Hong Kong Jockey Club CEO Winfried Engelbrecht-Bresges is our guest this week.

Engelbrecht-Bresges says the HKJC has managed to host all race meetings and improve revenue during the pandemic, and Hong Kong has the potential to become a world class horse racing and equestrian hub when we complete our own quarantine centers, and also to facilitate horse breeding in the Chinese mainland, where the market looks to have a great future.

Check out the full transcript of TVB’s Straight Talk host Dr. Eugene Chan’s interview with Mr. Winfried Engelbrecht-Bresges.

Chan: Good evening. I'm Eugene Chan with Straight Talk. Our guest tonight is Mr Winfried Engelbrecht-Bresges, the Chief Executive Officer of the Hong Kong Jockey Club. He is a world leader in horse racing, being the chairman of the International Federation of Horse Racing Authorities, and the Asian Racing Federation. He has had a lifelong passion for horse racing, and over 30 years of experience in this industry. Tonight, he is here to tell us why horse racing is vital to Hong Kong's prosperity and stability. Welcome, Winfried.

Engelbrecht-Bresges: Wonderful. Thank you for having me on the show.

Chan: Winfried, you know, the Hong Kong Jockey Club is such a big part of life for Hong Kong people, it really doesn’t need much introduction. Out of interest, I actually looked up Wikipedia and here's what it says. It is a nonprofit organization, providing horse racing, sporting and betting entertainment in Hong Kong. Is this an accurate statement, Winfried?

Engelbrecht-Bresges: It's an accurate statement, but not complete. Because I think if one looks at our integrated business model, you're absolutely right. We are not for profit. But it is, in a way, the components of horse racing and sports entertainment because if you look at Wednesday nights, if you look at Sundays where we have under normal circumstances 20,000, 60,000, 70,000 people. We are responsible for wagering with our components, especially football wagering has become very prominent. But the root is still in a way horse racing. And we have some Mark Six, we are one of the largest membership clubs in the world, with 25,000 active members. And last but not least, in the integrated model, it is our charity side where we have donations of approximately $4.5 billion, which makes us in the top 10 charity donors. And our purpose is for the betterment of Hong Kong,

Chan: Right. Winfried, it is interesting when you're saying not for profit, because when you look at the term racing and betting entertainment, they're usually not usually not-for-profit activities. As you say you have an integrated business model. How unique is it in the world?

Engelbrecht-Bresges: It's absolutely unique. I think it's probably what I would call a social enterprise, which was created with a vision and a way to make contributions. And what we do especially in the wagering side, we channel the wagering demand responsibly for community benefits. And it's nowhere else in the world where you have such an integrated model, and you have nowhere in the world where an organization can create so much value to the community, then in such an integrated form.

Chan: Right, just now, you mentioned the purpose of Hong Kong Jockey Club is for betterment of society. And the core values are to serve the community. You mentioned that you're one of the biggest donors and I think you might be one of the biggest taxpayers for the Hong Kong government, one of the largest organizations that employ people. So what else do you contribute to the society? Just for the viewers collective recollection.

Engelbrecht-Bresges: If you look at the tax contribution, I think I would like to put it into perspective of what it takes and what it makes practically as a contribution to the Hong Kong community. Because with our tax contribution of approximately $25 billion, which is 6% of the tax income, we keep the tax rate in Hong Kong low, which is a competitive advantage. And if you see in a way our charity donations, we are very strategic, how we think we can serve the people of Hong Kong, and how we allocate the money. And I think it is important, especially in situations of need in a situation of crisis, that we can act fast, and that we can be agile, and help the community especially during COVID.

Chan: Right. When you talk about contribution, the thing that comes to my mind, a lot of the building infrastructures we have in Hong Kong, I mean, even the Hong Kong government stadium where I used to go watch football, I think the Jockey Club has a big part to play. What are the physical structures that you think are of very memorable value to the Jockey Club that you have donated?

Engelbrecht-Bresges: I think this goes back to our journey in our contributions. But a lot of people don't know that we did the reclamation for Victoria Park, that in a way the Hong Kong Jockey Club clinics were in a way built by the club. If you look at the Hong Kong UST, which was funded and built by the Jockey Club, if you look lately, in a way is the revitalization of the Central Police Station of Tai Kwun. 

Chan: Tai Kwun, yes. 

Engelbrecht-Bresges: And last but not least, if you see the donations we made to the Palace Museum, which will open now on the July 2nd, we think that our landmarks, which people I think will have benefits for the people, will create real benefits for Hong Kong as a brand.

