Hong Kong Jockey Club under starter’s orders with new mainland training centre

Jockey Club's mainland base is a major victory, but regular racing over border remains a long shot

PUBLISHED : Tuesday, 13 May, 2014, 10:29pm
UPDATED : Wednesday, 14 May, 2014, 10:30am

Hold your horses and hold all betting tickets, too.

The possibility of regular racing on the mainland is a distant dream, facing a myriad of challenges extending from financial viability to basic horse care and a "matrix" of multitier government obstacles.

There was a degree of optimism when Chinese officials at the Asian Racing Conference in Hong Kong last week urged the international community to help them build a racing industry.

But Hong Kong Jockey Club officials warned of problems - and they were in a good position to judge. After months of tough negotiation, the HKJC finally worked out details with mainland authorities for its new training centre in the Conghua district of Guangzhou, due to open in 2017.

The 150-hectare site - which has the potential to house 1,500 horses and become a fully operational racetrack - marks a major breakthrough for the HKJC.

The club will now have a significant presence beyond Hong Kong borders for the first time.

But to make this happen, the HKJC officials had to overcome difficulties much greater than they originally anticipated.

They admitted they had underestimated the complexities of dealing with mainland bureaucracy and the technical details involved.

HKJC executive director of corporate affairs Kim Mak said the layers of government and, below them, the sporting authorities made progress on the simplest of tasks painfully slow and created a financial black hole for would-be investors.

"The challenges range from financial viability to basic horse care and feed. There is a matrix of central and local government organisations that could impact on any future development, and navigating this landscape is going to prove quite different from that in the Western world," he said.

Mak chronicled a history of failed racetrack ventures over the past three decades - multimillion-dollar facilities now either abandoned or turned into car yards - most of them falling victim to government crackdowns on gambling, "guessing games" aimed at circumventing the strict rules or illegal betting.

HKJC chief executive Winfried Engelbrecht-Bresges said any talk of wagering on the sport would be premature.

"We are talking about the sport of horse racing. We are not at this stage talking about horse racing with wagering," he said.

"What is necessary is the development of a regulatory and governance framework, which is a prerequisite of any sport in the world to ensure that it is conducted on the basis of integrity, fair competition, animal welfare and prohibited-substance-free racing," he said. Even if gambling on racing, the sport's lifeblood, were to be considered in the medium to long term, Engelbrecht-Bresges said the framework needed to be "shaped and constituted from the beginning".

Gambling does exist, with two sports lotteries operating, but Mak said the high take-out rates - more than 30 per cent - could not be matched by any financially viable racing model.

He also pointed out how a high take-out - the share of the betting pool a track's owner receives to cover expenses and provide a profit - would invite illegal operators to feast on racing, exacerbating already considerable concerns surrounding integrity and the involvement of organised crime.

Racing does exist on the mainland, but it is a largely unregulated, disorganised, factionalised and under-resourced pastime, with a lack of properly educated participants.

It's merely a small-time hobbyist pursuit up against Hong Kong's high-stakes scene.

The embryonic nature of the relationship between the sport's world governing body, the International Federation of Horse Racing Authority (IFHA) and the leading mainland authority - the Chinese Horse Industry Association - was perhaps best described by IFHA chairman Louis Romanet, who said: "At least we now have a phone number for them."

Professor Han Guocai, vice-chairman of the Horse Industry Association, said: "[We need] help to organise races and integrate the resources of owners in China with international organisations.

"We are keen to learn, to upgrade, to improve, and we want to contribute to horse racing in China and the world."

But Han's mention of a project to develop horse racing generating "100 billion yuan (HK$126 billion) in GDP, 40 billion yuan in tax and three million workers" seemed to be taken with a pinch of salt and passed over without any explanation of how it would possibly be paid for or implemented.

What was made clear by power brokers was the sport's need for a regulatory framework and for stringent integrity measures to be put in place - points hammered home by Romanet and HKJC officials.

Michael Connolly, international business director for Red Mills horse feed, has been at the forefront of Western investment in racing in China.

He described how it took his company "two years to even begin" and how there was a lot of "moving the goalposts" when working with different levels of government. "It has been a roller coaster of complications," he said. "Your best and only partner will be government."

Even so, last month's Dubai-backed race meeting in Chengdu was hailed as a success in that its swiftly arranged quarantine agreement allowed horses to be flown in and out by the Meydan Corporation to compete for the first time.

But the meeting was postponed twice as organisers - faced with renovating a track littered with dangerous objects - were hampered by local government red tape.

Meydan's project manager for the event, Patrick Baker, said his staff even needed government approval to buy and use a lawnmower.

Even the Hong Kong Jockey Club - familiar with China's befuddling politics and sensitive cultural issues - has admitted it "underestimated" the challenges when planning the multimillion-dollar project at Conghua.

On quarantine, the arrangements at the training centre offer a more sustainable entry and exit for horses, but that is only between Hong Kong and the training centre. Meanwhile, Chengdu's "fly-in, fly-out" model was not a long-term solution, according to Engelbrecht-Bresges.

"Firstly the concept employed in Chengdu is very expensive, and it is impossible to have a Chinese-based horse compete with an overseas horse," the Jockey Club boss said. He added that he could not see fully functioning quarantine being feasible within the next five to 10 years.

One of the biggest - and least talked about - obstacles involved in establishing modern racing across the border is the lack of veterinary expertise.

This is compounded by the unavailability or illegality of commonly used equine drugs and a lack of basic facilities.

HKJC head of veterinary clinical services Dr Chris Riggs said vets have "little status or authority to handle medications".

These issues not only led to a potentially dangerous and unprofessional "make-do" attitude from practitioners and possible neglect, Riggs said, but also opened the door to opportunist foreign vets to smuggle their own drugs from overseas.

Riggs said equine studies were not included on any undergraduate curriculum and he was aware of just one specialist equine surgeon in all of the mainland.

But there is a growing group of young veterinary scientists ready to enter a new era. "The Hong Kong Jockey Club has a genuine wish to support horse welfare in mainland China, develop relevant skills and share our skills and knowledge," he said.

Business expert Dr Edward Tse cited the gradual deregulation of other industries as a positive sign for racing's future.

Tse said he believes wagering on horse racing will one day happen, most likely on a short-term, experimental basis to begin with. "That is the Chinese way," he said. "Perhaps today we don't see an imminent change … but you never know."

Engelbrecht-Bresges said: "In the end, one of the biggest questions we have is how to finance operational costs. How would it be possible to fund a model without the significant income that comes from the wagering side?

"It's an ambitious objective and the question is, what is the business model under which racing in mainland China could be run?"