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SA Racing – The State Of Play

What now? Bottom up?

It is by now well documented that the horseracing industry and all its peripheral industries find themselves in dire straits, perhaps the greatest of crisis in the last 30 years, certainly since corporatization took place.

Many past experts, would be, want to be and actual experts have eloquently and not so eloquently been vociferous of their dissatisfaction with the current state of affairs using various forums and media platforms available, writes Paulo Do Carmo.

The voices are loud. What and whom has led us to the current status, and the disastrous path, down which we could potentially be heading has been discussed, finger pointed and announced with resonating echoes.

The reality is that the current status has been shaped by historical events, acts and omissions that were perpetrated over a long period of time and by the leaders of every one of these peripherals – all whilst the relevant stake holders (us), stood idle and inactive, a stark reminder of Nero fiddling whilst Rome burned.

Rome was the epicentre of the “world” at the time – What of racing?

There are many out there making suggestions – laymen, stakeholders of many origins and forms, on how it can be saved, changed, moved forward.

Some are meeting in secret, within closed networks, non inclusively and continually avoiding the lower ranks of the industry.

Several still in love with the idea of the Great Leader emerging, if only because we like reading biographies and fantastical history – focused on the myth that a perfect, virtuous and incorruptible leader will emerge from the clouds or the falling debris of what was once a thriving industry.

This has happened before, and never in a more extreme manner, than with the recent emergence of one Markus Jooste, and whilst many vilify and others defend, Markus Jooste for all his alleged crimes and doings, merely delayed the inevitable for an already obvious state of affairs, supporting a false economy within various sectors of the industry with allegedly ill gotten gains – the recipients continued with open arms and oblivious to the required action, aside from the blessing of the time.

The downward spiral of the racing industry had begun, albeit subtly, long before Markus Jooste was in full swing.

The fact is that we all ignored it and currently no-one has a definite plan or a clear cut strategy to present for support – not least the incumbents.

The incumbents is where it all starts – or so seems to be the conventional wisdom.

Factually though, it is known that in business, management and general organisational scenarios, “top-down” is always bad, “bottom-up” is always good – so why do stakeholders believe the good, the bad and the evil all starts with the incumbents (PGL. Gold Circle, The RA, NHRA and the Gambling Boards)?

Perhaps it does, because with them sits the ability to empower and enable the bottom up – the inclusion of the bottom for the betterment of the top.

We can say that markets are a system of mass cooperation. You compete with rivals, not blame them for your short-fallings, but you cooperate with your customers, your suppliers and your colleagues, even your competitors.

Business both needs and breeds trust, and in respect to all of these, the incumbents, and all of us who identify ourselves as stakeholders have failed miserably.

Jeff Bezos’s (of Amazon fame) favourite saying is – ‘Start with the customer and work backwards,’ (bottom up) – and it is repeated and used as a mantra by all of the 650 000 odd employees globally – something for today’s racing incumbents to ponder.

Let’s pick on one of the incumbents for a bit, just a bit, without of course exonerating the others who befall the same ills – lets pick on PGL, who is the one charged with the foundation task of putting on the show, collecting, promoting and operating the systems that generate betting revenue, that in turn funds, a part of the regulator (another incumbent), the stakes for which owners race for, pay jockeys and trainers. Fund stabling, tracks, transporters, and a large myriad of support services that make the whole thing happen, at least in 4 of the 5 provinces that racing takes place in SA.

PGL, who recently claimed the potential of liquidation, has historically blamed competitors for their shortfalls, be they turnover, taxation, attendance figures, rather than look within for solutions.

The time, effort and resource, both human and financial, spent on this, has surely been detrimental to the solution provision?

I have yet to hear a local football club blame racing for a lack in attendance, or a fellow DSTV channel complain about the migration of viewers from their channel to Tellytrack, or a bookmaker blame the tote for the loss of clients, or a betting shop for the loss of customers to the local tote, or even a casino for their declining numbers because horse racing was attracting more players.

Turffontein

Yet PGL famously and publicly bemoans the fact that the challenges faced by these factors are affecting performance (almost every annual report without fail) – this is myth.

