Archive for the ‘Industry Organizations’ Category

By Ray Paulick
For those of you wondering whether I’d gone into the witness protection program following the announcement of election results for the Breeders’ Cup board of members and trustees (where 10 of those elected were recommended here in an earlier analysis), fear not. As one of my mentors in this business often reminds me, family should be a person’s top priority, and I’ve spent the last couple of days carrying out his advice.

Several things stood out when the results were announced on Tuesday. First, I believe they represent a victory for continuing the trend toward transparency and openness for the organization. There should be no turning back to the days of secrecy with how the industry’s money is being spent at the Breeders’ Cup. Minutes to board meetings should be posted on the Breeders’ Cup web site, information about committees and subcommittees needs to be published, and decisions should no longer be made in a vacuum. I believe the board of directors, which has taken steps in the right direction over the last couple of years, has been put on notice in that regard during this year’s vote by nominators.

Second, I believe the results showed dissatisfaction with the status quo. Two members of the smaller operating board of directors, Don Dizney of Florida and Tracy Farmer, were not re-elected to the larger board of members and trustees. It’s that larger board that decides who to elect for the smaller operating board, and to be a candidate you have to be on the board of members and trustees. Dizney and Farmer will be replaced on the smaller board after having been defeated in the election.

Third, the results show the strength of stallion farms and coalitions, something I wrote about last year. I don’t think any one stallion operation has the votes to elect an individual to the board of members and trustees, but several farms working together can do so. And there was coalition building going on prior to and during this election process.

Finally, and perhaps most significantly, the leading vote getter among Breeders’ Cup nominees, Richard Santulli, is the same man rejected by a majority of members and trustees voting for the smaller board of directors last year. I wrote then that the members and trustees made a huge mistake in not electing Santulli to the board. He is a man with great energy, enthusiasm for this industry and great business experience that could be put to extraordinarily good use by the Breeders’ Cup. He is chairman of NetJets and often is mentioned as a potential heir apparent to Berkshire Hathaway’s Warren Buffet. Perhaps the “old guard” on the board of members and trustees voted against Santulli because NetJets dropped its Breeders’ Cup sponsorship, or maybe because he is closely associated with Thoroughbred Daily News Publisher Barry Weisbord, who can be a prickly critic of the status quo. It’s also widely believed that Santulli felt the Breeders’ Cup should have sought executive experience from outside of horse racing when current Breeders’ Cup president and CEO Greg Avioli was given the job in 2007. Putting him on the smaller board could add some discomfort to management.

Whatever the reason, the nominators in this election voiced strong disapproval of the vote to keep Santulli off the operating board. Let’s hope he still has the interest in giving his time, energies and insights to the industry and will submit his name for nomination later this month.

There are six open spots on the board of directors, and if dissatisfaction with the status quo and the old guard carries over into that election, we could have a significant change in philosophy on the operating board. As mentioned, the board positions currently held by Tracy Farmer and Donald Dizney are open because they failed to be re-elected to the board of members and trustees. The other four candidates that are up for re-election are Reynolds Bell, Don Robinson (appointed to fill out the remainder of the term held by B. Wayne Hughes, following the decision by Hughes to resign from the board earlier this year), G. Watts Humphrey and Bob Manfuso.

Bell and Humphrey are closely associated with Lane’s End Farm, owned by William S. Farish, the father of current Breeders’ Cup board chairman Bill Farish. For years, Humphrey and the senior Farish were the guiding force of the Breeders’ Cup executive committee, back when the organization practiced limited transparency and operated under the auspices of a self-perpetuating board.

While the old guard from the Jockey Club (Farish is a Jockey Club member, his father-in-law is chairman Ogden Mills (Dinny) Phipps and his father is vice chairman, Humphrey is a longtime member and former steward, and Bell is a member and current steward of the club) did maintain control in the last board election, their grip on power has been weakened. I expect the slate of candidates from opponents of the status quo/old guard to make a concerted effort to defeat Humphrey and Bell in the upcoming election. Sources say Bell, who does extensive bloodstock work for Lane’s End, has been hand-picked by the Farishes to replace Bill Farish as Breeders’ Cup chairman if Farish serves five years, the limit for a chairman under the organization’s current bylaws. He has served three years in that role.

There will be much more here in the coming weeks on the Breeders’ Cup board election, which takes place during a meeting of the newly elected members and trustees on July 9. Candidates seeking a position on the board have until June 30 to state their intention to run.

Copyright © 2009, The Paulick Report

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By Ray Paulick

(UPDATED JUNE 3 TO REFLECT A CHANGE IN RECOMMENDATION FOR GEORGE ISAACS)

The 25 candidates running for election to the Breeders’ Cup board of Members and Trustees may have different backgrounds, income levels and positions within the Thoroughbred industry, but I think they all share a common thread: a desire to help the Breeders’ Cup grow. All are to be commended for their interest in helping achieve that goal, even if their philosophies do not follow the same path.

