Archives for April 2009


The men on the inaugural Horse Racing Business “Power Dozen” for 2009 were selected because they have had a significant positive and/or negative effect on the horse racing industry in the United States. Some have been an influence over a long period of time while others have left their mark recently. The list represents the racing industry at all levels, from the racetrack to breeding and sales and support services.  A profile of each man depicts why he was chosen for this year’s list.

Peter M. Carlino, Wyomissing, PA.

Mr. Carlino is Chairman and Chief Executive Officer of Penn National Gaming, Inc., which owns the most racetracks of any U. S. company except for the bankrupt Magna Entertainment Corporation.   Penn National Gaming is traded on Nasdaq.  It owns twelve casinos, six racetracks, off-track betting facilities, and two advance deposit wagering subsidiaries. Its operations span fourteen states and Ontario.  The company’s racetracks encompass Thoroughbred and harness racing, plus one greyhound track. Four of the racetracks are racinos, combining horse racing with slot machines. Mr. Carlino is a graduate of Pennsylvania State University.

Robert N. Clay, Midway, KY.

Mr. Clay is the founder of Three Chimneys farm, which he operates with his wife Blythe. Their son Case is the President. Mr. Clay’s farm was home to Triple Crown winner Seattle Slew and currently stands Kentucky Derby and Preakness winners Smarty Jones and Big Brown, plus Barbaro’s sire Dynaformer.  His service to the racing industry includes leadership positions with the American Horse Council, the National Thoroughbred Racing Association, the Thoroughbred Owners and Breeders Association, Breeders’ Cup, the Keeneland Association, and the Kentucky Thoroughbred Association. Mr. Clay, a member of The Jockey Club, is a former trustee of The Blood-Horse magazine and past president of the Thoroughbred Club of America.  He is a member of the board of directors of PNC in Pittsburgh, Pennsylvania.  Mr. Clay is a graduate of the College of William and Mary.

Steven Crist, New York, NY.

Mr. Crist is Chairman and Publisher of the Daily Racing Form. More than any other person, he is the voice of racing to the most loyal fans who support the sport by putting up the money to fuel it. As the main force behind the Daily Racing Form and, the author of such books as Betting on Myself and Exotic Betting, and a blogger, Mr. Crist is the go-to guy for handicappers.  He is a bold risk taker, both as a businessperson and a bettor.  Mr. Crist is a graduate of Harvard.

Richard L. Duchossois, Barrington Hills, IL.

Mr. Duchossois is the founder of Duchossois Industries in Elmhurst, Illinois, which owns or has stakes in diversified businesses. He owns approximately 24% of the common stock of Churchill Downs, Inc., a Nasdaq-listed company with four racetracks, off-track-betting locations, slots facilities, and an advance deposit wagering subsidiary. He sits on the Churchill Downs, Inc. 13-member board of directors with his son, Craig J., and with the President and Chief Operating Officer of Duchossois Industries, Inc., Robert L. Fealy. Mr. Duchossois was Chairman and owner of Arlington Park racetrack when it was acquired by Churchill Downs, Inc. He has been honored by the racing industry with an Eclipse Award of Merit and was a recipient of the American Jockey Club’s Gold Medal. Other recognition includes a Special Sovereign Award from the Jockey Club of Canada and receipt of the Lord Derby Award in Great Britain. Mr. Duchossois owns Hill ‘N Dale Farm in Illinois, which has produced many winners of note. He is a member of the Jockey Club. Mr. Duchossois attended Washington & Lee University, but dropped out to fight in World War II.

William S. Farish III, Versailles, KY.

Mr. Farish and his family own Lane’s End Farm with locations in Kentucky and Texas. Lane’s End has been the leading stud farm in the United States ten times, including in 2008, and its stallion roster reads like a Who’s Who.   Mr. Farish hails from Houston, Texas, and has a background in oil and stock brokerage.  He is a Steward and Vice Chairman of the Jockey Club and the President and a director of Keeneland Trustees, Inc., the owner of the Keeneland Association.  The Keeneland Association operates Keeneland racetrack in Lexington, Kentucky, runs the world’s biggest and most prestigious Thoroughbred auction, and is half owner of  Turfway Park racetrack near Cincinnati, Ohio.  Mr. Farish previously served as Chairman of Churchill Downs Inc. and as a director and Chairman of the Executive Committee of the Breeders’ Cup.  He was President George W. Bush’s Ambassador to the Court of St. James for three years, including during the difficult period immediately following the September 11, 2001 attack on the World Trade Center in New York.  He attended the University of Virginia.

