they call omnibus research, so it was covering a whole range of things. People were asked what sports they were interested in. One in 10 were interested in racing.
So though we're the second highest attended sport, most people don't come because they love racing, they come for a good day out. So we're probably just about in the top ten favorite sports, even though we're the second most attended. So that's a challenge, but it's also an opportunity for us.
Luckily in the five years after that, that doubled to 1 in 5. Now, our revenues haven't yet followed that trajectory, but that gives us some hope that the revenues will continue to grow, because if we can keep people engaged and relevant to people in the sport.
We use a model like this. So this is effectively saying of the population, adult population in the U.K., about 50 million, how many people know about racing, how many are interested, how many might consider coming racing, watching or betting? The good news for us is †not very many people don't know about racing. And it's far too expensive to try to work on that 5 million. It's too small a group.
But we have a huge number of people who are aware of racing but haven't really thought about going. And that's an area where we think there could be real benefits if we could find a way of attracting a proportion of these people to become part of the 10 million people who we think could consider and come racing once a year.
That's where a lot of our marketing and digital database focus is these days. So part of it is what are the innovative ways or things we can do to engage people? It's not just about marketing what you've got. You have to think about new ways of engaging people.
Digital content, at the top of the list, is, as we all know, critical these days. I would say racing around the world, it's true in the U.K., culturally finds that quite a challenge. But the other side of that is, actually, we have a sport that is really, really well suited to, I think, digital content. We're all getting much better at that.
But are there other ways we can engage people in the sport? Can we create team racing? It's very hard as a sports fan to follow an individual competition. There isn't really a competition. Horses turn up, and, yes, from a racing point of view, we know how they get to particular events. But from a normal sports fan point of view, it's very difficult to work out why a horse just turns up for a race and is champion. That's not how any other sport works.
It's very hard to do that at the top level, but at handicap level, we think there is an opportunity to create a team racing concept. So that's something we're working on.
Why not run a race through the streets of a city? We've been working on this for a couple of years. We would have liked to have done it in London. But at the moment it looks like Paris will be the first place to do that. There will be a number of cities interested if we can prove that concept. We have a way of doing it where we think we can do that. We have a Safetrack that could be put down on a major street, like the Champs Elysses- in a day. You could race on it safely and take it up in a day.
Diversity, racing is not very good at that. We're very good at talking to ourselves or people like us, but look out there, the world is not like that. That's not our customer base. That's not the base of people we should be talking to. We need to do better on that.
Loyalty scheme, we have a fantastic loyalty scheme which has worked well for us to get people engaged with the sport, those who are fans and interested in racing to get them to come more. A whole range of different things we have to do. This is just some of them, but we all need to be thinking about innovations and new ways of engaging with people while still retaining the essence of what the sport is all about.
And branding. I talked about branding. A lot of the things I talked about werehow do we present the brand and how do we speak to people as a brand. That requires some consistency, and it also affects the kind of brands that we are seen with.
So I think you've seen the kind of focus that we have that we think is important in The Jockey Club and in the U.K. How do we get people more engaged with the sport, not just to come more, not just to bet more, to do everything more, probably more important than anything, to become perhaps a syndicate owner in horse racing.
So I have a call, really, if we want racing to sustain, grow and ideally thrive in the future, in the U.K. and U.S. and elsewhere, we must find ways to give more people a reason to care about it as a sport, not just as something to bet on or something to go to.
We're up against other global sports brands and entertainment brands, and we need to do more together to promote racing and make sure there is a consistent and strong messaging around that.
I think that's something we need to do in the U.K. I think it's the same challenge you have here, but some consistency around that and working together is going to be really important. So I'm really looking forward to meeting that challenge head on with you and with other racing stakeholders around the world.
That's what we've got to do. We need to leave Thoroughbred horse racing in a better state than we found it with a proper and healthy growth path. Thank you very much.
Stuart S. Janney III: Simon, thank you for a fascinating presentation.