HKJC chief discusses this and other major international issues in a special TRC interview
As one of the most influential racing administrators in the world, Winfried Engelbrecht-Bresges has a rare level of insight into the sport’s major issues.
Since February 2007, Engelbrecht-Bresges has been chief executive of one of the most admired and progressive jurisdictions on the planet, the Hong Kong Jockey Club. The not-for-profit HKJC is the territory’s biggest employer, with a staff of more than 26,000, its biggest taxpayer (accounting for more than 10 percent of the Hong Kong government’s income), and by far its biggest charitable donor.
Engelbrecht-Bresges is also renowned internationally -- as a member of the executive council of the Asian Racing Federation (ARF), which comprises 20 controlling bodies of racing in Asia, and vice chairman of the International Federation of Horseracing Authorities (IFHA). He has served as chairman of the Asian Racing Conference and oversaw the HKJC’s hosting of the event last year at what was the largest racing conference ever staged.
Before joining the HKJC as director of racing in 1998, Engelbrecht-Bresges, a graduate of the University of Cologne, spent six years as CEO of the Direktorium, the governing body of German racing and breeding.
Paul Haigh recently queried him on matters of international racing.
The impression many got from the Asian Racing Conference (ARC) in May last year was that Hong Kong is now ready to take a leadership role in world racing. Do you believe this, and if so what progress has been made in the last 10 months?
“I have long believed that internationalization of racing is key to the sport’s future and Hong Kong has always been committed to playing our part in making this a reality.
“There are a number of facets to this, including our hosting of the secretariat of the Asian Racing Federation [ARF], the fact that we sponsor the annual World’s Best Racehorse Rankings conference, the role we play in hosting the annual International Movement of Horses plenary session, and the time and expertise that our senior club officials contribute to chairing various IFHA and ARF standing committees, such as the Asian Pattern Committee, the IFHA Standardization of Raceday Rules Committee, and the Technical Advisory Committee.
“Another important dimension to our engagement at the international level is the assistance we have been able to provide to fellow racing jurisdictions.
“For example, we frequently receive requests for Dr. Terence Wan, the head of our racing laboratory, to advise other countries on how to structure and operate their analytical testing programs.
“We have also been happy to host visits from government figures from other countries and supply information on policy issues that will affect racing. For example, we have provided briefings to a number of overseas governments on wagering policy issues, and last year I was asked by breeders in New South Wales [Australia] to provide a submission to the government tribunal that was examining the issue of coal mining and its impact on breeding in the Hunter Valley region.
“The club’s executive director, customer and marketing, Richard Cheung, is chairman of the Asian-African Tote Association, which works to secure the links between the major operators in these regions.
“Hong Kong has also done as much as possible to support the work of the IFHA. As a vice-chairman of the IFHA, I have taken on special responsibility for a portfolio that includes improving our capacity to move horses internationally, and at last year’s ARC my proposal was endorsed that we enter into a formal collaboration agreement with the World Organisation of Animal Health (OIE) as a means of better tackling long standing issues such as the capacity of South African horses to be exported.
“Similarly, the club’s director of racing development, Andrew Harding, is made available as special counsellor to the IFHA chairman, and as the co-chairman of the IFHA Technical Advisory Committee. In 2013, we hosted the inaugural Longines World’s Best Racehorse award ceremony, and in 2014 the inaugural Longines World’s Best Jockey award ceremony.
“The message to take from all of this is that, at the world level, Hong Kong will continue to be committed to practical action which can help develop and strengthen our sport globally.”
Do you feel the Asian Racing Conference was a success? How many of the resolutions and recommendations put forward at that conference have been followed up at subsequent international gatherings of the sport’s administrators?
“With almost 900 delegates from 39 countries, it was the largest international racing conference ever held. Gauging the ARC by that measure, and by the extremely positive feedback for those who attended, the ARC was definitely a success.
“In terms of resolutions or decision making, the reality is that nobody can force the myriad different racing authorities to commit to a particular position. However, what can be done is to examine issues in an objective fashion and develop a consensus around what is necessary to meet the challenges and opportunities that face us all.
“Achieving this has been one of the great strengths of the Asian Racing Conferences over the years, and I particularly have in mind here the attention we have given to wagering as the lifeblood revenue source for racing. This has brought the focus on growth opportunities such as commingling, which we now see flourishing in our region, and on the mechanisms for ensuring an appropriate level of return from wagering operators to the racing authorities which stage the events.”
