Archives for June 2015

The ESPN headline read:  “Entries in long-hidden notebook show Pete Rose bet on baseball as player.”  The accompanying story explained:  “The documents are copies of pages from a notebook seized from the home of former Rose associate Michael Bertolini during a raid by the U.S. Postal Inspection Service in October 1989, nearly two months after Rose was declared permanently ineligible by Major League Baseball.  Their authenticity has been verified by two people who took part in the raid, which was part of a mail fraud investigation and unrelated to gambling.”

Substitute, for example, the name of D. Wayne Lukas for Pete Rose in the ESPN headline:  “Entries in long-hidden notebook show trainer D. Wayne Lukas bet on [his winning entry Charismatic in the 1999 Kentucky Derby].”  This disclosure would not be scandalous because pari-mutuel wagering is legal in Kentucky and owners and trainers are permitted to bet on their horses to win.  Yet why is this lack of transparency acceptable in horse racing when a baseball player who bet on his own team is barred from the Hall of Fame or when a celebrity entrepreneur and businesswoman like Martha Stewart is imprisoned for insider trading?

Several people, including a well-known sports commentator, were discussing the Rose revelations on a television program.  One person said Rose was only betting on his team, the Cincinnati Reds, to win, implying what was so wrong about that?  The rejoinder was that in the games in which Rose declined to bet on the Reds, he evidently did not like their chances, possibly because the starting pitcher was in a slump or did not match up well with the opposing hitters.  In so doing, he was using inside information to distinguish between likely winning and losing wagers.

Meanwhile, another sports report, this one in the Plain Dealer, revealed how Cleveland Cavaliers starting guard Iman Shumpert coped with injury and pain in the recent NBA Finals:  “…Shumpert…gave the Cavaliers all he had as he essentially played the last four games of the postseason with one arm…He was shot up with painkillers [emphasis added] before Game 4 of the NBA Finals in order to continue playing through the excruciating pain of a bruised shoulder, a source revealed, and he may have been injected more than once during the Finals.”

Substitute, say, American Pharoah into one of the sentences about Shumpert, as follows:  “American Pharoah was shot up with painkillers [in the Belmont].”  Why is it appropriate for an NBA guard to take painkillers on game day and not a racehorse?  Perhaps because a horse has no choice or because jockeys’ lives are at risk when a sore horse runs with a masked ailment.

There are often no easy answers to ethical questions.

Major League Baseball’s first commissioner, Kenesaw Mountain Landis, demanded the power from club owners for the commissioner to be able to investigate “any act, transaction, or practice” that is “not in the best interests of baseball” and to ascertain “what preventive, remedial or punitive action is appropriate.”

Horse racing does not have a commissioner, much less one with dictatorial power, but it does operate under the aegis of increasingly cooperating state regulators and may eventually come under federal authority regarding medication.

When it comes to provocative image-laden issues like race-day medication, insider betting, and aggressive whip use by jockeys, my opinion or your opinion is anecdotal and irrelevant.  What counts is how such matters are viewed by the betting cohort and the general public.  An enterprise that does not maintain a generally favorable standing is on a slippery slope if not doomed.

Copyright © 2015 Horse Racing Business

Attendance at horse racetracks has dropped dramatically over the years, for several reasons.  First, the quickened pace and increased demands of modern society are not compatible with spending a leisurely day at the races.  Second, people of today do not have the same appreciation for horses that their agrarian ancestors did.  Third, the gambling side of horse racing has been eviscerated by proliferating casinos in the United States and offshore.  Fourth, advance deposit wagering in many states has allowed people to bet legally without setting foot on a racetrack.

Falling racetrack attendance is part of a larger and likely irreversible societal phenomenon in which brick-and-mortar retailers are having a difficult time competing with online retailers.  According to Green Street Advisors (as reported in the New York Times), in the past four years about two dozen malls have gone out of business in the United States and 60 more are on the verge of closing.

As mall anchors like Sears, J. C. Penny, and Macy’s continue to close stores, malls suffer the consequences.  Gap just announced that it will close one-fourth of its 675 stores in North America, J. Crew laid off 10% of its headquarters personnel, and Abercrombie & Fitch and Aerospostale are paring the number of stores in their chains.

A few showcase horse-racing events do attract large crowds.  The New York Racing Association capped attendance for the 2015 Belmont Stakes at 90,000 and tickets for the Kentucky Derby and Preakness are always in high demand.  Barring unusually bad weather, the 2015 Breeders’ Cup at Keeneland will be packed with fans.

Peter Guber has a provocative idea about enabling more people to attend sporting events through virtual reality, which would, of course, expand the revenue base for the events.  The 73-year-old Guber has serious credentials in both sports and entertainment.  He is the former Chairman of Sony Entertainment, current CEO of Mandalay Entertainment, part owner of the NBA’s Golden State Warriors and Major League Baseball’s Los Angeles Dodgers, and chairman of Dick Clark Productions, the premier global producer of live event programming.

Guber has a significant investment in NextVR, a company that he says is capable of providing virtual reality technology that is “a game changer for live sports, festivals, concerts, shopping, and travel.”  For sports, a virtual viewer would have a real sense of being at an event like the Kentucky Derby that it is not possible to experience by watching on conventional television.  The business behind the virtual reality could offer the customer either a pay-per-view subscription or “clips” that supplement a conventional telecast.

As with any incipient technology, there are barriers to commercialization that have to be addressed.  For instance, Guber said that an unanswered question is whether people would be comfortable watching entire games in a virtual reality headset.  Moreover, until sufficient economies of scale are reached, the technology would be prohibitively expensive.

The concept of enabling an avid horse racing fan to (virtually) attend the June meet at Royal Ascot or the Kentucky Derby seems to have great potential.  Millennials and ensuing generations raised with iPhones and social media should feel comfortable with the technology, especially as it is refined and costs come down.

Copyright © 2015 Horse Racing Business

Justice Department prosecutors and the FBI are investigating Major League Baseball’s St. Louis Cardinals for possibly hacking a Houston Astros’ database to steal information about players.   An investigation, of course, is not synonymous with guilt and the facts will come out over time.

The New York Times reported that “Law enforcement officials believe the hacking was executed by vengeful front-office employees for the Cardinals hoping to wreak havoc on the work of Jeff Luhnow, the Astros’ general manager, who had been a successful and polarizing executive with the Cardinals until 2011.”

Reports of hacking for purposes of industrial espionage are unexceptional in the Internet era, but an allegation of hacking by a professional sports team to steal trade secrets has been unheard of until now.  Professional sports, of course, are periodically tarnished by cheating, as shown by well-publicized recent incidents involving the Super Bowl champion New England Patriots of the National Football League, steroid usage in bicycling and Major League Baseball, and corruption in soccer.

What is most surprising about the allegations pertaining to the St. Louis Cardinals is that the team has traditionally been one of the most successful franchises in Major League Baseball, with numerous World Series wins.  But, then again, the same can be said about the New England Patriots.

An impressionable 12-year-old might well infer that unethical behavior–or even illegal behavior–is the way to succeed.

In any sport, including horse racing, integrity is a fragile and perishable concept.  Every notorious incident chips away at the sport’s reservoir of good will amongst the public.

Horse racing, especially, will always have a precarious standing with its customers and the general public because gambling money and horse welfare are involved.  This is the best argument for why horse racing needs uniform rules of conduct across the states that are strictly enforced in a consistent manner.  Medication and in-race whipping are two key components.

Copyright © 2015 Horse Racing Business