Monday, February 08, 2010

As Good As It Gets, Gets You Nowhere

(CHICAGO, IL – February 8, 2010) The newspapers saved space in their weekend editions to criticize the appointment of Aqueduct Entertainment Group as the operator of New York’s next VLT casino. The unflattering press began in Friday’s New York Times with a 500-word desk-written essay accusing Gov. David Paterson of putting personal gain ahead of public considerations. By Sunday, Glenn Blain of the Albany Bureau of the New York Daily News gave heft to the point by getting Peter Kiernan, the governor’s top lawyer, to concede that the selection was influenced by politics.

“I’m surprised that the bidders who weren’t named are not screaming more than they are,” said Assemblyman Gary Pretlow, chairman of the Racing and Wagering Board, according to Blain. Angry losers in the bidding process claimed the process required them to continuously adjust their proposals and raise the ante. It was only when Paterson had gotten all that he could from the exercise that he called an end to it. Perhaps this is what has been going on for the nine years that horse racing in the State has been dangling.

The winning AEG team has ties to a Mercedes-driving clergyman from Queens, NY, the borough in which “Aqueduct Raceway,” which is how both papers referred to the racetrack in numerous articles, resides. Rev. Floyd Flake’s Darman Group joins the Navigante Group, led by Larry J. Woolf, former Chairman, CEO and President of MGM Grand Hotels in Las Vegas, and a bevy of local construction companies. There are no people in horse racing involved.

On the record, the New York Racing Association has been non-committal about which group of bidders it preferred. All it really wanted was to get a decision. The VLT casino at Aqueduct is projected to take in $6 billion annually and NYRA’s cut of that amount is seven percent. The windfall should create plenty for purses, upkeep, marketing and much needed renovations at Saratoga and Belmont Park. Note, however, the key word in that statement is “should.”

On Wednesday, multiple New York State Senate Committees, engaged in studying horse racing, heard from trainer Rick Violette, Jr., the President of the New York Thoroughbred Horsemen’s Association, that horse racing in the state accounted for $2.2 billion of the national handle or 18 percent of all money wagered on the sport in the United States, a figure that is disproportionate by a factor of 350 percent to the percentage of races New York holds when compared to the whole. Violette furthered explained that the horsemen’s cut of this astonishing amount wasn’t enough to enable 90 percent of horse owners to make ends meet. In other words, he said horse racing in New York is as good as it gets anywhere while saying that “as good as it gets” in New York gets you nowhere. Consequently, do you wonder where all the money goes to leave horsemen in such a predicament or, for that matter, why NYRA can’t operate profitably despite its success?

Well, the sport’s various interests maneuvered within a faulty legislative structure to grow the State’s horse racing industry to a size that is simply unaffordable. The entire horse racing industry is dealing with reduced revenues, a shortage of horses and increased competition in the gambling sector. But all other jurisdictions serve as manufacturer and retailer of their products and NYRA does not. Moreover, few people involved in the operations of racetracks have been promised so much and granted so little by governments required by the people to serve them.

National Thoroughbred Racing Association president Alex Waldrop was among the officials who testified along with Violette. Like Violette, Waldrop praised NYRA’s lofty status. He reported that New York’s tracks contributed $112 million to government in 2007. He noted that California horse racing, in comparison, contributed just $45 million to the State, suggesting that New York taxes are crippling to profitability. He is right, of course, but that still doesn’t explain how to fix things.

Begin with the understanding that New York State is not about to reduce taxes during its current economic crisis. As a matter of fact, it was the State’s need for more revenue that prompted the long-awaited decision. In perspective, the $112 million is just half of the revenue from the VLT casino at Yonkers, a business that generates slightly less than what’s projected for the new Aqueduct parlor.

Furthermore, a more pressing issue now is what’s to be done with off-track betting including the bankrupt NYCOTB operation; that’s the problem at which all energies are being directed. It seems as though each time one problem is addressed, another needs attention. You’d expect someone with some sense of causation would start from the beginning and remedy the effects of the commingled mess simultaneously.

