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Thu 9 Oct 2008 04:00 AM

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English thoroughbred

Horse racing is no longer just a sport – it is big business. Laura Collacott meets the CEO of Britain's iconic Ascot track to find out what makes a racecourse tick and what the opportunities for global collaboration are.

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Charles Barnett - CEO of Ascot racecourse.
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(Image courtesy of Ascot Racecourse Ltd)
English thoroughbred
(Image courtesy of Ascot Racecourse Ltd)
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(Image courtesy of Ascot Racecourse Ltd)
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Sheikh Mohammed bin Rashid Al Maktoum attending Royal Ascot.
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Horse racing is no longer just a sport – it is big business. Laura Collacott meets the CEO of Britain's iconic Ascot track to find out what makes a racecourse tick and what the opportunities for global collaboration are.

British institutions are no strangers to history. And Ascot racecourse is no exception. "This racecourse was started in 1711," Charles Barnett, CEO of Ascot, tells me. "Queen Anne was on the throne. She was hunting buck in what was (and still is) Windsor Forest, came upon this bit of land and thought it would be a great place to race horses. They started racing in 1711 and have been doing so ever since."

Immersed in tradition, Ascot stands in the shadow of Windsor Castle - one of Queen Elizabeth II's official residences and the largest inhabited castle in the world - and forms part of Windsor Great Park; 14,000 acres of ancient Crown Estate.

I think that Ascot has a certain cachet that very few other brands have in the UK. It's high-end market, it stands for quality standards and the top of the range.

Two pink ‘proposal' benches sit amongst their green counterparts - a custom that no one can quite remember the origins of. The highlight of its racing calendar is Royal Ascot; a meet that dates back to the 18th century and is now a prestigious event, widely attended by the well-heeled from across the world.

In fact, mention Ascot and this is likely to be the image that springs to mind, complete with carriages, top hats, morning suits and royal parades. It's one of the quintessential events on the English summer social calendar, attracting 300,000 racegoers each year.

It has its share of unique traditions: picnics of the poshest kind take place in the car park; access to the Royal Enclosure requires sponsorship from a person who has attended Royal Ascot for at least four years. Then there is the strict dress code - hat or substantial fascinator, no bare shoulders, no miniskirts and covered midriffs for the ladies; black or grey morning dress with top hats for the gentlemen.

The fanfare of Royal Ascot is so big that it can easily overshadow the rest of the company's activities, yet Barnett's work goes on throughout the year to develop and promote the business, even if there are only 25 days of actual racing in the calendar.

He didn't start his career in this sector: "I'm a lawyer. I worked for marine insurance for 10 years and then for a shipping company." How do you go from shipping to horse racing? "I've always liked horses," he says. "I've got horses at home and I've done amateur racing myself but I've never had a racehorse - it's too bl**dy expensive!"

Eventually he married his hobby with his career. "I thought, ‘Time for a move'," he puts it simply. "I went to a headhunter and he said I ought to be thinking about that job. So I went to run Haydock Park racecourse up in Lancashire, then I went from there to run Aintree (home of the world-famous Grand National in the National Hunt racing season) and from Aintree here."

There have been a number of changes to the venue in the past few years. To start, there is the US$440million redevelopment. Having decided that the old stand was looking a little tired, the management embarked on an ambitious plan to revolutionise the venue, bringing Barnett - an old hand at redevelopment having overseen the US$70million programme at Aintree - on board at the same time.

Ascot closed its doors to the public from 2004 to 2006, and the team razed the stand, shifted the entire racecourse over (to create more room) and built a glittering new, six-storey edifice to house eager punters.

The result is a striking building that Barnett describes as "a pretty spectacular example of modern architecture", but it received a lukewarm welcome when the gates were thrown open again in June 2006. The criticisms were twofold: Obstructed views were all too prevalent, and many claimed that too much space had been dedicated to ‘money-spinning' facilities. Barnett pays no heed to these accusations.

