Archives for January 2013


On the Paulick Report there is currently a lively discussion from advocates and opponents of the use of furosemide on raceday. Ray Paulick is in the latter camp and his editorial on the subject provoked numerous comments.

The furosemide-on-raceday topic is mostly argued on the basis of what various empirical veterinary studies find concerning the advantages and disadvantages of using furosemide to mitigate exercise induced pulmonary hemorrhaging in racehorses. This line of reasoning is useful but misses the main point. Here is why.

The most important entity in any business is the customer. Without the pari-mutuel bettor, horse racing would not be a business at all, but rather a cottage industry hobby, wherein wealthy owners occasionally ran their horses against one another, similar to show-horse competiton. Absent the betting customer, racetracks, farms, and every other business that absolutely depend on pari-mutuel wagering would atrophy or cease to exist.

The perception that racehorses run on drugs (the general public generally does not differentiate between therapeutic drugs and others) is highly damaging to horse racing. If people tend to believe that furosemide is nefarious and does damage to innocent animals, then perception is reality. This fact trumps all of the veterinary studies that can be produced.

The 2012 New York Times expose, despite serious flaws in methodology, gave the impression that horse racing is a shadowy enterprise in which drugged horses are subject to injury and death. Many readers came away with this indelible thought. And horse racing has been attacked on the raceday drug issue by other media sources, as well as animal rights groups.

Racing needs to focus on conveying the best possible image of the sport to the public, especially to potential pari-mutuel customers, instead of arguing over whose furosemide study is more valid or concerning itself with whether this owner or that trainer is threatening to get out of the business. And the best possible image is that all racehorses run 100% drug free.

Whereas many current pari-mutuel customers may not care one way or another if horses are administered furosemide on raceday, or actually prefer that they are given furosemide, if horse racing is to attract a new generation of customers, it had better present a drug-free image.

One might counter the “customer is king” assertion by saying that the welfare of the horse should take precedent. This is certainly right, which is a primary reason that in Europe and Dubai racehorses run in races sans furosemide.

Copyright © 2013 Horse Racing Business


Racing businesses positioning for the rest of 2013 and beyond face tremendous uncertainty from changes within the industry and volatile outside forces.

Strategic and operational planning for enterprises have become increasingly challenging in the 21st century because risks and contingencies have grown in magnitude. Planning has been complicated by unstable fiscal policies and permissive monetary initiatives in the United States and Europe, sophisticated technologies that disrupt established business models, and unpredictable “black-swan” events like terrorism that can dampen commercial activity.

The United States is bleeding red ink in order to accommodate an unsustainable level of government spending, with the lion’s share accounted for by burgeoning entitlement programs. Since January 2009, the U.S. national debt has exploded by about 53.3%, from $10.7 trillion to $16.4 trillion.

In 2009 federal government spending as a percentage of gross domestic product was at the highest level (25.2%) since the end of World War II. This was due to the dramatically slowing economy in 2008 and government bailouts of companies and banks beginning at the tail end of the Bush presidency.

The 2013 New Year’s Day federal budget agreement to deal with the nominal fiscal cliff did nothing to impede the trajectory of government outlays, and left many important and divisive issues to be resolved in the near future. Moreover, the compromise raised tax rates on individuals earning more than $400,000 and couples earning more than $450,000, which could affect small businesses that choose to be taxed as individuals.

Yet the U.S. economy is amazingly resilient, and its growth rate could improve in 2013 in spite of the head winds. Caution calls for businesses, including those in horse racing and breeding, to put extraordinary emphasis on cash management and a solid balance sheet. Companies with free cash flow—operating cash flow minus capital expenditures—will have the ability to capitalize on opportunities as they arise and weather unexpected events in an inscrutable 2013 and beyond.

A shorter version of this article appeared in the Blood-Horse of January 12, 2013. Copyright © 2013 The Blood-Horse. Used with permission.


President John F. Kennedy, in his commencement address at Yale University in 1962, made a distinction among truth, lies, and myths that offers timeless wisdom for leaders in all sorts of industries and organizations, including those in horse racing in 2013.

“For the great enemy of truth is very often not the lie–deliberate, contrived and dishonest–but the myth–persistent, persuasive, and unrealistic. Too often we hold fast to the clichés of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.”

Horse racing is a sport and an enterprise based on both a deeply embedded tradition of how things have always been done and modern science and technology. The techniques of training racehorses are passed down through the generations, but trainers also rely on the latest in veterinary medicine. Old-time theories of mating stallions and mares are adhered to today, but computer analyses of large databases are employed to capitalize on findings from advanced genetics. Handicappers combine heuristics with software algorithms that churn out speed and pace figures.

It some cases, it is easy to separate truths from the myths that have taken root and are relied on as gospel. For example, while some people consider the current Triple Crown format inviolable, the historical record shows that the three races have been held in different sequences, at varying distances, and with shorter and longer gaps between races.

Other issues are more complex. In the controversy over race-day use of furosemide, one school of thought advocates a return to a time when trainers ran their horses on oats, hay, and water, but furosemide proponents counter that conditions are different now, with year-round racing. Similarly, whereas most horse registries have permitted artificial insemination and embryo transfer, the Thoroughbred breed has steadfastly resisted, mainly on the grounds that it would be harmful to the gene pool and stud fees.

The task of industry and company leaders in racing should be to objectively seek out and evaluate facts, in order to determine the best way of proceeding, even when doing so may debunk “a prefabricated set of interpretations” and ruffle feathers.

The decision-making processes in any industry or organization need to be carried out with a healthy respect for time-honored practices, but also with a willingness to test the validity of the underlying assumptions.

Copyright © 2013 the Blood-Horse.  Used with permission.