Do you think there is likely to be any progress, for example, on the proposal passed with an overwhelming majority by the (obviously non-binding) vote of delegates present that there should be a culling of black type races worldwide to increase their credibility?
“Effective quality control of the Pattern system is essential to its credibility. We have come a substantial way over the past decade to achieve this quality control, but it is still a work in progress.
“Several things are required here: unambiguous ground rules governing qualification for black type and the promotion and demotion of races, a globally integrated ratings system to support those rules, and global consistency of application of the ground rules. We will not see a dramatic reduction in the number of black type races in the immediate future, but once these elements are fully in place the credibility of the Pattern system will be enhanced.
“Regional differences in medication rules and how this is dealt with in terms of the global recognition of black type is a difficult conversation, but it is another issue that is pertinent to credibility.
“There is no room for substances such as anabolic steroids and I believe that only those races in which all horses are free from their influence should be given black type status. Moreover, the testing for such races must be undertaken only by analytical laboratories which meet a certain performance standard."
How much pride do you take in the performances of Hong Kong horses against international opposition and the high figures such as Able Friend and Designs On Rome have achieved in the international ratings?
“These performances are the product of a strategy embarked upon back in 2000, which aimed to develop our racing as a world-class product.
“It is worth remembering that our very first horse to make the rankings came as recently as 1998, when Johan Cruyff registered 115. By 2003, the number of our horses in the list had risen rapidly to eight and the progress since then reflects the commitment of the Hong Kong Jockey Club to drive racing in this city to the forefront of the sport globally.
“We are at the point now where Able Friend and Designs On Rome are currently ranked No. 2 and 3 in the world [Designs On Rome is equal third with Australian sprinter Lankan Rupee] both horses having begun their climb to the top in the 2014 BMW Hong Kong Derby.
“We had a record number of 23 horses in last year’s World Rankings, and the pride in these accomplishments is shared with all people associated with Hong Kong racing, particularly the racing fans.”
What is the explanation for this high achievement by horses from a jurisdiction with a small equine population? Is it purely the purchasing power of Hong Kong owners or do the methods of preparation at Sha Tin have something to do with it?
“There are a number of factors at play here, but the common strand is the commitment to excellence. You see this each stage of the value chain, beginning with the horses themselves and running right through to their training.
“Starting with the racehorse population, we set a cap on the total number of Hong Kong racehorses, and in terms of our import policy we have deliberately placed the emphasis on increasing the quality of new entrants. At the same time, by substantially investing in prize money and in the facilities and services that are provided to Hong Kong racehorse owners, we have created the incentives for our owners to source high-quality horses.
“We are also committed to providing the best training facilities that are achievable within the physical constraints that we operate under. This extends also to the investment we make to attract world-class trainers, and in structured vocational training for work riders, stable attendants, and assistant trainers.
“The standard of our racehorse trainers is plainly a major influence. Here the commitment to excellence is driven by the intense competition between our 24 trainers, which is reinforced by a performance-based licensing system.”
Hong Kong’s practices of administration, particularly as they relate to stewarding, both of riding offences and drug abuses, are frequently cited -- particularly in the U.S. -- as examples other jurisdictions should follow. Is this a source of pride for you?
“Our major focus is on how we are viewed by our customers, the majority of whom are within Hong Kong. We want our fans, and the Hong Kong public in general, to know that they can have absolute confidence in the integrity of our races. What gives me the most satisfaction is that the people of Hong Kong can take pride that this city’s racing is now seen as world class.
“So far as external perceptions of our racing are concerned, one important consideration is that our fan base is increasingly becoming a global one, and commingling will accelerate this. I am certain that Hong Kong racing’s reputation for integrity plays a significant role in the growing international appetite for our racing, both in terms of simulcasting and commingling.”
What problems need to be overcome elsewhere before their anti-abuse programs match Hong Kong’s lead?
“We are certainly not alone in our views on medication in racing – and the ARF actively promotes a common approach within our region. If you look around the world, there are many countries that are equally serious about ensuring the biological integrity of racehorses to achieve a level playing field in racing. While it is not a direct concern in our circumstances, the implications of medication-affected racing results on selection for breeding are also something that is taken very seriously in a large number of countries.
"Resourcing is a significant commitment. We have invested substantially in our racing laboratory, both in hardware and software, to make it at least in the top two such laboratories in the world. Rigorous sampling programs, both in training, pre-race, and post-race are also essential.”
How does the BHA’s new policy on drug abuse compare with the HKJC’s?
