LOGO Racing s Lifeblood The Future Landscape for Wagering
LOGO Racing s Lifeblood The Future Landscape for Wagering Chairman: Winfried Engelbrecht-Bresges Chief Executive Officer, The Hong Kong Jockey Club Vice Chairman, IFHA Vice Chairman, Asian Racing Federation
Overview of Plenary Session 1 Racing s lifeblood - The future landscape for wagering Winfried Engelbrecht-Bresges Vice Chairman, Asian Racing Federation CEO, The Hong Kong Jockey Club 6 May 2014 3
Making Racing Relevant to Customers is key Customer 4
Broad range of Issues Anti-doping Industry vocational training Racecourse operations Environmental sustainability Jockey Safety Wagering Movement of Horses Big data Social media Customer Integrity Major events Pattern racing Laboratory accreditation Breeding Popular culture 5
Wagering Income is Key Investments : Racecourse facilities Customer services Marketing Technology Integrity Doping control Prize Money 6
Revenue Sources of Horse Racing and Other Sports 120% 100% 80% 41% 30% 36% 38% 60% 40% 20% 0% 22% 45% 37% Global Sports Market 25% Big 5 European Football Leagues 23% 41% British Rugby Union 44% 18% NFL (American Football) 15% Horse Racing Commercial Broadcast Matchday/Raceday 7
Revenue Sources of Horse Racing and Other Sports 120% 100% 80% 60% 40% 20% 0% 41% 22% 45% 37% Global Sports Market 30% 36% 38% 25% Big 5 European Football Leagues 23% 41% British Rugby Union 44% 18% NFL (American Football) 20% 65% 15% Horse Racing Owners Wagering Commercial Broadcast Matchday/Raceday 8
Turnover USD ($ bn) Competition Trend $200 Sports Betting surpasses Race Betting in 2014 $150 $100 $50 Race Betting Sports Betting $0 2007 2008 2009 2010 2011 2012 2013E 2014F 2015F 2016F 2017F Turnover (USD $ Mil.) 2007 2008 2009 2010 2011 2012 2013E 2014F 2015F 2016F 2017F CAGR from 2009 to 2013 CAGR from 2013 to 2017 Race Betting 132,201 136,998 126,880 126,671 132,314 132,232 131,221 132,683 134,694 135,935 137,431 0.8% 1.2% Sports Betting 108,363 109,584 102,969 107,392 101,231 109,953 121,897 133,131 145,492 155,492 162,629 4.3% 7.5% Lotteries 208,919 224,101 222,145 226,439 256,031 259,538 275,188 284,447 298,394 311,637 324,016 5.5% 4.2% Other Activities (excl. Casinos) 42,166 42,849 43,586 45,096 47,087 47,606 49,095 51,194 53,029 54,662 55,989 3.0% 3.3% 9
Industry Speakers Breon Corcoran Jennifer Owen Paul Bittar Philippe Germond David Attenborough 10
Slide 4 The Challenge How to create more value for racing? 11
Regulatory Environment and Governance Integrity Fair Competition Animal Welfare Prohibitive-substance-free Hygiene Factors 12
Value Creation Racing (Event) Organiser Value 13
Value Creation Racing (Event) Organiser Value Wagering Operator 14
How to Create Value in a Vertically Integrated Model - HKJC Image needed [Field of 11 + horses] 15
HKJC Racing Business Trends and Changes 2000/01-2012/13 Club s Business Focus Racing turnover decline accelerated with intensifying Macau competition starting 02/03, customer attrition behavior (see next slide) disconnected with economy growth Key Performance Indicators Turnover -6% p.a. Real GDP +4% p.a. Races +1% p.a. 81.5 78.2 71.5 65.0 62.7 60.0 Turnover ($bn) Lost 26% of business in 6 years 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 Hong Kong Real GDP ($t) 1.2 1.2 1.3 1.3 1.4 1.5 1.6 1.7 1.8 1.7 1.8 1.9 2.0 YoY Chg % +8% +1% +2% +3% +9% +7% +7% +6% +2% -2% +7% +5% +2% 16
Customer analytics Customer Segmentation 17
HKJC Racing Business Trends and Changes 2000/01-2012/13 Club s Business Focus Racing turnover decline accelerated with intensifying Macau competition starting 02/03, customer attrition behavior (see next slide) disconnected with economy growth Rebate program launched Key Performance Indicators 81.5 78.2 Turnover -6% p.a. Real GDP +4% p.a. Races +1% p.a. 71.5 65.0 62.7 60.0 Turnover +4% p.a. Real GDP +5% p.a. Races +1% p.a. 64.0 67.7 66.8 Turnover ($bn) Turnover increased by 11% in 3 years 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 Hong Kong Real GDP ($t) 1.2 1.2 1.3 1.3 1.4 1.5 1.6 1.7 1.8 1.7 1.8 1.9 2.0 YoY Chg % +8% +1% +2% +3% +9% +7% +7% +6% +2% -2% +7% +5% +2% 18
HKJC Racing Business Trends and Changes 2000/01-2012/13 Club s Business Focus Racing turnover decline accelerated with intensifying Macau competition starting 02/03, customer attrition behavior (see next slide) disconnected with economy growth Rebate program launched Increase supply & product quality Key Performance Indicators Turnover -6% p.a. Real GDP +4% p.a. Races +1% p.a. Turnover +4% p.a. Real GDP +5% p.a. Races +1% p.a. T/O +13% p.a. Real GDP +4% Races +5% 81.5 78.2 71.5 65.0 62.7 60.0 64.0 67.7 66.8 75.5 Turnover ($bn) Turnover increased by 13% in 09/10 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 Hong Kong Real GDP ($t) 1.2 1.2 1.3 1.3 1.4 1.5 1.6 1.7 1.8 1.7 1.8 1.9 2.0 YoY Chg % +8% +1% +2% +3% +9% +7% +7% +6% +2% -2% +7% +5% +2% 19
HKJC Racing Business Trends and Changes 2000/01-2012/13 Club s Business Focus Racing turnover decline accelerated with intensifying Macau competition starting 02/03, customer attrition behavior (see next slide) disconnected with economy growth Rebate program launched Increase supply & product quality Revitalizing Racing with customer segmentation and focus on New Growth segments Key Performance Indicators 81.5 78.2 Turnover -6% p.a. Real GDP +4% p.a. Races +1% p.a. 71.5 65.0 62.7 60.0 Turnover +4% p.a. Real GDP +5% p.a. Races +1% p.a. 64.0 67.7 66.8 T/O +13% p.a. Real GDP +4% Races +5% 75.5 Turnover +8% p.a. Real GDP +4% p.a. Races - 80.4 86.1 94.0 Turnover ($bn) Turnover increased by 41% in 4 years 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 Hong Kong Real GDP ($t) 1.2 1.2 1.3 1.3 1.4 1.5 1.6 1.7 1.8 1.7 1.8 1.9 2.0 YoY Chg % +8% +1% +2% +3% +9% +7% +7% +6% +2% -2% +7% +5% +2% 20
Facilities Racecourse facilities for new generation customers 21
Racecourse facilities for Owners Racecourse facilities for the mass customers 22
Events 23
Digitized Content is Key 24
ibu Race Simulator App 25
Technology Race 26
Growth by being Customer Centric 27
New Form of Collaboration to Create Value Integrity Fair Competition Animal Welfare Medicationfree Racing (Event) Organiser Value Creation Wagering Operator 28
Industry Speakers Breon Corcoran Jennifer Owen Paul Bittar Philippe Germond David Attenborough Panel Discussion 29
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Panel Discussion Racing s lifeblood - The future landscape for wagering 31