Archive for January, 2009

By Ray Paulick
Nicanor – the 3-year-old full brother to the ill-fated 2006 Kentucky Derby winner Barbaro, beat just two horses in his career debut at Gulfstream Park on Saturday, finishing far behind another first-time starter, Warrior’s Reward, in a one-mile maiden race on a fast main track.

Ridden by Barbaro’s regular rider, Edgar Prado, Nicanor appeared to be squeezed back at the start of the one-turn contest, racing at the back of the field in the early stages. He gained ground quickly after the opening quarter to move into fifth place and in heavy traffic as favorite Dubinsky carved out the early fractions, but Nicanor paid the price for that effort, fading before the field reached the turn for home and winding up a well-beaten 10^th. Prado wrapped up on Nicanor when he was clearly beaten.

“(Nicanor’s) better than that," Prado said afterwards. "I’ve worked him in the mornings and he showed me a lot .  He broke really fast and unfortunately grabbed his left quarter.  We’ll just have to see how long it takes to heal, but I know he’s better than that.”

Said trainer Michael Matz: “He grabbed the quarter (heel) of the left front leg leaving the gate. He wasn’t comfortable, so Edgar just wrapped up on him.”

The winner, a 3-year-old son of Medaglia d’Oro out of For All You Do, by Seeking the Gold, is owned by A. Stevens Miles Jr., trained by Ian Wilkes and was ridden to victory by Calvin Borel. He was bred in Kentucky by Jayeff B Stables and sold at the Keeneland September yearling sale for $180,000. Warrior’s Reward  paid $63 for the win. Allrightsreserved was second, Single Malt third and favored Dubinsky faded to fourth.

Final time was 1:39.69 after fractions of :24.33, :48.03, 1:13.49, 1:26,86 and 1:39.69. Click here for the Equibase chart.

Nicanor had a steady string of workouts – none of which were particularly fast — at the Palm Meadows training center going back to early December. The son of Dynaformer out of La Ville Rouge, by Carson City, was bred in Kentucky by his owners, Roy and Gretchen Jackson, who campaign in the royal blue, green and white silks of Lael Stables.

His debut was widely anticipated not only by racing people but by many in the general public who for months followed the ultimately tragic saga of the 2006 Kentucky Derby winner after his catastrophic leg injury shortly after the start of the Preakness Stakes. Barbaro died Jan. 29, 2007, two years and two days before his younger full brother made his first start as a 3-year-old. Nicanor’s coming out was previewed by the national news media, including the CBS Evening News, which focused on the colt and his famous brother, who began his career with six consecutive victories, culminating with a 6 ½-length win in the Kentucky Derby.

A HALF-HOUR BEFORE Nicanor’s debut, a field of 10 3-year-olds contested the $150,000 Holy Bull Stakes, a Grade 3 event over 1 1/8 miles, with 12-1 longshot Saratoga Sinner edging 30-1 Bear’s Rocket for the win.

Under red-hot Julien Leparoux (who had ridden seven winners over the last two days), Saratoga Sinner tracked Bear’s Rocket from the outset as the latter set fractions of :23.62, :47.88, 1:12.73 and 1:38.20 for the opening mile. Leparoux asked Saratoga Sinner at the top of the stretch and the colt wore down Bear’s Rocket in the final eighth of a mile, winning by three-quarters of a length and completing the distance on a fast track in 1:51.45. West Side Bernie, making his first start since finishing second in the Delta Jackpot Dec. 5, made a strong move on the turn for home but could do no better than third. Kentucky Jockey Club winner Beethoven was fourth, getting a wide trip from the outside post position in his first start since November.

Saratoga Sinner was coming off a maiden win Jan. 7 at Gulfstream Park, his fourth start for the Lally Stable and trainer Eddie Kenneally. The son of Harlan’s Holiday out of Naughty Linda, by Slew City Slew, was bred in Kentucky by Brereton C. Jones and sold at the Keeneland September yearling sale for $130,000. Chart.

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By Ray Paulick
If Barbaro had been euthanized immediately following the 2006 Preakness Stakes in which he suffered a catastrophic injury to his right hind leg, there probably would be no books written about the Kentucky Derby winner, no television specials, no statues and memorials, no group known as the FOBs (Fans of Barbaro), and no Nicanor watch, a long-running web diary devoted to his younger full brother. If the injury had occurred 10, 15 or 20 years earlier, it’s very likely that’s what would have happened – a quick decision to inject the horse with a fatal mixture of drugs to take him out of his misery.

That isn’t what transpired with Barbaro. Veterinary science has come a long way from the days of a cursory on-track inspection and the realization that nothing could be done to save a horse suffering from a massive leg fracture. Unlike humans, horses can’t rehabilitate in bed while their leg heals.

So owners Roy and Gretchen Jackson, along with Barbaro’s trainer, Michael Matz, made the decision to do everything possible to save Barbaro’s life. He was vanned – followed by news helicopters — from Pimlico race course in Baltimore to the University of Pennsylvania’s New Bolton Center near the small town of Kennett Square, southwest of Philadelphia. The colt was put in the care of Dean Richardson, a surgeon who would soon become the closest thing the equine veterinary community has ever had to a rock star.