There are, however, only 13 positions for these 25 individuals on the board of Members and Trustees, whose principal role within the Breeders’ Cup organization is to elect the 13 members of the board of Directors at an annual meeting, scheduled this year for July 9. The smaller board of Directors makes all major decisions regarding the operations and governance of the Breeders’ Cup and elects a chairman and vice chairman each year. 

So who nominators elect to the board of Members and Trustees is critical in shaping the smaller, operating board of Directors. The six individuals whose two-year terms on the board of Directors expire in July of this year are: Reynolds Bell, Donald Dizney, Tracy Farmer, Don Robinson (who served out the remainder of B. Wayne Hughes’ term after Hughes’ resignation), G. Watts Humphrey Jr., and Robert T. Manfuso. Only elected Members and Trustees may run for the smaller board of Directors.

Fifteen of those running for the board of Members and Trustees submitted answers to questions from the Paulick Report or statements about their candidacy (click here to see their responses in an easy-to-read or print PDF document). Biographies of all the candidates can be viewed here at the Breeders’ Cup election web site.

I have covered the Thoroughbred industry for nearly 30 years and have seen a number of these candidates in board-room settings, talked with others about issues of interest to the Breeders’ Cup and Thoroughbred racing and breeding in general, and consider many of them friends. Some are or have been advertisers of this web site. In making the following comments and voting recommendations to nominators, I have done my best to remain objective in rating the various candidates without regard to friendships or business relationships.

Here is my summary of each candidate, along with a voting recommendation:

JOHN AMERMAN: Skilled businessman who as retired chairman and CEO of Mattel certainly understands consumer products and traditional marketing. I’ve not seen great leadership or fresh ideas spring from Amerman in his various industry roles and cannot recommend a vote for him on the board of Members and Trustees.

NADIA SANAN BRIGGS: Daughter of the outspoken but highly successful businessman Satish Sanan, who has played a major role in the Breeders’ Cup as chairman of the Strategic Planning Committee. Briggs has her own independent streak and would bring a fresh, young perspective to the board. She is bright, totally committed to the industry, and would make an outstanding member of the board of Members and Trustees. Recommend for election.

JACK BROTHERS: Has played a major if understated role in the success of Frank Stronach’s Adena Springs breeding and racing operation after virtually growing up in the horse business. Doesn’t claim to have all the answers for resolving the challenges at the Breeders’ Cup, but I doubt there would be a more fair-minded or harder-working individual on the board of Members and Trustees. Recommend for election.

BILL CASNER: Few people in the industry have shown the courage to stand up to the failed, old-guard industry leadership like Bill Casner has. He understands racing from the standpoint of the blue-collar horseman and now plays the game at the highest level while not forgetting his humble beginnings. Recommend for election.

CASE CLAY: One of the up-and-coming “next generation” industry leaders, Clay is the son of Three Chimneys Farm owner Robert Clay but was not heavily involved in the farm’s operation or the industry until the last five to seven years. I do have concerns that as one of three candidates with close ties to Three Chimneys (see below), there may be an effort to “stack the deck” for a future agenda, and for that reason cannot recommend a vote for election to the board of Members and Trustees at this time.

LINCOLN COLLINS: One of three individuals (along with Case Clay and Tracy Farmer) closely allied with Three Chimneys Farm. Collins has a good reputation for honesty and integrity in his Kern Thoroughbreds bloodstock agency, though seems light on service and industry experience. Cannot recommend a vote for election to the board of Members and Trustees.

DONALD R. DIZNEY: A member of both the board of Members and Trustees and the smaller Breeders’ Cup board of Directors, Dizney has done little to distinguish himself as more than a rubber-stamp voter for the status quo. There have been suggestions among some at the Breeders’ Cup that Dizney has not been as engaged through his board or committee attendance as others, but a request for attendance records of board meetings from Breeders’ Cup secretary Jim Philpott was ignored. Cannot recommend a vote for election to the board of Members and Trustees.

TRACY FARMER: Politically powerful in Kentucky through his work and fund-raising with the Democratic Party, Farmer has been a close ally of Kentucky Gov. Steve Beshear and was appointed to the Kentucky Racing Commission, on which he serves as vice chairman. Farmer serves on both the board of Members and Trustees and Breeders’ Cup board of Directors, where sources say he has not distinguished himself as an independent voice. The Paulick Report requested minutes of Breeders’ Cup board meetings to analyze the involvement of each board member, but secretary Jim Philpott denied the request. Cannot recommend a vote for election to the board of Members and Trustees.

