For decades, Hong Kong's gambling scene has been a one-horse race with a sure-fire winner - the Hong Kong Jockey Club.
But the growing popularity of football, the internet and cross-border betting are sapping the club of both fans and income. Races hosted by the Jockey Club are the city's only legal form of gambling, apart from the Mark Six lottery which the club also runs. But what was once the only game in town is finding itself struggling to maintain its appeal.
The 2002-03 season has faltered at the start. Turnover for the first racing day of the season held last month was HK$751 million (US$96 million), a 10 per cent drop from the $841 million achieved for last year's opening day.
This is not a sudden change of fortune but a long-term losing streak.
The Jockey Club's before-tax surplus has plunged 38 per cent in five years.
Turnover is down 15 per cent and attendance at the track has dropped by almost a third.
This is bad news not just for the Jockey Club itself, but also for the Hong Kong community. Under Hong Kong law, a share of all Jockey Club revenue must go to charity, and the club has funded many hospitals and schools across the city.
But the Jockey Club's head of marketing, Maisie Koo, insists there are no plans to change strategy. "Our focus is really on customer service and improving the experience of all our customers, whether they actually come to the races or play off-course, she says. In the past year, a food court and media hall have opened at the Sha Tin Racecourse to what Koo says has been a popular response from patrons. Renovations are also underway at the sister track in central Happy Valley to make it cleaner and more punter-friendly.
Koo also denies suggestions that horse racing is now regarded as an "older person's sport with little attraction for the city's youth. "In our own surveys, we found that horse racing is equally attractive to young and old."
But if the Jockey Club's management thinks its marketing message is on track, our two industry experts don't agree.
VITAL SIGNS
Betting turnover Attendance
(HKdlrs mlon) avrge per meeting
yr to Jun 30 '000
1998 91,493 81.9
1999 81,335 75.2
2000 83,417 69.7
2001 81,833 66.6
2002 78,159 58.2
Source: Hong Kong Jockey Club
DIAGNOSIS
ANANT DEBOOR, REGIONAL PLANNING DIRECTOR, J. WALTER THOMPSON, HK
Hong Kong's largest contributor to the tax kitty. World's 10th largest charity provider. Cutting-edge betting technology. Exclusive membership club. Over the years, the club has set up this awesomely slick machinery that relies on the irresistible urge to gamble, then turn hefty portions of that moolah over to charities.
But at the moment problems abound for this institution. The brand seems to have become incidental to the business model and not the driver behind the business. The sport of racing seems to be losing relevance. As indeed it is in most other parts of the world, thanks to an explosion in entertainment choices.
To really understand the future impact of the issue, one has to only glance at the organisational structure and internal culture offered through the annual reports to realise that even fundamental concepts of marketing need to take hold. The word 'brand' seems absent in the annual report or the accompanying brochure; neither is there a separate marketing function.
It only has research and planning. Set all this against the backdrop of the club's stature as the most integral, world class pre-eminent provider of horse racing entertainment in Hong Kong. And thanks to its charities, the most impactful body in raising the quality of life.
JOHN WOODWARD, REGIONAL PLANNING DIRECTOR, ASIA-PACIFIC, LEO BURNETT
There are three reasons for the Jockey Club's declining fortunes. Firstly, it suffers from Hong Kong's weak economy. In 1997, when the economy was growing rapidly, the Jockey Club's revenues surged by nearly 15 per cent.
Since then, on-course, off-course and telephone revenues and meeting attendances have all declined relentlessly. Clearly, people are less inclined to gamble when they feel poor, and it would be irresponsible to try to change this.
Secondly there is, allegedly, an increasing trend towards illegal gambling driven by better odds.Thirdly, young people are more interested in football than horse racing. They prefer the action and coverage of European leagues, and like to support teams and stars. In fact, among 18-24 year-olds, 92 per cent rate football their favourite sport. Because of this, the club is losing revenues to illegal football gambling. There are regulatory remedies: football gambling could be legalised and given to the club; betting tax could be changed to improve the odds, as it has been in the UK.
But even if this does happen, the Jockey Club needs far-reaching marketing solutions to maintain the popularity of horse racing in the long-term.
It has millions of dollars invested in racing, real estate and facilities.
TREATMENT
DEBOOR'S PRESCRIPTION
- Understand that the brand is core to the business: a legal monopoly over the horse racing/gambling business does not ensure monopoly over consumer affection.
- Undertake a serious holistic evaluation of the club as a brand and the accompanying business impact. Re-connect with the core values that bring in revenue. The thrill of the sport. The competitiveness of racing itself.
- Re-establish the primacy of the sport of racing as key to club's future and indeed to Hong Kong itself.
WOODWARD'S REMEDY
- Package racing in a modern way to appeal to young people, by learning from overseas sports like NBA and NFL.
- Fill flat slots between races with competitions.
- Draw young people in with concerts to create a day-long entertainment experience.
- Introduce younger, more charismatic TV presenters, present analysis in a way that appeals to the non-specialist, and create stars among the horses, owners and jockeys: perhaps horse racing needs to find its "Tiger".
