HANGING SEPARATELY

At the 2018 Jockey Club Roundtable, James L. Gagliano, the group’s president, provided ominous empirical findings from McKinsey & Company research: “Among the general public, there have been minimal improvements in the perception of racing since 2011.  Today, 22% of the general public has a positive impression of the sport, and that’s up from 19% in 2011.  Forty-five percent of fans would now recommend racing to others, and that’s versus 41% in 2011.”

To some degree, these mediocre metrics are self inflicted: the results of resistance to reforms from within the racing industry rather than to uncontrollable macro trends.

The general public views racing poorly for at least three reasons.  First, any gambling-related enterprise raises ethical and moral concerns among a sizable portion of the population.  Second, widely publicized incidents of cheating—such as the 2017 scandal at Penn National–contribute to and reinforce this predilection.  Third, because racing is an “animal-performance” sport and business, it is vulnerable to charges of inhumane treatment.  Mr. Gagliano in his presentation said: “One of the big issues in racing’s public perception continues to be on the matter of animal welfare.  For example, McKinsey found over 50% of casual fans would stop betting if they knew horses were mistreated, and new fans specifically objected to the use of the whip.”

Besides the whip, three other image-shaping humane issues are always in horse racing’s present and future: Real and perceived medication abuse, equine deaths due to breakdowns, and unwanted racehorses dispatched to slaughterhouses.

Given racing’s standing among the public, it should be obvious to individuals with a vested interest in the sport that substantive and ongoing image-enhancing measures are essential.

Yet racing’s penchant for forming circular firing squads, rather than uniting for the common good, is endemic.  The latest example came in a June 2018 Congressional subcommittee hearing over the proposed Horseracing Integrity Act.  In favor of the Act were speakers from The Jockey Club, Breeders’ Cup and, Humane Society of the United States.  In opposition were representatives from the Horsemen’s Benevolent and Protective Association, Thoroughbred Horsemen’s Association, and Association of Racing Commissioner’s International.

A member of Congress hearing the testimony would immediately see that American horse racing is a house divided.  Moreover, he or she would not know which side of the argument to believe and would be apt to conclude “If you can’t even agree among yourselves what needs to be done, why should I care?  Especially when there are far weightier matters to the nation to be considered.”

Some influential people and institutions whose livelihood depends on a viable racing industry block reforms that would give the sport’s marketers a strong basis for building a brighter future in an already difficult business environment…and for countering critics with facts.  Benjamin Franklin’s counsel and admonition to his fellow revolutionaries in 1776 is apropos:  “We must, indeed, all hang together or, most assuredly, we shall all hang separately.”

Absent continuous unified action on key image-related matters, hanging separately is likely what will happen as racing businesses contract or perish along with economic decline of the sport itself.

Copyright © 2018 Horse Racing Business

REPLENISHING THE FAN BASE

At the 2018 Jockey Club Roundtable, Ian Highet, the organization’s Secretary-Treasurer, reported that “Racing fans are 63 years old on average, which…is in line with PGA TOUR, NASCAR, baseball, and some other sports.  The average age of a TV sports viewer has been increasing for all sports over the past ten years, and racing is aging at a similar rate…”

Manifestly, the number one strategic challenge for perpetuating horse racing is to cultivate new generations of fans.  This, of course, has been a topic of discussion within the industry for years.

Many fans of horse racing will tell you they developed an interest in the sport when a relative took them to a racetrack.  For instance, my father took me with him to Churchill Downs when I was much too young to bet.  The obstacle to this approach today was illustrated in the McKinsey & Company presentation at the aforementioned Jockey Club Roundtable:

“…of the top 35 metro areas by population in the U.S., only five have a Thoroughbred track that we would describe as major league based on achieving a TripAdvisor rating of 4.5 stars…There are 12 cities with no Thoroughbred racetrack at all.”

The next-best-thing to actually experiencing horse racing by attending it in person is watching it on television.  Though television viewing in general has been in decline, and particularly so among younger U. S. residents, TV is still a powerful medium, especially when combined with effective social-media outreach.