H. GREG GOODMAN: Houston native has been a partner with Lane’s End Farm’s Will Farish, which doesn’t necessarily suggest he will be a “yes” vote for a potential Farish-orchestrated board of Directors slate. However, his non-response to the Paulick Report questionnaire and his vague personal statement on the Breeders’ Cup voting web site does not build confidence in his independence. Cannot recommend a vote for election to the board of Members and Trustees.

GEORGE ISAACS:(UPDATED JUNE 3, FOLLOWING RECEIPT OF RESPONSE TO PAULICK REPORT QUESTIONNAIRE) Veteran horseman is well respected throughout the industry for his work as general manager at Bridlewood Farm in Florida. Relatively new to national industry organizations, but in his responses to the Paulick Report questionnaire demonstrated a commitment to adding value to Breeders’ Cup nominations and increasing accountability and transparency within the organization. i believe it is also important to have representation among Florida breeders. Recommend for election.

TOM LUDT: One of the most independent-minded, cut-to-the-chase people I’ve seen in this industry in recent years. Has distinguished himself on the Kentucky Racing Commission, having been appointed by both a Republican and Democratic governor (and without being a major financial contributor to either of their campaigns), on committees at the Thoroughbred Owners and Breeders Association, and Breeders’ Cup board of Directors. Recommend for election.

REILEY McDONALD: Has many years of experience in the auction arena, most prominently as co-owner of Eaton Sales. Has not been as involved in industry leadership positions as I would like to see for someone with his knowledge and insight, though it is encouraging to see him step up at this critical time. However, I cannot recommend a vote for election to the board of Members and Trustees.

MICHAEL McMAHON: One of the individuals running who is completely invested in the Thoroughbred industry and its future, McMahon may lack in national industry organizational experience but more than makes up for it in passion. My instinct is he will add a truly independent voice who takes his responsibilities seriously. In his reply to the Paulick Report questionnaire, McMahon repeatedly spoke of the importance of increasing participation at the grass-roots level among breeders, by adding value to the program for nominators. Recommend for election.

CLEM MURPHY: Coolmore principals and associates are often guarded in what they say to the media, but I’ve found Murphy to be accessible and a source of innovative thinking when it comes to both the Breeders’ Cup and the racing industry. Recommend for election.

OGDEN MILLS PHIPPS: The phrase “lead, follow, or get out of the way” comes to mind. The Jockey Club chairman has had his opportunities to lead (New York Racing Association declined during his years of power), has not shown much interest in following, and that leaves one alternative. Cannot recommend a vote for election to the board of Members and Trustees.

DAN PRIDE: Believes in accountability and transparency, and has brought fresh ideas and enthusiasm to Fasig-Tipton since joining the auction company from Darley. Pride does a good job representing a younger generation of leaders that have real-world experience. Recommend for election.

ANDRE REGARD: For a relatively young man, Regard has a broad base of knowledge, and I think there is little doubt that he will be a growing influence in future years as he gains experience in the industry and its various organizations. One to keep an eye out for in the future, but at this time cannot recommend a vote for election to the board of Members and Trustees.

RICHARD SANTULLI: An enormously successful businessman, Santulli is a no-nonsense kind of guy who brings independence, integrity and a serious commitment to the Breeders’ Cup because of his passion for the Thoroughbred game,first as a fan and horseplayer and later as an owner and breeder. Last year’s effort by the old guard to keep Santulli off the smaller board of Directors represented a low point in the history of the Breeders’ Cup. Recommend for election.

JOSEPH V. SHIELDS JR. Has served on the board of Members and Trustees and board of Directors, but has not publicly articulated a clear vision for how the Breeders’ Cup can grow. Closely associated with old-guard Members and Trustees who have lacked innovation. Cannot recommend a vote for election to the board of Members and Trustees.

JOHN SIKURA: Fiercely independent and driven to build his own business, Sikura has a vision to grow the Breeders’ Cup to become an even more important world championship by incorporating horses from different parts of the globe. He is one of those “all in” horsemen who do not look at the Thoroughbred industry as a part-time hobby but as a full-time commitment of his time and financial resources, and his personal success is tied to the growth of events like the Breeders’ Cup. Recommend for election.

OLIVER TAIT: Represents Darley USA, one of the most important contributors to the Breeders’ Cup in terms of nominations and participation in the world championships. Tait may not be a household name in the U.S. at this stage of his career, but he has accumulated extensive international experience in Europe and Australia. Recommend for election.

DUNCAN TAYLOR: Listening to your customers seems like a logical approach to any business, but I don’t think that has been a strong suit of the Breeders’ Cup board of Directors or management in the past. Taylor Made has developed into the industry’s leading sales agency because of its customer-centric approach, an approach that can only help the Breeders’ Cup. Recommend for election.

