The Business of racing
February 28th to March 7th is Auckland Cup Week; the busiest week on the Auckland Racing Club calendar. NZBusiness went behind all the glitz and glamour and discovered a dynamic business network fuelled by ‘the Ellerslie Races’ and a fired-up CEO.
Cameron George ushers me into the plush, wood panelled confines of the Auckland Racing Club. The history of the 140-year old institution is palpable. The framed photos on the wall are a reminder of how long horse racing has been around in the city. According to the Club’s website, racing dates back to 1842 – 32 years prior to the Club being established.
19th century racegoers would never have envisaged the magnitude of today’s horse racing culture, and in particular, Auckland Cup Week and the sizeable industry fuelled by its running.
If you’re into statistics, there’re plenty to get your head around. The Auckland Racing Club holds 25 meetings per year and is a major part of an industry that now directly employs more than 52,000 people, and generates more than $167 million in export revenue – putting it on a par with New Zealand’s wine and seafood sectors.
This season a prize-money pool of $9.6 million is up for grabs at Ellerslie. The Club expects to welcome up to 100,000 punters onto the picturesque Ellerslie grounds in 2015. Race-goer attendance in 2014 was up five percent on the previous year. So you can start to get an appreciation of the size of the business opportunity for the hundreds of businesses that make a living from the racing calendar.
The Club also engages with more than 280 sponsors during the course of a year – its big business no matter which way you look at it. Cameron says nothing gives him more pleasure than helping their sponsors achieve their desired outcomes. “Seeing our smaller partners grow as a result of their association with us is a huge satisfaction.”
With around six hours of client engagement during a typical race-day, he also believes any sponsorship deal represents outstanding value for money for the corporates.
An Australian who got hooked on racing while cleaning out stables in New South Wales as a teenager, Cameron moved across the Tasman in 2006 to become head of integrity (or Chief Stipendiary Steward) for racing in New Zealand, and has been CEO of the Auckland Racing Club since mid-2012. He has never been more excited about the future of the local industry and Auckland Cup Week in particular.
“We’re blessed in Auckland; people really enjoy racing as a sport and we have a strong support base from all corporate levels – which is critical for us, especially for leveraging opportunities to promote Cup Week.” Being based in New Zealand’s largest city helps generate high attendance over the week too, he says.
Cameron describes Auckland Cup Week as a unique experience. “Three great days with a different feel to each, and catering for everybody – from kids through to high-end international visitors.
“We have the best horse stock in New Zealand; the best jockeys; over $2.7 million in prize money. All combined with the best off-track entertainment, socialising, corporate hosting and free kids’ entertainment. We believe it’s critical to cater well for families.”
Where racing’s in fashion
It goes without saying that Auckland Cup Week will pump millions of dollars into the local economy. Hundreds of service providers benefit, as do accommodation providers such as the Sofitel and local hospitality venues.
“Everyone feeds off a very successful Cup Week,” says Cameron. “That’s what we’re most proud of. We see it as a huge benefit for the local economy.”
Smaller, family enterprises and owner-managed businesses are an important part of the whole Cup phenomenon – businesses such as Natalie Chan Boutique in Parnell.
One of New Zealand’s most respected milliners and fashion designers, Natalie Chan has carved out a highly successful reputation around race wear since starting out in 2001.
Natalie is also a judge and sponsor at Ellerslie’s Fashion on the Field and her couture creations often adorn the heads of fashion competition winners and celebrities alike.
“My relationship with the Ellerslie Races began in 2007 when I first met Rachel Holland, the marketing director at the time,” recalls Natalie. “Our mutual passion in fashion bonded us instantly. We both shared a vision that fashion could become a greater attraction in the racing scene.”
Natalie says it is difficult to gauge exactly what percentage of her yearly turnover is directly related to the Ellerslie Races, but her guess is 15 to 20 percent.
“Being associated with Ellerslie Races has definitely helped raise my brand profile in a different market from my normal special occasions market,” she says. “Working there has given me and my brand opportunities that would not have otherwise happened.”
Natalie says one of the unique challenges in the fashion business is balancing fashion trends – creating a statement whilst still being original. “With my team I have to create exclusive designs consistently to meet the high expectations of my clients – to keep on being innovative and pushing design boundaries.”
The fashion business is highly seasonal; therefore the challenge is to plan and manage cashflow carefully to ensure the business is financially sound, she says.
