Horsing around in business and politics

My background… I have been at Racing Victoria just over a year – I was part of the search for a new chief executive. Originally I was born in England but I have been in Australia for a long time. When they called I was back in England for several years, [but I] returned to Australia in March or April 2008 and I started here in August.

Before I left to back to the UK I was the CEO of Jupiters Ltd, which is a casino with other interests in sports betting and so on. We did a major transaction to sell Jupiters to Tabcorp for $1.7 billion at the end of 2004. My background is very much in gaming, wagering and retail business – leisure and media if you like – so coming into racing was a very good fit for me as far as my background in understanding wagering and betting.

It’s a different role… I had always run publicly listed companies previously and this company is essentially a private company. It is a company limited by guarantee established by the Victorian Government through legislation, but it is not like running a for profit business. All the money that comes into Racing Victoria is filtered out through the industry as prize money, for riding fees for jockeys or for building infrastructure for racing. Our goal every year is to distribute everything and end up without any profit.

That is a totally different environment for me, because although we are trying to maximise the top line – and it isn’t really that it is not-for-profit because we hope to generate a profit for our participants through prize money and other things – it is a total distribution model.

And it’s very political… What I had not appreciated in a business like this and a model like this is how many different factional interest groups there are – people who have a view about how it should be done. When you are running a public company you obviously report to the board and you are responsible to your shareholders and they are your primary responsibility – and they are all pretty aligned in what they want, a maximisation of profits. In racing not everyone is aligned. The trainers have different objectives to the jockeys who have different objectives to the owners and the breeders and then the race clubs themselves are all their own separate legal entities. The punters themselves are perhaps the most important of all, they are actually the customers in this industry. The only two groups of people who put money in without getting the same amount back are punters and owners. In aggregate all the horses in training in Victoria and the costs associated with that aren’t covered by the prize money we pay out. Customers are also subsidising the business because we are taking 14 cents out of every dollar they bet at the tote.

Clearly they are very important yet they don’t have a voice. All the other participants are people who are living and working in the industry who all have different views and different agendas. It is quite a different business and very interesting because it is so unpredictable and you learn quite early that you can’t please everybody.

Fortunately, the beginning was easy… I did have a bit of a honeymoon because I joined a few weeks before the spring racing carnival last year so I had a nice time going around meeting everyone and people gave me the benefit of the doubt. This spring carnival might be a different experience.

Racing isn’t really a business… It’s politics. Getting the political line right is almost as important as getting the business side right in the eyes of many of our stakeholders. I have to try and get the business side lined up as best I can to streamline the operations and administration, maximise the attraction of the product to the punters, customers and the owners, and in the meantime get the politics right to keep everybody – as somebody famously once said – sullen but not rebellious.

I have a wonderful mentor because the chairman Michael Duffey is the ex-attorney general in the Hawke and Keating governments and he is the consummate politician and the ideal person to be the chairman of a body such as this to provide guidance on how to deal with difficult issues.

The spring racing carnival’s success is not surprising… People worked very hard at that and it didn’t happen by accident. The Victorian Racing Club took a conscious decision to build the Melbourne Cup and the Spring Racing Carnival into something very special.

It really started to take off when they started to attract international competitors to the Melbourne Cup, which generated interest and notice around the world. They took that program through a serious investment of marketing and prize money. It has gone from the most important race in Australia to one of the most important races in the world in terms of the international runners we have and the level of interest. The prize money is just phenomenal when you compare it to most of the international races. Now that they have got to that point, there is no room for complacency because everyone is trying to build similar races and similar carnivals. 

The whole program is building and getting very exciting. This will be a terrific year for racing –the quality of the racing will be outstanding.

Away from the track, there are still some hurdles… We have a major challenge coming up. In 1994 the state government privatised what was the TAB and at that time they granted a license to Tabcorp to operate in conjunction with the racing industry through to 2012. That is only two years away and we have got to work through negotiations with the state government and get ourselves to a point in this rapidly changing market – with the advent of corporate bookmakers and internet competitions and technology – where we have a partner for the next 10 to 12 years. Whether that is Tabcorp or not, the major challenge for us is to secure the funding for the racing industry under the new license. That is the thing I spend more time on than any other topic, because that will secure the long-term future of the racing industry if we are successful, but if we are unsuccessful then the consequences could be quite dire.

We also need more Gen Y punters… The other most important strategic issue for us is to capture the next generation. Technology has moved so quickly that the idea of the middle aged man in the pork-pie hat at the racetrack as our main source of revenue is dying out. We have got to adapt to internet, mobile – not just video and relaying races to mobile devices but being able to bet online quickly with lots of opportunites and attractions.

We are also shifting our program to night racing to attract a younger audience, but also importantly to get into the Asian timezone where if we are appearing in Hong Kong and Singapore then they will bet. Night races at Moonee Valley are being run at the moment and nearly all of them coincide with a Singapore meeting so that Singapore-based punters are betting alternately on Moonee Valley races then a Singapore race and the money flows to us.

We are going into Hong Kong, South Africa and the UK and we are really establishing an international expansion, which is based around this shift to a twilight and night time racing program. It is critical to us and the next generation. We really need to appeal to Gen Y and beyond, else we will lose them and the massive influx of funds we have had from people who see the races as a good day out will just die out.

You must have a vision… The key for your entire team is giving everyone a common vision. What are we about, where are we going? You need to be really inspirational about buying into that vision. Inspirational vision is critical to be able to deliver and communicate that measure.

The second thing you must do is surround yourself with brilliant people. You must not be afraid to employ people and have people on your team who are smarter than you and quicker than you and more capable than you. That is the way you will succeed, by surrounding yourself with good people. The counterpoint to that is that if you have people holding back the culture, no matter how good they appear to be, they have to be removed. You just have to make those tough decisions. People have to be really on board with the decision and really committed. It is all about getting people to do the work – I think that is the same in any job.

I love my job… I love it, absolutely love it because it is like working at my hobby. It’s so different. This company in revenue terms is a quarter or less of the size of Jupiters, yet it is 10 times more complex and twice as exciting because something different happens every day. It is great fun, I have to go to the races for work on the weekend and during the week – it’s not bad at all.