ROBERT TRUSSELL JR.: Was a member of the Gainesway Farm team when John Gaines created the Breeders’ Cup in the early 1980s, so he has a great depth of knowledge and history of the organization. However, it is difficult to grasp where he stands on issues of importance given his lack of response to the Paulick Report questionnaire and the absence of a personal statement accompanying his biography on the Breeders’ Cup election web site. (In the original version of this article, I reported the Breeders’ Cup web site did not include a biography of Trussell; that has since been added here.) Cannot recommend a vote at this time for election to the board of Members and Trustees.

ROB WHITELEY: If you are in favor of maintaining the status quo, Whiteley is not your candidate. He was an outspoken critic of the decision last December to suspend the stakes supplement program, and I believe his leadership on that issue led to a quick reversal by the board of Directors. Strongly believes in accountability, transparency and fiscal responsibility. Recommend for election.

JACK WOLF: Knowledgeable about the importance of the Breeders’ Cup in the industry and bullish on the role the organization can play to increase the popularity of the sport, something it has not yet been able to do. Refreshingly candid, independent and with outstanding credentials both in racing and in the outside business world. Recommend for election.

Copyright © 2009, The Paulick Report

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By Ray Paulick
One thing about horseracing, there’s no shortage of people willing to offer free advice or to share their opinion. After all, at its core, that’s what the game is all about; if you’re an owner, you’re willing to prove that your horse is faster than the next person’s, and if you’re a horseplayer you put money behind your opinions at the mutuel windows or betting account.

I’ve even got a few opinions of my own …

– Calvin Borel has likely ridden himself into the Hall of Fame with his rides in the Kentucky Derby and Preakness. What he did aboard Rachel Alexandra from the 13 post in the Preakness was every bit as ingenious as his rail-skimming trip on Mine That Bird in the Derby. If Borel doesn’t send the filly from the gate the way he did, there’s a good chance she gets hung up very wide going around Pimlico’s first turn, and we’ve got a completely different horse race with Big Drama loose on the lead.

– We’ll start hearing over the next few days about how this crop of 3-year-olds is a weak one, based on an unheralded gelding winning the Derby and a filly taking the Preakness. But let’s not forget this crop has lost some of its best and most promising members (at least temporarily), starting out with 2-year-old champion Midshipman, and the two other finalists for the Eclipse Award, Old Fashioned and Vineyard Haven; the Derby’s morning line favorite I Want Revenge; Florida Derby winner Quality Road; and West Coast speedster The Pamplemousse, the likely favorite for the Santa Anita Derby. That’s an unusually large attrition rate at the top.

– I’m not sure why there was so much criticism of Jess Jackson for buying Rachel Alexandra after her tour de force in the Kentucky Oaks, switching her to his regular trainer, Steve Asmussen, and injecting some enthusiasm into an otherwise humdrum Preakness. Does Jackson have an ego? Of course he does. Does he care about this game? I don’t think there’s any question.  Was the move ultimately in the best interest of our sport? I think so. The California winemaker did right by Curlin and the sport, racing him as a 4-year-old and showcasing him before an international audience in Dubai, giving him the proper time off, and then running the son of Smart Strike in Kentucky, New York and California. There was talk of sending Curlin to the Arc de Triomphe until the colt was properly given a chance to prove himself on turf in New York, and the right decision was made not to pursue that goal. I think Jackson will similarly put the best interests of Rachel Alexandra and the sport in the forefront (in that order) when making decisions about here future.

– Sunland Park may be off the beaten path between Kentucky and New York, but the American Graded Stakes Committee has to take a more serious look at the New Mexico racetrack’s premier races when it comes to their grading process. There is a flaw in the system that discriminates against racetracks in a “circuit” that is without a graded race. That same flaw promotes self-perpetuating grades on many formerly important races. There should be an uproar if the Sunland Park Derby is not made a graded stakes for 2010 after the exploits of Mine That Bird in the 2009 Triple Crown.

– The Triple Crown needs to get back to the concept of a participation bonus and points system for the horse that has the highest finish in all three races. If Rachel Alexandra doesn’t go in the Belmont  Stakes (and I don’t think she will), I’m afraid that race is goinig to be a dud. Over the past decade we’ve seen the failure of the National Thoroughbred Racing Association to create a national office, the loss of a title sponsor for the Triple Crown, and the disappearance of racing on television. Is anyone in a position of authority paying attention to these trends as we slip towards oblivion?

