Saturday, December 13, 2008
The blind lead the blind, deaf and dumb
In a revealing Monday analysis of declining betting receipts that began late in the 20th Century and has since steepened that appeared on his site, Ray Paulick raises the point that corporate ownership of racetracks has been a unanimous failure while the few remaining privately owned tracks – Tampa Bay Downs and Oaklawn Park – have flourished while swimming against the tide of declining attendance and betting receipts.
Meanwhile, in Tucson, where the annual excuse for golf and cocktails wrapped around the annual symposium hosted by the University of Arizona Racetrack Industry program, there is universal agreement that an effort to draw fans and bettors back to racetracks is essential to the sport’s future.
This is more or less the equivalent to saying: My portfolio is down by 50 percent. But I’ll survive the recession if I can win the lottery.
structure and underpinning.
There are no fans to bring back and bettors are reacting to an unpalatable product by reducing risk. This is more a financial market than a sport.
Corporate types that make decisions nowadays are focused on the bottom line and responsible primarily to shareholders. Magna Entertainment, the largest corporate owner of racetracks including Santa Anita and Gulfstream Parks – is a monumental failure even while, as Paulick notes, the shareholders have seen more than 99 percent of value evaporate beneath the weight of fearless leader Frank Stronach’s dementia. His first mistake was the notion that people come to racetracks to be entertained, which is entirely fallacious. Horseplayers show up, if at all, to bet on horses.
A matter of months after a 1-for-20 reverse split undertaken to avoid delisting, the stock is again trading at less than $1, closing at $0.785 on Wednesday. It is difficult to imagine Magna’s long-term survival is unlikely and the most devastating failure in the racing’s history is almost assuredly at hand.
Private ownership, while working nicely at Tampa and Hot Spring, Ark., can also be disastrous in the wrong hands. Two words support this observation: Hialeah Park.
The real problem is that the people who operate racetracks lack an understanding of the sport and its audience. They continue fruitlessly ludicrous attempts to emulate the business practices of other sports, which are organized in leagues and franchises and enjoy central authoritative organizations. Racing is by comparison a herd of cats attempting to solve the same challenges that began to manifest themselves decades ago when the handwriting first appeared on the wall.
Recall forecasts made in the ‘70s that predicted the day when only a few of the largest tracks would survive, racing would become a studio sport and horseplayers would place wagers by telephone. This was evident long before anyone imagined the current advances in technology.
Now that these predictions have become the reality, there is alarm.
Racetrack operators have not suffered the loss of a live audience; they have encouraged the migration to alternatives venues. This is neither accident nor unfortunate but was premeditated. Lamenting the result is ridiculous. Aside from the most important days of the racing season, there will never again be a vibrant atmosphere at most racetracks. Saratoga, Keeneland and Del Mar, along with Tampa Bay Downs and Oaklawn, are the exceptions and share the strength of the short, clearly defined seasons coupled with inviting ambiance.
This is the result of expanded simulcasting, the emergence of off-shore, Internet-based wagering alternatives that offer more attractive rebates, 12-month racing calendars in major markets, neglected facilities, price gauging, arrogant management, the absence of meaningful customer service at most tracks and a generally substandard product of which there is no better example than what is being passed off as horse racing at the moment in New York.
Racing differs from other sports in every conceivable way.
Most importantly, it is not a spectator sport but rather participatory through wagering, which is its central nervous system. Defined seasons are local and absent in the major markets. Racing goes on throughout the year. Its most attractive draw, the “big” horse, is of dubious value because of careers shortened by economic expediency and injury. Jockeys lack the star quality they believe they possess. Trainers, most of whom prefer to remain in the background, and owners, seen largely as passive participants, are not marketable. Even George Steinbrenner, larger than life in the world of baseball, and Joe Torre, perhaps the nation’s most recognizable baseball manager, are seen as celebrities who dabble in racing, not horse owners and breeders who happen to be involved in baseball. Racing has no equivalent to Mark Cuban but certainly could use such a personality. In this sport, original thinking and an outside-the-box approach will surely be rebuffed.
Most racing executives look to NASCAR as the standard for growing a fan base but nothing about NASCAR applies. Most people own automobiles and enjoy driving fast, so the process beings with a visceral connection. Few humans ride horses, fast or otherwise. And if NASCAR staged 10 races a day, five days a week, 12 months of the year at 20 tracks, the stands would soon become unoccupied except on the biggest days – just like the nations nation’s racing hippodromes.
The term “fan” in racing, except in rare and short-lived circumstance, is not applicable. There are only horseplayers, most of whom have no interest in being at Aqueduct or Hawthorne or Laurel Park on a daily or even occasional basis.
When racetrack crowds were large, there were no legal gambling alternatives outside Nevada, clearly defined seasons, no off-site options, no Internet and no in-home simulcasting. Racing has implemented most of these things in order to make the product, even a bad product, conveniently available or in reaction to an absurdly widened gambling market that places racetracks in competition with among other things the lotteries operated by the states that regulate the industry. There are too many things wrong with this picture to count.
So, between cocktails in Arizona, people are telling racing executives that they must bring back the fans and others are taking these lame warnings seriously.
Repeat after me: There are no fans. There are only horseplayers. They are already out there. You just don’t see them. They pay attention but they are not particularly happy. A look at the races being run today at most tracks may provide some insight as to the source of this displeasure. So, lacking opportunity, they put less money at risk. To make matters worse, they are suffering the same economic hardships that plague pretty much everyone in the world at the moment.
Bringing them back to Aqueduct, Hawthorne, Laurel Park, Turfway Park is not an option.
Work with what you still have. -- PM
Check out Paul Moran on Blogspot At the Races