Competition is natural and stimulates growth, not impairs it.

As a more venerable example, they have used the Open Bet debate as propaganda for several years now, using several ploys to ensure compliance by bookmakers and other competitors, expanding valuable resources and creating negative perception amongst industry peers.

All this without once consulting with the customer, as to why this process exists and/or is used by the customer. Then providing a problem solving solution.

At the end of the day, we all know that a customer uses the Open Bet or ANY bet because of convenience, service, seamlessness of interaction, sometimes credit and comfort – what has PGL provided as a counter solution? Propaganda.

In the end the customer and markets will determine – as they have – the industry has suffered loss of revenue.

Turffontein

Without harbouring on the PGL shortcomings, these “performance challenges” without sustainable and viable solutions, addressed with time and money spent on propaganda and legal exercises, were paralleled with PGL becoming the darling of the JSE in dividend payouts – both in regularity and percentage as ROI – challenges indeed.

Shall we say that perhaps PGL has socialised the cost amongst the industry and privatised the reward to a small group of shareholders, to the detriment of industry stakeholders?

We could go on, but lest we harp on what has been said before, let us focus on a few small steps, and just in case everyone else thinks they are free from blame, and only the incumbents are guilty, remember “bottom up” – you are all in it:

  • Customer First…listen, co-operate, satisfy. If we start here, we are truly at the bottom and the trajectory will be clear. Tote customers, Fixed odds customers, owners – ALL customers.
  • Co-operate with your competitors – believe it or not, bookmakers are very friendly with each other, somehow avoiding collusion. Even casino operators seem to mingle and exchange ideas on a regular basis. Listen to operators who are willing to channel Tote turnover for a few % more, as opposed to total loss of revenue.
  • Innovate – Don’t complain about numbers and lotto’s and casinos, provide similar or better products – safely and reputably – Imagine betting on Roulette?
  • Share – not only with shareholders, but with those that provide the pieces needed for the puzzle to come together. Literally from Haymaker to Award winner.
  • Lead by example – Crying financial wolf at the door and calling for austerity doesn’t look good when hosting officials at premium levels. Austerity, like charity, begins at home.
  • Use technology – Use technology, Use technology
  • Allow the market to dictate – do not dictate to the market. Customers do not need cows or cases of water, they need safe, comfortable environments, with better payouts – touchy one – less take out. In times of yore most of the so-called robber barons got rich by cutting the price of goods, not raising them. A lesson for the incumbents.
  • Allow for oversight – Real oversight, not by non representational organizations, or conflicted ones that are paid to regulate the entities needing the regulation. Remember William Easterby said that “The real cause of poverty today – now that it is avoidable – is the unchecked power of the state against poor people without rights” – This holds true to business.
  • Regulate – Protect the integrity of the sport, really do – not by just by fining the trainer, but by ensuring those in the sport earn a living wage (not a minimum one), that stakes are proportionate, that Associations are really associated – to everyone, that everyone is inclusive and that the rules are the same for everyone. Let the regulator be subjected to the oversight above – nothing speaks louder and clearer than transparent rules and open books – remember “from the people, by the people, for the people”? ALL of the people. Why is my groom who slept with my expensive horse, whilst he was sick and feeds it and has access to it everyday, not licensed, not known, not protected, not have a say? ALL of the people.
  • The Pipe – Think that perhaps the “pipe” supplier is the model going forward. Provide for an infrastructure that allows third parties to “plug-in” to the “pipe” and provide services. I venture to say that most bookmakers employ larger technical resource than PGL or GC or NHRA or the RA or any of the Gambling Boards – in case anyone hasn’t noticed, technology is the way forward – allowing 3rd part access to the “pipe” will not only allow for the technical innovations to rise up, but for fertile ground for ideas and innovation to develop – all in all raising revenues and profile.

This all sounds rather easy and we could go on and on, and if anyone else was writing this, the pages would fill like a dam on a torrential night, it does need implementation and for that to happen it needs a willingness – from ALL – hopefully to do it bottom up, because the beauty of business is that when it works it rewards people for solving other people’s problems.