The news coverage, fueled by public interest from hard-bitten horseplayers to people who had never been to a racetrack, was unprecedented. Richardson’s surgical team miraculously put Barbaro’s shattered leg back together with metal plates, screws and more than a little hope that it would all hold. The big colt chilled out following surgery,hoisted into a recovery pool specially designed for large animals that would prevent him from thrashing about and destroying the repair work. Two previous high-profile surgeries – on Ruffian following her 1975 match race and on Alydar after his mysterious stall accident in 1990 at Calumet Farm – ultimately failed during recovery after the horses had regained consciousness and reinjured themselves.

Richardson dealt patiently with inquiries from members of the media who were trying to quench the thirst for information from the public. Television and radio news and talk shows carried numerous Barbaro stories, and many horse racing Web sites crashed from the surge in traffic, including one operated by the University of Pennsylvania that provided daily updates with photos of racing’s tragic hero.

It was a time for the horse racing industry, and particularly those in the veterinary community, to feel proud for the care given and the advancements made in treating injured horses. The outpouring of concern for Barbaro from the general public was reassuring to an industry that feared a high-profile injury might be its worst nightmare. This much we learned: people still loved horses. Thousands of them made visits to New Bolton, sent get-well cards, flowers, letters and carrots. 

There were critics (aren’t there always?) who said keeping Barbaro alive was cruel to the horse, that he would never have anything close to a normal life. But only a couple of months after the surgery, I was invited by a veterinary associate of Richardson’s to visit New Bolton and see Barbaro. His hind leg was twisted abnormally, but he was bright-eyed and seemed like a happy horse, though on the day of our visit Richardson (pictured, left, with Barbaro and me) had concerns early signs of laminitis were beginning to appear. It’s the No. 1 fear many veterinarians have for their recovering patients; that circulation problems will develop in the foot on an injured leg, causing the horse to distribute his weight unevenly, which can lead to further problems in the other feet. The old axiom “no foot, no horse” really is true.

Barbaro’s laminitis condition improved and the injured leg continued to heal, leading the Jacksons to begin considering a life after New Bolton for their Derby winner. There was even some speculation that he might be able to cover mares some day and pass along whatever special ingredient he had that carried him to six straight victories, including a dominating, 6 ½-length victory in the Kentucky Derby.

Ultimately, and sadly, the laminitis returned. Richardson and his New Bolton team, along with some outside advisers, tried a variety of treatments and special shoes to ensure circulation to the right hind foot. The condition worsened in January 2007, however, leading Richardson to try more radical treatments, including an external brace on the right hind leg to take weight off the foot. After those efforts failed, more than eight months following his injury, the decision was made on the morning of Jan. 29 to euthanize Barbaro. A nation mourned.

I wondered at the time how the saga of Barbaro would affect the popularity of racing. I have no doubt that we have new fans because of him, though many of them have to be considered “light users” when it comes to supporting the game at the mutuel windows. His gallant struggle to survive created enormous interest, and in some ways what almost seems like a cult of followers who have now transferred their interest to Barbaro’s 3-year-old full brother, Nicanor. The latter makes his long-awaited debut in the eighth race on Saturday at Gulfstream Park, a maiden test going a mile on the dirt. Barbaro’s regular rider, Edgar Prado, will be aboard the colt, who will be shouldered with the heaviest burden of expectations that any horse in my lifetime has ever carried.

We learned a great deal from Barbaro. Some outsiders discovered what many in the horse industry already knew: that the level of advancements in veterinary science is enormous. But we also learned that some maladies, including laminitis, remain a mystery despite the ongoing efforts of researchers and those who provide financial assistance to them.

The eyes of the racing world will be on Nicanor tomorrow as he makes his racing debut. Many people will be betting on the colt in hopes that he can rise to the level of his older brother. Others will look at that race as a great wagering opportunity, figuring that Nicanor will be one of the most overbet first-time starters ever, and they’ll look for betting value in his opposition.

Here’s a suggestion for anyone that plans to bet on Nicanor or on someone else in that maiden race. Put aside a few bucks that you were going to bet, and take a few more if you wager successfully on the race, and make a donation to equine research, specifically to help find a cure for laminitis.

Here are two worthy causes:
NTRA Charities – Barbaro Memorial Fund, c/o Bessemer Trust Company N.A., attention Robert Elliott, 630 Fifth Avenue, New York, NY

Grayson-Jockey Club Research Foundation, 821 Corporate Drive, Lexington, KY 40503  or click here to donate.

Let’s do more than remember Barbaro and cheer for his brother. Do something to make a difference in the future of other horses that may suffer a similar fate.

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By Ray Paulick

Random notes while waiting for the ice to melt …

The devastating snow and ice storm that hit Kentucky earlier this week has created serious economic hardships on Thoroughbred farms, many of which are without electricity and have suffered major damage, just as the foaling season is hitting full swing and the breeding season about to begin. Let’s hope organizations like the American Horse Council, the NTRA, Thoroughbred Owners and Breeders Association, the Kentucky Thoroughbred Association and the Kentucky Equine Education Project are in contact with government officials to seek relief, now that Gov. Steve Beshear has asked the Obama administration to declare a federal emergency.

Horse farms are already under extreme economic pressure because of the plunge in bloodstock prices, and this latest problem is only making things worse for them. It’s at times like these that these alphabet soup organizations can actually do some good.