“In regard to the planning and preparation for Auckland Cup Week, it takes around nine months. I have created a working culture that requires everyone to be part of the team. We hold regular team meetings to discuss plans and sometimes, depending on situations closer to race date, we may change our plans.”
Natalie has designed many hats, headwear and fashion for the races over the years, and believes today women are much more confident in what they wear and no longer worry what others think.
“I know, for sure, all my really big statement making hats and headwear are extremely popular; they are literally flying off the shelf!
“When I first started, trying to sell a small headpiece was a big deal! Now selling the larger statement headpieces and hats is quite normal. These days people understand that fashion and the races go hand in hand. People love to dress up, which is a huge part of the fun of going to the races. Even men are paying attention to what they wear these days!”
Another local business that enjoys a special relationship with the Auckland Racing Club and Cup Week is Ellerslie Jewellers and Engravers, sponsor of the $10,000 Diamond Darling prize. Ellerslie Jewellers and Engravers was purchased by the Rennell family in 2001 and since refurbishing its historic building at 115 Main Highway in 2004 has achieved consistent double-figure growth. As John Rennell points out, the business has morphed to be not only the local Ellerslie jeweller, but a dominant bespoke jeweller for Auckland and provider of some of the most prestigious awards and engraving throughout New Zealand. The list of high profile events it is associated with include BNT NZ SuperTourers, Western Springs Speedway, the Halberg Awards and Ernst & Young Entrepreneur of the Year.
“At the top of this prestigious list is the Auckland Racing Club, for which we’ve enjoyed a wonderful relationship as both award provider and race sponsor.”
In that time, engraving technology has advanced considerably. “The business we took over relied on a single decades-old manual pantograph machine,” recalls John. “Over the years we installed several state-of-the-art computerised systems with almost unlimited graphics capabilities. That, coupled with glass and crystal etching, colour sublimation, vinyl printing, and highly skilled hand engraving, puts us at the forefront of our industry.”
The business’s craftsmanship was well and truly tested in 2014 when a winner’s trophy was engraved on-site on Derby day.
“On two previous race days we discretely set up our hand engraver near the bird cage where our engraver practiced engraving the winning horse’s name with a stopwatch close at hand,” explains John. “We had to ensure that on Derby day all of this was completed in the time it took for the horse to travel from the finish line to the winner’s circle – all the while allowing for race inquiries to be resolved.
“I’m pleased to confirm it took only six minutes and our engraver was extremely relieved the winning horse’s name was ‘Puccini’. On one of our practice days, the winning horse was ‘Whoshotthebarman’!
“In the end it was worth the stress to be told by the Chairman of the Board that Ellerslie Jewellers and Engravers ‘…was like gold here’.”
Today jewellery sales make up a considerable portion of turnover. “When we purchased the business the primary turnover was trophies and engraving,” says John. “But over the years we have successfully shifted the poles to a healthy mixture of both; with the jewellery side being the more prominent.
“Each side of the business feeds the other and we’re fortunate that our sales are predictable. With the exception of December we do not necessarily experience the same peaks and troughs other jewellers are susceptible to.”
Meanwhile, for Cameron George, beyond Auckland Cup Week the focus is on taking the Auckland Racing Club business to another level over the next five years. He admits to getting a good deal of satisfaction from leading a “young, quality team” and is excited about the diversity of the Club’s revenue generation through its racing, events centre, and more recently, property opportunities (total turnover ranges from $60 to $70 million).
Cameron was one who saw the revenue potential in the 150 acres of land the Club controls and says they’re currently exploring “a myriad of options”.
He sees the biggest challenge for the business being the need to expand facilities to cater for the increased number of people attending race days. Planning is already underway to redevelop the members’ stand and outdoor facilities.
The racing industry in general still has some way to go to shake off its ‘old school’ image too, believes Cameron. But he’s encouraged by the current leadership at the top of the Racing Board and TAB and the Club’s initiatives to attract the next generation of racegoers away from their games, apps and TVs and engage them with the sport of racing.
He says the key to his role is understanding the expectations of staff, the board, members, sponsors and partners, and communicating how they will be achieved. “That’s a critical skill for this business.
“And I refuse to be a micro-manager; I’m a big believer in encouraging staff to grow and develop through their own ideas.”