Chan: So Winfried, I mean now with all the significant contribution that just mentioned, one of your objectives is actually to counteract all this illegal betting. And your revenue basically is from gambling and betting entertainment. So how do you strike the balance between responsible wagering versus, I mean, promoting gambling or even compulsive gambling, which can be a problem in society? How do you do that?

Engelbrecht-Bresges: I think one has to be very mindful that gaming activities can create social problems. But if you see for example, football betting, football wagering. In 2002, during the World Cup, there was no football wagering in Hong Kong, and there was a huge illegal market. And this illegal market funnels from money laundering, from drugs, from crime. So when it came down to the legislation of football wagering in 2003, we had a very responsible way, how we... how many matches we offer, what kind of bet types we offer, we look at, “Do we see any pattern in our 2 million accounts that people wager above their means?” So it is, in a way, a very holistic approach we have, and in a way, we don't promote gambling, we don't in a way go out and say “please gamble”. It is a demand, which is in the community, we channel and which creates tax revenues, and in the end creates community contributions via employment and via charity donation.

Chan: I mean, when you talk about all this huge amount of, I mean, revenue coming in. How has the trend been the last few years? Has it been increasing? About staying the same or reducing?

Engelbrecht-Bresges: If you see in way from… if you go back to 25 years ago, 1996, 1997, we had practically only horse racing plus Mark Six, this was around $100 billion. We now have... with the football side, we look at this year, probably around $285 billion. So that's a 2% increase in relation to last year. And we see in a way it was definitely the reserve income of Hong Kong people that was in a way the development of Hong Kong that we have grown. 

Chan: Do you see it increasing? 

Engelbrecht-Bresges: I think we see a very gradual increase. I think in a way we are, our development is very much linked to the GDP, we don't outperform GDP, because in the end it’s disposable income, but we could see an increase of our wagering turnover during the time where Macao, Macao, which a lot of people don't realize Hong Kong people lose as much money in Macao than they lose on responsible gambling in Hong Kong.

Chan: Right. So do you see… when you say the increase, is it because more people are getting into the game? Or is it because people are betting more? Or per bet is higher? Which is the answer?

Engelbrecht-Bresges: I think you have different customer segments, you have an 80/20 rule. 20% of people contribute 80% of the turnover, and there are people who are pretty wealthy and have significant spendable income. If you look at the average bet over the years, it has not grown much.

Chan: Right. And how about the actual demographics? Is it more young people getting into the game or are you seeing basically it goes up with the age of the population?

Engelbrecht-Bresges: We are very, very careful not to go into underage gambling. And if you see that we measure especially our customers who are 25 plus. And with the demographics we can definitely see especially in horse racing, with more people are mature, you see an increase in wagering behavior and pattern, while young people have only a very small income, percentage of income in the club.

Chan: Winfried, you've been at the club as the CEO for 15 years. You're executive director of racing, you're now very influential in all the organizations, the International Federation of Horse Racing Authorities. So can you say Hong Kong, in the racing world, are we on the world map? How strong are we?

Engelbrecht-Bresges: We are now a world leader. If you see and this is probably one of the interesting parts, if you look at 1996, 1997. From a colonial Hong Kong Royal Jockey Club, we have emerged as the Hong Kong Jockey Club as being a world leader. We had in 1998, we had no horse who was in the top international ratings. We had no race who was one of the major races in the world. Now we are practically in the top five. We have one of the biggest international racing carnivals. We have 0.7% of the world's horse population. But we have 8% of the best horses trained in Hong Kong. If you look at all leading positions globally, the racing organizations are dominated by Hong Kong Jockey Club employees. And that shows that we have best practices and are seen as a global leader.

Chan: Right, Winfried before we go to the break. Let me ask you about the 25th anniversary. Hong Kong is right at the juncture of having returned to the motherland for 24 years, we're going to 25 years. What have you planned for Hong Kong?

Engelbrecht-Bresges: First of all, I think we want to celebrate with the community and that's why we have partnered with the government. I donated $613 million for the campaign and activities really that we have fund for, that we celebrate with the whole community. Besides this, we definitely have special activities. Like we have a special race meeting, we have a special Mark Six draw, we have a special jackpot, but it's, in the end in a way, something we want to celebrate and I think people will have fun.

Chan: Right, let's take a break and don't go away. 

Chan: Welcome back.

With us tonight is Winfried Engelbrecht-Bresges from the Hong Kong Jockey Club. He has been sharing with us about how the club’s unique operating model has enabled it to contribute significantly to Hong Kong’s economy and society.