It is ‘best understood as an evolutionary system, constantly creating and trying out new solutions to problems in a similar way to how evolution works in nature. Some solutions are “fitter” than others. The fittest survive and propagate. The unfit die.” – Ridley

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20 comments on “SA Racing – The State Of Play

  1. M9chael Jackson says:

    A very good article that gets to the nub of the problem. Instead of ” it’s the economy, stupid”, the racing establishment should realise ” it’s the punter, stupid!”. When every stakeholder realises the importance of the PUNTER, then racing will start improving again. The punter bets, which results in pools, stakes, take-outs, income, salaries, etc. All of this money comes from the punter. The punter funds the industry, not the owner, not the trainer, not the breeder not the operator, not the RA. If punters don’t punt, then there are no stakes for the owner!

    Instead of having a meeting with the RA members and owners, the establishment should have a meeting with the punters and ask us what is wrong with the industry! Then maybe this industry can be saved. But I doubt that would happen. Owners, trainers, operators are too arrogant to engage with the people who really matter, the punter!

  2. Chris Swart says:

    One of the very best articles I’ve read on Sporting Post in many years.

    This is exactly what the industry needs to hear and start operating by

  3. Emmie says:

    Well written! I

    It is for all involved parties to own up, stand up and get involved.

    The customer is king and if we do not understand their needs by listening to them, understanding it and make them feel part of the racing family, we will fail.

    Cost needs to be contained but not just from the bottom up…..races and stakes are cut. Can the top come to the party as well? That will go a long way to winning back some trust.

    Grooms need to be educated, taken care off. Your biggest asset is your staff; however trainers struggle to make ends meet and help owners to afford keep. Trainers and grooms work long hours… and when an owner say they cannot pay keep as they are on holiday it somehow do not feel right. Technology enable them to post holiday pics on social media…a bank app is not hard to use. Stables do not close during holidays….horses need to eat, staff and bill’s need to be paid. Please spare a thought !

    Jocks are professionals in a dangerous sport, maybe think about the fact that they have to make split second decisions.

    Owners pay and pay. Talk to them, respect them for what they do for the industry. Thank those who pays keep promptly. Do not waste their money and time.

    Most owners came into the game because they were exposed to racing as children…they learned to love horses, the race days…. are the current market campaigns geared towards the right target markets…… to spend a lot of money to bring “once off” wannabe celebs to a party where they leave not knowing which horse and jock won the main race! The same one where the noise caused a favourite to be scrathed.

    Breeders keep us in horses and also need to be paid on time. These people work even longer hours and are out all our of the night to make sure mares and foals are well.

    Our punters are just such a special part of this industry….every Rand counts. Treat them with respect. These people bring our next owners ….the kid who accompany a parent, family member or friend to the races.

    Our horses need fair chances to grow and mature. You have an amazing living four legged wonder. Be patient, allow time to learn grow and mature. Allow time to heal when injured. Allow professionals to help you understand their problems, the cost involved and the time needed.

    There is no saviour. We need to stand up, be responsible, be willing to share the pie, work together to make a larger pie…then every one benefits. We cannot keep on closing tracks, cutting down on races and stakes. We need to work to increase sales by presenting an open honest industry with positive marketing. No one wants to support a supplier that keep on complaining….customers buy where they feel welcome and where their business ,big or small is appreciated. Remember, the small punter, owner, breeder, trainer are leaving a legacy…. new owners, trainers, punters etc, who understand the industry, are passionate and want Racing to continue for their children.

    We need fairness….. rules must he the same for all and to the benefit of the industry.

    We have the supporting industries, so many people so many wants and needs.

    We have the future of racing in our hands. Handle with extreme care.

  4. Brendon says:

    Excellent piece and well said Emmie.

    Great piece for the new management and leadership to take note of.

    PGL management had a slightly different take on Bezos’s mantra, which they were clinical in executing:

    ‘Start with the customer and work backwards”

    Not quite sure how much more backwards the PGL management team wants to take this industry.