“Philosophically Hong Kong and the BHA have identical views on this subject – performance-enhancing substances such as anabolic steroids have absolutely no place in our sport. In practical terms, here in Hong Kong we have the capacity to achieve total compliance.”
There are many HKJC officials, including stewards, and many TV commentators as well as journalists who come from Australia. Do you feel that Hong Kong racing is becoming too Australianised?
“Not at all. The truth of the matter is that Hong Kong racing has its own clearly identified character, which has drawn the best talent from right around the world. The facts speak for themselves – the expatriate trainers and jockeys that are currently licensed in Hong Kong have come here from around the globe. The executive director of racing is from the U.S, the chief handicapper is from the U.K, our head of broadcasting and head of racing laboratory are both from Hong Kong itself, and I myself have never been mistaken for an Australian.
“As important as the English language press is as part of Hong Kong racing, most of the media in Hong Kong is in Cantonese.
“The contribution made by Australians working in Hong Kong racing is significant and valued, but it is merely one thread in a unique and strong racing culture.”
Hong Kong has just two race meetings a week, supplemented by simulcasts of major meetings overseas, but some people still believe there is too much racing. What’s your response to this suggestion?
“I know that this is a debate that can occur in some other countries, but there is no serious suggestion from anyone in the mainstream that we currently have too much racing in Hong Kong.
“The fact is that we race 83 times a year, with a seven-week break in the middle of the year. There are only 15 stand-alone simulcast days. Compare this with other major racing countries, where there can be a racing calendar of 363 days a year. In these countries there will be four or five city race meetings being run simultaneously each Saturday plus a handful of provincial and country meetings. Add to all of that another two codes of racing, which do not exist in Hong Kong.”
How do the two courses maintain the quality of going?
“We have been able to build an expert team to maintain our tracks, and the results speak for themselves. They take a an all-encompassing approach to this, which includes an exhaustive monitoring scheme based on target levels established by expert advice, scientific literature, and user feedback covering a range of physical, chemical, botanical parameters applicable to turf or dirt track. Several significant features of what we do are:
Data-based and proactive maintenance regimes based on regular track surface sampling and data collection;
Fine-tuning track preparation based on going assessment, race time, moisture content data, and jockey’s feedback on raceday;
Annual technical audit on turf track surfaces by leading and independent turf and soil scientists.”
Are the Longines Hong Kong International Races (HKIR) and the Audemars Piguet Queen Elizabeth II Cup and Champions Mile in the spring still loss leaders in that they cause slight reductions in turnover? If so, do you think they justify this by raising the profile of Hong Kong, and of Hong Kong racing in particular?
“Our international races have been able to be developed as a strong part of our portfolio across all of the relevant metrics: turnover, attendance, brand exposure. If you take last year’s Longines HKIR, it saw attendance of 79,000 people and turnover of over HK$1.4468 billion [about US$180 million] both of which compare very favourably with our non-international offerings.
“The turnover gap between local races and international races has closed significantly in recent years, which is due to better familiarisation of our customers with international racing via our program of overseas simulcast races.
“It should also be noted that we have just seen all six of our eligible G1 races staged last season ranked within the IFHA top 100 G1 races, with four featuring in the top 25. Simply stated, our international races perform well on both counts – individual business performance and achieving a prominent placing on the world stage.”
What is the future of racing on dirt in Hong Kong?
“There is no ambiguity about this – Hong Kong racing is built around turf races. This is necessary because with a total population of 1,200 racehorses a clear focus is required in order for us to achieve a competitive world-class product. The role of what we refer to as the all-weather [dirt] track is predominantly to relieve pressure on the course proper, meaning that dirt races constitute about 10 percent of the season’s races.
“We celebrate the success of those Hong Kong horses which have emerged as successful dirt runners, and we try where we can to provide opportunities to build their careers, but the focus will always remain on turf racing.”
Are four G1 races enough for the Longines HKIR? Might a dirt race be added to the program to bring the meeting closer to a numerical par with the other great meetings of the world?
“I do not accept the premise that an increased number of G1 races is relevant to how the Longines HKIR is compared with the other great race meetings in the world. The fact is that all four of the HKIR races are in the IFHA top 100 G1 races, with two of them coming within the top 25 such races. This is at least the equal of the great race days in other countries. We have no qualms about saying that our focus is on quality, not quantity.
“Going back 10-15 years our strategy was to build the HKIR into the World Turf Championships. Objectively measured we have largely succeeded in this.”
To what extent is the facility at Conghua [an HKJC training centre under development in southern China] a saver bet on the possibility that racing will one day be allowed to operate in China under the same legal rules as the HKJC?