So Winfried, we talked about the core value of the Jockey Club, which is for the betterment of society, we talked about in the past what the contribution there has been done. Let's move on to some COVID-related matters, which influenced Hong Kong a lot in the past. And I just realized that actually we haven't lost one race in the last 2 years during the pandemic. It calls to remind of Mr. Deng Xiaoping’s words about the race will go on, and dancing will continue. So, in Hong Kong, everything had stopped, even schools and work, everything stopped, right? So why do you keep the racing going on at this time?

Engelbrecht-Bresges: I think it’s… what's probably one of the biggest challenges we had ever had in the history of the club. But starting from a must, we have horse welfare. We have 1,200 horses under our care, and one has to take care of them. And if you look to do so, you need around 600 people. When you then see if you want to run race meetings, how many more people you need? Probably around 400. So we came up with a holistic strategy. First of all, guiding principles: none of our activities can create a public health risk; secondly, none of our activities can create a health risk to our employees, to our customers, and our licensees. From this we identify very early, we have to develop a holistic testing strategy. So we went in a way in that at the height of the pandemic, we tested 1,500 people, PCR every day. So we could early identify any risk, any potential positives, we could isolate before these people who were infected could become infectious.

Chan: Were there any unexpected results at all? Surprises?

Engelbrecht-Bresges: I think the surprises is that you learn that you have to be even more vigilant, and that you even have to extend it to the families because one of the biggest risk factors came from the families. So with this testing regime, we could ensure that we live up to our guiding principles, we could ensure that racing continues. And in it, I think it shows the signs of resilience of Hong Kong, and it was admired around the world. And a lot of protocols we developed, we shared with all colleagues in the Asian Racing Federation, in the International Horse Racing Federation, where it was adopted and were then able to resume racing. But for us, I think it was important as the number one entertainment in Hong Kong to have every Wednesday’s race meetings and Sundays, without creating a public health risk, and people were looking forward to it. I got around probably every week 200-300 emails, whatsapps, from taxi drivers, of all works of life, who said please continue racing, that’s the only thing which I look forward to, doing it during evening time. 

Chan: Winfried, in the last few shows, we often talked about that Hong Kong has very stringent quarantine requirements, and that is not very friendly to businesses, and a lot of expatriates are being said, they have reported that they are leaving Hong Kong. Any of your colleagues or jockeys left because of the current restrictions? Just a matter of interest.

Engelbrecht-Bresges: I think it’s a massive challenge. I think we were able to hold the international races, in a special racing bubble, the same model which was used for the Beijing Olympics. And with this we could call it international travel. But we faced the challenge, especially when we have now our colleagues or families overseas. So we have around 15 to 20% of our colleagues in the management level, work currently overseas, to enable them not to lose the connectivity with family, to enable them that they still make contribution to the club. And it is, from the business side, one of our biggest challenges to keep tenants and to attract them. 

Chan: Indeed. Has the overall revenue or turnover, has it ever reduced even during COVID?

Engelbrecht-Bresges: We have, in a way, successfully digitalized our operation, so that we had already 85% of our revenues on digital platforms. When we closed the OBCs, there was a certain impact…

Chan: OBC meaning?

Engelbrecht-Bresges: Off-track betting centres. There was a certain impact, but when it came then to periods where we could open up the off-track betting centres, we use this to have more people reconnecting with us by opening up accounts, resetting their password. So if you look at the overall turnover, we have a turnover decline in the local horse-racing side of around 2%, which is over compensated by our international commingling, which I think goes now in 13 countries and 60 partners. In the football side, we have a 2% increase. So we roughly will look at a 2% increase of revenue base, even during COVID, which I think shows it remarkably resilience.

Chan: It’s very amazing, amazing results.

Engelbrecht-Bresges: And you see, we have the biggest user of FPS faster payments, we have 950,000 people registered with that. So technology is key for our success. And that’s why we invested so much in our IT systems… systems which we have IP rights to, which only, in a way, able to handle so many transactions globally than our system.

Chan: Winfried, you were in the news last week, and you were basically saying it was mission impossible for Hong Kong to host an equestrian event for the 2025 national games. Given the good work that has been achieved, even during COVID you have no drop of income, the racing can continue, why was that?

