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Global Views: Who Can You Trust?

In Global Views, Godolphin Flying Start trainees provide insight into practices experienced and observations taken on their worldwide travels. Second-year trainee Arvin Chadee looks at opportunities for transparency at the sales.

As consumers, the way we make important purchases-like investing in the share market, buying real estate or even booking a holiday–has evolved considerably over the last 20 years thanks to the internet, technology and social media. Yet, the process of purchasing a Thoroughbred has evolved only marginally.

Those evolutions have included the introduction of online bidding and purely online sales, which became more widespread and was adopted by many auction houses in 2020 due to the global pandemic. Vendors have also become accustomed to providing buyers with extensive videos of horses in the lead-up to sales. However, in comparison to the greater marketplace, we as an industry have been unable or unwilling to truly innovate and adapt.

At the forefront of creating change is the Kick Sales Platform. Consumer behaviour has changed the way we make purchases, whether that be watching influencers review the latest tech gadgets on YouTube, reading reviews of local eateries on TripAdvisor or having detailed specifications of used vehicles on Autotrader. We now have access to a wealth of information at our fingertips. The Kick Sales Platform is bringing this to the Thoroughbred marketplace.

When Vicky Leonard first set out to create the Kick Sales Platform, she was confounded by the unparalleled amount of information available on the stock market when looking to invest in shares. Comparing that to the Thoroughbred yearling market, she found an information barrier.

“Yearling buyers only know what's in front of them in the sales catalogue–the branding on the horse's shoulder only illustrates where the horse was weaned, not bred, and vendors have the option to say and hide what they want.” Leonard said. “Asymmetric information refers to when one party in a transaction possesses more information than the other.” This is the case when buying Thoroughbreds.

This information barrier is also a barrier to entry for potential owners looking to enter the Thoroughbred industry at a time when, as a collective, we should be encouraging and making our industry more accessible. The Kick Sales Platform allows buyers to freely access records such as ownership, breeder details, horse history, vaccinations, current treatments, x-ray and scope reports, extensive pedigree information and dam progeny and race records.

Scone based Bhima Thoroughbreds launched the Kick Sales Platform at the 2019 Magic Millions Gold Coast Yearling Sale. Mike Fleming, owner and manager of Bhima, explains that improving the consumer experience was pivotal to enabling his business to differentiate from its competitors.

“When you stand in the shoes of the buyer with a catalogue of 1000-plus horses these days, it's easy to see how their experience can be improved,” Fleming said. “This service and platform put full information on the product in front of the buyer quickly and easily.”

The platform not only benefits consumers, but improves the experience of bloodstock agents. Craig Rounsefell of Boomer Bloodstock said the platform allows him to look closely at more horses in a large catalogue.

“At every sale, there are many very nice horses that slip through the cracks under value simply because, as a buyer, I can't vet every single horse I like; it is cost-prohibitive,” he said. “The sales platform has revolutionised the buying process for me and will allow me to bid on a lot more horses.”

While using the Kick Sales Platform, Bhima achieved a clearance rate in 2019 of 97.4%. The current industry standard is 84.19%.

Fleming also noted, “more people have inquired to sell their horses through Bhima due to us being on the Kick Sales Platform.”

Collaborative consumption–or the sharing economy–is built on shared trust between two parties. It's an economic system in which services and assets are shared between private individuals through technology in a peer-to-peer networking system. Think Airbnb, Uber and Kickstarter.

Although the yearling marketplace differs from the collaborative consumption market, lessons can be learned from this economy and culture.

The shift in consumer behaviour, technology and the social media era has revolutionised the way we interact with one another and how we interact with marketplaces. Rachel Botsman, the author of Who Can You Trust? describes how rapid adoption of new technologies has increased the efficiency and the social glue of trust. For example, active Facebook users are three times more likely than a non-internet user to believe that most people are trustworthy. The successes of collaborative consumption entities like Airbnb are not the assets it holds or the money it has, but rather using technology to build trust between strangers.

The Kick Sales Platform is establishing this kind of trust between vendors, consumers and bloodstock agents through unprecedented levels of transparency. They have coupled technology through an ergonomic digital platform with a reputation of providing accurate and transparent information on every horse listed.

Rachel Botsman outlines how “virtual trust will transform the way we trust one another face-to-face.” Reputation is the measurement of how much a community trusts you. As your reputation improves, consumers will further trust you as a brand and feel confident buying from you.