Michael Ivarone, Garden City, NY.

Mr. Iavarone founded International Equine Acquisitions Holdings (IEAH) in 2003. He is President and a director of IEAH and has brought many newcomers into Thoroughbred racing as investors. IEAH has posted a truly remarkable record. In 2008, IEAH had only 243 starters but won 58 races, for a 24% rate, and led all owners with $10.7 in purse earnings.  Twenty five of the wins came in stakes races and eleven were Grade 1 victories. The Grade 1 wins were with eight different horses. IEAH’s Big Brown won the Kentucky Derby and the Preakness and was named champion 3-year-old. Its Benny the Bull won the Group 1 Dubai Golden Shaheen and was voted champion sprinter. IEAH is building the Ruffian Equine Medical Center at Belmont Park. Mr. Ivarone is a graduate of St. Joseph’s College in New York.

Jeffrey P. Jacobs, Cleveland, OH.

Mr. Jacobs, whose family was prominent in shopping center development and once owned the Cleveland Indians Major League Baseball franchise, fully or partly owns and controls four racetracks.  He is the Chairman and largest shareholder of MTR Gaming Group.  Its properties are Mountaineer Casino and Racetrack in Chester, West Virginia, Presque Isle Downs in Erie, Pennsylvania, Scioto Downs in Columbus, Ohio, and a telephone and online wagering company.   In addition, Mr. Jacobs is the owner and Chief Executive Officer of Colonial Downs in New Kent, Virginia. He is Chairman and CEO of Jacobs Entertainment, Inc., a developer, owner, and operator of gaming and pari-mutuel wagering facilities throughout the United States. He is also Chairman and CEO of Black Hawk Gaming, Inc.  He earned an MBA from Ohio State University.

John Magnier, Fethard, County Tipperary, Ireland.

Mr. Magnier, a high-rolling entrepreneur in racing and other ventures, is arguably the world’s foremost expert in the art and science of stallion selection. His interests have included the famous Manchester United soccer franchise, restaurants, and resorts.  Mr. Magnier began the Coolmore Stud in Ireland in partnership with his father-in-law, the renowned trainer Vincent O’Brien, and the late soccer-pool heir and Thoroughbred mover and shaker Robert Sangster. Since then, he has taken sole ownership and expanded Coolmore’s reach to three continents. Mr. Magnier’s Ashford Stud is one of the premier stallion stations in the United States. His many high-price purchases at the U. S. yearling sales and 2-year-old-in-training sales have been a major factor in maintaining a strong bloodstock market. In 2006, Mr. Magnier and his partners paid $16 million for a 2-year-old colt, The Green Monkey, at public auction, which is the highest price ever for a horse sold through an auction. The urbane Mr. Magnier is sometimes referred to as a “farmer in pinstripes.”

Mohammed bin Rashid Al-Maktoum, Dubai, United Arab Emirates.

Sheikh Mohammed is the Vice President and Prime Minister of the United Arab Emirates, Ruler of Dubai, and owner of Godolphin racing and Darley Studs with locations in Lexington, Kentucky, and five countries besides the United States. Darley is a namesake of one of the three foundation sires of all Thoroughbred racehorses, the Darley Arabian. Sheikh Mohammed’s stallions are among the best and his horses have won most of the outstanding races around the world. His junior wife, Princess Haya bint Al-Hussein, owns Raven’s Pass, who won the 2008 Breeders’ Cup Classic, and the Sheikh’s Midshipman won the 2008 Breeders’ Cup Juvenile.  In 2008, Synergy Investments, Inc., with close ties to Sheikh Mohammed, purchased the Fasig-Tipton auction company. Like John Magnier, the Sheikh’s many purchases have supported the auction business at Fasig-Tipton, Keeneland, and elsewhere. The Sheikh sponsors the world’s richest race, the Dubai World Cup.  He has expressed his affection for racehorses in his poem “To the Equestrienne.”

