CAVEAT EMPTOR AT AUCTIONS

The Keeneland September Yearling Sale is about to begin and that brings to mind a television program I watched recently on CNBC’s series “American Greed” about shill bidding.  Ebay defines the practice as follows:

“Shill bidding happens when anyone—including family, friends, roommates, employees, or online connections—bids on an item with the intent to artificially increase its price or desirability… Shill bidding is…illegal in many places and can carry severe penalties.”

(“Ghost bidding” is a term sometimes used to describe both shill bidding and “ceiling bidding.”  In shill bidding, an actual person colludes with the auctioneer to drive up the price, whereas in ceiling bidding, the auctioneer pretends that a real bid has been made.)

The American Greed episode pertained to Bill Mastro, who operated an Illinois auction house that sold baseball cards and other sports memorabilia.  CNBC explained how Mastro defrauded his clientele out of at least $1 million by rigging auctions, which got him a 20-month prison term:

“In 2013, [Mastro] admitted using a system of so-called shill bidders whose sole purpose was to drive up prices and bring him higher commissions.  He also tried to pass off a baseball that he falsely claimed was from America’s first professional baseball team, the Cincinnati Red Stockings.  And in a collector’s sacrilege, he trimmed the edges of a rare Honus Wagner baseball card in order to make it look more attractive to bidders.  Had they known the card was altered, it would have drastically reduced its value.  But Mastro failed to disclose it.”

CNBC concluded: “…the industry he helped create remains loaded with pitfalls.

A cursory Internet search revealed that shill bidding is a problem in auctions tendering all kinds of goods and services.

While Keeneland, Fasig-Tipton, and the other well-known horse auctions have endeavored to increase transparency, unscrupulous sellers can sometimes game the system.  Caveat emptor is truly sound advice when it comes to selecting honest bloodstock agents who know what they are doing at auction and to buying racehorses at their fair auction value.

Copyright © 2017 Horse Racing Business

DYING SPORTS?

Every year like clockwork, a few reporters and media commentators write or talk about how horse racing and/or professional boxing are “dying” sports, economically deteriorating remnants of the past.

Yet these two “moribund” activities had quite a day on August 26.  Dying is not a word anyone with a rational regard for facts would use to describe what transpired.

The Floyd Mayweather-Colin McGregor fight, pitting an undefeated world champion boxer against a world champion mixed martial arts champion who had never fought in a professional boxing bout, was a 38-minute monetary blockbuster.

The fight was front-page news, not only in the United States and Ireland (McGregor’s home) but in faraway places like Australia.  I heard people talking about the match-up who surprised me, folks you definitely would not expect to be at all interested.  The first question my wife asked me Sunday morning was “Who won the fight?”

The demand to watch the showdown was so strong that live-streaming Internet sites could not cope and therefore some customers had poor reception or buffering, so much so that refunds are forthcoming and a class action suit is (predictably) already in the works.

According to USA Today, the guarantee to Mayweather was $100 million and to McGregor $30 million “before any of the Pay Per View or Sponsorship money is divided up.”  Turns out that Mayweather’s purse is approximately $300 million and McGregor’s is $100 million.  USA Today said: “That means Mayweather will make more in one night than any NFL, NBA, or MLB player has made in their entire career (excluding sponsorships).  If that’s not crazy enough, that’ll also be close to three times more than Tiger Woods made in on-course earnings during his entire golf career, though, again, that doesn’t include Tiger’s off-course earnings, which put his total earnings over $1 billion.”

These astronomical dollar figures would have been even more impressive had the almost 3 million viewers who watched illegally paid up.  Pirated signals came from people holding smartphones in front of their television screens and sharing pictures on social-media sites like Facebook and YouTube.

Meanwhile, earlier in the day in upstate New York, 47,725 people were elbow-to-elbow at Saratoga Race Course (attendance was limited to 50,000) for Travers Day, and millions more watched on NBC, TVG, at simulcasting facilities, and online.  All-sources betting on the 13-Race Travers Day card was $47.9 million, the second-highest in the history of the Travers and a 5-percent increase over 2016.  (The most ever bet on the Travers card was in 2015, when Triple Crown champion American Pharoah ran second in the feature race.)

The next time a reporter or commentator has a creative block and decides to resort to the all-too-familiar subject of how boxing and/or horse racing are withering away, think about Mark Twain’s retort to the rumors of his demise:  “The reports of my death are greatly exaggerated.” Horse racing and boxing assuredly “ain’t what they used to be,” but their capacity to generate billions of dollars in revenues annually is not what you would expect from anachronisms allegedly one-step away from the grim reaper.

Lately, I have been seeing and hearing more and more about how football’s days are numbered because of head injuries and how baseball’s popularity is diving among younger generations for lack of action, so reporters and analysts now have some more impending death knells to expound upon.

Copyright © 2017 Horse Racing Business

U. S. HORSE RACING’S BILL BELICHICK EQUIVALENT

Bill Belichick has coached the NFL’s New England Patriots in six Super Bowls and his teams have won five of them.  Bob Baffert is the great coach’s contemporary in American horse racing.

On August 19, 2017, Mr. Baffert sent out Collected and Arrogate to run one-two in the Pacific Classic and the next Saturday won the Travers at Saratoga with West Coast in a full field that included the winners of all three 2017 Triple Crown races.  Mr. Baffert also won the Travers last year with Arrogate.

In the past several years, Mr. Baffert’s entries have won the sport’s two richest races–the Pegasus World Cup Invitational and the Dubai World Cup—and the American Triple Crown, which had not been accomplished in 37 years, and numerous other stakes like the Haskell.  Were it not for Real Quiet’s loss by a whisker in the 1998 Belmont Stakes, Mr. Baffert would have joined the select company of “Sunny Jim” Fitzsimmons and Ben A. Jones as trainers of two Triple Crown champions.

Remarkably, Mr. Baffert has three horses in his charge—Arrogate, Collected, and West Coast—that could be favored in the 2017 Breeders’ Cup Classic.  It is like having Tom Brady, Eli Manning, and Aaron Rodgers on your team as quarterbacks.

Critics say that Bill Belichick would not have been so productive without a Tom Brady playing quarterback or that Bob Baffert is riding high only because of horses like American Pharoah and Arrogate.  Indeed, talented athletes give a coach or trainer the ingredients needed to be successful, but they must be developed into winners.

Horse racing has several outstanding up-and-coming trainers and a handful of very accomplished veteran trainers.  However, if I could choose an individual to train a potentially “big-money” horse to run on a dirt surface, the white-haired fellow from California approaching the twilight of his career would be the choice.  He has a rare talent to get a horse ready to win the crème de la crème of races.  He can beat you on his racetracks in California or ship in to beat you on your racetrack in Dubai, Florida, Kentucky, or New York.

Copyright © 2017 Horse Racing Business