In 2013, racecourse operator The Jockey Club launched the first retail bond in UK sport as a means of funding a major redevelopment of Cheltenham.
The Racecourse Bond offered a return of 7.75 per cent on a five-year, fixed-term investment of between £2,000 and £100,000. It exceeded its £15 million target by almost £10 million, making it the second largest unlisted UK bond ever.
The 7.75 per cent return is paid as 4.75 per cent in cash interest and three per cent in points for the Rewards4Racing loyalty scheme, which can be redeemed against items ranging from tickets and food to hospitality and annual memberships at Jockey Club racecourses.
Rewards4Racing is an important data collection tool for the Jockey Club, but played a central role in actually creating the bond strategy as well: the club and its financial advisers Rothschild used feedback from scheme members to determine the potential and structure of the eventual public offer.
“We were used initially as a survey tool to go out to our members and find out if they would be interested in investing in a bond, and if they were, how they would like it be structured.” Josh Apiafi, Co-Founder, Rewards4Racing
Rewards4Racing is also used to track the bond’s impact on investors’ racegoing behaviours as they redeem their loyalty points back at Jockey Club racecourses.
“The programme has enabled The Jockey Club to track what’s going on with the bond as points are given every quarter as part of a bond-holder’s interest payment.
“We can track how many investors are new customers to Jockey Club racecourses, how many were lapsed and how many were engaged at the launch of the bond. We can then measure whether investors are spending more at Jockey Club racecourses because of the points they receive on a quarterly basis. The Jockey Club is then able to measure the impact of this spend on the real rate of interest it is paying.” Josh Apiafi
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