– Maryland Jockey Club officials deserve some sort of award (the Dumbass Decision of the Year?) for their decision to keep Preakness fans from bringing their own beer into the infield this year. The decision cost the bankrupt parent company over a million dollars in ticket sales that could only be offset if each infield patron drank 20-30 beers apiece at $3.50 a pop. Were the kids who brought in cases of beer over-the-top drunk in the past? Yes. But when I looked at the front page of the Washington Post on the morning after the Preakness, the visual was stunning: a picture of a mostly empty infield in 2009, compared with a jam-packed infield party last year. That image sent out the message that the Preakness and Maryland racing is on a fast track to oblivion. I used to think keeping patrons from bringing in their own beer was the right move, but I was convinced by people who knew better that it would kill the spirit of the Preakness and any chance to ever get young people to that rundown, crumby facility.

That’s my six-pack of thoughts after the first two legs of the Triple Crown. What do you think racing has done right and wrong this year? Use the comment section below to express your opinion.

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By Ray Paulick
The Breeders’ Cup has begun to let the sun shine on the annual election process that determines who ultimately sits on the organization’s board of directors. For the first time this year, the Breeders’ Cup has decided to publish a roster of eligible voters and their available number of votes; complete results of its elections, with vote counts for winners and losers; it is requiring candidates for the board of directors be declared prior to the annual meeting, with no nominations to be accepted from the floor; has established on-line voting for both the members and trustees election and for the board of directors; and its officers have agreed to abstain from voting in the board of directors election.

The process began on Monday, May 4, when stallion and foal nominators could begin nominating candidates to run for 13 openings on the 48-person Breeders’ Cup board of members and trustees. By now, nominators should have received a letter from the Breeders’ Cup with a customer login and passcode to access a secure voting website that will be open for one week until May 11. Individuals must receive a minimum of 50 votes to be nominated (one vote is assigned for each foal nominated to the Breeders’ Cup and one vote for each $500 in stud fees for nominated stallions). There are 39 elected positions on the board of members and trustees, each with three-year terms, and 13 positions are up for election every year. The other individuals on the board of members and trustees are founding members of the Breeders’ Cup, past presidents and corporate officers.

When nominators go to the voting site, they should have access to a complete list of nominators and the total votes each nominator is eligible to cast. The disclosure of the nominators and number of votes is new to this year’s election.

The next step (from May 12-15), following the closing of nominations, is tabulation of the list of nominees. Individuals that received the required 50 votes are sent a consent form and will be requested to provide a short biography and suitable photo.

On May 18, True Ballot, a company that specializes in elections for labor unions, professional organizations, etc., mails nominators a letter with customer login and password information for secure online election voting. Nominators may request a paper ballot if they prefer.

Voting for the members and trustees election is open from June 1-15 among all nominators to the Breeders’ Cup program.

Following are the 13 members and trustees whose terms are expiring this year: John Amerman, Boyd Browning, Alice Chandler, Donald Dizney, Tracy Farmer, Tom Ludt, Clem Murphy, B. Wayne Hughes, Ogden Mills Phipps, Dan Pride, Richard Santulli, John Sikura, and Frank Stronach. These members and trustees whose terms are expiring are automatically re-nominated unless they opt out of the election.

On June 22, True Ballot will report the results of the members and trustees election and Breeders’ Cup will publish the results. Those results won’t be made official, however, until the annual meeting of members and trustees is held on July 9, and the candidates with the most votes are put up for election by the existing members and trustees. Prior to the vote at the annual meeting, according to section 4.2 of the Breeders’ Cup bylaws, nominations from the floor can also be made by members and trustees.

All members and trustees wishing to be candidates for two-year terms on the smaller board of directors have until 5 p.m. on June 30 to submit their names to Jim Philpott, the Breeders’ Cup corporate secretary. While the election for those open board positions (there are six this year) is conducted during the July 9 annual meeting of members and trustees, individuals unable to attend may vote through the election web site or via proxy, provided the member holding the proxy reveal the identity of each proxy he or she has received at the annual meeting. Each member is entitled to vote for up to six candidates.

The six board members whose two-year terms expire in July are: Reynolds Bell, Don Dizney, Tracy Farmer, Don Robinson (who is serving the remainder of the term of B. Wayne Hughes, who resigned from the board in January), G. Watts Humphrey, and Robert Manfuso. There are 13 elected board members, plus Breeders’ Cup president/CEO Greg Avioli.

Breeders’ Cup will publish the results of the board election, including votes, at the conclusion of the July 9 meeting.

Officers are elected at a subsequent meeting of the newly elected board of directors. According to Breeders’ Cup bylaws, no individual may serve more than five consecutive years as chairman or vice chairman of the board. Bill Farish of Lane’s End Farm is in his third year as chairman.

In a memo to the Breeders’ Cup members and trustees, Farish outlined the changes to this year’s election (publication of vote totals by nominator, full election results, on-line voting for both elections, proxy procedures, and officers electing to abstain in board of director election). “These changes to the election procedures are intended to provide full transparency to all nominators and ensure confidence in the election process,” Farish said in the memo.

