Archives for September 2017

The National Football League and American horse racing are much different sports and businesses.  Yet they share one negative:

Some of the major financial beneficiaries of each sport/business take actions in the workplace that are bad for business and therefore counterproductive to their own livelihood.

In the case of the NFL, numerous players have alienated a significant percentage of their fan base by kneeling during the playing of the Star Spangled Banner.  One reputable poll found that 55% of Americans called the players’ disrespect for the National Anthem “inappropriate” and another established poll revealed that 34% of Americans are less likely to follow the NFL owing to the players’ conduct versus 12% who are more likely.   DirectTV is even offering $280 refunds to subscribers who cancel NFL Sunday Ticket over the players’ behavior.

Most concerning to the NFL are television ratings; the teams could play before empty stadiums and still make money from TV revenues.  In the first three weeks of the 2017 NFL season television ratings were down about 10%.  While it is not possible to determine precisely how much of this decline is due to viewers boycotting NFL games, it is certain that at least some of the downturn in ratings is attributable to fans refusing to watch.  Any percentage loss is too much.

Noted sports journalist and TV host Jason Whitlock cogently summarized the NFL’s perilous path in a Wall Street Journal editorial: “…a social-justice month, as some players have suggested…might sound awesome on Twitter, but in the real world it’s likely divisive and poisonous for NFL TV ratings.  Professional football’s core customers have more in common with our Twitter-addicted president [Donald Trump] than with sanctimonious athletes posturing for social-media approval.”

Michael Jordan was once asked why he did not publicly participate in helping politicians running as Democrats.  He famously and sagely replied “because Republicans buy shoes, too.”  This kind of obvious advice is sound for any business or industry:  Do nothing to alienate your current or potential customers.

(During either the 2008 or 2012 presidential election, a racing publication took an unscientific sampling at the Saratoga race meet of how people involved with Thoroughbreds intended to vote.  D. Wayne Lukas replied “undecided.”  Smart businessperson, indeed…keeping controversial subjects out of his workplace…knowing that people with all sorts of opinions and political persuasions own racehorses and employ trainers.)

The NFL brouhaha comes at a time when football is already under increasing scrutiny for the brain damage it does to many players.

Horse racing also has an injury byproduct that turns off fans, breakdowns, with the most publicized being Eight Belles during the telecast of the 2008 Kentucky Derby.  Yet the non-response by most racetracks to breakdowns–including all the major venues–is to continue to hold the vast majority of races on dirt, empirically shown to be the unsafest of the three types of racing surface.  The industry then scrambles to explain to the public why, for instance, there were a rash of horse fatalities this year at Saratoga and last year at Del Mar.

Other prominent examples of self-inflicted wounds are readily available and include drug-abuse incidents that were described in a 2012 New York Times expose and the pervasive corruption at Penn National Race Course in 2017.

As long as various individuals and interest groups in horse racing resist uniform regulation and enforcement of drugs by an independent federally-sanctioned organization, as well as other measures–like installing synthetic racetrack surfaces and ridding the sport of whipping imagery–they will persist in the same detrimental “do what is bad for business” pathology as some of the current crop of NFL players.  Masses of people will tune out a sport they perceive as unnecessarily dangerous to horses and jockeys and unfair to bettors.

Copyright © 2017 Horse Racing Business

The recent Keeneland yearling sales sold 2,792 horses for a total of $272.9 million and an average of $97,740.  The sales topper brought $3 million, which was the largest amount paid for a yearling in the United States in 2017.

Dollar figures of this magnitude vividly demonstrate the sizeable business of buying and selling prospective racehorses.  But they obscure the risks and emotional pain that are inescapably part of breeding and raising horses.  A heartfelt discussion on Sirius radio between host Steve Byk (At the Races with Steve Byk) and bloodstock expert Sid Fernando on September 20, 2017, conveyed this point better than any words that could be written to describe the lows of breeding and raising horses.

Mr. Byk, a small-scale participant in breeding and racing, told of how he had bred three mares (one rescued from a kill pen on the way to slaughter) and ended up with only two of their offspring still living after several years, instead of six or seven.  He told how a weanling unexpectedly died from disease and a mare aborted her foal on New Year’s Eve.

You could tell from Mr. Byk’s tone that the experience still hurts him deeply.  Anyone who has ever lost a family pet knows how the feeling of emptiness lingers.  Like Mr. Byk, the primary motive for numerous breeders with only a few mares is usually the love of the game and certainly not hefty profits.

However, my guess (you can never know someone’s emotions for sure)  is that the vast majority of large-scale breeders are similarly affected.  While commercial breeders expect that there will inevitably be mares that don’t carry their foals to full term and foals and yearlings that get sick and die, they still are saddened by the losses, and not just because a possibly financially valuable asset has been lost.

[Click here to access the At the Races segment.  The discussion referenced begins at about 35 minutes into the segment.]

_________________

In another part of the Byk-Fernando dialogue, Mr. Byk told (not in a braggadocios way) of how he considered whether to breed a Dunkirk mare he raced.  In the end, he gave her to an eventer because, in his view, she was not good enough to propagate the breed.  This made me think about the preponderance of entries I see in the cheapest claiming races at lower-rung racetracks.  It is evident that breeders have too often mated undistinguished mares to stallions that have little or no qualifications to be sires.

On Thursday October 5, I will post another article about a few of the many people who show their love for horses via their actions.

Copyright © 2017 Horse Racing Business

On September 15, 2017, Churchill Downs, Inc. and Keeneland Association, Inc. announced a partnership for the purpose of opening two new racetracks in Kentucky.  One would be located in Corbin, in the southeast, and the other would be in Oak Grove, in the southwest.  Each track would have a live race meet and historical wagering machines.

The rationale is unclear.  The overwhelming trend in horse racing, and retailing per se, is away from brick and mortar and toward online. Moreover, the geographical sites selected are poor and isolated areas.

Corbin is in two Appalachia counties, Knox and Whitely, with sparse populations.  Knox County has almost 32,000 residents with a per capita income of about $11,000 and Whitely County has 36,100 residents with per-capita income of approximately $13,000.  In Knox County, 35% of the families have incomes below the poverty line and the figure is 26% in Whitely County.

Corbin is 86 miles from Knoxville, Tennessee, 89 miles from Lexington, Kentucky, and 163 miles from Louisville, Kentucky.  These are the nearest population centers.

Oak Grove is in Christian County, Kentucky, about 20 miles away from the Army base Fort Campbell.  The county’s population is 73,000 and the per-capita income is $14,600.  Fifteen percent of the families in Christian County have incomes below the poverty line.

Oak Grove is 73 miles from Nashville, Tennessee, 83 miles from Evansville, Indiana, and 170 miles to Louisville, Kentucky.  Kentucky Downs, located in Franklin Kentucky, is only 57 miles away and Ellis Park in Henderson, Kentucky is 88 miles distant.  Ellis Park is convenient to Evansville patrons.

While Oak Grove appears to be better able to support a racetrack than Corbin, neither location has anything approaching adequate population and buying power to do so.

It may be that the intent is to open TV production studios, so to speak, to beam racing signals to bettors elsewhere.  Yet there already are ample racetracks competing for bettors’ attention and dollars.

A more plausible motive for opening the racetracks is to establish locations for installing video lottery terminals should Kentucky legalize them to help close the state’s yawning budget deficit and address its huge unfunded pension liabilities.

Why enough people from population centers would patronize the racetracks when casino gaming, including table games, is easily accessible in Indiana, Ohio, and Tennessee (on the Cherokee reservation) is a puzzling question.

Copyright © 2017 Horse Racing Business