"It was more viewing levels, to be honest, but that's all been resolved now," he replies quickly. "We reorganised the stepping, we cut out the ground in various places so you could see over the heads of people on the lawns - those were the sort of small things."He's not keen to entertain the criticism of ‘money spinning' much either. He brushes it off: "Yes, there's corporate hospitality and that's a very important element of our business but there's plenty of space for the public in a majority of different ways," he states briskly. Besides which, these other uses are crucial for the ongoing success and growth of the business.

The financial arrangements of the course are unusual. It was designated a ‘purpose trust' in 1913 to "promote the welfare and prosperity of Ascot", correspondingly meaning that it has no direct beneficiaries.

With no shareholders, the work of the management is to enhance the success of the organisation as a whole. Barnett and his team work to further the interests of the stakeholders, nominally the Crown Estate (Ascot's landlord), racing fraternity, sponsors and customers, including box holders and members of the Royal Ascot Racing Club.

It's general entertainment; you don't have to be here just for racing.

It is difficult to see how this arrangement works in a capitalist system. The motivation to create profits could potentially be lessened with no shareholders and no dividends to pay. Yet it is an understanding that has enjoyed great success to date.

Besides which, the course must generate income for its prize fund to keep the crowds coming. None of the races at the Royal meet are commercially sponsored so Barnett and his team have developed other ways of generating funds. Royal Ascot, for example, has a total prize fund of US$8million - one of the most valuable race meets in the world. The money has to come from somewhere - and ‘somewhere' has three main origins.

The first (needing little explanation) is off-course betting; an enduringly popular pastime in Europe. The second is the visiting public, from spectators to owners. This source provides 52% of the revenues, so it is important to keep encouraging as many visitors as possible.

Their needs, Barnett says, must be built into the very fabric of the course. Firstly, a course must have good facilities for the owners: "Let's face it, there's only going to be one winning owner; there are going to be lots of losers and they want to have a nice day as well." Comfortable club and dining facilities keep them happy and, crucially, coming back.

"Then here in this country we've got the paying public - a very important part of our business, whether it's Fred coming to have a bet and a pint of beer or someone paying a lot of money for proper hospitality and bringing their guests here. It's general entertainment; you don't have to be here just for racing."

To this end, the course holds themed days - a Hong Kong day, a countryside day, show jumping, and beer festivals, for example - to make sure that there is something for everyone. "We ask ourselves, ‘How can we make our race days more interesting for different types of people to get more crowds in?'," Barnett explains. Regardless of the ownership arrangement, the more popular the management can make the events (as with any sporting venue), the greater the profitability. He doesn't even rule out the possibility of a camel race in the future.

Yet Ascot's brand is strengthened, in large part, by the exclusivity of the events. "I think that it has a certain cachet that very few other brands have in the UK. It's high-end market, it stands for quality standards and the top of the range," asserts Barnett. So does the open invitation to all threaten to corrode the brand? "No, I don't think so," he refutes. "It still remains exclusive to go into the Royal Enclosure. But there's no reason why the whole racecourse should be exclusive." Adding diplomatically: "Lots of people want to go racing with different financial arrangements."

In a similar vein, corporate hospitality and events make up another substantial portion of the organisation's revenues. After all, there is plenty of opportunity to profitably use the space outside the racing calendar. Weddings, conferences and summer and Christmas parties are all encouraged. There is no point leaving the ground fallow.

The third main financial source is sponsorship. Although the Royal Ascot event scorns the commercial sponsorship of any races, the organisation does not have an overarching policy of non-sponsorship. Quite the opposite. Various individual races in the calendar are sponsored (with Middle East companies such as Dubai Duty Free and the National Bank of Dubai already supporting races of their own) and the course has three more expansive sponsorship deals with partners they tag ‘founding partners'.