DID FRANK STRONACH’S ONE-VOTE MARGIN over IEAH Stables in the Eclipse Awards outstanding owner category come by virtue of several racing secretaries who work for him? I have a great deal of respect for Stronach’s racing and breeding operation, which has produced solid numbers for many years now, but I just can’t fathom how 2008 was an Eclipse Award-winning year for him.  Ahmed Zayat’s stable earned slightly more money but only ranked sixth in the number of first-place votes. IEAH had a far superior year in terms of Grade 1 winners. George Strawbridge’s Augustin Stable had a better year when the number of starters was taken into consideration, as did the racing stables associated with Sheikh Mohammed. Here is the year-end ownership standings by money.

Apart from the National Turf Writers Association, which has historically published how its members vote, there is no disclosure from Daily Racing Form or the National Thoroughbred Racing Association about who votes – never mind who each individual votes for. But the NTRA should insist that racing secretaries or any other voters who work for racetracks owned by Stronach’s Magna Entertainment not be allowed to vote in categories where there is a potential conflict of interest. That would include the leading owner and leading breeder categories. The awards are too important to permit any conflicts of interest or suspicions of impropriety.

In the owner and breeder categories (the latter of which was for years determined by a committee vote), there seems to be little imagination or thought put in by voters, who more often than not look at which owner and breeder is at the top of the money list that is supplied with the ballot. If the people who vote for Academy Awards were that lazy, then “Paul Blart: Mall Cop” would win the Oscar for best picture this year.

Opportunity (the number of starters) should play a role in voting for outstanding achievement by an owner or breeder. Twice in the last eight years, a breeder who produced two individual champions in the same year from a small band of broodmares (Virginia Kraft Payson, with Farda Amiga and Vindication in 2002, and Aaron and Marie Jones, with Speightstown and Ashado in 2004) did not even get enough votes to be among the three finalists! That’s insulting to the thousands of Thoroughbred breeders who either can’t afford to or don’t choose to maintain massive numbers of broodmares.  (Click here to see what I wrote about this issue a few years ago at Bloodhorse.)

The NTRA needs to address this, either by eliminating the vote and simply giving the awards for leading owner and breeder to whoever wins the most money, or by changing the system of selecting the outstanding individuals in these two categories. I don’t think enough voters understand the importance of this category or what “outstanding” means when it comes to owning or breeding Thoroughbreds.

SPEAKING OF THE NTRA, what is its future? The organization is a shell of its former self, when it had widespread industry support and a mission to improve the economics of racing and breeding through increased pari-mutuel handle, marketing and greater exposure on television. Following its split from the Breeders’ Cup, the NTRA has lost much of its economic clout and influence, as it no longer has the annual championships to promote to the general public or to race sponsors that were tied in to group purchasing (i.e., John Deere, NetJets, Dodge), which only a few years ago produced upwards of $100 million a year in sales. Following the NTRA-Breeders’ Cup “divorce,” group purchasing through NTRA Advantage has dropped significantly.

Today, the NTRA seems to be playing more defense than offense, reacting to crises (i.e., the death of Eight Belles in the Kentucky Derby, Congressional inquiries, totalizator problems) but not really having the resources to go on the offensive in any areas, including marketing and promotion.

Complicating matters (and this isn’t new) is the ongoing struggle to maintain membership in the NTRA. Churchill Downs Inc., which is tabbed to pay approximately $400,000 in dues for its various tracks in 2009, hasn’t recommitted to membership. A source says Churchill might considering paying $200,000 in dues.  An NTRA official told the Paulick Report he hopes Churchill executives see value in the NTRA’s legislative activities, the “Racing to the Kentucky Derby” television series on ESPN, NTRA Advantage purchasing, the National Handicapping Championship, and the Safety and Integrity Alliance. The interesting thing about the latter, I’ve been told by sources, is that Churchill Downs CEO Bob Evans is the one who insisted the NTRA do something about the safety issues that led to the creation of the Safety and Integrity Alliance.

Magna apparently hasn’t committed to renewing its NTRA membership, either. If the NTRA loses the two largest track ownership companies, it will be further weakened, perhaps terminally.

CORPORATE SPONSORSHIPS ARE A CHALLENGE in the current economic climate, whether it’s the PGA Tour, NASCAR or horse racing. But it was, nevertheless, a surprise to see Bessemer Trust drop its sponsorship with the Breeders’ Cup. I would think the wealth management firm formerly chaired by Ogden Mills (Dinny) Phipps and now run by his cousin, Stuart Janney Jr., is encountering the same economic challenges that many financial institutions are (though Bessemer’s investment strategy is believed to be conservative).  

Janney responded to an email with the following comments: “I would say our reasons for dropping out are as follows. First, we have been a sponsor for some time, which means many of our clients have been entertained at a Breeders’ Cup event and having them back again is possibly less appealing than providing a different venue. Second, the two-day format works better for others than it does for us. Third, we have never been able to really derive full value from the TV ads as our target audience is very narrowly focused. Fourth, as we look at other sponsorships and ways to thank our clients or meet prospects, it helps in tighter times to have this money available. We believe our involvement with the Breeders’ Cup has been beneficial to Bessemer and the staff at the Breeders’ Cup has been a pleasure to work with.”

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By Ray Paulick
There are many questions to be answered at tonight’s Eclipse Awards from Miami Beach, Fla. (from which I’ll be dutifully live blogging starting sometime after the 5:30 p.m. cocktail hour begins and before TVG goes on the air with its 7 p.m. coverage). Who will get the crown as 2008 Horse of the Year? Will it be the reigning champion, Curlin, or the unbeaten filly, Zenyatta?