  5. Shanil says:

    You simply covered everything that is not been done. Well written. Every punter learnt the basics of form study and betting either from an uncle, dad or friend. Today’s kids are not following their dad’s habits . So it’s time to market the basics to younger people . Not just social media but personally. Approach experienced punters to assist with structuring a simple trifecta swinger etc. For young people. Use national Tv like SABC and Etv slots for a previews and betting advice . And lastly the black market is huge . Get more black presenters on radio and tv to market the game in black languages.

  6. Leon Smuts says:

    Great piece of writing and equally excellent comments. The punter is and always will be the life blood of the industry and the primary source of funding in a successful racing model. A very different approach is needed in future to create new interest in the wonderful sport that racing is. Don’t focus efforts on creating hard core punters that spend every available cent on racing but rather build a completely new market consisting of entertainment seeking competitors that play not just for money but also for fun and prestige. Games should demonstrate the value of skill and promote skills development by rewarding skill and improvements in skill appropriately and should form the mainstay of any new product offerings. Make numerical growth in players the number one priority ahead of turnover based measurements. Turnover will take care of itself as skilled players are far more likely to expand their involvement over time. Create more winners more often and make the rules and the formats truly player friendly. The industry will benefit tremendously from having regular winners of bigger paying exotics and more winners daily. Racing needs to live up to it’s old mantle as the brain game and should position itself as the game of choice for a winning involvement. Treat new and existing punters with the respect that they deserve and make them feel special in every way. The customer is king.

  7. Tex says:

    Top article Paulo

  8. Sam Naidoo says:

    A well written article. Hopefully someone in power listens as we love this game and do not want see it’s demise!

  9. Steve Reid says:

    Cracking post Paulo but do you think anyone is listening? The current executive at Phumelela would make Icarus look like a low altitude pilot.

    The logical starting point for change to occur would be to get rid of the Phumelela aligned RA and replace the current Uncle Toms with people who act in owners interests first.

    This is clearly assuming that there will be anything left to save.

  10. Muhtiman says:

    Good stuff Paulo, but not enough to get those heads out of the sand

  11. Roy says:

    Very informative article Paulo. Thanks. The customer, which is the punter in horse racing is the king. The punter needs the most attention in this sport. I believe that the customer base is quickly getting smaller. For two reasons. Firstly, through age, and inevitable death of old regular punters. Secondly, I am sure most youth are not interested in horse racing, although I can’t prove this with statistics. The youth are more interested in other sports like soccer, rugby and cricket. So the reality is that you have lost numerous customers through old age but you have not replaced the loss by attracting the youth, forget about increasing your customer base. This is the reason for the dramatic decline in the support . The industry needs to find some creative ideas to attract the youth. Wishing all the stakeholders everything of the best for the future.

  12. Graham Hurlstone-Jones says:

    Ah…Nero…..and bottom up not top down ( been calling it )…The restaurant with that bad service…..The reason SA racing is in this state is because of narrow self interests, everyone is in it to get a piece of the pie, the one that is served up by the punter every day, this has been going on for years, and the punter has been sucked dry ( and owners )…. don’t forget that tote as well, the manipulation does not stop, someone is having a laugh with the tote fav being changed all the time after the result. DO NOT DISTURB THE STATUS QUO……The whole industry is based on self preservation but now the trough is not so full ( no investment just take what you can but don’t put back anything, nothing..name me anything that is given back to the punter…ever ?? but you see everyone else on Teletrack doing really well off the back of the punter, the same lot all the time and punters see this )……The punter has walked away. That export protocol will enhance the “top” ( that is all they are waiting for ) then you will see racing as a true us and them. Elitism will be entrenched. The man on the street will be priced out of racing. Has anything changed ? The men with many hats are still there, life is still carrying on and the “top” will never let go ( self preservation ). I can tell you now the punter will not be going back any day soon…..the whole lot stinks. The P6 coupling being dropped was purely done to “control” pay outs ( no consultation ) so the Spectacular feature days are financed by the punters and then have to pay through the nose to try and get there money back. The carryovers have turned racing into lottery….( I wonder if anyone is actually listening ). The “top” really think if the “bottom” are winning it is coming out of there pocket ( it is exactly how the ANC think )…they think it is their money, they don’t understand punters will walk when they know they are being taken……The extreme results that no one seems to know except the few select and fit nicely with doubles and trebles but trainers are just a s surprised !!??……of course they are, it’s been going on for years….next race in 30 minutes. Horse racing in SA is now a lottery, no form required just put fields in according to the experts on tele track……and hope you spot the “pattern of the day”…….( today is Matchetts turn I see, never one winner at 33/1 must be the double or treble, no form whatsoever but there it is)….Dont worry the punter is a fool but the industry depends on that….

