Industry set for boom in China

On a typical evening in Macau, the tables in the island’s many casinos are three-deep, a human swarm that makes the current atmosphere in Las Vegas look like a church bingo game in Kansas. Two recently opened casino-resort hotel properties in Singapore, where the locals willingly pay a $100 admission for the privilege of losing their money, are booming.

Zenyatta is not a draw in Hong Kong, but the last six Breeders’ Cup races, a simulcast that began at 3:10 a.m. local time on the other side of the planet, produced a total handle of about $38.4 million in Hong Kong dollars — roughly $5 million in American currency despite the inconvenient hour. On a typical day at Happy Valley or Sha Tin, more money is risked on every race than is wagered on an entire Saturday program at Saratoga, the American gold standard. A crowd of 100,000 at Tokyo Race Course is no more than business as usual.

Asian countries appear to love to gamble, and a sleeping giant is about hear an alarm clock in the Orient. Exactly what this arousal of a behemoth means to racing on a global scale is not yet fully clear, but is most assuredly important. The times, they are a-changin’.

The population of mainland China is about 1.4 billion. This is the world’s largest and most promising untapped market for all forms of gambling and soon to be opened to racing on a world-class level.

Almost lost to the post Breeders’ Cup dialogue that followed one the event’s most dramatic and certainly most emotional conclusions was the announcement a dozen time zones away of a joint venture that will result in development of China’s Tianjin Equine Culture City, an ambitious complex modeled after the Meydan Racecourse in Dubai. The partnership involves the International Equine Group, developer of the expansive and opulent Meydan, and Tianjin State Farms Agribusiness Group Company, a formidable coupling.

According a Meydan news release: The joint venture, called Hua Zhi Jie Horse Industries, will be based in Tianjin. International Equine Group is a partnership between Meydan and Malaysian-based Teo A. Khing Design Consultants. Tianjin State Farms Agribusiness Group is an entity owned by the Chinese government.

Tianjin is the largest industrial city in northern China, a port city of 11.2 million people close to Beijing, itself a city of 22 million. In the modern version of urban China, this is the epicenter of a new and growing consumer class, enthusiastic participants in one of history’s great economic expansions. Racing’s potential in mainland China is incalculable. The burgeoning economy is evident in almost every aspect of international commerce and it is a market the surface of which has been no more than scratched.

Although several racecourses already exist in China, the Meydan news release said, this project is aimed at reinvigorating the redevelopment of racing in the world’s most populous nation, which began disappearing after 1949 when the Communist Party took over.

“The [racing] industry has not taken off as previously expected due to the absence of an ecosystem to support and drive the industry,” the release stated. “The potential for growth of this industry in China is enormous if one takes into consideration the direct economic impact that the equine industry has had on the national economies of the United States, United Kingdom, and Australia, with estimates of $39 billion, $8 billion, and $6 billion, respectively.”

“Meydan’s success since its launch and its continued growth potential makes it an excellent model to replicate in a burgeoning economy such as China’s,” said Saeed Humaid al Tayer, chairman of the board and chief executive officer of Meydan. “It is a significant partnership and we are very bullish about the growth prospects.”

Being “very bullish” is never difficult when faced with a sure thing and the backing of government.

The Chinese government already owns a mountain of U.S. debt, will soon be a major shareholder in General Motors and in time may control the world’s most valuable thoroughbred bloodstock — the province, until now, of Kentucky, where the taking of profit has always enjoyed preferred status, and Europe.

In recent decades Americans have seen Sunday Silence, Forty Niner and Empire Maker, among other stallions, exported to Japan. China, an economic force far greater than Japan and with a new need for an acquisitive position in the international bloodstock market, will in time dwarf the world’s leaders and the inevitable development of a companion breeding industry will impact North America, Europe and Australia — and not in a good way. Money talks and it speaks both Mandarin and Cantonese.

“We hope to lend our expertise and extensive experience in positioning horse racing, so that it not only promotes the sport, but supports its related industries and provides viable economic returns to the people of China,” al Tayer said, “at the same time allowing horse racing to be seen as a prestigious sport, and a symbol for luxury, lifestyle, and culture.”

The Chinese government has at hand access to a deep pool of operational expertise in Hong Kong, which is the blueprint for racing management and execution at its highest level. The Hong Kong Jockey Club, however, has always been hamstrung by geography. There is no land available for breeding in the Special Administrative Region, where racing has flourished since it was introduced by the British after the Opium Wars in the mid 19th Century. Expansion to the mainland eradicates that problem and opens a vast and uncharted territory to thoroughbred racing.

The economics of international racing are about to change radically and China’s entry to the market will impact every nation in which the industry is present on a meaningful scale.

The Chinese equivalent to the Dubai World Cup, which offers the largest purse anywhere in racing, could be run in 2012, Meydan officials said.

The times, they are a-changin’.

Originally Posted on ESPN