Ogden Mills Phipps, Palm Beach, FL.

Mr. Phipps’ father, Ogden Phipps, and his grandmother, Mrs. Henry Carnegie Phipps, raced some of the great horses of all time, including Bold Ruler, Buckpasser, and Personal Ensign. His late sister, Cynthia, was also a successful owner. Mr. Phipps and his family breed and race their own stock and have broodmares with some of the finest bloodlines and racing records. The Phipps stallion Seeking the Gold has left his mark as a sire. Mr. Phipps is the Chairman of the Jockey Club and a trustee for the Breeders’ Cup, the National Thoroughbred Racing Association ,and the New York Racing Association.  Throughout the years, Mr. Phipps has been a leader in important racing initiatives and he has been a stalwart of the sport through thick and thin.  In recognition of his efforts, he was awarded the Eclipse Award of Merit.  Mr. Phipps is a graduate of Yale.

Frank Stronach, Aurora, Ontario.

Mr. Stronach is a prolific entrepreneur. In the 1950s, he immigrated from his native Austria, virtually penniless, to Canada and founded and built a business empire. He is the Chairman of Magna International, an auto parts firm, and MI Developments, a real estate enterprise. In 1998, Mr. Stronach created Magna Entertainment Corporation for the purpose of acquiring and operating racetracks. The company recently filed for bankruptcy and this failure is having the most influence on racing in the United States of any event in several years. Mr. Stonach owns Adena Springs Farm in Paris, Kentucky, and Williston, Florida. He earned an Eclipse Award as both the outstanding breeder and the top owner for 2008, which is the second time he has achieved this double; Adena Springs was North America’s leading breeder by earnings in 2008 for the sixth consecutive year. The farm stands such classic winners as Awesome Again, Touch Gold, and Ghostzapper.

David Williams, Burkesville, KY.

Mr. Williams is President of the Senate in the Kentucky Legislature. He is not directly involved in the horse business, but he has influenced the horse racing industry in a momentous way by adamantly opposing legislation that would allow Kentucky voters to decide for themselves whether to permit slot machines at the Commonwealth’s racetracks. This impasse threatens the breeding industry in the state with the most prominent Thoroughbred stallions, imperils Kentucky racetracks and the overall quality of racing, and thereby contributes to the further weakening of the Commonwealth of Kentucky’s most important industry.  Mr. Williams is a graduate of the University of Kentucky and the University of Louisville School of Law.

A Baker’s Dozen: Power Player in Perpetuity

Andrew Beyer, Washington, DC.

Mr. Beyer is a retired racing columnist for the Washington Post. His name will live on as long as there is handicapping on Thoroughbred horse racing. His influence is evident when someone reads or talks about a horse’s “Beyer,” the speed figure developed by Mr. Beyer and scrutinized by handicappers reading the Daily Racing Form past performances. Mr. Beyer attended Harvard.

The May 9, 2009 Horse Racing Business will profile the “Power Dozen” women in horse racing.

Copyright © 2009 Horse Racing Business


Today’s Los Angeles Times carries an article by Bill Dwyre titled “He doesn’t want to be a nag about horse racing, but …” Mr. Dwyre begins by saying “Even with the approach of Triple Crown season, the sport has problems. Almost too many to count.” Then he introduces a “scorecard of current-day horse racing” by listing and explaining seven or eight news items that are plaguing the sport in what should be an exciting time of the year with the approach of the Kentucky Derby.

This is rich–a classic case of a person who lives in a glass house throwing stones. It is absolutely true that horse racing, like numerous industries, has had its share of bad news. One could write the same kind of negative story about a litany of industries, most notably in this case, about newspapers. Really, now, is a newspaper columnist (especially one in the employ of the bankrupt company that owns the Los Angeles Times) in any position to pontificate about the woes of other enterprises?