Inquiring minds may want to know…will Michael Iavarone of IEAH Stable have more bodyguards than Jess Jackson? How big will Frank Stronach’s posse be? Who will take the first punch at the publisher of the Paulick Report? Iavarone (I’m no fan of his), trainer Steve Asmussen (I wrote that no trainer with a pending drug positive deserves an Eclipse Award) or my former boss, Bloodhorse publisher Stacy Bearse (who needs no further introduction to our faithful readers)? We’ll try to answer those questions and more, going behind the scenes as best we can.

Many of the Eclipse Award winners are obvious (both of the 2-year-old divisions, 3-year-old male, older male and female, jockey and trainer), but there actually is suspense in several categories (3-year-old filly, male and female turf, male and female sprinter, owner and breeder). Unless, of course, someone at the sponsoring organizations – the National Thoroughbred Racing Association, Daily Racing Form or National Turf Writers Association – has leaked the results, something that has happened in the past.

Without access to the leaks, here are my predictions for the night (on the Eclipse Awards front):

2-year-old male – Midshipman (a slam dunk)

2-year-old filly – Stardom Bound (should be a unanimous vote)

3-year-old male – Big Brown (there might be a few stragglers that voted against him)

3-year-old filly – Proud Spell over Eight Belles (performance should win out over sentiment)

older male – Curlin (slam dunk)

older female – Zenyatta (should be unanimous, though I am reminded that some sports writers didn’t vote for Rickey Henderson to get in the Baseball Hall of Fame)

male sprinter – Midnight Lute (if it’s like boxing, the defending champion should have an advantage, and we’re like boxing, right?). This may have been Bob Baffert’s best training achievement in his career (and he could have three Eclipse winners this year without being a finalist for outstanding trainer!)

female sprinter – Indian Blessing over Ventura (the anti-synthetic track votes may come into play here, diminishing Ventura’s win over Indian Blessing in the Breeders’ Cup)

outstanding owner – Unimaginative voters will probably give this to Stronach Stable, based on the highest earnings (though the 2008 leading owner by money won was Zayat Stable, who was not a finalist). Of the three finalists (Sheikh Mohammed’s Godolphin Racing is the third), IEAH deserves the award if it is strictly based on racetrack performance

outstanding breeder – tough one to call. Adena Springs has the numbers, but the other finalists, Stonerside and WinStar, had very good results from smaller foal crops. With Robert and Janice McNair producing two Breeders’ Cup winners (Midshipman and Raven’s Pass) for Stonerside, they get the nod

trainer – Steve Asmussen, an outstanding horseman and the certain landslide winner (though as I stated in an earlier column, I believe medication positives during the year in question should disqualify individuals or horses from awards consideration)

jockey – Garrett Gomez. Another landslide

apprentice Jockey and steeplechase horse – no clue

Horse of the Year – Curlin, by a comfortable margin…a deserving two-time champion

Tune in to the Paulick Report later tonight to see how wrong I can be!

UPDATE: Due to multiple braincell failure, two hotly contested categories were omitted from the original post.

male turf — Einstein over Conduit. A season of top performances in North America should rate higher than a single Breeders’ Cup win.

female turf — Forever Together (for the same reason as Einstein, even though Goldikova’s BC Mile triumph was nothing short of breathtaking.

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Following the 2008 Breeders’ Cup, where European horses had their best results ever, the Paulick Report Daily Poll questioned readers about why the European runners fared so well. Was it the recent California ban on anabolic steroids, leveling the playing field for international runners who have never raced on the medication? Was it the synthetic surface at Santa Anita used for the traditional dirt races? Or were European horses simply better this year? The results were mixed, but 47% of respondents thought the synthetic surface made the biggest difference.

One thing that never crossed my mind was a possible difference in the feed given horses in Europe vs. what they are fed in the United States. Sharon Hinsley, who with her husband runs a public stable in Chicago and Tampa Bay, thinks that could be a factor in the increasing fragility of American-based runners. 

Pending the results of scientific research, some ingredients have been banned from feed in Europe, where a movement for “natural” or “green” food ingredients is much farther along than in the U.S. GMO feed (with genetically modified organisms) is labeled as such in European Union countries. (Click here to read about European protests against GMO food.) Nutrition experts here caution us, however,  that “natural” products are not necessarily any safer, and that all food ingredients should be monitored and tested.

The following commentary by Sharon Hinsley (who can be reached at Dhhstable1@aol.com) certainly opens for us a new debate about food ingredients, one that has been ongoing in European and Asian countries. Her views do not necessarily reflect those of the Paulick Report, but we think the subject matter is important enough to be discussed. – Ray Paulick

By Sharon Hinsley
My husband and I have been owners and trainer of a public racing stable for over 22 years. As with so many others whose life’s work has been in this industry, we have seen first-hand the increasing fragility of the Thoroughbred and its growing impact on this once-great and beloved sport.

Following the European success in the 2008 Breeders’ Cup at Santa Anita, I couldn’t help but think back to several of the comments voiced in a magazine article about the success of the European runners. For instance, a comment was made that American-bred horses competing in Europe race significantly more than their counterparts here in the United States.

In the same discussion, someone questioned whether changes in the water or type of feed may be contributing to the durability problem. While factors such as racing surface, breeding practices oriented toward speed and precocity, steroids and medication (both legal and otherwise) have dominated the discussions about the seemingly increased fragility of our horses, have we missed some very important and fundamental contributing factors? Could something as basic as what we feed our horses be a part of the durability and soundness problem? Is there something different about the feed given to horses in Europe versus what we feed our horses in the United States?