  13. Emile says:

    What about the farce,with carryovers. You invest in a pool at a racing center and the operator takes your money if there are no winners.

  14. Andy says:

    There are solutions to every problem. Funny how, as an intelligent species, we continue to be unable, even unwilling, to see the obvious. Example 1 : Climate Change is caused by the over-exploitation of our planets resources. The experts cite a plethora of solutions, but none of them can see that the problem is caused by over-population. Resolve that and all the planet’s resource problems simply disappear. Example 1 was purely a demonstration of how everyone keeps missing one of the biggest KEY FACTORS killing the business that is horse racing. Example 2 : The Rake. I could write a thesis on how “the rake” in any gambling environment is key to its survival. Apologies if my figures are slightly inaccurate, but via the tote in SA horse racing, the rake is roughly 25%. This massive number means that so little is actually being returned to the punter that it impacts extremely negatively on turnover, because the punter has nothing to re-invest, hence the business DIES. The Rake should be massively reduced to stimulate and re-invigorate turnover. Start by explaining to the gambling boards that they have to come to the party. Reduce overheads to be able to reduce the percentage rake. After all, 25% of R100 million = R25m. Reducing the rake to just 10% would have the effect of quintupling turnover to R500 million, and 10% of R500 million = R50 million. It’s not rocket science, any business must spend less than it gets in. The reverse is bankruptcy, which is where every badly run business ends up.

  15. Head Scratcher says:

    I beg to differ Andy. The planet has never been overpopulated. Mankind has a unique ability to maintain itself ahead of the dangers that are ever present. That is what makes us human, an ability to out-think our environment and utilise scarce resources in a more efficient manner. I wonder if you realise how contradictory your opening and closing statements are?

  16. Graham Hurlstone-Jones says:

    I did not know it was 25% thats a big return, why would you want to kill the goose ? Feed the bugger ! it should be symbiotic. I will disagree with you on climate change……Climate change is Sun driven but thats another story ( just like racing we are fed very bad information to keep up the narrative ) you can fit the whole worlds population in New York just to put the number into perspective…..they use “overpopulation” to spread fear…..it’s simply not true. Who determines what number “overpopulated” is ?…Its the biggest fraud with the CO2 lie….a bit like PGL…..

  17. Les Hale says:

    Brilliant article wish all concerned would read it and take action

  18. Edwin says:

    Let me add one more comment. The black market is huge. Potential untapped. Can we attract them to the sport of kings? Let’s pose the following questions. How many black commentators do we have? How many black on course presentators do we see on telly track? Racing awards presentations? Form analysts?

  19. Louis Goosen says:

    Paulo has been in this game since he was a youngster. His racing experience, knowlege of all facits of racing and passion for racing together with his huge knowlege of technology is what created this brilliant article.

    I know that over the years he has put forward many brilliant solutions, only to be ignored. It is mindboggling that he has not been brought into the think tank.

  20. WILLIAM MILKOVITCH says:

    Well said Louis, the major stakeholders have claimed over the years that their doors are open but any suggestion contrary to their “Bubble Boy” mindset is dismissed & smirked upon.

    Paulo’s article, for me, is like a tracing paper record of my thoughts and experiences since 1979.

    Well Done Paulo for taking the time to put pen-to-paper . Sorry, fingers-to-keyboard.

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