Engelbrecht-Bresges: I think if you go back to the Beijing Olympics, Beijing Olympics were held in Hong Kong 2008 because the mainland has not a health status which enables the transport of horses internationally, so we created… Hong Kong has a world-recognised status. And we transferred this world-recognised status into Conghua, where we have our training centre, so for the horses go back and forth between Hong Kong and the mainland. But if Chinese mainland horses would come to Hong Kong, they would have to go through a 90-days quarantine in the US because if these horses would come to Hong Kong, the health status of Hong Kong would not be any longer recognised internationally. We could have not international races, so that’s why in a way, the National Games, we have from all mainland horses coming, cannot be held in Hong Kong because of the consequence would be… we would lose our international current status. And this is understandably not creating value.

Chan: Right. So let's move on to another part of history of the Jockey Club. I know that recently you have a 50th anniversary of your Apprentice Jockeys' School, and how many jockeys have we successfully trained and become a champion riders

Engelbrecht-Bresges: I think becoming champion riders is definitely something very difficult in a very competitive world, but definitely Tony Cruz was a world-class rider. And if you see, it’s our really systematic training programme we have, we have now jockeys like Vincent Ho, Derek Leung, who holds the status among best riders in the world. But it is a very holistic, 7-year program, which would mean mandatory spending 2 years overseas to hone your skills before you come back to Hong Kong and go into the horse-racing side. And we trained them as world-class, top-class athletes. And that is why they are very competitive and they have a positive mindset, and they are able to compete with the world’s best.

Chan: Yes, I just read that the Equestrian Sports was awarded Tier A status…

Engelbrecht-Bresges: Yes.

Chan: …by the Hong Kong Sports Institute in 2019. So has it encouraged more youngsters to join as an apprentice rider?

Engelbrecht-Bresges: I think one of our challenges is weight.

Chan: Weight?

Engelbrecht-Bresges: Because I think, in a way, people getting a little bit more heavier. And we have around 400-500 people who apply, we go to assessment centres where we look at their balance, their reaction time, and their suitability to become jockeys. But for everybody who joins, has a career path. If he doesn’t make it to a jockey, he can work in the stables, he can become an assistant trainer, he can be a head led, he can go into administration. So what you do is a holistic approach, not only looking at one sportsman, which is probably not easy to be able on the top competing against word-class jockeys.

Chan: Winfried, just now you mentioned Conghua in Guangzhou, it was opened in 2018. What was the purpose of having a racecourse in Guangzhou, which is quite far away from Hong Kong? 

Engelbrecht-Bresges: I think if you look at our challenge in Hong Kong, we have not enough land. Shatin Training Centre, which was built in 1978, was not designed for an expansion and was not designed for world-class horses. So we could not get more land in Hong Kong, we support the Asian Games, and we had an unique opportunity to create a training facility, which is the world’s best. And that enables us to renovate for $3 billion, our stables in Shatin to bring them to world-class standard. But it enables further growth because we can, in a way, look at more races, including races in the Chinese mainland, but moreover it will tie into the national strategy of developing an equine value chain, an equine industry, and that will be a wonderful platform to further live to the “one country, two systems” principle.

Chan: Winfried, just one question that came into my mind - Jockey Club has done the right thing for Hong Kong people, I mean it allows responsible wagering, it has a lot of funding for the tax, and also helping projects. And with the Greater Bay Area right next door to us, in the next 25 years, how can you see Hong Kong having this great platform to develop to something even bigger? Is it even possible with the Greater Bay Area?

Engelbrecht-Bresges:I think we can, in a way, make contributions to a wider value chain. At the moment we have to buy our horses from all over the world because there is no breeding industry in Hong Kong. And I can see, if you look at 10, 15, 20 years, there will be a breeding industry in the Chinese mainland. And these horses can then, and we build a special quarantine station, acquire the health status of Hong Kong, they could participate in Conghua, in Hong Kong, and racing in the end is a selection process for breeding. And these horses go back to the breeding industry, so we can create a much bigger value chain, which will be in line with the national development plan.

Chan: Right. So how is this going to benefit Hong Kong? As you know, as I have reading that the equine industry is not only just the horses, trainers and jockeys, and also supporting staff as well. And you mentioned horse breeding.

Engelbrecht-Bresges: It is definitely a significant de-risking of our current supply chain long-term. And I think it gives development opportunities to Hong Kong people to work in the training centre, and vice versa. So in the end we think we have a wider population, which we hopefully can have interest in the sport, we have a wider population of people we can give exposure to develop. And therefore it's definitely win-win.

Chan: All right. Winfried, that is all the time we have, and thank you for coming to share with us how horse racing is vital to Hong Kong's stability and prosperity. Have a good week and goodnight.