Archives for February 2022

LESSONS FROM FACEBOOK

Old-time tradition-laden sports like Major League Baseball and horse racing habitually struggle to attract the next generation of fans.  And today’s consumer has lots of choices from a growing assortment of leisure and gaming activities.

Facebook (parent company = Meta Platforms) is a high-profile case-in-point in how not even a company with a huge free cash flow to protect and enhance its brand equity and fend off competitors is guaranteed continued success in a highly disruptive marketplace.  Last week, Meta Platforms reported that Facebook experienced its first-ever decline in daily active users, negative 5.7% to be exact.  As a result, its stock immediately plunged by 26% or $230 billion. This is the largest loss of market value ever experienced by an American company in a single trading day.

Facebook co-founder Mark Zuckerberg, in his conference call reporting fourth-quarter 2021 operating results, made it clear that Facebook is feeling the effects of upstarts like Chinese-owned TikTok and Snapchat.  Such social-media platforms have great appeal to younger people and are hip alternatives to stodgy Facebook and Instagram.  For example, 25% of TikTok’s active users are aged 10-19, 22.4% are 20-29, 21.7% are 30-39, and 20.3% are 40-49.  In sum, nearly 90% are less than 50 years old. 

Increasingly, younger people consider Facebook to be a social-media forum for parents and grandparents…and that is a looming threat to Facebook’s future.  This concern is driving Meta Platform’s metaverse strategy of virtual reality.

On a much smaller scale, horse racing’s major perpetual problem mirrors that of Facebook: How to attract younger fans to a sport that, accurately, has the image of being a pastime for older people.  With sports betting spreading across the United States, the competition for younger players will be more intense than ever.

Moreover, American race purses are supported by slot machine revenues at racinos.  This source may dry up, either through government decoupling of racing and slots or as slot machines lose popularity among tech-imbued younger generations who may find slots to be a boring form of recreation.

Meta Platforms recognizes that it has a “growth” problem and has proactively developed a plan to address it. Likewise, the horse racing industry has long known it has a demographic problem that imperils its future but, unlike Meta, it lacks a deep-pocketed centralized authority to formulate, fund, and implement a way forward. And that itself is a monumental problem.

Copyright © 2022 Horse Racing Business

HYPERBOLIC COMMENTARY BY NBC RACE ANNOUNCERS

The NBC telecast of Saturday’s Pegasus World Cup was reminiscent of some of the Super Bowls that have been billed to be potential nail biters only to turn out to be duds with one team dominating the other.  The ones where the advertisements were far more interesting than the game.

The entire sports world is full of exaggerated nomenclature—great or greatest this or that—and horse racing is no exception. Consider, for example, the NBC telecast of Saturday’s Pegasus World Cup.

In the lead up to the race, on-air personality and former jockey Jerry Bailey said that he could not remember a better matchup of two horses than between Knicks Go and Life is Good.  He is old enough to recall epic showdowns between Alydar and Affirm, Sunday Silence and Easy Goer, and don’t overlook several contemporary examples like Beholder and Songbird. Another NBC announcer added to the hype by telling viewers that the Knicks Go vs. Life is Good clash was a battle for the “ages.”  

The putative race for the ages was quickly decided when Life is Good took a commanding lead by the first turn and never looked in jeopardy of losing.  I have seen more thrilling races from $5,000 claimers. After the race, Bailey said “we expected a duel and got a blowout.”  Even this description is superfluous because a 3-length win is an easy victory but no blowout.  Secretariat’s win in the Belmont and Funny Cide’s performance in the Preakness were blowouts.

Certainly, announcers want to keep a sports event as interesting and exciting as possible, but the Pegasus World Cup TV crew went to extremes with their verbiage.  (Also, an awkward moment in the telecast came when a young women in the paddock gave the official order “riders up” and the jockeys did not mount when directed to do so.)

The payouts for the race reflect how uncompetitive it was.  The $2 exacta paid $4.80, the $2 trifecta was $15.60, and the $1 superfecta was $37.60.

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On an unrelated racing note, the Southwest Stakes was held at Oaklawn Park Saturday and was won by the Bob Baffert-trained and undefeated in three starts Newgrange.  As with the colt’s win in the Swaps Stakes on New Year’s Day, he did not accumulate any Kentucky Derby qualifying points owing to Baffert’s ban through 2023 by Churchill Downs, Inc.  Newgrange has five ownership interests and they apparently are not concerned that their colt is most likely going to be on the sidelines for both the Kentucky Derby and the Belmont Stakes unless Baffert is replaced as his trainer.

A couple of Baffert 3-year-old colts are attracting plenty of money in Kentucky Derby futures betting. This indicates that bettors either believe that his colts will be transferred to other trainers or that Baffert will somehow be successful in overturning his ban, most likely the former.

Copyright © 2022 Horse Racing Business