The changes were requested by members and trustees who felt previous elections lacked sufficient transparency.

Additional changes have been requested, including amendments to the bylaws that would eliminate voting in the election for the board of directors by current officers (they have voluntarily abstained from the upcoming election); voting in the board of election by past presidents (James E. Bassett III and D.G. Van Clief Jr.); and voting in the board of election by founding members of the Breeders’ Cup, some of whom are no longer active in the Thoroughbred industry.

I’ll have my own thoughts on the Breeders’ Cup election process in a follow-up commentary tomorrow.

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By Ray Paulick
Alex Waldrop is a good soldier who reminds me of Hiroo Onoda, the World War II legend who in 1944 was sent to Lubang island in the Philippines and told by his Japanese superiors to wage guerrilla warfare against the allied forces and to never give up. Along with a few others who survived a 1945 invasion by American soldiers, Onoda conducted operations from a base in the mountains of the island, even after leaflets were dropped saying the war had ended. Letters from loved ones begged Onoda to come home, but even after his fellow holdouts left him or died, Onoda carried out the orders given him.

It wasn’t until his one-time commanding officer flew to Lubang in 1974 that Onoda gave up the fight.

Waldrop, in his capacity as CEO of the National Thoroughbred Racing Associations, hasn’t fought as long as Hiroo Onoda did, but someone needs to tell him the war is over. The NTRA has about the same relevance and power as the Japanese Imperial Army did after the end of World War II.

It’s not Waldrop’s fault. He came into an untenable situation in December 2006 when the unraveling of the NTRA and Breeders’ Cup relationship was complete and the NTRA was left with little money and even less authority to carry out a mission to be the “league office” for horse racing. An organization that began in 1998 with high hopes and lofty goals of organizing and marketing a dysfunctional business that lacked structure, coordination and a strong central authority — the hallmarks of success for other sports — was, by 2006, a pale shadow of its former self.

What survived of the NTRA after its divorce from the Breeders’ Cup in 2006 was an understaffed press office and an industry lobbying effort in Washington, D.C., and not much more. Illusions of marketing grandeur or meaningful changes in how the sport was structured were gone like the budget the NTRA once had.

Eighteen months into Waldrop’s tenure at the NTRA, the Thoroughbred industry had a serious implosion. The filly Eight Belles died after the finish of the Kentucky Derby with millions watching on television in horror. Compounding the problem, Rick Dutrow, the trainer of Derby winner Big Brown, revealed one of our sport’s dirty little secrets, that anabolic steroids were in rampant use and, shockingly to many people, were perfectly legal. The public outcry was enormous, and the NTRA was ill-equipped to deal with it, because it lacked the authority to speak for the industry over which it had little control.

When hints of a Congressional inquiry surfaced, there was a scramble to react. The industry did what it always does: form committees and make recommendations. Foremost among those was a decision by Waldrop and the NTRA board of directors to create a new entity, the Safety and Integrity Alliance, which drafted an ambitious code of standards on a variety of safety and welfare issues for horses and jockeys. It was and is an admirable document, however meaningless it mostly likely will turn out to be.

Tracks that comply with the code of standards will be accredited by the alliance, sort of a “good horsekeeping seal of approval” that a track owner can frame and hang on his wall. And what about tracks that don’t comply? Well, they’ll have a little extra wall space. That’s the carrot and stick that Waldrop is armed with.

It goes back to something said during the Congressional inquiry held last June, when members of the House of Representatives repeatedly pointed out to Thoroughbred industry leaders how important it was for them to get their act together and establish a meaningful central authority unless they wanted the federal government to do it for them. After Alan Marzelli, the president of the Jockey Club, testified about some of the safety recommendations his organization was making to the industry, he was asked how the Jockey Club intended to have its recommendations adopted.

Marzelli’s response: “We believe in the power of persuasion.”

The power of persuasion (aka, committee recommendations) is what has kept this industry from realizing its potential as a major league sport. The harmless carrot and stick that Waldrop now carries in his briefcase is about as powerful as the army that Hiroo Onoda commanded on Lubana island for all those years after World War II.

Onoda survived, which I’m afraid is about all Waldrop and the NTRA and the rest of the racing industry can do with our current structure (or lack thereof). Maybe, just maybe, if enough tracks comply with the Safety and Integrity Alliance’s code of standards, we can stop the bleeding that’s been going on for some time, long before Eight Belles took her last breath or Rick Dutrow uttered his last insult. But stopping the bleeding is not a cure for what ails us.

What we have isn’t working. What we need are fewer organizations and fewer committees, more followers and fewer (but stronger) leaders. Why, someone pointed out to me the other day, do we need separate organizations like the NTRA, the Thoroughbred Owners and Breeders Association, the Jockey Club, the Breeders’ Cup, the National Horsemen’s Benevolent and Protective Association, the Thoroughbred Horsemen’s Association and so many others? He answered his own question: because none of those groups is willing to cede authority and lose whatever little fiefdom they control.