Toward that end, NYRA has proactively responded. The franchise has prepared a proposal to put itself on a self-sustaining basis that makes use of some current State subsidies consistent with the size it has grown to in expectation of legislation and offered to organize off-sight betting activity under its supervision. Reconstruction of the operating model is what should have taken place three years ago when the NYRA franchise was put up for grabs. Instead, there was talk only.

New York’s method of conducting the sport since the day it was put into practice 40 years ago is a dysfunctional amalgamation steeped in waste and corruption. There are flaws in the State’s archaic approach that won’t accommodate crisis, and it appears crisis is what has befallen the industry now. The competition for bettors is suicidal; the expenditures for similar functions like tote systems, account wagering platforms and marketing are wastefully redundant.

As talks resume between the State and New York’s racing interests, a foolish bet would be to predict that even a seemingly resolved issue such as the appointment of the VLT casino operator will have the casino up and running in six months – a goal mentioned. Woolf was able to meet such an ambitious schedule with Casino Niagara, but that was Canada. New York on the other hand, has its problems. They are Sheldon Silver, jealous bidders and a history of deal-making, procrastination and recalcitrance. Progress in Queens from AEG won’t come as fast as the criticism of it did.

Opinions about horse racing from Vic Zast can be accessed throughout the week at Facebook.com/viczast and Twitter.com/viczast.

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Monday, February 01, 2010

The Week That Was

(CHICAGO, IL – February 1, 2010) The controversy engine that powers a comatose horse racing industry and causes constipated turf writers to move their vowels was unusually static this past week. There was news, yes - although, for the most part, it avoided the criticism, doom and gloom, frustration and resignation of other weeks. Some of the past week’s developments, in fact, brought a smile to the face.

Take, for example, the revelation that $500,000 was won by a 61-year-old accountant named Brian Troop from Barrie, Ontario, Canada in the DRF/NTRA National Handicapping Championship. That seems like a lot of money for something as mundane as horse picking, but that’s how much dough the lucky Troop got. These days a half million bucks may not be enough to change a man’s life but it’s enough to ask why the racetracks don’t hold a contest like this every day to boost attendance. It was a good show all around for the folks that participated in and those that put on the event. Bravo!

The week that was also produced Champs Elysees as the Sovereign Awards' Horse of the Year. Such a dubious honor would have left Bobby Frankel embarrassed. In addition, the past seven days ushered in the first of the Top Derby Horses lists. This annual tradition enables ego-centered “assperts” to impart their consensus-inspired views on which horses are most likely to enter the Churchill Downs starting gate for the featured stakes on the first Saturday in May. Heck, nobody knows on the last Saturday in January what steeds might step forward to race for the roses, of course, but that isn’t stopping anyone, including yours truly, from making a fool of himself now. Stay tuned for HorseRaceInsider’s version of the embarrassing prognostication this Wednesday.

Speaking of fools, New York Gov. David Paterson announced that he selected the Queens-based Aqueduct Entertainment Group to build and operate the Aqueduct VLT casino and AEG says it’ll take only six months to open the doors of the palace of one-armed bandits. As everyone knows, it’s taken the State almost nine years to proceed with the project and Sen. Sheldon Silver, an enemy of the sport, wants to add more time on top of it. For the time being, however, there’s reason to rejoice – that’s of course, if you want horse racing on life support. Not everyone does, mind you.

All these bland story lines, however, compared histrionically to one that seemed to be no story at all when it started. Then the issue grew bigger and bigger with each passing day until all the events that gave it traction made it something worth writing about. The issue of track surface was addressed several times in several different manners and culminated with newsworthy events that took place on the West Coast, East Coast and Dubai. Perhaps the most consequential occurence of the past week was its least obvious one. First, let’s put some things in perspective.

