Modifying NYRA’s Purse Structure to Better Serve New York’s Economic Interests
Today's offering comes from erstwhile contributor "Chuck From Saratoga," a longtime racing fan, horse owner, and retired economist. We thought it was worth passing along in the HRI Readers Blog. On the merits, let us know what you think.
1- Establish a Linkage between the Amount of the Purse and the Number of Horses Entered.
Under the existing NYRA purse structure, there is a predetermined amount for each race regardless of the number of horses entered. As a result, the winning horse in a race that attracts 5 entrants earns the identical amount as the winning horse in a comparable race that draws 12 entrants. And the handle and resultant pari-mutuel revenue for a 5 horse field is dramatically less in a 5 horse field than a comparable race that draws 12 entrants.
Since larger fields generate geometric increases in handle and resultant pari-mutuel revenues, it is in the State's economic interest to use purses to reward increased field size. It is also appropriate to reward horsemen who enter horses in races that have large fields.
PROPOSAL: Establish a New Purse Distribution Model to Incentivize Larger Field Sizes.
One option is to establish an 8 horse field as the expected field size (“8 horse model”) for a predetermined purse set forth in the condition book (a publication by NYRA of races planned for a given day) Such purse would then be adjusted based upon the number of horses that actually run. For example, if 12 horses run in a particular race, the purse would be increased by $2,500 per runner beyond the expected field size of 8 (12 runners - 8 expected runners= 4 which is multiplied by $2,500/runner, thereby generating a purse increase of $10,000). The $10,000 increase in purse would be more than offset by the increase in handle and pari-mutuel revenue generated by the larger field. Conversely, purses could be reduced by $2,500 per runner for field sizes less than 8, with such savings used to offset the purse increases for races with larger fields. Exceptions to the "8 Horse Model" could be made for stakes races and top level allowance/handicap races where smaller field sizes are commonplace due to smaller foal crop sizes and intense inter-track competition for high quality racing stock.
II. Establish "Purse Parity" for NY-Bred Races and Open Company Races.
New York's Horse Breeding Industry represents a major component of the State's Upstate Economic Development Agenda. Therefore, it is the State's current policy to support and encourage the expansion of the State horse breeding industry using a variety of economic stimuli, including the creation of races that are restricted to horses that are bred in New York.
However, the existing NYRA purse structure provides purses for NY-Bred restricted races that are $15,000 below those for comparable "open company" races (i.e., races which are open to all horses including NY-bred horses, but are predominantly comprised of Kentucky-bred horses).
Although some might argue that NY-bred horses (vs. Kentucky-bred horses) already benefit by the creation of races specifically restricted to NY-Breds, (with some added breeder/owner awards), the failure of NYRA to provide "purse parity" for its State-bred horses is at odds with the existing practices of other states such as New Jersey and California. For example, at racetracks like Hollywood Park in California, the California bred maidens and first level allowance horses run for exactly the same purses as the ‘open’ company horses. And in neighboring NJ at Monmouth Park, the NJ bred maidens and first level allowance horses run for $10,000 more than the open company horses compete for.
PROPOSAL: Provide Identical Purses For NY-Bred Restricted Races and Comparable Open Company Races.
--This proposal could be self-funded by eliminating the existing purse disparity between NY- Bred Restricted races and Open Company Races by increasing the purse amounts for NY-Bred races by a set amount and decreasing the Open Company races by the same amount. If there were to be significantly more NY-Bred races than open company races, this could be factored-in when determining the final purse amounts.
The proposals outlined above are intended to "tweak" existing purse structures offered by NYRA to better serve the State's economic priorities. These proposals are also intended to generate additional pari-mutuel revenues for the State and, at a minimum are structured to be revenue neutral.
The first proposal would be ground-breaking and would establish a linkage between purse revenues and field sizes that would likely be emulated by other states. The second proposal would simply align New York's purse structure for State-bred races with those currently in place in comparable other states and promote New York as the leading racing venue in America.
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