THE SHANGHAI RACE CLUB BUSINESS STRATEGY
In the early 20th century the Shanghai Race Club (SRC) transformed horse raacing into one of the most followed sports in Mainland China. This document set outs the SRC’s strategy for repeating this in the early 21st century.
Key points made in this document:
- The racehorse is a symbol of luxury.
- There are 75 million people in Mainland China spending 60 billion euros per year on luxury goods.
- The SRC has created an online mechanism that is not gambling related, but will succeed at converting these 75 million luxury buyers into genuine and aspiring racehorse owners.
- Success of this business strategy will contribute 1 Billion Euros to the annual commercial revenues of horse racing.
The racehorse and the world of luxury.
Owned by Kings, Queens and Princes, the racehorse is still the world’s ultimate luxury possession.
Furthermore the racehorse fulfills the aspiration of the luxury buyer far beyond general luxury goods, as it bestows upon its owners a genuine feeling of participation in the exclusive world of titled and wealthy people.
Watching your racehorse team compete against those owned by the Queen of England or the Ruler of Dubai is a priceless experience that truly draws you into the realm of high society, even if you are only one of the dozens or hundreds of owners of your team.
Racehorses and buyers of luxury goods.
Yet the racehorse has never been presented to the luxury buyer in a way that makes it a simple and affordable pleasure.
Solving this for the 75 million luxury buyers in Mainland China whom collectively spend 60 billion euros per year on luxury goods is the goal of the SRC and through the success of this initiative contribute an additional 1 Billion euros to the annual commercial market for horse racing by 2020.
Learning to introduce buyers of luxury goods to the racehorse.
The SRC first brought horse racing to Mainland China 1862 and since the revival of the SRC brand in 2008 has gained an unparalleled level of kind support from both Chinese and European government leaders and industry institutions for it’s initiatives to rebuild the popularity of the sport amongst luxury buyers in Mainland China.
SRC’s recent accomplishments include the hosting of a celebrity packed Royal Ascot showcase dinner in Shanghai in partnership with the prestigious Gieves and Hawkes, Guerlan and Lanvin brands. This was lauded as the grandest horse racing dinner to have been hosted in Mainland China in recent years.
The dinner was followed by a private tour to England with supermodel Miss China to attend the world finest race day, The Royal Ascot gold cup. The tour took SRC members through a money cannot buy experience including encounters with aristocracy, celebrities and entry into the Royal paddock area of Royal Ascot, the exclusive reserve of royalty and celebrity racehorse teams owners.
With support from two of the worlds leading sports media companies the SRC has also pioneered live streaming of European horse racing in Mainland China engaging over 20 million viewers across the nation in 2013/14 with live video and chat content in Mandarin Chinese.
Selling racehorses to 75 million luxury buyers in Mainland China.
Drawing on the last few years of priceless insights gained by the SRC team into the attractions of horse racings to China’s luxury buyers the SRC has developed an original and profitable business strategy.
The business model centers around the release of a range of commemorative coins with each set depicting the team colours of notable horse racing owners such as HRH The Queen of England, HRH Aga Khan, The Ruler of Dubai or Lady Rothschild, and the team colours of notable institutions such as Oxford & Cambridge university.
The coins or “Paoma” as they are named, are digital and can be purchased online from the paoma website. Paoma is one of the meaning for the word “racehorse” in Mandarin Chinese.
The benefits of Paoma digital money.
1. Paoma coins becoming increasingly more valuable. The Paoma coin offer luxury buyers in China an attractive proposition to start to pursue an interest in horse racing, as they multiple when the racing team displayed on the coins win a featured race, making the coin holder richer. The coins never drop in value to avoid being misconstrued as an element of gambling.
2. Paoma coins make fine living more affordable. Paoma coin holders are encouraged to spend their digital money in the designated online store where they can use them to pay to become an owner of a racing team (starts from 500 euros) or purchase racing related luxury brand goods such as Longchamp leather bags or wallets (starts from 250 euros).
3. Paoma coins make horse racing culture fascinating and simple to learn. Through the buying and spending of coins the holders discover and become increasingly familiar with the names of the racing teams and the rivalries between these team owners. Coins holder are fed engaging stories updating them on the conflict and friendship between their team and other teams as they compete for trophies.
Paoma coin targets and business goals
2014 The SRC goal during the beta test in 2014 is to sell 10,000 of these coins for 10 euro per coin generating a pool of 100,000 euro’s with a coin redemption (spend) of less than 25% or 25,000 euros.
2015-2017 The paoma digital coin platform will then be scaled to manage 5 million coins during phase 1 and a pool of 50 million euros.
2018-2020 Then scaled to 50 million coins during phase 2 generating a pool of 500 million euros.
SRC will additionally benefit from other commercial revenue streams notably licensing of racing teams logos, merchandising and sponsorship collectively forecast to contribute 50 million euros in phase 1 and 500 million euros in phase 2 .
The target for coin redemption is set below 25% throughout the phases.
SRC profits and company value.
SRC focus on profit comes through managing fees and commissions from commercial services provided to racehorse team owners, thus providing them with a new revenue stream stemming from licensing, merchandising and sponsorship of their team colours in Mainland China.
The digital coins serves the purpose of making the racehorse owner names and team colours famous in Mainland China and are not positioned as an SRC profit center. This is a logical decision made to avoid distrust accusations arising from the buyers of coins, which would in turn have a detrimental effect on the acceptance of paoma coins in the market.
Through this business strategy the SRC stands in a powerful first mover position in Mainland China market for supplementary businesses such as gaming, as they open up, should these new opportunity be considered at the time the correct path for the SRC to pursue.