With 13% of revenue coming from sponsorship and these founding partner deals, the management is looking for a fourth. "We'd like to get a fourth partner who would sponsor the King George VI race and at the same time have a relationship with us," says Barnett. There is flexibility in the reciprocal arrangements for each sponsor. Allied Irish Bank (who also funded the redevelopments) uses the onsite branding - standard in each ‘package' and situated just behind the finish post - to hook more clients, a large proportion of whom are racing fanatics. Cisco has installed its sport venue operating system on site and uses it as a marketing tool for potential customers.

Sony has provided the television screens that show race information throughout the site, and gets to use the facilities for its company events in return. Each of the founding sponsors naturally gets priority privileges on race days and - importantly - at Royal Ascot.

So what sort of company is Barnett after? "In my mind is that it's an international brand - perhaps a Middle Eastern or Asian brand - which has interests in the UK already and wants to develop those interests by associating itself with the brand that is Royal Ascot," he specifies.

A lot of Middle Eastern people are interested in and connected with horse racing. Arabs are the foundation of thoroughbred horses.

The new partner would have big shoes to fill - until recently the position was held by DeBeers. "It had a sponsor for 26 years in DeBeers; it held the cachet of the event and it was very, very successful," says Barnett.

"They had a fantastic time, and got incredibly good value. Close connection with the royal family, diamonds and all that. So we're trying to find a pretty long-term partner, someone who is going to do the same for us in the event as DeBeers did and also gain a huge benefit themselves."

In turn, Barnett believes that with a bit of spare cash he could develop Ascot's King George VI stakes (already the second most important day of the year) into another big player on the international scene. "We're looking to internationalise the event even more," he states.

"It's already the second most valuable race in the UK but it will become more valuable when we've got a sponsor with us, and will therefore attract international interest." The potential exposure is huge: last year 10 million people tuned in to watch the race live in Japan alone, despite the fact that it screened at nearly midnight.

Racing is truly international and growing more so. "It's a huge industry," agrees Barnett. This wasn't the case 20 years ago, when  it was a much more regional affair. This more or less changed with the launch of the Breeders' Cup World Championship in the USA in 1982. The event paints itself as a season-ending championship of thoroughbred racing and, as such, appealed to European racers. Since then the international circuit has opened up, with horses traversing the globe to race in Australia, Japan, America, the UAE, Hong Kong, and even China and India.

Australia, Hong Kong, America and Japan have established scenes but other countries are making incursions. "India's obviously an important market. India's quite strong," says Barnett. As, potentially, is the fellow emerging market of China. "Whether it takes or not in China is quite complicated. The government aren't too sure whether they like betting or not," he cautions.

I point out that they've overcome that here in the Middle East, which he acknowledges, but he also identifies cultural differences: "The thing is that the Chinese country is very strong in terms of gambling, whereas of course in a Muslim regime it's not. In China they are concerned because they are mad on gambling and they want to control it in some way."

However the individual sites choose to maximise their own incomes, racecourses worldwide are collaborating to cultivate a more profitable and internationally exposed industry. Members from each course are invited to other events, introductions and connections are made, and the industry grows. The benefits are clear. The more popular the sport, the more it will gross internationally, especially when gambling (in countries where it is accepted) and media rights are considered. Horses can also increase in value if they can prove themselves on a global stage, keeping owners happy too.

Accordingly, Barnett and his team have been developing relationships with many international courses, including the forthcoming Meydan course in Dubai (the plans for which he describes as "amazing; very exciting"). Many of the Middle Eastern owners and trainers are regulars on the circuit and familiar with Ascot. His Highness Sheikh Mohammed Bin Rashid Al Maktoum regularly runs horses and attends the Royal meeting.

In Barnett's eyes, it's an organic link: "A lot of Middle Eastern people are interested in and connected with horse racing. There's a natural inclination for people in the Arab countries to like horses. Arabs are the foundation of thoroughbred horses in the world and it's a natural and very important link."

He's full of praise for other courses but regardless of links that his team develop with other courses, there is one clear frontrunner in Barnett's mind: "Ascot is the top racing there is in the UK, if not the world."

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