A review of UK horse feed Web sites shows some interesting terminology not seen associated with horse feed in the United States. For instance, many of the UK feeds contain statements such as “non-GMO” and “Identity Preserved”. GMO stands for Genetically Modified Organism and Identity Preserved refers to quality assurance programs and certifications aimed at ensuring that products can be traced through the entire production cycle so they have not been contaminated by genetically modified organisms.

 A genetically modified organism is the result of genetic engineering. Also known as transgenic organisms, they are the product of laboratory processes that take genes from one species and insert them into another in an attempt to obtain a desired characteristic. Although genetic engineering holds great promise, particularly in the field of medicine, its application in the agricultural arena has been primarily focused on herbicide tolerance and pesticide control. By making a crop herbicide resistant, herbicides can be applied over and over again allowing the plant to live while everything else around it dies. This has proven to be economically advantageous for the producers of the herbicides but potentially troublesome for consumers, not to mention the environment. And what of the effect that ingestion of these genetically modified crops might have on horses?

There is a significant difference between what has happened in the United States agriculturally and in many parts of Europe where GMOs have been banned from being grown or used in any feed or food.    Within the United States (and Canada), the proliferation of genetically modified organisms within the food supply is troubling, particularly given the high degree of uncertainty that exists with respect to the health effects of GMOs in food. This is equally true for the unknown effects that GMO feed may be having on our horses.

The current technology of genetic engineering is not nearly as precise as most would believe. The insertion of new genetic material is still a highly inaccurate procedure. Unintended side effects are often encountered, and many of these unintended side effects are not well-studied or documented. Genetically modified plants have been known to create toxins. The plant may be significantly altered with respect to its nutrient content, the balance of proteins within the plant may be disrupted, again with unknown consequences. In addition, due to the use of antibiotic resistant marker genes, GMOs may be contributing to increased antibiotic resistance, particularly in critical gut bacteria. GMOs may also be contributing to increases in allergies. The effect of GMOs in what we feed our horses is simply not well-known or understood. In the United States, though, it is likely we are feeding our horses a steady diet of GMO feed. Could this be a contributing factor to the durability issues of the modern Thoroughbred? It is certainly food for thought.

As horsemen we must become educated about what is in our feeds. We cannot assume that the quality of grains we used to get in decades past is the same as what is now in bags of feed. The recipes of our favorite brands may have changed without us even knowing. Oftentimes, we may simply see that bright label saying "new and improved." However, “new and improved” might mean something substantially different from what we would expect it to mean. We must put pressure on our mills to produce non-GMO feed free of pesticide contamination just like our European counterparts have available to them. We need to start asking and validating the contents and quality of the feed we provide to our horses.   Even though every horse in the racing business is for sale one way or another, we have a moral obligation to preserve the durability and quality of the breed no matter who owns the horse we raise. Garbage in/garbage out and eventually we are all out of business.

Copyright © 2009, The Paulick Report

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By Ray Paulick
Satish Sanan has never been afraid to speak his mind, whether he’s at a Thoroughbred auction, the racetrack or a corporate boardroom. Still a relative newcomer to this industry (he and wife Anne bought their first yearlings at Keeneland in 1997 for his family’s Padua Stables), Sanan has been a proponent of greater transparency and disclosure in many facets of racing and breeding.

A native of India who was educated in England and is now a U.S. citizen and successful businessman, Sanan was first asked to join the Breeders’ Cup board in 2003. He was elected to the 13-member board of directors when the organization restructured its governance in January 2006. “I’ve seen the good, the bad, and the ugly when it comes to the Breeders’ Cup,” Sanan told the Paulick Report, “but I’ve seen a lot of progress lately.”

If there is progress in the future, Sanan might deserve a large share of the credit. He is head of a strategic planning committee that’s hired a world-class consulting firm to examine virtually every aspect of the Breeders’ Cup and present a strategic plan to the board of directors in July. The committee was his idea, after he criticized the organization for not having a five- or 10-year strategic plan, instead operating tactically on a year-to-year basis and making decisions on what Sanan called “knee jerk reactions” to events.

But while Sanan has been critical of some aspects of the Breeders’ Cup, he strenuously objected to the tone and content of an editorial written by owner-breeder Peter Blum that appeared in the Thoroughbred Times of Jan. 10, 2009, and was referenced here in the Paulick Report. Sanan wrote a rebuttal to Blum that was published in the Jan. 24 edition of the Thoroughbred Times, citing a series of changes and improvements to the Breeders’ Cup since the new board was elected three years ago. (Neither Thoroughbred Times commentary is available online.)

“I felt the (Blum) article was all negative and non-factual,” Sanan told the Paulick Report. “He is objecting to a number of things, but doesn’t back it up with anything, and I tried to go through it step by step and back it up with a lot of data.”

Sanan said there are some who will criticize “whatever the Breeders’ Cup board and its management do. The perception is that it’s still the ‘old guard,’” he added, “that (board chairman) Bill Farish runs it and his dad (William S. Farish of Lane’s End) tells him what to do. But the reality is a lot of people on that board are pretty damned vocal and will say what they want to say. From operations to communications to financial management to the whole structure, I tell you it is so much better than it was five years ago.”

