Wednesday, September 17, 2008
Racing Has Problems? Compared to What?
Saratoga Springs, NY, September 16, 2008--Compared to Wall Street, racing’s financial difficulties pale. I wonder now if Phil Gramm, famed financial adviser, still believes that Americans are whiners, that the economy is on sound footing, and that the ultimate political strategy is the one that wins, truth be damned?
(OK, so that last part was mine, but you get the idea. So send in the clowns, the pigs, and get me someone from the Revlon company on the line, stat).
Actually, despite the bad economic news contained in a chart provided by NTRA and Equibase reprinted here last week (see HRI archives), racing isn‘t doing nearly as badly as many other American businesses, including its major competition for the wagering dollar.
As another aside, following the lead of Churchill Downs Inc., Equibase unfortunately no longer will provide quarterly handle summaries beyond daily handle figures noted at the bottom of result charts. And this is despite requests from media outlets that they continue doing so for the sake of reportage. So much for transparency.
To the point, it’s ironic that the Video Lottery Terminal form of casino wagering that has injected fiscal life into struggling racetracks is, along with traditional forms of casino wagering, also suffering the effects of a failing American economy. Sobering that not even gambling, long considered as being recession proof, no longer is.
According to a story in Sunday’s New York Post--forget the political agenda; their business section is solid--casino revenue on the Las Vegas strip decreased 15 percent in July. And it was the seventh consecutive month that Sin City casino business declined.
Las Vegas visitation has flattened or has been declining for months, with projections indicating that the slide will continue at least in the near term. Air travel to Las Vegas is on the wane not only domestically but from foreign sources as well, especially the Asian market, and that‘s been a much bigger problem.
Despite the progress on display during the recent Olympics from Beijing, Asian economies have slowed down. Between the deceleration of Asian economies and competition from glitzier Macao-based casinos, many of which were built and owned by household American gaming-industry giants, the whales have been lured into staying closer to home, afforded more and more perks.
Macao-based casinos have made serious incursions into Hong Kong’s horseplaying market, too, a longtime staple of the Asian betting community, where handle on a single program can reach an unthinkable nine figures in Hong Kong dollars.
But compared to racing’s slide here and elsewhere, casino receipts for high-roller gaming have fallen at an alarming rate. According to the Post story, table revenue in Las Vegas is down nearly 19 percent, while the exclusive baccarat action is down more than 26 percent. Nowhere is racing’s losses as dramatic.
Casino business in Atlantic City isn’t much better. Since travel to AC commonly is done by auto, steep gas prices have taken a toll. For slots players, the cost of a full tank is tantamount to pulling a lever for an entire afternoon. Staycation for slots players means having to stay and play joker poker at the local tavern. Be still my heart.
Atlantic City receipts are down a comparably acceptable 5.2 percent through August, which includes both table games and slots. What’s troublesome is that the downturn reflects not only high rollers but mom and pop slots players, too. If this trend doesn’t abate soon, Atlantic City gaming receipts will be down for a second straight year.
Along with gas prices, competition hasn’t helped. Connecticut casinos have been cutting into Atlantic City visitation for years, but competition from Pennsylvania and Delaware, especially the former, has been devastating to not only New Jersey and Maryland racetracks but to shore-based casinos as well. And it doesn’t figure to improve when a 100 percent smoking ban begins October 15.
Parenthetically, Maryland has been playing politics with slots for almost as long as Albany has been delaying construction of a racino at Aqueduct. For the last seven years over-burdened New York taxpayers have not gotten any relief from VLT revenues. What’s the definition of criminal negligence, anyway?
And now the Pimlico barn area is closed, and their racing dates have been cut drastically except for the traditional spring Preakness meet. Even if a slots referendum passes this November, it’s doubtful whether Pimlico, which this year marked the 70th anniversary of the celebrated Seabiscuit-War Admiral match race, ever will race year-round again. http://www.washingtonpost.com/wpdyn/content/article/2008/09/13/AR2008091302213.html?hpid=sec-metro
But as we all learned upon awakening Monday morning, horse racing and gaming are only the tips of an economic iceberg whose bottom cannot be seen below the murky waterline.
Written by John Pricci
Saturday, September 13, 2008
Fan Wants Media To Be Part of the Solution
Saratoga Springs, NY, September 12, 2008--His Internet handle is Indulto. I may or may not know him. I can say for sure that I don’t know his given name. But I know that he’s a racing soul mate, a kindred spirit who addresses issues that concern him with intelligence and passion. So maybe we all should listen up.
Indulto might be pleased to learn that I know his namesake was a King Ranch runner, trained I recall by the venerable Max Hirsch. I remember him as a versatile stakes winner whose best game was late running sprint speed, the kind that seven-eighths of a mile usually hits right between the eyes. If memory fails I’m certain the two-legged Indulto will let me know.
I might have done this once before--reprinting a comment in its entirety on the lead page--after which I will react. But it’s reproduced here because Indulto has something important to say; to the industry, to Breeders’ Cup and to turf writers; the entire gamut of racing society.
