Gai Waterhouse has worked her way to the top of her field to become one of the Australia’s top three horse trainers. Gai discusses the keys to her business success.

Legendary thoroughbred trainer, TJ (Tommy) Smith was often asked: “Isn’t it a shame that you didn’t have a son to carry on from you?” His response? “I could’ve had a son who wanted to be a window dresser, but I’ve got a daughter who’s as keen as me.”

Gabriel Waterhouse, now better known as Gai, has steadily worked her way to the top of her field to become one of the most recognisable faces of Australian horse racing and one of the country’s most astute businesswomen with both hands firmly on the reins of a multi-faceted business.

A family affair

Waterhouse is no stranger to the rigours of mixing family and business. As a child, she accompanied her father to the track and much of her adult life has revolved around horse racing since. Her husband of 35 years, bookmaker Robert Waterhouse, is the son of bookmaker Bill Waterhouse. Her son, Tom, is a bookmaker, while her daughter, Kate – a former David Jones Racewear Ambassador – pursued a career in journalism and does regular racing, fashion and entertainment-related TV segments for various networks.

The headquarters of Gai Waterhouse Racing is Tulloch Lodge at Royal Randwick racecourse, where Waterhouse began working alongside her father in 1978 before eventually taking over from him when he retired. Named after a champion horse trained by her father, and one of the five inaugural horses inducted into the Australian Racing Hall of Fame, the lodge consists of more than 120 horses and 60 staff. She also has the nearby Bounding Away Stables on Kensington’s Doncaster Avenue.

The proof of Waterhouse’s extraordinary acuity for running the family business is in her stellar results. According to Racing Australia, with 125 Group 1 wins, she’s currently the country’s third most successful trainer ever, behind second-placed Bart Cummings (266 Group 1 wins) and her father in the top spot (282 Group 1 wins). Recognised as the highest standard of thoroughbred racing in Australia with minimum prize money of $300,000, there are 65 Group 1 races held each year in Australia, including the Melbourne Cup, Cox Plate, Caulfield Cup, Blue Diamond Stakes, Golden Slipper and Crown Oaks. And apart from the large sums of prize money, Group 1 horses often go on to become big earners in the breeding industry.

Waterhouse’s prize winnings represent her intrinsic instinct for champion horses and the hands-on know-how of running a business that relies on the often volatile combination of horse and rider.

A flare for drama

After graduating from the University of New South Wales, Waterhouse moved to London to pursue a career in acting and landed roles in the television series Dr Who: The Invasion of Time and in the theatrical production of The Scenario. She traces her fondness for the theatrical life back to her late mother, Valerie Smith, who came from a musical and theatrical background.

But her father, now immortalised in bronze with a life-sized statue at the centre of the track at Randwick racecourse, felt she’d missed her calling. “TJ constantly told me that I was mad not to come into the family business,” says Waterhouse. “He kept saying, ‘it’s something that you enjoy, and there’s probably no money in the theatre – come work in the family business’.”

Returning to Australia following the death of her uncle, Waterhouse did just that. She took a job as the stable clocker but continued to act, signing with talent agent Harry M Miller and landing a role in The Young Doctors. Gradually she dedicated more of her time to the stables and acting took a backseat.

“I was working in the office and clocking the horses in the morning, so it wasn’t like I was training them,” she says. “I’d be learning more and getting down into the yard more often and the more I was doing this the more I realised I just adored it. I couldn’t get enough of the training side.”

Her dramatic instincts are more than just a colourful backdrop. In a business context, her charisma translates into an ability to motivate and inspire her clients, riders, trainers and other team members, year after year.

In fact, the aspect she loves most about running her own business, and one that underpins its success, is the people she meets, from the owners to the jockeys, racing managers and other staff at Tulloch Lodge. “I can ring everyone from the Prime Minister to a dear little sweet lady to talk about a horse they may have,” she says. “It’s an industry with such diverse people. And I love working with the animals. Horses are fascinating; it’s like having some small children and some grown up children around you. I enjoy the challenge of training a horse. I’m a bit like a football coach, getting everyone to rally and getting the horses to peak at the right time.”