Operating in a world that is extremely fast-paced and with technology constantly evolving-as well as living in a momentous time in history when international sport was cancelled and the eyes of the world were on Australian racing due to the global pandemic–it is clearer than ever that as an industry, adopting transparency through technology is going to be a game-changing move for an industry steeped in tradition. Initiatives like the Kick Sales Platform are redefining the industry standard of trust and transparency worldwide.

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Godolphin Flying Start Applications Close On Feb. 8

Applications for the 2021 – 2023 Godolphin Flying Start class are currently open and close on Feb. 8. The online portal for application has this year been opened a month early to allow applicants more time to complete their applications in a process that is more streamlined than ever before.

David Skelly, a first-year trainee on Godolphin Flying Start, said, “I cannot recommend the course to any aspiring industry leader highly enough. The opportunities and experiences it offers are unparalleled in the Thoroughbred industry worldwide.”

Caitlin Smith, a second-year trainee currently based in Australia at the Magic Millions sale, said, “There’s no barrier to entry once you are willing to learn and are passionate about horseracing. The opportunity provided through the various international lenses is amazing, and the alumni network is incredible.”

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Global Views: Australian Extension

In Global Views, Godolphin Flying Start trainees provide insight into practices experienced and observations taken on their worldwide travels. Second-year trainee Lowri Allen shares the news of the course’s syllabus change that will see them attend the Magic Millions Gold Coast Yearling Sale.

The Godolphin Flying Start Programme offers a unique opportunity to spend time working in and learning about the Thoroughbred industry in five major racing jurisdictions; Ireland, Britain, America, Australia and Dubai. The 2019-2021 class of trainees are now in the fourth phase of the programme, spending time in the capital of Australian Thoroughbred breeding, the Hunter Valley, in New South Wales. Prior to this we spent time in Kildare, Newmarket, and Lexington, learning a tremendous amount about the Irish, British and American Thoroughbred industries.

Spending time shadowing bloodstock agents at the sales forms an integral part of the programme’s syllabus, and consequently we attend many of the major sales internationally. Many of the programme’s graduates have gone on to be highly successful in the bloodstock field.

Ordinarily, trainees would finish the Australian phase of Flying Start in mid-December. But a change resulting from previous year’s feedback, which suggested that the Australian phase should be extended to provide trainees with the opportunity to attend an additional major yearling sale, will see us staying in Australia until the end of February for the Magic Millions Gold Coast Yearling Sale.

The Magic Millions Gold Coast Yearling Sale is one of Australia’s premier yearling sales and this year, a quality line up of 1273 lots has been confirmed by vendors for the seven-day extravaganza. Yearling inspections by trainers and bloodstock agents are currently well underway as they tour the Hunter Valley stud farms looking for the next champion. Legendary trainer Gai Waterhouse places great value in conducting stud farm inspections and is usually one of the earliest visitors on the stud farms. This practice is a noticeable difference between Australia and other jurisdictions, where prospective purchasers might see the yearlings for the first time at the sales complex. From my limited experience, it seems hugely beneficial to see a horse on its home turf and observe how it develops from mid-way through its sales preparation, to the finished product on sales day.

Further to this, the practice of pre-sales inspections was, I think, a major contributor to the success of the 2020 Inglis Easter Yearling Sale. It was the first major sale to take place during the coronavirus pandemic, and it was held at a time when many countries and Australian states were in lockdown. Whilst the sale was conducted with online bidding in a virtual auction format, many prospective buyers had already had the opportunity to view the yearlings through stud farm inspections. Consequently, there was greater buyer confidence and the sales results held up remarkably well considering that the global Covid-19 pandemic drove some challenging economic factors.

Whilst the traditional sales calendar has been kept broadly in line, digital sales continue to gain in popularity. Many in the industry say that the pandemic has pushed forward their usage. Inglis held its first digital sale back in May 2017 and the platform has grown steadily since then. This year was one of exponential growth, with the platform’s gross having doubled that of 2019 by the end of November, being just shy of $50-million.

Across the waters, at Keeneland in Lexington, similar growth was shown at their digital sales. Keeneland debuted its first digital sale in June, offering 31 horses. This number was more than doubled at the December digital sale where 70 horses were offered. The bloodstock industry has been resilient and flexible during 2020, with online bidding and digital sales rapidly establishing themselves alongside those of a traditional format.

The opportunity to learn about and experience sales across all the major racing jurisdictions has been an advantageous aspect of the programme. In Australia, syndicates form a major part of racehorse ownership, with one in every 244 Australians owning a share in a racehorse. In America and Europe, syndication forms a much smaller part of racehorse ownership and syndication groups take up far less of the buying bench at sales in these countries. Another difference is the speed of auctioneering, which is noticeably quicker in Australia and allows the working hours for sales staff to be more favourable than those in Europe, where sales could often go on late into the evening.

