WSJ.Money
China: The Next Big Horse-Racing Center?
England, Dubai, Paris and Kentucky are among the best-known horse-racing hubs. Now a Beijing businessman is trying to add China to that exclusive list
June 5, 2014 10:51 a.m. ET
Ren Ningning's farm
Photograph by Jonathan VDK for WSJ.Money
FROM THE OUTSIDE,
there doesn't appear to be anything special about
Ren Ningning's
farm southeast of Beijing, tucked among plots of lotus root and
other crops. But once beyond the redbrick wall and locked iron gate, a
visitor enters into a rich man's fantasy land—a sprawling, 100-acre
equestrian estate with row after row of stables and some of the priciest
horses in China.
There is a clubhouse
filled with racing paraphernalia: saddles emblazoned with Chinese flags,
medals and trophies from past victories, and an odd enormous floor
lamp—in the shape of a horse, of course. Outside, there's space for
Ren's 150 Australian, Japanese and Irish horses to exercise, as well as a
900-meter training track surrounded by wooded groves. Some of the
stables are air-conditioned to make sure the thoroughbreds stay
comfortable, and there is a swimming pool the horses can use to cool off
in the summertime.
Wealthy Chinese businessman Ren Ningning is breeding
horses and hosting races in hopes that China will soon have a horse
racing industry like the U.S. or the U.K. But there's one thing missing:
gambling.
Ren Ningning at his farm in china.
Photograph by Jonathan VDK for WSJ.Money
Photos: Can Ren Ningning Make China the Next Big Horse-Racing Center?
Click to view slideshow
Ren, who built his wealth through a
medley of businesses selling everything from car parts to concrete, has
spared no expense to ensure his farm turns out the best-trained animals
around. He set up a breeding station with an $800,000 Japanese black
stallion and hired a full-time staff of 30 keepers and 15 jockeys. He
has his own brand for his animals: A stylized "R," for "Ren," with a
horseshoe underneath. Sometimes Ren wanders out himself for a ride,
dressed in traditional riding attire, with a riding cap and whip.
For
many of the more elite, of course, raising horses is merely a hobby.
But at age 60, Ren has set his sights on an unusual dream. In the world
of horse racing, the best-known hubs are England, Dubai, Paris and,
naturally, Kentucky. But in the next 10 years, Ren thinks he can turn
China into the world's next big horse-racing center, rivaling any of
those. He wants only the best—the best jockeys, the best horses and the
best racetracks. And for now at least, money and effort are no object
for Ren, who sports strands of long gray hair and the kind of soft,
round belly that often signifies wealth in China.
There's
only one problem. Although horse racing technically is legal in China,
it has long been frowned upon by Beijing authorities, who see it as a
decadent holdover from Western colonial times. Most important, they have
prohibited betting, an activity that draws many of the spectators in
other parts of the world.
Indeed, the
thrill of studying the odds, placing a bet and winning a trifecta is so
essential to horse racing that it is tough to imagine the sport without
it. Yet Chinese lawmakers worry horse-track betting will only lead to
more social ills and crime. As a result, the top races now held at
China's half-dozen or so major tracks rarely attract more than a few
hundred spectators, and when bets are made, they are generally under the
table.
Plenty of people hope that will
change, and not just horse owners like Ren. Horse breeders in places
like France, England, Australia and the U.S. share Ren's dream, because
it will create another rich market for pricey thoroughbreds, with scores
of newly minted Chinese billionaires bidding against Middle Eastern
sheiks and other wealthy elites for top racing prospects.
But
it will be a long race before the world's most-populous nation ever
fully embraces the sport of kings. A recent anticorruption push by the
government may have made it even more difficult to change minds in
Beijing, where leaders are preoccupied with showing they are cracking
down on corruption and flashy wealth. Although boosters such as Ren have
tried wining and dining government officials to end the betting ban, so
far "all it gets them is fat and drunk," says one skeptic in the racing
community.
Ren isn't ready to give up yet.
Ren's clubhouse outside of Beijing is decorated with a decade's worth of racing victories.
Photograph by Jonathan VDK for WSJ.Money
HORSE RACING has a
long pedigree in China. Legends tell of a Zhou dynasty general, Tian Ji,
who earned fame when he challenged a Chinese king to horse races in the
fourth century B.C., while centuries later European aristocrats raced
thoroughbreds at tracks around the country as they carved out
concessions in port cities. But horse racing came under suspicion in the
1930s as China entered a period of political uncertainty, civil war and
foreign invasions, and the official end came in 1949, when Communist
Party leader
Mao Zedong
came to power, casting out hobbies like horse racing, which he
saw as foreign and evil.
