Archives for December 2010

FROM BLOCKBUSTER TO BROKE

Blockbuster Inc. was founded on October 19, 1985 and became a resounding success.  Nearly twenty five years later, the Wall Street Journal headline was attention grabbing:  “Blockbuster Reel Nears End On Its Bankruptcy Filing.”  The first paragraph of the ensuing article read:  “Blockbuster Inc. is in the final stages of preparing a long-awaited bankruptcy filing, marking a milestone in consumers’ shift away from brick-and-mortar video stores to films delivered by mail and the Internet.”

Blockbuster, staggering under a mountain of debt, has closed 1,000 stores and plans to shutter another 500 to 800.  Its stock has been delisted and trades for pennies on the Pink Sheets market that is the financial equivalent of the old wild west. 

The company’s proposed turnaround plan in Chapter 11 bankruptcy is to keep open a small number of stores in certain attractive locations and otherwise to concentrate on digital distribution.  With heavyweights like Netflix and cable television providers in the fray, this may be too little too late.

In the days before there was a Netflix and mass access to the Internet, a local Blockbuster store was a convenient way for a consumer to pick up a movie and return it in a couple of days.  Now most of those stores are vacant, vestiges of the not-too-distant past, and a reminder of what can happen to any business whose core product can be delivered electronically.

Racetracks have been similarly disrupted by the Internet.  On-track attendance at physical locations has generally plummeted, as bettors opt to watch on TVG or on an advance-deposit-wagering Web site.  Betting is usually possible from anywhere there is an Internet connection.  The New York City OTB found itself in a similar situation to Blockbuster–vulnerable to ADW companies.

Fortunately, there is a fundamental difference between the outmoded Blockbuster business model and the traditional racetrack model.  Blockbuster never provided entertainment; the only reason a customer visited a Blockbuster store was to rent or buy a movie.  By contrast, racetracks can offer entertainment to fans preferring to experience the sport up close.

Del Mar, Keeneland,  and Saratoga are exemplars of entertainment-oriented racetracks that can draw an on-track “sporting” crowd as well as cater to gamblers, both at the racetrack and via phone and the Internet.  However, many and perhaps most racetracks do not have the ingredients to become entertainment magnets for fans. 

For this reason, such racetracks will continually have to make their signals attractive to remote bettors or else go the way of the vast majority of Blockbuster stores.  Just as customers no longer need to visit a tangible store to rent a movie, bettors need not set foot on a racetrack to consummate transactions. 

The end game almost certainly will be a market-dictated downsizing of the number of racetracks.  Market equilibrium will be reached when there are just enough racetracks to feed the demand for remote wagering. 

Copyright ©2010 Horse Racing Business

Republished by permission from the Blood-Horse

BREEDERS’ CUP DREAM RACES PART III

This is the third edition of Breeders’ Cup “what if” dream races, as researched and prepared by Patrick M. Premo. Patrick is an avid racing fan with a special interest in the history of the sport. In his former day job, Patrick spent 37 years as an accounting professor at St. Bonaventure University–a fine school academically, south of Buffalo, New York near the Pennsylvania border–before retiring three years ago.

Patrick has selected 20 horses per Breeders’ Cup race and has used the rule that no horse can be entered in more than one race (Secretariat, for instance, would be in the Breeders’ Cup Classic rather than the Breeders’ Cup Juvenile, even though he was American Horse of the Year as both a 2-year-old and 3-year-0ld). Other than that, any racehorse in history could qualify and the objective is to seed the field with the best 20 horses that meet the conditions. Each entrant selected is listed by the year that he or she was foaled and in what nation he/she did most of its racing.

Each racehorse was evaluated for a specific race rather than over his or her entire career.

Today’s races are three sprint races.

Sprint, dirt or synthetic

1901 Roseben USA
1908 Iron Mask USA
1946 Olympia USA
1947 Sheilas Reward USA
1953 Decathlon USA
1979 Chinook Pass USA
1980 Eillo USA
1983 Groovy USA
1984 Gulch USA
1994 Smoke Glacken USA
1995 Artax USA
1995 Reraise USA
1997 Caller One USA
1998 Orientate USA
1998 Speightstown USA
2002 Lost in the Fog USA
2003 Midnight Lute USA

Sprint, turf

1843 The Hero ENG
1869 Prince Charlie ENG
1901 Delauney ENG
1908 Hornet’s Beauty IRE
1914 Diadem (filly) ENG
1915 Irish Elegance ENG
1921 Mumtaz Mahal (filly) ENG
1922 Doimedes ENG
1943 The Bug IRE
1946 Abernant ENG
1951 Princely Gift ENG
1952 Pappa Fourway ENG
1954 Right Boy ENG
1966 Vain ENG
1977 Moorestyle ENG
1978 Co-Tack ENG
1987 Dayjur
1999 Silent Witness HKG
1999 Takeover Target AUS
2003 Sacred Kingdon HKG

Filly & Mare Sprint, dirt or synthetic

1902 Artful USA
1910 Pan Zareta USA
1931 Mata Hari USA
1932 Myrtlewood USA
1946 Two Lea USA
1960 Affectionately USA
1961 Tosmah USA
1966 Ta Wee USA
1968 Chou Croute USA
1972 My Juliet USA
1973 Dearly Precious USA
1973 What a Summer USA
1979 Gold Beauty USA
1982 Pine Tree Lane
1983 Melair USA
1986 Safely Kept USA
1989 Meafara USA
1989 Very Subtle USA
1998 Xtra Heat USA
2002 Dubai Escapade USA

Next week’s races will be the mile on dirt/synthetic and turf.

Copyright © 2010 Horse Racing Business

BETFAIR IPO FOLLOW-UP

Click here to read in the Wall Street Journal about how the Betfair stock has disappointed since the Betfair IPO discussed in the Horse Racing Business article of Saturday, December 11, 2010.  The stock price started out well but has since retreated.