Track surface has been a hot topic since two Kentucky and three California racecourses replaced their dirt tracks with a synthetic composition several years ago. But, following the second straight whooping that the turf-raced European and California-based horses gave their dirt-experienced challengers in the Breeders’ Cup at Santa Anita, it’s become more than polite chit-chat. Those in favor of synthetic racetracks say they’re safer in terms of equine fatalities. Those against say they’ve not been proved to be safer and, in fact, that they’re not good for business. The gamblers, who once loved them, now hate them.

In any case, shortly after the 2009 Breeders’ Cup was held, the Breeders’ Cup Ltd. announced that its end-of-year championship event would be seeking a permanent venue as part of an overall upgrade, and conjecture grew quickly that part of the deal would require the host racecourse to have a dirt racetrack. The announcement caused Santa Anita to say that it’s leaning to changing its surface, although Ron Charles, the track’s general manager, fell short of promising it. On the other hand, the day after the Eclipse Awards, Del Mar president Joe Harper announced that his racecourse would stick with synthetics, regardless of what happened in Arcadia. He might as well have said to heck with the Breeders’ Cup, but he didn’t.

Then, on Monday of last week, Charles was certain a change was in order. Santa Anita lost its track for the twelfth time in two years because heavy rains had caused drainage problems. Charles said that Santa Anita would replace the existing Pro-Ride track following the close of its current meet and would consider a change to dirt “very seriously.” Three days later, New York Wagering and Racing Board Chairman John Sabini said NYRA preferred dirt and its financial difficulties as well as its record for safety led to leaving the tracks as they were. This put Belmont and Santa Anita squarely suited for what the Breeders’ Cup people wanted from a permanent host. Or did it?

Finally, on Thursday, Sheikh Mohammed bin Rashid Al Maktoum held Dubai’s first-ever race card on its Tapeta track at the new Meydan Racecourse, thus completing a busy week. Yesterday, Meydan announced a record number of horses nominated for this March’s Dubai World Cup program. In the parts of the world where horse racing is holding its own and is relative healthy, the push toward synthetics is growing.

In England and Ireland, from where so many Breeders’ Cup stars have come, the USA’s preference for dirt is seen as backward thinking. Time and effort and money should be spent on eliminating the drawbacks of synthetics; inherent to its concept are benefits such as safety, cost savings and a level playing field. Should Meydan create its own World Championship event in the fall of the year, as encouraged by some, its ideal location, perfect weather, the Sheikh’s ambitions and personal wealth, as well as the right track surface, will make Dubai where to be each November as opposed to whichever site the Breeders’ Cup settles on.

Is a stubborn respect for a racing surface, then, but a synecdoche of gauche isolationism? I hope not. For at least the last century, the American thoroughbred industry had led everyone else. So, the industry here must believe we know better than everyone else and that the troubles we face are just temporary. That would be the bright side of decisions being taken, not the controversial one.

Vic Zast has more to say on Twitter.com and Facebook.com

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Monday, January 25, 2010

Stunts Stunt Attendance

(CHICAGO, IL – January 25, 2010) People of a certain age were taught to put their best face forward or risk being thought less of. But I wonder if people of a current age believe that there’s truth in this lesson.

Dan Silver, the December 2007 graduate of the Race Track Industry program at the University of Arizona who now serves as the New York Racing Association’s Director of Communications, seemed confused when I asked him about the possible negative impact on racetrack attendance caused by horse racing’s ongoing self-defacement.

Trey Ditto, in this case, an aptly-named Rubenstein Associates public relations man for the New York Thoroughbred Breeders, Inc. - another guy with nary a gray hair on his noggin - seemed to know what I was getting to but became mute in the face of its implication.