The applications for the 2021-2023 intake of Godolphin Flying Start trainees are currently open and close on Monday, Feb. 8, 2021. For more information and to apply, click here.

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Global Views: Understanding Racing’s Economics

In Global Views, Godolphin Flying Start trainees provide insight into practices experienced and observations taken on their worldwide travels. Second-year trainee Rachel Wade discusses how racing must gain a clearer understanding of its economics.

Often vaguely described, economics is a study in human choice and behavior and their effect on society. The term has historically carried a monetary connotation but really delves into how different choices are made, why humans make those choices and what the implications of those choices are to industry and the wider economy. As such, it is important for any industry to understand economic forces in order to achieve whatever their goals may be.

Horse racing falls short in its research and understanding of the more subtle economic intricacies such as incentives and decision making. Reports on economic impact show the quantitative measurements of the industry, which are indisputably important, but fail to address anything qualitative pertaining to racing. How can we expect to improve our industry and keep it relevant without understanding what everyday decisions and incentives drive it forward or hold it back?

I have been incredibly privileged to experience racing in four major racing jurisdictions during the past 15 months on the Godolphin Flying Start scholarship. Through my travels I have yet to see a racing industry that doesn’t suffer from a skilled staff shortage. This issue is both fashionable and widely accepted within the industry, yet there is no research into why it exists. Many are quick to point the finger extrinsically, blaming issues such as an increasingly urbanized population and its resulting disconnect between humans and animals or the younger generations’ aversion to manual labor. Perhaps it is time to look intrinsically and improve our understanding of things such as the appeal and value of racing, what its barriers to entry are and what incentivizes people to work in it. Without an understanding of something such as incentivization, our industry will never be able to attract and retain a viable workforce.

The book Freakonomics describes incentives as “why human beings do things,” and separates incentives into three categories: economic (material), social and moral. Humans base decisions on all three factors which is evident in society as well as more specifically in the Thoroughbred industry. For example, Australian studs in the Hunter Valley constantly compete with the neighboring mining industry for workers. Mining staff work fewer hours for substantially higher wages, yet stud farms still manage to recruit and retain staff (albeit often international/seasonal workers), demonstrating that people find value outside of material incentive to work in our industry. If humans were truly rational and motivated only by material incentive, it is unlikely racing would have any workers in any jurisdiction.

There can be no doubt that higher wages would make our industry more attractive, but it is unlikely that racing will ever be able to pay enough to compete with an industry as large and subsidized as mining. It is therefore paramount that we identify and promote the key social and moral incentives that racing offers in order to maximize our workforce. Furthermore, racing should pinpoint nonmaterial incentives that could be changed in order to align with society’s values. For instance, assume that society places high value on time spent with friends and family. If horse racing altered its working hours to appeal to this value and allow staff a more sociable lifestyle, the personal utility gained may make our jobs more attractive than the higher paying industry next door.

Oftentimes to its detriment, the racing industry has acted as a ‘reactive’ rather than ‘proactive’ business. Issues such as animal welfare and aftercare have emerged and been debated with increasing ferocity in the past decade as society’s values and opinions on animals used for sport has changed. In my opinion, racing has responded urgently and effectively to this issue, but much of the damage to public perception may prove irreversible. If the industry is to survive over the coming years, it will be necessary to identify strengths and weaknesses within the sport and attempt to make change proactively rather than reactively. The world’s population is expected to reach nine billion by 2050, with approximately 70% of the population living in urbanized areas. This can be viewed as both an opportunity and a threat to the racing industry. If racing can shift to a proactive mindset, perhaps this growth can be used to thrust horse racing into a top tier sport. For example, racing may appeal to those who value ecological sustainability as it is a sport with a relatively small ecological footprint and has many positive externalities. Stud farms have a vested interest in the land they occupy, protecting and cultivating it so that it may be used to raise healthy racehorses. This is more sustainable than single- use industries such as mining. As more people become disconnected from animals through an urbanized lifestyle, horse racing may satiate a desire to connect with large animals. Though these are only speculations, horse racing must prepare for society’s change over the coming years and identify how it can fit into shifting values and norms.

Although often hidden and misunderstood, economics plays a vital role in our beautiful industry. A greater understanding of its impact could unravel the numerous challenges the Thoroughbred industry faces as it struggles to maintain relevancy in a constantly changing and modern world. Maybe it is time we begin to look at racing through the eyes of an economist and ask ourselves why we love this industry and what hidden incentives can be used to attract new people to racing as both professionals and patrons.

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