And the parties should listen because my sense is that Indulto speaks for all loyal racing fans/horseplayers. So we’re clear, the slash indicates that racing fans--loyal followers of a sport--and horseplayers--the complimentary practitioners, are different entities, which makes racing the best game played outdoors. The groups can be mutually exclusive or exist as a hyphenate. But their goals, even with different agenda, are as one.
Indulto’s comment followed a piece I wrote: “As in Presidential Politics, Horse of the Year Narrative Has Changed.” (If you missed it, you can read the story in HRI’s archives. If you read it, perhaps you should revisit it, as I did, to draw your own inferences).
12 Sep 2008 at 04:17 am
…I did read [your] pieces which is why I was taken aback by what appeared to be your sudden enthusiasm for a BB-Curlin meeting on a synthetic surface, as well as by your suggestion that Curlin’s camp would be the ones doing the ducking if that didn’t happen.
Just because they built it doesn’t mean anybody has to come. HOTY doesn’t have to be decided on October 25 just because it’s in the BC’s interest that it does. And it probably won’t be. IF BB doesn’t run in the JCGC because his connections are concerned with BB’s ability to handle Belmont, then fine, nobody’s quacking. Owners of Champions are good guys when they don’t let bettors take risks when they themselves have doubts. Same for Curlin in the “Classic.” But if both win or lose their respective events and then either refuses the Clark as well, then Daffy and/or Donald has a permanent home.
As to my inferences, if you are not a fan of synthetic surfaces and not in favor of running the BC at a venue with a synthetic track (at least in the near future), then why did you lend credence to this misguided endeavor and promote risking a less-than-optimal performance by either or both contestants in an event on which few will be able to bet with confidence? Consistency is a quality valued in turf writers as well as equine competitors.
Perhaps I’m overreacting, but it doesn’t seem enough just to recognize the colossal blunders committed by BC 2008 planners that created this frustrating situation; missteps that so many turf writers have brought to their readers’ attention. I’ve never seen so many comments from readers so up in arms about anything related to racing that wasn’t accidental like the Eight Belles and Barbaro tragedies.
Frankly, I don’t understand why people aren’t falling over themselves to send a message like the following to the BC so that both they—and the industry as a whole—will start listening to their customers: “Stop diluting interest and enthusiasm for the game by putting on races we don’t want to watch or wager on, and start cooperatively planning and scheduling those that we do. Keep faith with the sport’s competitive traditions. Start growing participation and handle by leveling the playing field for both players and owners, and universally reducing the high takeout that continues to shrink racing’s share of the gambling dollar.”
So, JP, my question to you and your colleagues is: ‘Are you going to help seize what appears to be an opportunity to influence the changes needed to turn the sport around and preserve the game? Are you collectively willing to lead the way as some of us have requested, or are you all going to remain “journalistically neutral” and simply report on what happens after having raised our awareness?’
What was it Ed McMahon said when he had money? “You are correct, sir.” The Horse of the Year championship does not have to be decided on October 25, and with both Big Brown and Curlin facing retirement at the end of the year, why not the season-ending Clark at Churchill Downs for the whole thing?
Would I love to see that, over a track both horses like? Absolutely. Will it happen? Maybe, but probably not. But I’ve seen this movie. Both horses need to have something to gain to make the risk worthwhile. My experience is that one would back down. But you’re right. There’s no good reason both shouldn’t try.
Why am I lending credence and promote risking a less-than-optimum performance? Good question. It’s because I honestly believe the Classic is the best way to get these two together; glare of the spotlight, whole world watching, et al. Doesn’t make it right, just pragmatic.
Again, you are correct. I should have more respect for the fans, the viewing audience and my fellow horseplayers who seemingly don‘t want to see this matchup on anything but legit dirt.
However, racing on a surface that has been given high marks in Australia for training, but is an unknown for racing, provides an up-front advantage to neither. It may not be the race bettors want, but it wouldn’t do the sport any harm. True champions, as we’ve stated before, shouldn’t court excuses.
Finally, we’ve been painstakingly outspoken on the negative effects that high takeout rates have on the health of the bettors and the industry; in this context, one and the same.
State government operatives do not grasp takeout’s negative effects on handle via the churning of betting dollars, or simply refuse to acknowledge it because they have no interest in long range results, only those from election cycle to election cycle. The industry has done an awful job educating those who control their destiny.
Finally, turf writers can always do a better job. But I would argue that most independent writers who don’t work for media companies in league with, and dependent upon, racetracks for their own financial well being, do a good job at trying to keep the industry honest, albeit there are sycophants in every corporate society. Backstretches and front offices of racetracks are no exceptions.
It’s not that the messenger doesn’t deserve some blame but, Indulto, you might be giving the media too much credit. It can make suggestions but lacks the power to make things happen. Often, it has the opposite effect.
