'We Have a Significant Supply Chain Issue': Engelbrecht-Bresges on the Need For More Horses in Hong Kong

Winfried Engelbrecht-Bresges has been at the helm of the Hong Kong Jockey Club (HKJC) since 2007, presiding over a significant expansion of the Asian racing scene. Emmanuel Roussel received an update from the CEO during last weekend's Hong Kong International meeting, with topics including the development of racing at Conghua on the Chinese mainland, and the potential for the HKJC to establish breeding bases in Europe and Australia to boost its supply of Thoroughbreds.

Emmanuel Roussel: The international week is always a great event, so close to the festive season. Are you happy with what was under the Christmas tree for the Club?

Winfried Engelbrecht-Bresges: It's great that we are back in full swing. Last year, we were open but not yet quite out of our bubble, while what we saw [at the International Jockeys' Championship] with such a tremendous atmosphere, demonstrates that the city's vibrancy is back. The night went extremely well. And for me, one of the highlights was Vincent Ho winning the International Jockeys Championship. His victory meant a lot to Hong Kong people. Despite economic challenges and some geopolitical tensions, Hong Kong can be a centre of growth and excellence. That was a great symbol. Vincent is one of the most professional athletes you can find. During COVID, Amy, our head of the Sports Institute, said that very few athletes showed such dedication in training. And I want to really express my gratitude to Ryan Moore for having helped Vincent to develop into the great athlete he has become.

ER: The Club must also share the pride of Hong Kong, since Vincent is a local apprentice…

WE-B: This is one of our strengths. We put people and systems in place to develop our community. And we have transferred the same now to Conghua, our mainland training centre. We went from zero to 600 people there. Most had never seen a horse before. And if you go to Conghua today, you can always appreciate their horsemanship. 

We enabled platforms which allow us, since last month, to issue vocational training licenses in Conghua. We can bring up people from every province to follow vocational training to become jockeys and horse workers. That's quite a breakthrough.

ER: What is next at Conghua?

WE-B: In April, we will be able to show more. We are still building and will have to complete phase two of our stable expansion with another 450 spaces. We will also have the staff accommodation ready. The topping of the grandstand should be completed in February, too. It is planned to accommodate 10,000 people, as it is supposed to be a boutique racecourse. I have to admit that I'm very excited about it. This is one of the most iconic grandstands I know, built with full design on sustainability. Seventy per cent of the energy will be produced on site. And then we have plans for a wind farm which will be five or six kilometres away, that would allow us complete energetic independence.

ER: What about racing at Conghua?

WE-B: The first race meeting is planned for April 2026. We have to finish everything by October 2025, and then practice for six months, running simulations.

ER: First race in April 2026, and then?

WE-B: We will have the first meeting in April, and then that will do for the season. The following season, in 26/27, we will probably conduct one meeting a month in Conghua, from October to April.

ER: What is the Club's long-term plan in China? 

WE-B: This is only a part of our overall strategy for China. We want to contribute to the National Equine Industry Development Programme, which was published in 2020 by the Minister of Agriculture and the Ministry of Sport. We now try to outline an equine value chain and this includes breeding, training people, holding auctions and races, and horses going back into breeding. This is a long-term plan that would also include veterinary studies. Equine veterinary science is one of the development areas where one would need further progress. Last week, we met 160 equestrian vets from all over China in Conghua and they are really keen. We want to build a specific one-year training programme for equestrian vets.

ER: Will Conghua become the centre of the Club's strategy in China?

WE-B: We want to create a sustainable model in Conghua. Around 90 owners from all over China joined our members' clubhouse in Beijing. We will open up another such clubhouse in Shenzen, which will also be cultivating interest in horseracing, including an equestrian interest. In September, we will open an Institute of Philanthropy, through which we will make donations to China. 

People have to understand we are not only a racing institution, and especially not only a wagering organisation. What I found really fascinating in our surveys and the discussions we have had with potential owners is their will to understand breeding and racing, but rather from a sporting and cultural point of view. It's a little bit like what you find in Japan.

ER: How is ownership doing in Hong Kong at the moment?

WE-B: We don't have an ownership issue per se. There is a risk of an ageing ownership population you have to build up again. Many owners also lost interest in owning a horse during COVID because they could not go to the track. This has resulted in a higher retirement rate in the last two years. Secondly, owners used to go to the sales a year or two before getting their purchases home, and they have not been able to travel to buy during COVID. Therefore, they couldn't replace the horses they were retiring sooner. The optimal number of horses in training in Hong Kong is 1,280. We have probably at the moment 1,160 horses ready to run, that's 120 short due to these effects. The economic situation will probably delay the recovery. It will probably take a year and a half to two years to build back up to the normal level, and we need this for Conghua.

ER: How do you recruit new owners?