In December 2008, ABC News reported that “The Tribune, which owns flagship dailies like the Los Angeles Times and the Chicago Tribune, as well as 23 television stations across the US, has been hit by falling readership and bad business decisions.” What this means more specifically is that the Tribune took on too much debt and that newspaper readership and advertising have been rapidly declining, so much so that some major newspapers have gone out of business altogether (see item #4 in my article of April 18, 2009, titled “NASCAR and Other Potpourri.”)

The bet here is that horse racing has a better future than print newspapers. Unlike the latter, horse racing has a business model that allows it to make money online. The number of newspapers that can do likewise is very few.

Newspapers do not have “…problems. Almost too many to count.” On the contrary, newspapers have a single malignant problem called the Internet. One-sided and biased articles like Mr. Dwyre’s are part of the reason that newspapers are losing their readers and are largely unsuccessful in getting people to pay for online versions.

Copyright © 2009 Horse Racing Business


Horse racing fans often lament its undeniable decline in popularity.  It is commonplace to hear or read that the sport is moribund and that its fans are old and dying out.  Some people decry the sparse coverage in the newspapers and on television. 

My many years consulting for and researching troubled companies have taught me that virtually every such business thinks that the situation facing it is unusual if not unique.   This is normally not the case at all and horse racing is no exception.  Many old-line businesses and industries are coping with change. 

The fact is, the United States has become a compartmentalized society aligned around specific and sometimes very narrow interests and this presents opportunities and challenges.  The television networks have had their audiences carved up by cable channels and the Internet.  The major newspapers are fighting for their lives in the face of the Internet.  Major retailers have been eviscerated by specialty shops and online vendors and huge shopping malls often look deserted, not unlike Aqueduct on a cold Winter day.  Even baseball, the reputed American national pastime,  has valid concerns over the sport’s diminishing appeal to boys. 

Like a multitude of mass-market enterprises, horse racing will never be what it once was.  Executives in the horse racing industry must get over the past–it’s not coming back–and continue to take the steps necessary to survive and even prosper as a niche sport. 

Horse racing is not an isolated case of a venerable institution fighting for a better future.  Consider the state of NASCAR, golf, outdoor sports in general, newspapers, and sports writers, as discusssed below.

1. NASCAR is sometimes cited as a sport that horse racing should emulate. To be sure, the car racing that originated with drivers hauling bootleg whiskey in the South has grown into a blockbuster enterprise with the most television viewers among all sports except football. But the growth trend is faltering.  Forbes magazine (March 2, 2009) ran an article titled “Pileup,” in which it said: “The sport is suffering declines in sponsorship, attendance, and financial stability, and the roots go a lot deeper than the lousy economy.”  Consider the following facts and statistics from the Forbes article:

  • Between 1998 and 2005, NASCAR’s national television ratings outpaced every professional sport, growing by 180%. The National Football League’s TV ratings actually declined in the same time frame by 10%. From 2005 through 2008, NASCAR’s national television ratings decreased by 21%, whereas the National Football League ratings fell by 10%.
  • Advertising revenues have taken a hit-for example, by 16% in 2008 for NASCAR’s Sprint Cup circuit.
  • Track attendance declined in 2008 for the third year in a row from an average of 130,000 per race to 118,000. International Speedway Corporation cut admission prices for some of its seats by as much as 40% for the Daytona 500.
  • Sponsorship deals are increasingly hard to get. Major sponsors have quit the sport-for instance, Coors Light, Tide, Domino’s Pizza, and Eastman Kodak.
  • The way that NASCAR is structured, team owners are treated like third-class citizens, getting what is left after NASCAR and the drivers take their hefty cuts. Consequently, more and more racing teams are closing up shop or selling out, including NASCAR icon Richard Petty.
  • Finally, indications are that fans are increasingly bored with the action and are resisting the ticket prices.

This is a case-in-point that every product or service has a life cycle. While NASCAR is still producing attendance numbers and television ratings that are sensational, the sport is likely to be in the early phase of a downward trajectory, comparable perhaps to horse racing at the dawn of the television age in the early 1950s. Like horse racing, NASCAR will need to find ways to attract new fans and improve its core product in an era of tremendous competition for the entertainment dollar.