The younger Farish and chief executive officer Greg Avioli worked closely with Sanan in the early stages of the strategic planning process, beginning in August and September. “We asked for volunteers (among the 48 individuals on the Breeders’ Cup board of members and trustees) and got a very positive response, with more than 15 committee members,” Sanan said.

During a personal trip to London, Sanan scheduled an appointment with Spectrum Value Partners, a global consulting firm that was referred to him by Malcolm Glazer, owner of the Tampa Bay Buccaneers of the National Football League and majority owner of the English Premier League football giant Manchester United. Spectrum Value Partners offers strategic advice to a number of telecom and media clients worldwide, and also has a roster of sports clients, including several teams in the English Premier League. They also have had some horse racing clients, according to Sanan, including At the Races television, the Melbourne Cup and Victoria Cup. Click here to learn more about some of the sports consulting done by Spectrum Value Partners.

“We needed a firm that can take a 500,000-mile view and help us put together a five-year plan,” Sanan said. “The Breeders’ Cup needs to put a plan in place, like NASCAR did 10 years ago, something that says, ‘Here is where we want to be in five years, or 10 years.’

“They did a terrific presentation to the board, and the process has started,” Sanan said.

The first step was development of a lengthy questionnaire distributed to the 48 Breeders’ Cup members and trustees. The nearly 70 questions cover considerable ground, including sections on governance, nominations, perceptions about the Breeders’ Cup, comparisons with other sporting events, international issues, external challenges, and expectations about the future. The consulting team from Spectrum Value Partners, led by partner William Field and assisted by Janice Hughes, Richard Mooney and Sam Evans, will then conduct one-on-one interviews with roughly 50 major industry stakeholders from around the world. It will also gather information from racetracks and horseplayers, Sanan said.

In the midst of this, a two-day retreat for the strategic planning committee will be held in South Florida in February.

“One of the things I’ve been critical of is that we rely on one-day of revenue (now two days) with the championship races and on stallion and foal nominations,” Sanan said. “Breeders’ Cup needs to find alternative forms of revenue and not be dependent on foal nominations from breeders, but to somehow do more for breeders. Should we consider multiple cities for the event, like the World Cup does in soccer? We are in the baking stage, but I believe something good is going to come out of this.

“Whether or not it will be implemented remains to be seen.”

Putting together strategic plans is something Sanan has done in all of his businesses. “If you can put together a five-year plan and execute it, it’s very helpful,” he said. “You may have to adapt the plan each year, tweak it a little because of external events, but we’ve always executed these plans in my businesses. For some reason, a lot of people don’t do it in this (the Thoroughbred) industry.

“There is a big difference between running a business and building a business,” he added. “It’s in building and growing and transforming that you learn a great deal. The Breeders’ Cup is a great entity with a good brand name. We should be able to generate a couple hundred million dollars worth of revenue. This can be transformed into a huge, international, highly successful organization. Whether we can get there or not, I don’t know. But as part of the process, I’m going to give it a go.”

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By Ray Paulick
Is anyone really surprised to see Churchill Downs Inc. involved in yet another dispute with horsemen’s organizations over contractual terms for account wagering or advance deposit wagering? The incident in California involving TrackNet Media, the company CDI owns in partnership with Magna Entertainment, is the latest in a series of contractual and legal disputes between the Louisville, Ky.-based company and horsemen’s organizations in several states. 

The common thread in all of the disagreements is an effort by Churchill Downs to squeeze as high a percentage as possible for its TwinSpires ADW platform. In so doing, purses and state breeding programs, and in some cases racetracks, will get a smaller slice from account wagering dollars.

The formation with Magna of TrackNet Media in 2007, along with the subsequent launch of TwinSpires and the purchase of the AmericaTAB account wagering company, Bloodstock Research Information Services and an interest in the Horse Racing TV cable network, has made Churchill Downs a major player in the ADW world. The company can offer content (through its racetracks), wagering services (TwinSpires, which absorbed many of the AmericaTAB customers), television distribution (HRTV) and past performance information used by horseplayers (Bloodstock Research). 

CDI is also rumored to be the leading candidate to buy TVG, the largest ADW company in terms of customers and pari-mutuel handle, and with much greater distribution on cable and satellite television than HRTV. TVG is believed to be getting a larger share of account wagering revenue than any of the other ADW companies, at least in California, in part because of their investment in programming and distribution. If CDI ends up owning TVG and keeping its customers, it will be the leading ADW company in the U.S. It also may put an end to a lawsuit filed by TVG’s owners against HRTV for alleged infringement of company patents.

TrackNet Media negotiates ADW contracts with racetracks, including those owned by Churchill or Magna, which is what happened in the current California dispute. In essence, then, a company owned by Churchill and Magna may be negotiating on behalf of ADW companies owned by Churchill and Magna with racetracks owned by Churchill and Magna – an interesting scenario, to say the least. In some cases, as in California, those negotiations do not include representatives of horse owners.

Many industry participants who have been following CDI’s activities over the last 18 months are convinced the company is intent on moving wagers made on track or at simulcast facilities – including those owned by Churchill Downs – to its TwinSpires ADW platform. The reason? Churchill is positioning itself to make more from each dollar wagered through TwinSpires than it does from a dollar wagered on-track or at one of its off-track betting facilities.

