Archives for March 2019


After Santa Anita Park experienced 22 horse fatalities in early 2019, the track’s owner, The Stronach Group (TSG), temporarily closed the track and announced reforms, including the phasing out of the race-day medication Lasix. Since then, some owners and trainers have pushed back by indicating they may move their stables to other states. The North American Association of Racetrack Veterinarians has also voiced disagreement with Santa Anita’s decision on Lasix.

Regardless of one’s personal views on this dispute, an objective assessment leads to the conclusion that TSG is in an almost insurmountable power position vis-à-vis owners and trainers because of the superior business alternative it has to horse racing: real-estate development.

TSG’s website lists its five business segments and one of them is real-estate development: “TSG’s real estate development team is expanding our footprint and revitalizing our properties across North America, focusing on developing the lands surrounding our race tracks to create live, work and play communities.”

At least four of TSG’s seven racetracks are located on prime land that could easily be further developed for commercial purposes: Gulfstream Park (near Miami), Golden Gates Fields (San Francisco), Laurel Park (outside Washington DC in Maryland), and Santa Anita Park (Los Angeles).

TSG would likely be better off from a strictly financial point of view if they were to develop the land on which the four racetracks stand as opposed to continuing to operate racetracks. Gulfstream Park, for example, is already part of an upscale shopping facility and casino.

While TSG is deeply involved in horse racing and breeding, the commitment may not be as strong with current president Belinda Stronach in charge as it was with TSG’s founder, Frank Stronach. Forbes magazine’s special issue on “World’s Billionaires 2019” identified Frank Stronach as a “notable former billionaire” with a net worth of “at least $200 million” and wrote:

“In October, Stronach sued his daughter, Belinda, claiming she has mismanaged the clan’s Ontario-based Stronach Group, of which she is president. (The suit revealed that Stronach had earlier given up most of the conglomerate when he put it into trusts in which he had no interest.)”

Copyright © 2019 Horse Racing Business


Churchill Downs, Inc. (CHDN) at the end of February released its operating results for 2018 (SEC Form 10K). It reported net revenue of just over $1 billion for 2018 compared to nearly $883 million in 2017. Racing and racing-related online operations accounted for 29% of total net revenues with most of the remaining 71% coming from casinos. In 2018, CHDN had net income of $353 million versus $141 million in 2017. Diluted earnings per share were $4.39 in 2018 and $2.55 in 2017.

At the conclusion of 2018, CHDN had six wholly-owned racetracks: Arlington Park (IL), Calder Race Course (FL), Fair Grounds Race Course (LA), Presque Isle Downs and Casino (PA), Ocean Downs (MD), and Churchill Downs (KY). All of them conduct Thoroughbred racing except for Ocean Downs, which is a Standardbred track. Calder Race Course is leased to the Stronach Group and is known as Gulfstream Park West, although the associated casino retains the Calder name.

Online operations encompassed TwinSpires, United Tote, and Bloodstock Research and Information Services (BRIS). TwinSpires accepts bets via internet and phone, United Tote manufactures pari-mutuel betting machines, and BRIS provides handicapping information for bettors.

During 2018, CHDN pari-mutuel handle increased by 8.3%, largely due to betting on the Kentucky Derby and Kentucky Oaks, and would have been even better had there not been a large decrease in handle at Arlington Park near Chicago. CHDN launched 900 historical racing machines in 2018 at Derby City Gaming in Louisville, Kentucky. It also started BetAmerica Sportsbook at its two Mississippi casinos, for sports betting, and plans to expand to other states that have or will legalize betting on college and professional sports.

CHDN in 2018 owned eight gaming operations located in seven states (MS, FL, LA, ME, PA, MD, and OH). The facilities had some 9,500 gaming positions.

CHDN stock increased by 35.2% in 2018 in comparison with the S & P 500 that decreased by 6.59% or negative 4.75% if reinvested dividends are included. Institutions such as mutual funds and pension systems own around 88% of CHDN stock outstanding. The top ten institutions own 42% of the stock and the top 20 own 55%.

As of this writing, CHDN has acquired two additional casinos in 2019 (in IL and PA). CHDN has split its stock three for one and the share price is up in 2019 by about 5%.

(Disclosure: William L. Shanklin is currently a CHDN shareholder).

Copyright © 2019 Horse Racing Business


Auctions of Thoroughbred horses are well known for ringing up million-dollar sales. In fact, it has become so routine at premier auction houses in the United States and Europe that most people are not fazed when they see a report of a yearling or broodmare changing hands for millions.

But it got my attention when a reader of from Sweden sent me an article from The Guardian about how two buyers from China got into a bidding competition in a two-week online auction for a five-year-old racing pigeon and sire, named Armando, in which the winner paid the equivalent of $1,452,000 U. S. Reportedly, Armando’s new owner intends to stand him at stud in China, where he is to be bred to the owner’s prize brood-hen.

While horse racing is subject to cheating by various means, skullduggery is also evidently a threat to honest pigeon racing. According to the article in The Guardian:

“Last year, two professional pigeon racers in China were sentenced to three years in jail for cheating in a 466-mile (750km) race by smuggling their birds on to a bullet train to the competition’s finish line.

The men, Gong and Zhang, had earned €140,000 in prize money for winning the 2017 Shanghai homing pigeon race before their fraud was discovered.”

This brought to mind another famous case of cheating in racing, when Rosie Ruiz in the 1980 Boston Marathon jumped into the race about a half mile from the finish and won the female title, only to be disqualified eight days later.

Wonder if there are rules in world-class pigeon racing about race-day medication or a dispute about the need for a national oversight board to regulate drugs? Are pigeon races ever decided by a beak?

If a racing pigeon can sell for close to $1.5 million to Chinese buyers, imagine what potential there is for horse racing in mainland China if pari-mutuel wagering is eventually legalized.

Copyright © 2019 Horse Racing Business