Archives for August 2018

HORSE RACING AS AN ECONOMIC FORCE IN NORTH AMERICA

How big is the North American horse racing enterprise?  That is a highly subjective question because each individual has his or her own perception of what constitutes “big.”  For example, a micro-business employing two or three people might think of another business with 500 employees as big.  Yet the conventional definition used by the U. S. Small Business Administration would classify a company with 500 or fewer employees as small.

In 2017, North American pari-mutuel handle was $11.6 billion.  On the bloodstock side of the industry, auction sales in 2017 were nearly $1 billion.  Thus the North American racing industry produced revenues of $12.6 billion annually not counting hard-to-estimate but consequential revenues from private transactions, such as stud fees, non-auction horse sales, trainer and jockey fees, and from suppliers like pari-mutuel machine manufacturers, racetrack concessionaires, horse-feed companies, and bloodstock agents.

To put the size of the North American horse racing into perspective, benchmarks are necessary in order to make meaningful comparisons.  Take several recent examples:

Casinos generated $76.6 billion of revenue in 2017 in the United States.

American movie theatre ticket sales were $11.1 billion in 2017.

In 2018, Cintas ranked 500th on the Fortune 500 list of largest U. S. companies (using the metric annual revenues to do the ranking) with revenue of $5.5 billion.

The Dallas Cowboys, the National Football League’s most valuable team, led the NFL in 2016 with revenue of over $840 million.  Next came the New England Patriots at approximately $575 million.

The American Gaming Association estimates that in 2017 $150 billion was bet—legally and illegally—on sports in the United States.  More objective experts put the number at somewhere around $67 billion per year.

While horse racing does not approach the magnitude of casinos and sports betting, it is certainly far from a cottage industry.  Racing is a significant employer, and way of life, at both the retail racetrack level and in agribusiness.  By the numbers, North American racetracks, account wagering providers, bloodstock-related businesses, suppliers, and tertiary firms account for billions of dollars in commercial transactions.

Copyright © 2018 Horse Racing Business

JUSTIFY AND THE HALL OF FAME

Following is what the website of the National Museum of Racing & Hall of Fame says about eligibility of a Thoroughbred racehorse for Hall of Fame consideration.

“Thoroughbreds become eligible when five calendar years have elapsed between their final racing year and their year of nomination.  Thoroughbreds remain eligible between five and 25 calendar years following their final racing year.  Thoroughbreds retired for more than 25 calendar years become eligible through the Historic Review Committee.”

Glaringly absent is language specifying the criteria voters should use in determining whether a horse merits Hall of Fame inclusion.  The voters are left to apply their own standards, which is not so much an issue when an obvious horse candidate is evaluated.  However, a problem arises whenever a horse’s credentials are exemplary yet flawed in some meaningful way.  Justify presents such a case in that while he was undefeated and won the Triple Crown, his racing career consisted of six starts, spanning a period of less than four months, and he never raced against older horses.

Major League Baseball requires a player to have completed 10 seasons to be eligible for its Hall of Fame.  By contrast, neither the National Football League nor the National Basketball Association designate a minimum number.

When Justify becomes eligible for the Hall of Fame, voters will have to grapple with his candidacy.  In the wake of his retirement, opinions will abound on whether a colt with six career starts and no competition against older horses qualifies.  As time goes by, opinion will ebb and flow and may never coalesce around a yes or no answer.

The Hall of Fame needs to take action now and set down in writing some hard and fast rules that voters can follow.  If the rules are to remain silent on how many races are minimally necessary to get into the Hall of Fame, language is imperative on whether a candidate must have won Grade I races not restricted to horses of a certain age.

While American Pharoah raced only eleven times, of which ten races were age restricted, he won the Breeders’ Cup Classic in convincing fashion against all comers.  His small number of starts, with all but one against horses of his own age, would have raised the same issue as with Justify had he not won the Breeders’ Cup Classic.  That one race made him a lock for eventual Hall of Fame enshrinement.  Justify does not have the same credentials to compensate for only six starts against horses of his own age.

Copyright © 2018 Horse Racing Business