“The rationale for Conghua can be simply stated – we want to further upgrade our training facilities and we need more space. There is no additional land available to us anywhere within the HKSAR [Hong Kong Special Administrative Region of China, as the former colony is now known].
“To understand the reasoning behind our decision to develop the Conghua training centre, you simply have to compare the amount of space we currently have available in Hong Kong for training facilities vis-à-vis other major racing jurisdictions in this region. Miho training centre [in Japan] is 222 hectares and Kranji [in Singapore] is 160 hectares, whereas at Sha Tin we have 73 hectares.
“We strive our best to provide world-class training facilities at Sha Tin and the results of the Hong Kong racehorse population benchmarked internationally would indicate that we are successful in this regard. However, we have increasing demand for horse ownership and future growth is practically impossible without more space.
“So too is work that we would like to do at Sha Tin itself, such as improving the drainage of the all-weather track.
“It is also true that the Conghua training centre has the potential to become a racing centre which would position us well in the event that a major policy shift in China occurred, but this is not its raison d'être.”
Is there any reason to expect that, if legalisation does occur, the HKJC will provide the model on which Beijing would wish to build?
“I understand the interest in this internationally, but as the speakers explained in the in-depth discussion which took place in the session on China racing at the ARC, trying to predict such a thing is futile.”
How much has Conghua cost so far? Does the yet to be operational training facility there itself justify the large amounts that have been spent on it?
“The Conghua Training Centre [CTC] is a substantial undertaking, but beyond that we do not publish our internal financial details. What I would note is that the construction phase is properly viewed as only one dimension of this project. Hong Kong’s territorial reintegration into China has been described as “one country, two systems” – what is involved with the CTC replicates this.
“We will be operating dual training facilities under two environments that are substantially different in almost every respect that is relevant to racing. This includes the regulatory approvals to import feed, the regulatory approvals to import and use veterinary medicines, the licensing of veterinary practitioners, right through to different tax systems.
“In this sense, the dual-site operational model will represent a first in world racing. Moreover, it will unquestionably be worth the investment and effort. If one considers what we have been able to achieve in terms of the development of Hong Kong racing to the world-class level with the current physical constraints, then the addition of the CTC will give us the capacity to unlock the enormous potential that exists to take our racing to even greater heights.”
Will Hong Kong ever have its own breeding industry?
“Geography dictates that this cannot happen. On the other hand, a significant breeding industry in China is a possibility over the longer term.”
Hong Kong is a relatively closed racing environment compared with in other jurisdictions in which horses are often stabled off-premises. What challenges do you think might exist in attempting to export the Hong Kong administrative model to another jurisdiction?
“The starting point must be to ask ourselves what are our fundamental values? To me, they are that racing must be conducted with absolute integrity as a fair contest in which all participants compete on a level playing field. We have, in Hong Kong, the most comprehensive programme which has benefited from our unique vertical integration model from training to racing control and veterinary services provided et cetera.
“It is obvious that each country’s racing industry operates in its own environment. This will have a bearing on how each country’s racing authority goes about implementing these values. However, the values themselves should be seen as universal.
“Taking Germany for example, around 20 years ago, the requirement of keeping a medication book for every horse in which every veterinary treatment and medication given to an individual horse was recorded was introduced, in combination with a vigorous in-training testing programme which focused on compliance and prohibited substance.
“In UK, the racehorse population is stabled in private yards but the British Horseracing Authority’s new equine anti-doping rules have been structured in such a way as to apply a zero-tolerance approach to anabolic steroids to every racehorse in this country, from birth to retirement.
“In Australia, they face the added environmental challenge of a multi-tiered racing authority model. And yet they have implemented the same policy.
“In this case the U.K., Australia, and Hong Kong have nailed our colours to the same mast, irrespective of our very different operating environments.
“The question is not one of exporting the Hong Kong administrative model – it is what values we should all subscribe to regardless of our operating environments.”
How much of a threat to Hong Kong racing are the offshore betting exchanges like Citibet and AA Star?
“The threat from operations like this is not so much to Hong Kong racing as it is to the model of returning maximum benefits to the Hong Kong community the club represents.
“The club operates under a unique, not-for-profit business model. Every year, the club gives back more than 70 percent of its revenue to society through donations and tax contributions. In the last fiscal year, we returned HK$24.4 billion to the community, with HK$3.6 billion of that given in charitable donations and the rest [HK$20.8 billion] paid in taxes.”