Photos: The Golden Gallopers
Top-ranked horses have won more than $73 million in prizes over the past year at some of the richest races in the world.
Click to view slideshow
It wasn't until the 1990s, when
Chinese authorities started loosening their grip on the economy, that
horse racing started again, albeit on a smaller scale than 100 years
earlier. Newly rich collectors imported prize horses from Europe and
elsewhere, while racing clubs popped up in the southern city of
Guangzhou and in the northern capital of Beijing. Although illegal,
informal gambling crept in the back gate of the fledgling race clubs.
That went on until the late 1990s and mid-2000s, when Chinese officials,
worried about corruption, doping and betting, swept in to shut down
tracks in Guangzhou and Beijing, where police and paramilitary personnel
seized betting agents and race-club leaders. Some say a few horse
owners were so angry that they killed their own horses, leaving the
government with the carcasses to clean up.
Yet
like so much in China these days, it wasn't long before enterprising
entrepreneurs found a fresh opening. This time it was the 2008 Beijing Olympics,
which included equestrian events. It seemed implausible that horse
racing would be restricted when so many other equine events were being
planned, and so the sport re-emerged.
Today,
there are many abandoned tracks across China, but there are typically
eight official ones open for national races, including three in Inner
Mongolia, one in Chengdu, and one in Shanghai. Informal races are also
organized from time to time between horse owners like Ren and other
investors, who together imported some 1,730 horses from abroad last
year—a 64 percent increase from 2010. Sometimes there is gambling at the
races, which are organized by racing clubs throughout the
country, though the bets are very much under the table or between
friends. Prizes hover around $30,000, and sometimes reach more than
$400,000, thanks to limited ticket sales and sponsorships. But
organizers believe they could fatten the purses significantly if
gambling were allowed, since it would attract more spectators.
China
has allowed some gambling under limited circumstances. Although casinos
are prohibited in mainland China, Beijing has permitted a sports
lottery in which winners are determined by randomly selected numbers,
with proceeds going to support the training of state-sponsored
Olympians. Sales in that market jumped 18 percent to more than $50
billion in 2013 from the year before.
Racing
boosters contend that China is missing out on massive revenue by
keeping a lid on horse betting. They point to racing hubs such as the
U.S., France and especially the U.K., which logged more than $450
million in tax revenue from horse racing in 2012, according to Deloitte,
the consultancy. Dubai now draws more than 50,000 spectators each year
to the Dubai World Cup, a race that carries a purse of $10 million.
Private
developers, meanwhile, are pressing ahead with ambitious schemes built
on hopes that Beijing will someday allow horse betting or that racing
will at least take off. Hong Kong-based Desert Star Holdings has aimed
for years to break ground on a $1.7 billion luxury development dubbed
Tianjin Equine Culture City, which will include a track, in Tianjin, a
coastal city southeast of Beijing. Although some seriously question
whether the project will ever get off the ground, its original plans
call for 4,000 horse stalls, a high-rise glass-enclosed grandstand, a
luxury clubhouse and prize money of more than $160,000 for the Tianjin
National Cup, a 2,000-meter (11/4-mile) race set for 2015.
"Compared
to the rest of the world, this is the frontier," says Eden Harrington,
general manager of the China Horse Club, a members-only horse-racing
group whose website describes the organization as a "doorway to a world
of opulence and extravagance." The question is whether China will remain
a Wild West of horse racing—or eventually become the new promised land
for the mint-juleps-and-summer-hats set.
If they were held in china, racing proponents contend,
major events similar to the Hong Kong international races could be an
economic boon.
Photograph by Vince Caligiuri/Getty Images
A NATIVE OF
Nanjing, Ren got his first taste of the good life through a trading
company he opened selling parts for the government's fleet of official
cars in the 1980s. The business made him richer than most
Chinese—allowing him to buy a Mercedes-Benz—but he had a strong desire
to see what other countries had to offer. In 1988, he decided to move to
the sunny, seaside city of Perth, Australia, which was relatively open
to Chinese visitors.
Ren didn't speak
much English, so opportunities were limited. He landed a job as a
groomer at Belmont Park Racecourse, a riverfront track three miles east
of Perth's city center, and says he quickly fell in love with the
animals whose high speeds could move millions of dollars through wagers
and prizes.
Ren used savings to start a
machinery and equipment company in his adopted home. But when it became
clear China was set for a boom of historic proportions, he returned home
to start a concrete and equipment conglomerate, Hua Xing Holdings,
which paved his road to serious riches.
