While the major players rely on the conventional approach, others seek to get around the Chinese government’s interdiction on betting on horse racing in a more imaginative, if not necessarily more productive, fashion. Brandon Hillier’s investigation into the possibilities for racing in China continues.
Read Part I - Read Part II - Read Part IV - Read Part V
-----------
Wednesday night is race night at Hong Kong’s Happy Valley Racecourse. The devotees of the Chinese Special Administrative Region’s favorite pastime are again pushing the Hong Kong Jockey Club’s turnover for the evening past the HKD $1 billion ($130 million) mark.
Across town in Lan Kwai Fong, a man named Byron steps on-stage at the Bisous club and hitches himself onto a bar stool. Seated alongside him, with a microphone in hand, Napoleon fires the questions. The small audience listens with a mix of interest, skepticism, and polite bewilderment.
Anyone expecting Romance poetry or battlefield tactics would be sorely disappointed though, as would those arriving for the Bisous Club’s usual specialty, risqué cabaret. This man on stage is Byron Constable, Chairman of The Shanghai Race Club. His interviewer and host is Napoleon Biggs. The attendees are a collection of entrepreneurial types chasing their latest internet start-up dream at Web Wednesday, a weekly networking event for the digitally minded.
Constable is in Hong Kong to talk about his venture to spread the horse racing message in China. But his message does not follow convention. The Shanghai Race Club has no race track. It has horses, but not in the sense that one might think. It does have members, it claims almost 7,000, and several well-connected ones at that. This past summer, the club’s high-end field trip to Royal Ascot included “direct relatives” of Hu Jintao, China’s former president.
Back in the 1930s the Shanghai racing scene was one of the world’s most lavish. The racetrack, with its art deco grandstand, once the playpen of the Sassoons and the Moellers, is now the site of People’s Square. Constable has bought the brand, which lapsed sometime in the 1970s. His is more of a social club with a horse-racing theme that is aimed, for now, at the rich elite particularly in Shanghai and Beijing. But his ambition is to take the sport to the masses via new technology.
The club began with race-nights centered on a board game he devised. It has evolved into an online concept, unsurprising given Byron’s background in web marketing. The middle-aged Londoner, who relocated to China in the late 1990s, has blended that professional expertise with an interest in horse racing. His connection with the sport is rooted in his formative years in Wimbledon and childhood days out at West London’s two “park” racetracks, Kempton and Sandown.
Thanks to a link-up with the United Kingdom’s racing-dedicated television channels, Shanghai Race Club members receive live broadcasts of racing from Britain and Ireland via China’s PPTV (peer-to-peer television), which already commands a large online audience for English soccer. Members can watch on their smart phones. More than that, they can “collect” the horses. That is to say, they can lease, for a fee, horses running at tracks from Ascot to Ayr for the duration of a race through Constable’s website, paoma.com.
“The way we’ve done it is that when you go in to the website and select the horse, your name comes up next to that horse immediately,” explains Constable. “And your friends who you’ve brought into the club and are in it with you, their names are up next to their horse wherever they are. So you can race against your friends even if they’re spread all over the nation. The time difference back to the U.K. is ideal for us in trying to make horse racing part of the evening culture in China.”
Race nights are held amidst the bygone splendor of the old Moeller mansion in Shanghai. KTV plays a role, too. KTV (Karaoke Television) is China’s version of karaoke, and going out to a KTV club is a popular form of entertainment. Rather than gathering in one big bar area, groups of friends or colleagues book individual rooms inside the clubs. They order food, drink alcohol, and sing songs as their turn to do so comes round. Many business deals are struck over drinks in KTV rooms. The Shanghai Race Club’s KTV events ostensibly revolve around selecting horses while having a fun night out. But gambling, as it is known elsewhere, is not on the agenda, only the “collecting” or “leasing” of horses.
“Everybody is waiting for gambling to be legalized in China before they start to invest a bit more heavily, but if you do that then you’ll be waiting a long time,” Constable said. “It’s much better to get in there and present an exciting online concept to draw in women, to draw in younger people. What we are doing is evolving this similar to a game. Horse racing in this way could become the biggest game in the world. And by 2020, if it’s done correctly, it will be.”
As things stand, Constable claims the average his members have paid to be involved in the ownership experience, whether outright, via syndication, or through the club’s leasing platform, stands at £15,000 ($24,000). But Constable believes future growth lies in what he calls “aspirational racehorse collectors” and he said he aims to expand the market rapidly by reducing the cost of “owning” a horse to the equivalent of just £200 ($326).
“There are two groups to consider” he said. “There are the gamblers, and there are the aspirational racehorse collectors. The aspirational racehorse collectors could surpass the number of gamblers by 2020, just like in soccer or in cricket, where the number of actual fans surpasses the number of gamblers.”
Constable makes some bold predictions considering only a handful of his members, up to late October, had involved themselves in the “collecting” side of things. His business model is an interesting approach to China’s horse racing conundrum, but it is hard to see it as anything more than a curiosity in the larger scheme. The ethos of the Chinese nouveau riche is all about keeping up appearances – and prestige is what the Shanghai Race Club offers.
Perhaps the online “racehorse collector” concept will explode. Byron Constable could yet be China’s Mark Zuckerberg. But the big money players are still trying to do things the old-fashioned way: build a racetrack, bring in some horses, and then find some riders. What they long for is the right for their fans to bet.
---
Tomorrow, in Part IV of our five-part story on China: A case study on Wuhan’s Orient Lucky City racecourse.