Waldrop keeps fighting, seemingly against all odds. When racing’s obvious problems were brought up twice recently in the New York Times, first by sports columnist William Rhoden and then by turf writer Joe Drape, Waldrop fired back in a blog at the NTRA’s web site, defending the Safety and Integrity Alliance and pointing out progress that had been made since the death of Eight Belles. He even tried to incite an angry mob to join his army and attack the messengers at the New York Times for the audacity of their observations.

It was rather pitiful. I’m not sure that Waldrop, like Hiroo Onoda, is much more than an army of one.

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By Ray Paulick
Will a bet-processing tote division be the newest sibling in the Jockey Club’s family of companies? That’s the word I’m hearing from a variety of sources within the industry who say the not-for-profit breed registry is itching to get into the tote business with a new, for-profit subsidiary along the lines of Equibase, the horse industry’s official database for racing information that the Jockey Club owns in partnership with the Thoroughbred Racing Associations of North America.

Alan Marzelli, the Jockey Club’s president and chief operating officer, declined to comment when asked by the Paulick Report about the company’s possible entry into the tote business.

It makes perfect sense for the Jockey Club to take over yet another segment of the Thoroughbred industry, though it would be a move that is not universally supported. Would its entry into the tote business be a case of merely doing what’s right for the industry, or an opportunity for empire building by the Jockey Club, which already has six for-profit divisions? Those divisions are Jockey Club Information Systems (a data provider to industry publications, sale companies, and others); equineline.com (which sells breeding and racing statistical reports); Equibase (which sells past performance information to Daily Racing Form and for programs sold at racetracks and provides some free information to the public); TrackMaster (which sells customized handicapping information); InCompass (which bills itself as a technology solutions company for the industry and is involved in such areas as racetrack paymaster accounts); and TJC Technology Services (which provides technological infrastructure and support for the various Jockey Club companies).

These Jockey Club companies are all inter-related. For example, Jockey Club Information Services and equineline.com require pedigree information, which is provided by the Jockey Club’s registration department. Racing results from Equibase are fed into TJCIS, equineline, and Trackmaster products for consumers and into software applications in racetracks. A bet processing or tote company and an account wagering division currently are missing pieces in a Jockey Club strategy to cover as many of the industry’s bases as possible. The various companies must pay for the data, but the money essentially shifts from one pocket to another.

Let’s look a little more closely at the state of the tote industry. The three existing companies – Scientific Games Racing (Autotote), AmTote and United Tote – each has roughly one-third of the North American market. All have been struggling for years, in part because racetracks have played one company against another in contract negotiations and have marginalized their business. As a result, they have not made the kind of profits that lead to substantial investment in research and development, and the end product has been one that is technologically inferior and suspect in its ability to maintain absolute integrity in wagering pools.

All three companies are for sale. AmTote, which Magna Entertainment acquired for $17.4 million in a two-phased purchase agreement in 2003 and 2006, is part of that company’s bankruptcy filing. Last month, Scientific Games, a company that makes most of its money in lotteries, hired a financial consultant to look into selling its pari-mutuel division, formerly known as Autotote. Youbet.com, an account wagering company that has not been profitable, paid $49 million for United Tote in 2005 (at least two times higher than the appraised value of some industry insiders). One year ago, Youbet.com officials said they were hoping to find a buyer for United Tote.

At this stage, a purchase by the Jockey Club of United Tote seems the most likely, and sources say a deal could be announced in the coming weeks. The company has contracts with the New York Racing Association, which walks in lockstep with the Jockey Club. United Tote also serves Keeneland, whose president, Nick Nicholson, was instrumental in the development of the “family of companies” strategy when he worked as executive director of the Jockey Club. United Tote has contracts with the other Kentucky racetracks, including Churchill Downs, which employs AmTote at the other racetracks it owns.

All of the uncertainty involving the three leading tote companies comes at a time when the integrity of the Thoroughbred industry’s pari-mutuel wagering systems is being questioned by racing commissions, track operators, and, perhaps most importantly, horseplayers. Autotote, in particular, has been at the center of several controversies, including the 2002 Breeders’ Cup pick six scandal when three of the company’s employees had the only winning ticket and were in line for a $3-million payout. It was discovered they hacked into the system and processed their pick six tickets after the first four races had been run.

Racing executives familiar with the tote business suggest that United Tote may have the best tote machines, while the back end or software infrastructure for AmTote is the most advanced. Scientific Games is viewed as the laggard of the three companies, from a technology standpoint.