WE-B: We recruit potential young owners through our racing club. Traditionally, young club members are not allowed to own horses on their own for a while. We have 1,400 racing club members and 200 of those are very keen to become owners. So, we have created a pipeline racing club to allow them to be syndicate owners, and then become partnership owners or individual owners.

ER: You also have opened the doors to foreign owners last year…

WE-B: Yes, major breeders and owners can now come through our overseas ownership scheme. We have now some prominent owners from South Africa, Australia and New Zealand. We must do this carefully, because we want to be sure that they are really committed and we look at a combination of owners and breeders because, in the end, we will venture more into the breeding industry. And if you look at owner-breeders, they usually show longer stamina and they have a greater interest because they can breed horses and showcase their horses.

ER: Talking of breeding, are you also looking for breeding ventures in China?

WE-B: The Beijing government looks at the industry and sees that we have unique skills that we can share. Beijing understands what a developed equine industry can give. Besides, a lot of the breeding or training would be located in rural areas and would have a great impact on rural economy. It already has in Conghua. The economic impact there is already significant and growing. If you look at related industries, starting with bedding and other supplies, you create supply routes, logistic networks that boost the overall local economic development.

ER: Meanwhile, has the ever-growing sales market in Australia created issues to recruit new horses?

WE-B: We currently have a significant supply chain issue. Prices have gone through the roof. We bought a lot of horses from Australia, and it gets more and more difficult to buy them because they are owned by syndicates. So we have now a turned-down offer of  A$1.7 million for a three-year-old who won one race and a Listed race.

I see that if China opens, we will need a bigger supply chain. This is the reason why we are exploring strategic partnerships or maybe even buying ourselves a breeding or racing operation in the Northern Hemisphere and in the Southern Hemisphere. We need approximately 450 horses every year. If at least a quarter is guaranteed, our supply chain is back on. We will relaunch the Hong Kong International sales and if you look at the quality of horses that will come out of them, you will notice that it's completely different from what we had five years ago.

ER: How far into this project are you already?

WE-B: We have certain targets. All I can say is that we are beyond the feasibility study. We still have to assess the opportunities. There may be clusters if you buy a couple of operations that you combine, but this would not be run by the Jockey Club, rather by industry experts in this field.

ER: Where would you elect to establish a breeding operation in the Northern Hemisphere?

WE-B: We would be aiming more for Europe because of our focus on turf races. Australia will always be a key provider of horses but most of them are sprinters. When it comes to a mile and further, it's another story. We have already started to slightly shift our racing programme for it to focus less on short distances. I am not willing to talk about cheap speed but if there isn't enough quality available, we'll go to 1,400m and over. This shift will affect our supply chain, as Europe is a more appropriate provider of such horses. We will not focus on 2,400m horses because it's not appropriate for our climate and our trainers. Our focus will be more on horses to compete on distances from 1,400 to 2,000 metres.

ER: Can you provide an update on the World Pool?

WE-B: The World Pool keeps expanding and I think that in every continent people now see the benefit of this. 

I can understand why fixed-odds, especially in Australia, is so successful now: 83% of the win and place bets in Australia are fixed-odds. It is, I think, because of the number of daily meetings there – it is like every minute – and there is not enough liquidity. If you want to have a real bet with such limited pools, you can't. But with the liquidity gathered by World Pool, with the different views of the world from Hong Kong, from Great Britain, from Australia, you offer prices that a fixed-odds betting product cannot match. Suddenly, the bookmakers could not lay off certain things, because the value of the Word Pool product was too high. Customers get a choice. 

However, I don't see bookmakers as mere competitors. Pari-mutuel gives the highest return to the industry and the industry needs growth. Secondly, there are certain bet types that cannot be operated as fixed-odds bets. They are different products, offering different opportunities. 

We want to have the best 100 races in the world to be made available in the World Pool. We are working on a new platform and new wagering information protocol, which hopefully could be launched through a first pilot in April or May. We then would have the ability to take exotic bets on quartet, to six up to triple trio, and include wagers from the bookmakers into such pools. Bookmakers could find an interest in connecting with the World Pool, and that could be an option for them. What is important is differentiation. You need to have enough time between races to build up your liquidity. 

The next development would be more combined meetings. We did this already in France and Germany, and we could look at something like the Everest and the Caulfield Guineas, in Australia. We have done the top races as a separate, highly attractive product, and we could focus on quality to reach that level of differentiation from the intense simulcasting you find in Australia or in England. It's too much. We did a lot of market research, and it comes to this: horse racing cannot be a game of chance. It cannot be only a game of somebody's tips. You must make your own judgment. This research was conducted in Hong Kong, and you would have to do more studies globally but one of the reasons why the World Pool works is that it doesn't promote a game of chance. It is a game alright, but people get satisfaction in working on their own strategies and analysis to pick a winner. If you have a start every two minutes, you can't do that.