Archives for March 2015

The March 23, 2015, issue of Barron’s contained a special section on the “World’s Best CEO’s.”  Barron’s short and prestigious list of executives who have delivered outstanding returns to their shareholders included two individuals who are prominent in horse racing circles, one in the United States and the other in Ireland.

Kevin Plank is the 42-year-old founder and CEO of Under Armour.  Plank, a football player for the University of Maryland in his college days, has taken his creation from a 1996 start-up in his grandmother’s basement to the second largest sports-apparel maker.  Only Nike is bigger and Under Armour recently displaced Addidas in the number 2 position in the industry.

Plank is also the owner of Sagamore Racing.  He purchased and restored Sagamore Farm in Glyndon, Maryland, a historic site founded in 1925 by Issac Emerson.  Emerson’s daughter Margaret bequeathed the farm to her son Alfred G. Vanderbilt Jr.   Sagamore Farm produced champions like Discovery and the “grey ghost” Native Dancer.

Barron’s said of Plank:  “The former University of Maryland linebacker runs the company like a team.  ‘Marketing and endorsement is offense; manufacturing and distribution is defense.’  Under Armour’s stats:  Since its 2005 IPO, revenue has grown 30% annually and the shares are up 1,180%.”

Michael O’Leary has been the CEO of Ryanair Holdings since 1994.  The 54-year-old O’Leary made Ryanair a formidable force in Europe by replicating Southwest Airlines’ low-fare and no-frills business model.  Barron’s describes O’Leary as “one of Ireland’s leading racehorse owners.”

O’Leary’s Gigginstown House Stud in County Westmeath breeds racehorses and Aberdeen Angus cattle.

Copyright © 2015 Horse Racing Business

I’ve just starting using Twitter to alert readers when a new article has been posted.  If you want to be notified, my Twitter account is William Shanklin @HorseRacingBusi

Recently thumbing through a 2015 Gulfstream Park program, I came across a list of the company’s officers and operating officials.  The job titles vividly provide an example of why horse racing is in so much trouble at the retail level.

Listed under “Gulfstream Park Racing Association Inc. Officers” were the following five positions:  CEO; President; VP, Operations; Secretary; and Director, Finance.

Note the glaring omission—nobody mentioned for sales and marketing.

Listed under “Operating Officials” were President and staff positions, such as track handicapper, director of human resources, and track superintendent.  Three vice presidents were identified:  Vice President, Racing & General Manager; Vice President, Administration; and Vice President, Communications/Media.

Again, the glaring omissions:  sales is not included at all and there is no one in marketing at the rank of vice president.

Nowhere in the entire enumeration of personnel titles did the word “sales” appear.  The only reference to marketing was “Director, Marketing.”

Implausibly, the person in charge of communications and media holds the title of vice president but the chief marketing executive does not.  One can make a strong case that, in fact, communications and media should report to marketing because advertising is a key marketing function for a consumer-products company.

The slight of sales and marketing demonstrate how–at a premier racetrack company–the business functions responsible for bringing in customers are either not deemed important enough to be mentioned at all (sales) or are relegated to a subordinate role (marketing) below the rank of vice president.

This is more than semantics.  Position titles indicate the importance that a company attaches to business activities.

In an industry in which revenues (pari-mutuel handle) have been in a long-term secular decline, sales and marketing should be front and center and be staffed with the most capable people possible.  A company can’t “administrate” or “manage” or “engineer” itself out of a deteriorating commercial situation.  The only way out is via skillful marketing (such as product development) and savvy/aggressive sales efforts to get customers.

Little wonder that racing’s customer base and pari-mutuel handle are shrinking.

Copyright © 2015 Horse Racing Business

The increasingly strong U. S. dollar is one of the prominent economic developments of 2014 and 2015.  The buoyant dollar should have a telling effect on upcoming select summer and fall yearling sales in the United States and Europe.

The following list depicts countries in which Thoroughbred yearling buyers often come from and the respective percentage change of their currencies versus the U. S. dollar in the past 52 weeks.

Argentina (Peso) -10% change
Australia (Dollar) -16%
Brazil (Real) -28%
Canada (Dollar) -13%
France (Euro) -24%
Germany (Euro) -24%
Ireland (Euro) -24%
Italy (Euro) -24%
Japan (Yen) -16%
Mexico (Peso) -15%
Saudi Arabia (Riyal) 0.0%
South Africa (Rand) -13%
South Korea (Won) -5%
Turkey (Lira) –15%
United Arab Emirates (Dirham) 0.0%
United Kingdom (Pound) -12%

What the palpably strong U. S. dollar means, of course, is that yearling buyers from the vast majority of the forgoing countries will face consequential price increases at Keeneland and Fasig-Tipton.  By contrast, United States buyers at, say, Tattersalls in Great Britain and Ireland will benefit greatly.

While currency valuations ebb and flow, the U. S. dollar will likely continue to be strong when the select summer and fall yearling sales get underway.  This is a bearish sign for select yearling sales in the United States, but should be a nice boost for yearling sales in Europe.

No time in recent history has provided American buyers with the opportunity to go shopping for the best European-bred yearlings at historically bargain prices.

Copyright © 2015 Horse Racing Business