The company has refused to negotiate with the Thoroughbred Horsemen’s Group, a company formed in November 2007 to act as an agent on behalf of its members (local horsemen’s organizations throughout the United States) on ADW contracts. In fact, last year, when horsemen in Kentucky and Florida exercised their rights under the Interstate Horseracing Act to cut off signals for simulcasting or account wagering, CDI sued several local horsemen’s organizations and the Thoroughbred Horsemen’s Group, alleging anti-trust violations.

Some parties were dropped from the suits when CDI and local horsemen’s organizations reached contractual agreements on ADW revenue splits (in some cases, very short-term agreements). But at least one of the defendants, the Kentucky Horsemen’s Benevolent and Protective Association, which countersued CDI, opted not to have the legal action dropped after CDI and the horsemen reached an agreement on account wagering for the 2009 Churchill Downs spring meeting.

It’s an interesting case. In its counterclaim, the Kentucky HBPA pointed out a clause in the purse contract between Churchill and Kentucky horsemen that dealt specifically with possible future ownership of an account wagering company by CDI. The contract, said to be written by the Kentucky HBPA’s longtime counsel, the late Don Sturgill, with Sturgill, Turner, Barker & Maloney, was executed before CDI got into the account wagering business and is effective through the end of 2009.

The counterclaim (click here for a copy) against CDI reads: “Section 4E of the contract clarifies that wagers made on races through an ADW owned by CDI, i.e. TwinSpires, are to be treated as if made physically at Churchill Downs racetrack for purposes of determining the percentage of monies to be paid into the Horsemen’s Account for horsemen’s purses. Section 4E specifically states:

“Telephone Account or Other Electronic Media Wagering: For purposes of determining the amount of purses to be paid under this Paragraph 4, a telephone account wager or other wager made through an electronic media wagering system, the majority of which is owned by Churchill, shall be deemed to have been made at the racetrack or Trackside (Churchill’s OTB facility), as the case may be, and Churchill revenues received therefrom shall be allocated and paid to Horsemen as purses in the manner decribed in the appropriate subparagraph of this Paragraph 4. Fifty percent (50%) of any source market or other similar fees received by Churchill from telephone account wagering systems as a result of wagers made in Kentucky on races simulcast from within or outside of Kentucky shall be allocated and paid to the Horsemen as purses. For purposes of this Agreement, the term “source market” or “other fees” shall mean: any and all fees paid to Churchill and/or its horsemen by Television Games Network or any other account wagering entities not owned by Churchill for the right to accept wagers from account holders located in the state of Kentucky.”

The HBPA claims that Churchill Downs has not paid horsemen in accordance with that clause in its purse contract, and estimates a $3 million shortfall in purses.

Judge John Heyburn II of the U.S. District Court for the Western District of Kentucky at Louisville has ordered a Feb. 19 conference to discuss and argue the pending motions in the case. Judge Henburn also wrote a draft (which can be seen by clicking here) containing “a statement of the relevant facts and Plaintiff’s (Churchill Downs) legal theory as well as discussion of the standing, statutory immunity and contract issues.”

The HBPA must feel as though they are on solid ground with their counterclaim against CDI. Otherwise, why wouldn’t they have agreed with CDI to have the legal action dropped?

Account wagering has brought about many changes in the pari-mutuel industry. It’s clear that what is decided now on the division of revenue, either in the courts or among horsemen, tracks and ADW companies, will have a major bearing on the future economics for horse owners, tracks and the wagering companies, as well as on the horseplayers who fuel the game.

Let’s hope these issues are resolved while we still have people interested in betting on our sport.

The Paulick Report is interested in what you think about this issue. Write a publilc comment in the section below, and take the Daily Paulick Poll (located on the left-hand column of the home page) about whether you think it’s in the best interests of horsemen and fans for Churchill Downs Inc. to purchase TVG.

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By Ray Paulick
When Barack Obama is sworn in as the 44^th president of the United States, he will be entering office with enormous support from the American people and carrying the hopes that the message of change that worked so well for him during his historic campaign will be just as effective as he takes on the formidable challenges that we face as a nation.

The Thoroughbred racing and breeding world is a microcosm of the greater problems around us that a President Obama will tackle. The infrastructure is fragile. The fundamentals of our industry’s economic footing are anything but sound. Divisiveness and infighting have poisoned the waters of progress. There is an overall feeling that our greatest days are behind us, and not a part of our future. And, yes, in many ways, our leadership has failed us.

Obama’s arsenal of hope is built on a foundation that has stood the test of time since our forefathers declared their independence in 1776 and a short time later created a more perfect union. We have a form of government that, for all its flaws, has helped make the United States of America the envy of people throughout the world and a symbol of freedom.

We have no such foundation in our smaller world of racing and breeding. Complicated by onerous and disparate state regulations, the Thoroughbred industry is without any form of central authority. We represent one of this country’s oldest sporting activities, and certainly nearly all of us believe its equine participants are noble and beautiful, but we have been passed by other sports which, quite simply, have a better business model than ours, with a definitive structure and central leadership.

When racing enjoyed a monopoly on gambling and a playing field less crowded with other sports, the old ways of doing business worked.  Its leaders were largely sportsmen who raced their horses against one another. These men were not required to be innovative in the ways of marketing a sport in a competitive environment, or to recognize the need to adapt to a changing world and embrace new technologies. It was a local sport then whose biggest stars were national heroes.