According to McKinsey & Company, “In 2011, [horse racing was] down to 43 hours per year of Thoroughbred racing on national television.  The number of new fans introduced to racing through TV had declined.  Today, thanks to initiatives with the Breeders’ Cup, Keeneland, NYRA, The Stronach Group, FOX, NBC and others, there are over 200 hours of racing on national television.”

Horse-racing marketers have also made significant progress in the use of social media, especially during the Triple Crown season.  Yet they have a difficult task of supplying a continuous stream of fresh and attractive content once the public’s interest in racing ebbs after the Belmont Stakes in early June.

The ongoing reduction in the number of racetracks in the United States and the absence of tracks in a dozen of the top 35 population centers are major structural impediments to replenishing the sport’s aging fan base.  Television and social media are assuredly the way to go in attempting to compensate.  However, creating a new fan is only the first step.  The next step is to monetize a new fan’s interest by encouraging him/her to visit a racetrack or, if one is not nearby, to open a wagering account with an internet provider (if the state of residence permits online betting).

Expanding the number of horse-racing fans is a never-ending process metaphorically akin to hard-rock mining and requires an overarching national strategy with tactics tailored for local markets, similar to how multinational companies “think globally but act locally.”  The Jockey Club, McKinsey & Company, and other contributors have over the years provided the industry with actionable data-based strategic insights, but within the industry there are self-imposed impediments to effective strategy implementation.  This is the topic of next Wednesday’s post.

Copyright © 2018 Horse Racing Business

DECISIONS, DECISIONS: BET ON THE HORSES OR GO TO THE NFL GAME?

My favorite sports to watch and occasionally bet on are horse racing and the National Football League.  Eight days during the NFL season, I have entertainment choices that especially appeal to me:  Go to the local NFL game or stay home and multitask by watching the football on TV and squeeze in betting on some horse races as well.

Relative costs come into play…and horse racing is a great bargain by comparison to the NFL, even with moderate betting on the horses.

When I was in Saratoga recently, my trip to the racetrack with my wife cost approximately the following, excluding bets:

Two clubhouse seats (including track admission): $60
Parking: $15
Two programs:  $10
Non-alcoholic drinks and food:  $25

Total of $110

The racetracks near to where I reside are connected to a casino, so parking and admission are free, as is bottled water.  The outlays I incur are a program, betting, and food.

NFL attendance costs are dramatically different.  In 2017, CNBC calculated the average per-game monetary outlays at all 32 teams for two people.  For instance, total average costs for the Super Bowl champion Philadelphia Eagles were $268.38, with the components being:

Average ticket price:  $98.69
Price for a beer:  $8.50
Price for a soft drink:  $4.50
Price for a hot dog:  $5
Parking:  $35

NFL ticket and concession prices vary considerably depending on location and a team’s recent won/loss record.  A single premium ticket, for instance, to see the New York Giants play is over $500 whereas small-market teams are less expensive.

Where I live the average ticket prices and out-of-pocket expenses are about $250 for two people to see the local NFL team play.  (I acutally buy more expensive seats, but for the sake of discussion, assume the average ticket price.)

On a given Sunday, I can attend a game with my wife for $250 or stay home and watch on TV and also bet a few races via the internet during halftime or in the event the game becomes noncompetitive or boring.  About twice a year, I opt for attending a game, but most Sundays I stay home.

If I bet the $250 (on horse racing) I would have spent at the game, I might lose it all, in which case I would have broken even with attending the game.  But I might earn a profit…or at least not lose $250.

With sports betting on the horizon in my venue, I will soon be able to enjoy autumn and early winter Sunday afternoons and evenings by placing a few dollars on horse races from around the world and NFL games of my choice and watching the results from my well-worn comfortable family-room chair.  I rationalize the money it would have cost to attend the hometown NFL game as betting capital.

In addition, I don’t have to hear alcohol-fueled loudmouths at the game shouting profanities about how bad our coaching is, the referees’ bias, or the character flaws of the opposing team.  You’ve likely heard the same kind of invectives before…from losing bettors at the racetrack berating jockeys.

Copyright © 2018 Horse Racing Business