SHADES OF EQUIBASE?
This all sounds a bit similar to when Equibase was created in 1990. The Daily Racing Form had been owned by Walter Annenberg’s Triangle Publications for well over a half-century when he sold it to Rupert Murdoch’s News America Corp. in 1988, ending what had been a very cozy relationship between the Form and the racing industry. Whether this upstart Aussie (whose publishing empire includes the New York Post, Fox and other major media outlets) upset Jockey Club pooh-bahs like chairman Ogden Mills (Dinny) Phipps or they were worried about price-gouging or additional changes in the Form’s ownership will probably never be known. But under the banner of the racing industry collecting and owning its own data (versus a private company like Daily Racing Form doing it), Equibase was established in the imposing shadow of the Jockey Club.

At the time, there were pronouncements that the industry needed to provide more information to fans. Alan Marzelli, then the chief financial officer of the Jockey Club, said the “promotion and betterment of racing is behind the decision” to start Equibase. David Haydon, a longtime Jockey Club employee and the first Equibase president, took it one step further, saying the new company would “address racing’s need for fan base expansion.” Jockey Club chairman Phipps himself said, “Everyone in the industry realizes we have to make a day at the races more enjoyable and less intimidating for the general public.”

Equibase has succeeded as a business. Now, instead of competing with the Daily Racing Form, which eventually closed its track and field data collection operations, the Form is its biggest customer, purchasing past performance information to provide in its daily newspaper and for its online products. Most racetrack programs now include past performances – at a fee to consumers.

But where exactly has Equibase succeeded in expanding the fan base or making the races less intimidating?

Other sports, from Major League Baseball to the National Football League, National Basketball Association, and the PGA Tour, provide extensive data at absolutely no cost to the fans. This information is used by fans to make watching the sports action that much more enjoyable, and allows them to be more informed, whether it’s for their own general knowledge or to participate in the fantasy leagues that have become so popular, especially with young people.

Racing, or more specifically Equibase, insists on charging its fans for some of the most basic data. Lifetime past performances of a single horse cost a consumer $8; lifetime stats on a jockey or trainer cost $7 on Equibase’s sister site, equineline.com. If you want career statistics for a baseball player, just go to Google and type “Barry Bonds stats” and you’ll have a plethora of choices for free.

If you want to look at a simple race chart that’s more than a few days old, Equibase charges you $1.50. You want the box score of an NBA game from last month? Go to NBA.com, and click on scores. They’ll provide you with more stats on the game than you could possibly ever want – at no charge.

“It is symptomatic of our industry being a step behind,” said one racing executive who has grown wary of Equibase’s profit-driven motive and thinks the company has strayed from its original mission. “It’s short-term thinking. If our objective in racing is for the horseplayers to win, we should do everything we can to help him, and increase the churn. That’s where the revenue for our business should come from, not from the statistics the horseplayer needs.”

Hank Zeitlen, the current president of Equibase, said fans can get deals for free past performances from some of the account-wagering companies (which, of course, have to pay Equibase to buy the data) and there is often past performances for “feature races of the week” that Equibase makes available at no charge.

 “If you look back to 1990 and see what information was available and how it was made available, we’ve accomplished a lot,” said Zeitlen, who added that it’s unfair to compare racing with other sports. “The economic models of other sports are different than ours,” he said. “Each of those leagues has revenue coming from television. We don’t have that. And Equibase is not a handle-driven business.”

Zeitlen overlooked the fact that the tracks in the TRA that own two-thirds of Equibase (the Jockey Club owns one-third) are handle driven businesses.

JOCKEY CLUB’S THIRST FOR PROFITS
Perhaps it’s this thirst for profits that makes more than a few people wary that the Jockey Club may be getting into the tote business. There are some in that industry who say the Jockey Club, despite its claims, is not a very savvy technology company, and that its entry into the business would not be a giant leap forward – particularly if they wind up with a monopoly. Others believe the Jockey Club should focus on its core business, registering foals, and let private enterprise take care of other segments of the industry.

It was 10 years ago that Tim Smith, then commissioner of the National Thoroughbred Racing Associations, tried to forge a deal between the North American racing industry and IBM Global Services, which promised to modernize the tote system. An IBM executive told the Jockey Club Round Table in 1999 that he had never seen an industry so far behind in technology. The IBM proposal was blown up by some tracks who didn’t see the need for change or improvements in the industry’s tote and simulcasting technology.

Ten years later, we’re even farther behind. It’s clear something must be done to guarantee that the process of handling wagers is improved. If not, the industry will continue to lose the confidence of horseplayers, many of whom are convinced that past-posting of bets and tampering within wagering pools is all too common.

Is the industry ready for the Jockey Club’s family of for-profit companies to grow? Do we really have a choice?

Copyright © 2009, The Paulick Report

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