Overcoming barriers

Although Waterhouse’s pedigree was helpful, there’s a good reason she’s hailed as such a crucial female business leader. While Smith had encouraged his daughter to work in the family business, Waterhouse says he was firmly against her becoming a trainer due to the degree of difficulty involved. “He was very upset and felt it would be too hard dealing with the owners and the buying and selling of the horses,” says Waterhouse. “And he was right, it is difficult. It’s certainly not an easy thing to take on.”

Her first battle was getting her Australian Jockey Club (AJC) licence. She applied in August 1989 but was rejected on the grounds that her bookmaker husband could corrupt her. She fought the decision at the Anti-Discrimination Board, in the Equal Opportunity Tribunal and the Court of Appeal.

“That was a very traumatic time,” says Waterhouse. “It was well publicised and we weren’t too sure how to proceed. I was fighting a one-woman fight but Rob and my children were totally behind me. Rob said, ‘if you really believe in it, then you have to go for it; it’s something you’re really passionate about and have to do’.”

The case created extraordinary publicity around women’s rights. Kevin Perkins, who wrote the book Against All Odds about Waterhouse, noted at the time: “The case became a cause celebre. Wherever women gathered, in shopping malls, clubs, on golf courses or beaches, they talked about this denial of a woman’s rights. Gai emerged as a public champion of the ordinary woman to challenge entrenched practices and beliefs.”

Licence granted

When the AJC capitulated and granted her licence in January 1992, Waterhouse recalls being in total shock. The federal government also amended the anti-discrimination law in what was to become known as the Waterhouse Amendment.

But after the celebrations were over and she got to work, reality set in. “I didn’t know if I could train, no one knew if I could train,” she says. “I didn’t have any horses, I had to start from scratch. But I’ve never looked back.”

First Group 1 win

Her first Group 1 winner came later that year in October, when a horse from New Zealand called Te Akau Nick won the Metropolitan Handicap at Randwick and qualified for the Melbourne Cup.

At the time, she outlined her ambition to be one of the major trainers of Australasia. “I work very hard at what I do and I try to be extremely professional,” she said. “That’s the way I’ve been trained over the last 20-odd years working with my father. To be successful in racing you’ve got to be very dedicated and work very hard but, more importantly, you’ve got to run it as a business. And that’s exactly what I do – I run the stable as a business. You’ve got to look after your clients, who are the major base of any stable, you’ve got to look after your staff and you’ve got to look after your horses. Those three components are very important, you can’t work without the three of them.”

History, innovation and hard work

A key part of her business success is understanding how to combine classic and innovative training methods. Waterhouse’s training techniques are a blend of her own style and her father’s legacy. Renowned for his ‘bone-and-muscle’ regime that produced fit horses, Smith’s pioneering methods dramatically altered the industry’s prevalent thinking about horse nutrition and health.

“He was my mentor,” she says of her father. “TJ is the greatest trainer we’ve ever produced out of Australia – he was a one-off. And he was a very good trainer of people, constantly teaching me the right way to do things and making me very observant. I think my record is a tribute to the philosophy of combining the best of both worlds.” Her message to other business owners: retain the best of the past, but remain committed to innovating.

A working day

Her typical day starts at 3am with most mornings and afternoons spent with the horses. Then there’s communicating on a daily basis to the owners, dealing with transport companies, feed merchants, travelling to country and national race days and helping raise the profile of horse racing. She says: “Training requires you to watch your stable of athletes closely. They can change so quickly on you, so unless you keep your mind on them every day they can get away.”

While running a business with physically demanding roles is one challenge, managing the cash flow of a labour-intensive business is another. The solution? Ensuring that all the fundamentals are firing to produce results. “It costs a lot of money to run a training business and you have to be constantly winning big races to pay for the labour you need.”