2.  Another sport that has been experiencing a significant downturn in the United States is golf.  More golf courses have been closing than opening in recent years.  According to the New York Times, the sport has lost four million players (from 30 million to 26 million) since 2000.  The percentage of avid golfers, who play at least 25 times a year, fell by a third.  About one million golfers quit the game every year and fewer than that take it up. One of the main reasons offered is the cost of playing and the other is that  people increasingly don’t have the time to spend on a golf course, and in particular married men with children.   As a result, golf industry insiders have been experimenting with attracting high schoolers, families, and women.  Golf is part of a general decline in participatory outdoor sports like tennis and snow skiing.

3.  The Wall Street Journal (April 7, 2009) headline read:  “Baseball Writers Brace for the End.”  The article began with this verbiage:  “Baseball’s independent press corps, once the most powerful in American sports, is fading.  As newspapers cut budgets and payrolls, the press boxes at major league ballparks are becoming lonely places, signaling a future when some games may be chronicled only by wire services, house organs, and Web writers watching the games on television…It is not clear how many newpaper beat writers and columnists will vanish.”

Horse racing commentators and fans often bemoan the fact that racetrack beat writers and columnists are on the verge of extinction.  That is true, but the ranks of sports beat writers per se are being thinned because of the winds of change that are taking their toll on print newspapers.

4. Any bricks-and-mortar business whose goods and services can be delivered over the Internet is in danger of being decimated if not completely destroyed. Take newspapers. Almost all major newspapers have announced staff cuts.  The New York Times is $1.1 billion in debt and is trying to sell its stake in New England Sports Ventures (which owns the Boston Red Sox), as well as its corporate jet, to make it through 2009.  It may also shutter its money-losing subsidiary the Boston Globe.  Well-known newspapers have closed (the Rocky Mountain Daily News), some have gone strictly online (Seattle Post-Intelligencer), others have limited home delivery (the Detroit Free Press and the Detroit News) and a number have filed for bankruptcy (the Tribune Company-publisher of the Chicago Tribune, Los Angeles Times, and the Baltimore Sun). Similarly, Borders Group (book, music, and movie stores) and Blockbuster Inc. (movies and music) are hemorrhaging losses as online companies like Amazon and Netflix seize the market.

Like a wide variety of traditional bricks-and-mortar businesses in the early 21st century, racetracks’ future is online. Game, set, match, the Internet business model has prevailed. If the racing industry is going to grow handle, it will be largely through advance deposit wagering. That is the state of affairs and nothing can be done about it except to adapt.

In this regard, racetracks have a much better future than newspapers. The Internet is a made-to-order distribution channel for pari-mutuel wagering, whereas newspapers will have a difficult time making money from commodity-like online publications. Advance deposit wagering firms provide a convenient proprietary service that customers are willing to pay for through (reasonable) takeout, whereas newspapers supply information, most of which is readily available for free. However, a special-interest newspaper like the Daily Racing Form should do very well online because of the proprietary information it provides to handicappers.

5.  On an unrelated topic, Horse Racing Business ran an article on March 7, 2009, titled “Halsey Minor for Racing’s Jobs.” It proposed that high-technology entrepreneur and longtime avid racing fan Halsey Minor would be good for the sport as a racetrack owner. An excerpt reads:

“If Minor joined up with some of the bright young minds in the industry to operate a racetrack, in the right location and under the right circumstances, the results might be highly desirable. With the bankruptcy filing at Magna Entertainment this week, a few prospects come to mind.”

Minor made an attempt to acquire a large stake in MEC in October of 2008 and has renewed his effort in the past several weeks. Now that MEC has filed Chapter 11 bankruptcy and major creditors are dissatisfied with the company’s reorganization plan, Minor’s chances have improved.

Minor is a technology innovator, has deep pockets, and is clearly a proponent of Thoroughbred horse racing. I repeat here what I said in the March 7th article: “The racing fraternity should embrace Minor with open arms, as a force for change and experimentation-a straw that stirs the drink.”

Copyright © 2009 Horse Racing Business