In
1996, he bought his first Australian thoroughbred for about $56,000.
Although still a lot of money for him at the time, "it didn't matter how
much it cost," he says. "I had to have it." He kept on buying, at one
point chartering a plane to fly in 94 horses from Australia, and soon he
was one of the leading figures in China's emerging horse trade.
Ren
knows China well, and understands that little in the country is changed
by means that are common in the U.S., where advocates establish lobby
groups and create
Facebook
FB -1.09%
pages to push for change. Too many people jawboning about the
lack of gambling in China would likely just result in the government
slamming the door further shut, Ren and others figure.
Instead,
Ren and his allies have tried to build up the sport quietly, focusing
on places that may already support it. That means scheduling races with
the help of sympathetic local officials around the country and inviting
government leaders so they can see that the sport can be managed without
crime. Sometimes, Ren and others fete officials in their hometowns,
explaining how gambling could benefit the racing industry and spur
economic growth. He also helps lead groups like the Beijing Turf &
Equestrian Association, a local horse-sports organization, to plan
races, award top horses, and otherwise appeal to the country's rich
elite.
Golf and boxing have both
followed similar paths to acceptability in China. Both were viewed as
Western evils, with one representing wasteful use of land and the other
seen as a violent gateway into gambling. But China likes to be No. 1,
and when it learned golf would be included in the 2016 Olympics, it began bankrolling young golfers in the hopes of creating the next
Tiger Woods.
Chinese boxer Zou Shiming won two Olympic gold medals and three world titles, with government backing.
Ren
rarely misses an opportunity to spread the word. At one of the Beijing
Turf & Equestrian Association's most recent banquets in Beijing, he
raises a glass of imported Kentucky bourbon at table after table,
calling for "immediate development" of China's horse-racing industry. He
chooses his words carefully: In Mandarin, "immediate"—or ma
shang—literally means to be on top of a horse.
Clinking
glasses with China's most important horse-importing agent, Ren pulls a
Royal Yacht Club sweater down over his round stomach and says he's
especially optimistic about the current year—the Year of the Horse in
China's zodiac calendar. Among the goals: More races, and more cash from
sponsors like luxury car brands that can help build up purse sizes to
generate more interest.
"Horse year—it
will be a good one," says a flush-faced Ren, as he lays out a plan for
races in places like Inner Mongolia and China's Western Xinjiang region.
"You've never seen anything like the track in Xinjiang," he says,
telling his assistant to pull up pictures from her iPhone.
It doesn't look like much as far as tracks go—just an oval of brown
dirt in the middle of nowhere, with no luxury grandstand. But "the air
is clear, and there are mountains in the backdrop of the horses as they
run," he says.
"Ren Ningning is an
optimist," says Chu Wen, a fellow member of the Beijing Turf &
Equestrian Association. Others have come and gone over the sport's
turbulent history, he says, while Ren is among the few who have stuck it
out.
Many in the industry say the good
days are long behind them. China's new leaders, fresh on board, have a
laundry list of reforms—from financial to medical—on their agenda, and
greenlighting horse betting isn't among them.
"It's
a difficult process," Ren concedes. But he insists there has been
progress. At recent congressional sessions in March, for example, 13 of
China's 31 provincial heads from places including Inner Mongolia and
inland Ningxia raised the issue with top leaders, pushing them to allow
betting on horses.
"What other people do, I don't care, but the dream starts from me," he says.
Showcasing horses at an auction in Perth.
Photograph by Jonathan VDK for WSJ.Money
ON A RECENT Friday
night, at the VIP section of the Crown Perth Casino in Australia,
thousands of miles away from China, Ren sits sipping Chinese tea with
his entourage, including a young assistant and China's most successful
jockey. Murmurs of Mandarin are audible around the slot machines and
card tables, as Ren isn't the only wealthy Chinese man in the room.
Ren
has come to Australia to shop for more horses. But after a day poring
over the catalog at the Magic Millions yearling auction at Belmont Park,
he decided he wasn't interested in any of the animals on offer. So he
departed for the gaming tables.
The
members of his entourage follow his every move closely. "Nine...15...too
many," the dealer at the blackjack table says of her own hand as she
goes bust and hands Ren about $550 in chips. He started with roughly
$1,340 and after two hours has quadrupled his money.
Ren
recognizes the dealer, a young Chinese girl who went to school with his
daughter and is working part time at the casino. "I've heard you are a
tough one to crack," Ren says.
Write to Laurie Burkitt at laurie.burkitt@wsj.com
No comments:
Post a Comment