Picking a winner

The ability to pick a winning horse is at the heart of being a good trainer and maintaining a successful business, but it’s also a matter of keeping them fit and healthy, and matching them with the right jockey so they peak on race day. Waterhouse can’t look at a horse and know it’s going to be a champion, but she can tell if it’s an athlete – and if it’s an athlete, it’s got a chance of becoming a champion.

It’s an incredibly intensive process. Waterhouse and a team of about eight people regularly travel the country visiting horse studs in search of yearlings she can turn into potential winners. For example, in the months prior to January’s Magic Millions yearling sales on the Gold Coast, they could inspect up to 1,000 thoroughbreds. These sales are followed by a 10-day racing carnival, where horses that were sold compete in closed races worth more than $5 million. At the 2014 Magic Millions

Sales, Waterhouse reportedly spent $7 million on 30 horses.

With 90 percent of the 1,600-metre-plus races in Australasia won by horses originating from across the Tasman, she also attends the Karaka Premier Sale in New Zealand. “Rob’s racing formula when backing horses in staying races is to just look at the NZ suffix. In anything over more than a mile, these initials dominate.”

However, Ireland was the birthplace of Fiorente, the horse that delivered her biggest win. Waterhouse bought the thoroughbred specifically to win the Melbourne Cup and he didn’t disappoint. He placed second in his first Melbourne Cup in 2012 before claiming the Cup and its $6.2 million prize money the following year. It was a dream come true for Waterhouse, who had previously trained three second-placegetters in the Melbourne Cup.

An Australian first

The win made her the first Australian woman to take out the iconic race and only the third female trainer to do so. The first was a New Zealand trainer known as Granny McDonald who won the Cup in 1938 with a horse called Catalogue. However, at the time, women weren’t allowed to compete as trainers in Australia, so her husband, Allan McDonald, was officially recorded as the winning trainer. The second was Welsh-born Sheila Laxon who won in 2001 with her mare Ethereal.

“It was a very big moment,” says Waterhouse. “Rob said, ‘this is the most life-changing thing that has happened to us’, and he’s right. It’s very much recognised throughout the world. It’s something I wanted to achieve and I was so pleased I did it. Very few women have done so, it’s a great feat and people recognise it as such.

They are very hard races to win.”

She’s also trained five winners of The Golden Slipper Stakes. A 1,200-metre race for two-year-old thoroughbreds at Sydney’s Rosehill Gardens racecourse, Waterhouse considers it to be the champion-making race of Australia. And in 2001 she won the Golden Slipper trifecta with Ha Ha in first, Excellerator in second and Red Hannigan in third – a feat never before achieved in this race. She then went on to win again with Dance Hero (2004), Sebring (2008), Pierro (2012) and in 2013 with Overreach where the prize money was $3.5 million.

“If you can win the Golden Slipper as a colt, you can be assured that the owner or that group of owners will make many millions of dollars,” she says.

Racing’s future

Waterhouse is reflective about the future of the industry. The biggest change since she started is that people no longer go to the races as often as they used to.

“Racing has totally changed in the last 20 years,” she says. “It’s deteriorated dramatically. Part of the reason for this is the general public doesn’t quite understand it. I think they see it as somewhere where they go and get dressed up and have a party.” Ironically, it’s the female participation that’s been growing, making Waterhouse’s profile even more important.

A key issue for many Australian businesspeople is succession planning and

Waterhouse is no exception. While she followed in her father’s footsteps, she’s yet to spot a next generation Waterhouse to eventually take the reins.

So it seems the Queen of the Track may need to look further afield to find the next legendary female trainer.

This article was first published in Business View magazine (Summer 2014). For a behind-the-scenes look at Gai Waterhouse’s operations download the iPad edition of Business View for free via our app, NAB Think.

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