What can the HKJC do to combat their influence?
“From an integrity point of view, we are confident that we have the capability to prevent any impact from those illegal operators.
“The club’s focus on a customer-centric approach to our wagering customers has one of its objectives to try to provide a dedicated one-stop end-to-end service which attracts and retains customers who might otherwise be targeted by illegal operators.
“Beyond this, the issues would necessarily involve government action, both locally and, to achieve a substantial impact, regionally.”
Why doesn’t the HKJC just close down accounts known to be linked to these exchanges rather than just report them to the police?
“Potential account holders that may have links with those betting operations obviously do not volunteer this information. What we have done is to establish stringent policies and procedures to identify and monitor suspicious betting activities and fund transfers for the prevention of money laundering and other criminal activities. The club also proactively reports any suspicious betting activities to the police and will render full assistance and cooperation for its investigations.
“Let’s be clear about this, the root cause of this problem is the lax regulations in other jurisdictions which allows these types of operations to flourish.”
How much of a threat to racing is the popularity of football betting, which was introduced about a decade ago? Is racing still the major source of turnover in Hong Kong? If so, is the gap closing?
“This is an excellent question because it exposes the hollowness of the argument that racing cannot compete in the modern gambling world. We operate the football betting in Hong Kong – we introduced it in 2003 and the growth has been substantial.
“Add to this also the fact that over the same period the Macau casinos have mushroomed in size and revenues. And yet, since 2006, we have also been able to achieve a substantial increase in the turnover on racing – approximately 60 percent.
“We have all heard the theory that wagering on racing is a fully mature product. I do not accept this, and the results that we have achieved over the past eight years demonstrate otherwise.
“We have invested significantly in racing to grow our customer base. In 2013-14, total gross margin [revenue] before tax from wagering on racing, not including income from inbound commingling and overseas separate pools, was HK$16,162 million and from football it was HK$9,762 million. Turnover figure for horse racing by local customers was HK$103,781 million. Turnover figure for Football was HK$62,197 million.”
If you had the power to persuade the Hong Kong government to introduce one measure that would improve the position of the club in Hong Kong and its benefits to Hong Kong society, what would that measure be?
“We are fortunate that the club has a very strong relationship with the Hong Kong government, where they recognise our commitment to making our racing one of the areas in which Hong Kong can rightfully say that it is among the very best in the world, and to operating a model that maximizes the community benefit.
“At the same time, we are always cognizant of the social policies of the government and commit ourselves to working as a good corporate citizen within the regulatory framework that is established.
“From time to time we will engage within the government on changes we think make good sense for both Hong Kong and the strength and vitality of Hong Kong racing. For example, the legislative approval to engage in commingling, or restrictions on the number of races we can simulcast from other countries. These are always constructive discussions.”
If you had the power to impose one rule on racing worldwide, what would that rule be?
“Drug-free racing stands out. From whichever angle you examine this, the answer is the same – every horse in every race must compete free from the influence or benefit of medication. The public will not accept anything less, and our sponsors will mirror that attitude.
“Nor is it in our own long term interests to do otherwise, especially when you consider the selection of horses for breeding.”
How optimistic are you about the future of racing worldwide?
“Looked at globally, racing is facing its challenges in some countries, but I am overall quite sanguine about its future.
“Racing has always been a fantastic sporting spectacle. The attendance figures that are achieved around the world on the major race days attest to that. Add to that the way in which technology continues to revolutionise society’s consumption of entertainment and there is further cause for optimism about the future.
“From a wagering perspective, these technologies can to an extent be disruptive, but in terms of what we can offer to the public as an entertainment product I think that racing is especially well suited to capitalize on them.”
For which jurisdictions’ futures -- in economic terms and in terms of the sport’s popularity -- do you feel most cause for concern? And what are they failing to do that they ought to be doing?
“So much of the capacity of anybody leading a country’s racing industry to steer it towards success depends on the model that is in place. The Hong Kong model of vertical integration is not able to be replicated everywhere, but those jurisdictions which face the greatest challenges are those that have a tenuous influence on the commercial levers, especially wagering.
“Beyond the structural issues relating to the racing/wagering model, the absolute imperative is that racing focuses all its energies on satisfying its customers, be that the betting account holders, the racehorse owners, or the race day patrons.
“Nowadays people have a virtually limitless array of choice as to how they spend their recreational time and money and they simply will not accept a substandard racing product, whether that consists of question marks over integrity, small fields, inadequate food and beverage choices, or any other aspect of their racing experience.”