On days when a turf writer has done his job well, he earns a cold shoulder from track executives. No one is immune from criticism and that goes both ways. The media’s best ideas are seldom implemented because if they were, it would tantamount to track's admitting failure of some kind.
The best way I know to lead, as you suggest, is to identify and offer solutions to fixable problems, and to make the general racing public aware of issues. Then it’s up to the racing public to act. They are starting to build grass roots organizations.
If the racing public is willing to fund it, and find a voice to lead on issues, perhaps they can one day organize on a grand scale and be a force for change. The question then is whether they really want to make an effort.
Meanwhile, HRI staffers will continue to observe, comment, and keep the pressure on racing‘s leaders. Without any real power, that’s all any of us can do.
Written by John Pricci
Friday, September 12, 2008
Other People’s Money
Saratoga Springs, NY, September 11, 2008--The chart arrived via e mail this morning courtesy of NTRA and Equibase. As you scan the figures over a comparable time frame from last year to this, and the entire year-to-date number, the picture is clear and comes as a surprise to no one.
|Thoroughbred Racing Economic Indicators For August 2008
|August 2008 vs. August 2007
||August 2007 ||% Change|
|Wagering on U.S. Races*
|U.S. Race Days||709||639||10.95%|
|Year-To-Date August 2008 vs. August 2007
|Indicator||YTD August 2008||YTD August 2007||% Change|
|Wagering on U.S. Races*
|U.S. Race Days||4,242||4,213||0.69%|
|* Includes worldwide commingled wagering on U.S. races and separate pool wagering in Canada on U.S. races.|
While the numbers might not be alarming they nonetheless cause concern. Wagering on horse racing in the United States from all sources hit it’s high water mark earlier in the millennium and has been flat ever since. But things seem to be getting worse.
While Breeders’ Cup event day(s) attracts huge world-wide handle, HRI’s best guess is that its totals will match those of last year, an event handle-compromised by extremely inclement weather.
What Breeders’ Cup Ltd. might expect this year is an increase in volume due to the added races but that assessment coupled with similarly anticipated decreases in handle due to the synthetic surface in non-turf events. At best, it's probably a wash.
The thing that jumps out is that the industry as a whole is trying to maximize revenues by increasing the amount of product it makes available. To date that hasn’t worked. Other reasons? The insane wagering-platform wars for one, the counter-productive increase in the number of racing dates and races for another. The opportunities go up, the purses go up, yet the handle goes down.
It’s as if myopic bean counters never heard of parimutuel takeout and don't grasp its relationship to churn. The deadly combination of takeout and increased opportunities is wearing out horseplayers both mentally and economically--those that are still with us as bettors continue to skew older and older.
All this puts me in mind of Lawrence Garfield. Remember him, from the movies? Consider the words of the fictitious corporate raider, whose business sense seems at least as accurate as the racing industry’s real problems. To wit:
“This company is dead. I didn't kill it. Don't blame me. It was dead when I got here. It's too late for prayers. For even if the prayers were answered, and a miracle occurred, and the yen did this and the dollar did that and the infrastructure did the other thing, we would still be dead.
“You know why? Fiber optics. New technologies. Obsolescence. We're dead, all right. We're just not broke. And do you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes, slow but sure.”
And that’s exactly what’s happening to the industry. It devalued its product by overexposing and diluting it. It failed to embrace new technologies. It failed--and continues to fail--to understand the immutable law of takeout. They pay lip service to it, returning a few nickels and dimes here and there, but won’t change the paradigm.
You might ask, as does Mr. Springsteen, is there anybody alive out there? There are, but like a model constructed by America’s power elite, it’s about the preservation of fiefdoms. Dozens of strategic partnerships are created every year but seldom do these agreements yield big picture results.
Perhaps racing’s biggest mistake, as was suggested by Vic Zast in a recent HRI column, was expanding to an all-racing-all-the-time format, eliminating the seasonality that made the opening of each meet special.
When I was back at St. John’s four decades ago, the date March 20 was always circled. It marked the opening day of the New York racing season at Aqueduct by the sea. Aqueduct!
Seasonality made a day at the races special, as did clubhouse dress codes, for that matter.
But the industry followed the country’s lead and dumbed the whole thing down, trying to increase its share of the entertainment dollar, chasing a market of competitive interests that in no way resembled the special feeling of a day of sport, a day at the races.
Yes, racing had a gambling monopoly back then. But what it never failed to promote was that wagering on horse races was an intellectual pursuit that offered, and continues to offer, the best bang for your gambling buck.
Education is the key. A new handicapping model needs to be created that emphasizes that each race is a market unto itself, that there are prices, or odds, at which horses should be played or laid.
As Zast wrote the other day, “gamblers today can get a bet down whenever he wants and betting’s as ho-hum as the highway. Coincidentally, it’s almost as interesting.”
Then there’s Lawrence Garfield’s take: “I love money. I love money more than the things it can buy. There's only one thing I love more than money. You know what that is? It’s Other People's Money."
Written by John Pricci