Three weeks ago, Charles Hayward, NYRA’s president and CEO, drew first blood in another pitched skirmish with the State of New York, threatening to shutter the racetracks after the Belmont Stakes was run if the State didn’t begin funneling money from the proposed Aqueduct racino to the franchise soon. Two weeks ago, NY Breeders president Jeff Cannizzo attended an OTB hearing at the Capitol with a tombstone in tow, denoting the death of horse racing in the State if horsemen didn’t get their share from the bankrupted entity.

These were two recent attempts made by horse racing’s leaders to use fiscal miseries to achieve legislative leverage. And there was more of the same acrimony in the news following that. Hayward rejected an order by Comptroller Thomas P. DiNapoli to hand over the books so that DiNapoli could confirm where the last batch of money New York gave the sport had gone. A subpoena came down and Hayward gave in. A week later, NYRA was found dumping manure into Jamaica Bay. How much shit can the game shovel before nobody cares?

“I’m not really sure how much the people who like coming to the track care about all the political stuff going on,” Silver said, when I asked him about the fallout of fans from these unflattering rows. “I know I didn’t pay much attention to it, when I started going to the track when I was 18,” he confessed, while attempting to credit Aqueduct for boosting its attendance above the 1000 visitors count on the day that I called him.

Unlike Silver, Cannizzo perceives that collateral damage occurs from waging open warfare. Yet, he’s willing to try just about anything to have his message heard, even claiming annihilation. Putting the horse before the sport, the breeders’ leader said, “The best way to keep horse racing is to keep horses. One of our biggest concerns is the fans. But without the horses, there won’t be fans.” The question, then, I suppose, is of what importance are fans to the horses? The paradoxical problem is not an easy one to wrestle with.

Chuck Ebeling, the former head of public relations at McDonald’s and Baxter Labs, defined Hayward’s “going out of business” pronouncement and Cannizzo’s tombstone pilgrimage as public relations stunts. In defending the practice, he said, “A stunt is something you do when you don’t think the facts will be given the attention they deserve.” He said, furthermore, “It is typically the act of some desperation.” Good public relations are about being part of a good communications strategy, Ebeling added.

Regardless, doom and gloom, not success, constitutes the signature policy in all communications for industry members when matters pertaining to legislation surface. First spoken is the sport’s incapacity to be profitable on its own, followed closely by loss of jobs, industry catastrophe, Armageddon, and so on. Of course, the PR practitioners believe that the media will react to the sensationalism, thus forcing the point to be heard.

Unfortunately, the media is prone to seizing upon weakness more than exhorting strength. The public enjoys funerals. The combustible result of this circumstance causes image erosion. When horse racing portrays itself teetering - a deathly-sick enterprise in search of life support - many people believe that it’s no longer worth caring about.

“People are not likely to spend a lot of time with those who are always down on everything,” advised Jennifer Fortney, a veteran public relations practitioner who owns the Chicago-based PR agency Cascade Communications, a small firm that focuses on lifestyle consumer products. “Consumers believe that the owner represents a credible and reliable source. If he says that his business is failing, it can make a huge impact on a consumer’s decision to support it,” she said.

Granted, both NYRA and the NY Breeders had reason to behave the way they did. But they should also be fully aware that their actions beget consequences. Despite a world class racing agenda on many weekends, attendance is abysmal at the downstate tracks and trending south at Saratoga. To this extent, Fortney’s warnings bear significance.

For the most part, the State has been hard of listening to anything said and unresponsive to every effort made to correct things gone wrong. The newspapers have been brutal. But a belly-achin' policy won’t proxy for self-determination any longer. Decades of dwindling popularity have eroded horse racing’s influence with the people who govern. Politicians pay attention to big issues, not fringe matters, which is what the sport’s become.

Impervious of this evolving scenario, someone important obviously still trusts that horse racing is managing its business successfully by playing the role of a victim. On the other hand, if fans represent a market worth cultivating, there are better ways than self-abuse to satisfy a yearning.

For more from Vic Zast go to Twitter.com/viczast and Facebook.com/viczast

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