Times have changed. Thoroughbred racing and breeding is an interstate and in many ways international business, yet remains locally regulated. The sportsmen have mostly disappeared, though a few remain, clinging on to the vestiges of the past and still wanting to lead in the way their fathers and grandfathers may have done.

We are past being at a crossroads; that happened some years ago. Sadly, we are on the wrong path in this industry and heading in a direction that will not lead us to a better future. The only way to get back on the right path is to ask how we got here and what can we do to reverse our course.

Leadership is essential, whether it’s an individual business, an industry or the greatest nation on the face of the earth. But no one, not the United States of America, and certainly not the Thoroughbred racing and breeding industry, can have great leadership without having a structure that permits someone to rise to the top, to speak for everyone, and to work toward bringing about a brighter future.

How we create that structure is a difficult question. Can the federal government be trusted to help us form a national federation to oversee and regulate our business? Can the various fiefdoms in racing and breeding find enough common ground to give up individual power to help us grow collectively as an industry? Is a true league office possible, one that has authority to create a vision for our future, and to see it through?

Change is possible, if you believe in it, and work for it. 

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By Ray Paulick
When in-foal mares sell for less than the stud fees their breeders have invested in them, as is happening with unfortunate frequency during recent Thoroughbred auctions including the current Keeneland January Sale of Horses of All Ages, there can be trouble – trouble for the breeder who is trying to make ends meet, for the bank that may have loaned him money to buy the mare or operate his business and for the stallion farm that sold him the breeding right.

Those three interests have been butting heads increasingly as the market has weakened over the last year. Stallion farms and banks for years have put security liens on horses being sold, but now they have company from other businesses: veterinarians, boarding farms, feed companies, even tack shops. More people are fighting over fewer dollars, and some fear market conditions have not reached their low point. 

It’s impossible to say how many horses are sold with liens attached to them, either from banks or stallion farms. One auction house executive is certain it’s less than 50% of the horses that enter the ring. However, one stallion farm representative told the Paulick Report the farm has filed more liens in the past 12 months than ever before.

One of the perplexing questions about liens is, “Who gets paid first?” If a breeder owes $75,000 to a bank and $25,000 on a stud fee and only gets $20,000 when a horse sells, no one is going to get whole. How that money is divided up is the issue. Auction companies take an arm’s-length position, holding the money while telling the affected parties to negotiate a settlement and tell them who gets what.

A group of chief financial officers for Kentucky farms and many equine lenders met last year at Keeneland to discuss how to resolve credit issues when multiple liens are attached to a horse. “It’s getting very messy,” one farm representative said. “Everybody is filing liens now.”

The meeting was described as a good first step, with open dialogue and identification of the various issues. Nothing, however, was resolved.

Traditionally, banks and stallion farms have worked closely together to resolve these issues, but banks are no longer as flexible as they once were. “Historically, banks have recognized those (stud fee) liens, but the Uniform Commercial Code changed a few years ago and the basic rule in priority has to do with the first to file,” one banker said. “Lienholders like banks have filed some time ago, so it becomes problematic. It’s the bank’s money, or the bank shareholders’ money.”

Complicating the issue are new “pay from proceeds” agreements on stud fees whereby a breeder is not obligated to pay for the fee until after he sells the resulting foal, either as a weanling or yearling. More and more farms are making deals for breeders to pay stud fees from sale proceeds, even if those terms are not the farm’s advertised policy. When fees were due by Sept. 1 or Nov. 1 of year bred, or even when a foal stands and nurses, the stallion farms could withhold the stallion service certificate as its trump card if the stud fee wasn’t paid. That kept a foal from being registered with the Jockey Club or sold at auction.

Now, however, with pay from proceeds agreements, the stallion service certificate is released to the breeder so the foal can be registered and sold. By so doing, the stallion farms have lost their leverage to collect stud fees from some breeders, especially if the resulting sale is lower than the stud fee.

Those farms often have no idea whether or not other liens have been attached to a horse being sold. They can perfect a lien by filing the paperwork in the state where the horse’s primary owner resides, in part to determine if other formal liens have been filed and to determine priority. That can be difficult, too, since it isn’t always easy to identify who the majority or minority owners of a horse are.

“The horse business is tough to be a creditor in, because there is no title registry concerning who owns the horse,” one banker said. “The forensics of trying to find who owns a horse can be staggering. Pieces of them change hands all the time without any paperwork. Stallion farms allow someone to sign a contract even though that person may own no part of only a small part in a mare. The farms are conducting business without the kind of underwriting a bank would do.”

Some breeders would like to see an ownership registry, but that could stifle commerce if paperwork had to be filed with the registry every time a portion of a horse changed hands. Others have suggested the creation of a central clearinghouse for liens, so creditors have some idea whether liens have been filed against individuals, but that would have to be tied in with an ownership registry. “The Jockey Club is the natural party to do that,” one stallion farm representative said, “but they don’t want to get in the middle of this, and neither do the sale companies.”

Without any change in procedures, stallion farms are likely to be standing in line behind banks when foals produced through pay from proceeds agreements are sold.  “It will be a headache, and it’s going to be tougher if more people can’t pay all their debt,” said a banker. “We are looking at a market that is particularly weak, and you’d have to say the chances of people defaulting on loans is increasing. It will get worse."

“It would be less of a problem if you didn’t have pay out of proceeds,” he added, “but it’s a competitive market among the stallion farms, and it’s tough to put the toothpaste back in the tube.”

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