DID CUP RACE AGAINST THE SHEIKH’S MONEY?
There’s an old expression never to pick a fight with someone who buys ink by the barrel (people don’t get their news in print publications the way they used to, but you get the point). Similarly, it’s probably not a good idea to get into a money-measuring contest with someone who amassed a fortune selling oil by the barrel.
That’s what seems to have happened with the Breeders’ Cup, whose operating deficit and financial challenges are the subject of an outstanding article by Matt Hergarty in Wednesday’s Daily Racing Form (click here to read).
First run in 1984, the Breeders’ Cup has grown from a one-day championship of seven races worth $10 million to a two-day event with 14 races and purses totaling $25.5 million. It was the richest day of racing when it was created, and Breeders’ Cup officials have tried to maintain that status, even as the Dubai World Cup program, fueled by Sheikh Mohammed’s oil money, enthusiasm and competitive nature, grew substantially from its debut in 1996, when it offered $5.1 million in prize money.
The Dubai World Cup program exceeded the Breeders’ Cup in prize money beginning in 2000, when its purses were increased to $15.25 million for seven races, topped by the $6-million Dubai World Cup. That year’s Breeders’ Cup carried $13 million in purses (topped by the $4 million Classic). Another million in purses was added to the Breeders’ Cup in 2003, increasing the day’s prize money to $14 million for eight races (a Filly & Mare Turf race had been added to the original menu in 1999).
Dubai’s purses took another huge leap in2006, when they were increased to $21.25 million for seven races. Shortly after those hikes were announced Breeders’ Cup officials scrambled to keep up with the sheikh after worrying they might get left in cloud of desert dust. Purses for the eight Breeders’ Cup races in 2006 were increased to $20 million, including a $1-million jump for the Classic, which became a $5-million race.
The biggest difference between the Breeders’ Cup and the Dubai World Cup program is the source of funding. Nominations for foals and stallions, along with a percentage of betting handle, are the primary sources of revenue for the Breeders’ Cup. Sheikh Mohammed, the ruler of Dubai, can arbitrarily set prize money for the World Cup program. Though Dubai at one time was an oil-rich country, gas and petroleum now account for less than 10% of its revenue, according to reports. Construction, real estate and tourism are major contributors to Dubai’s current economy (though the world’s economic slowdown have hurt each of those sectors). Nevertheless, Dubai remains a wealthy country, and Sheikh Mohammed controls its purse strings. He can turn the faucet for the Dubai World Cup on or off at his pleasure.
Because wagering and event day ticketing is such an important part of the Breeders’ Cup revenue stream, officials with the organization decided to increase the number of wagering opportunities as it added to the prize money. The 2007 championships at Monmouth Park included three new races, bringing the total to 11 races worth $23 million, and the event was extended to two days. Last year, another two contests were added, bringing the total to 14 Breeders’ Cup races worth $25.5 million. That exceeded the Dubai World Cup purses—for now. However, Sheikh Mohammed has said the 2010 World Cup race will carry a $10-million purse, and it’s likely he’ll add to some of the others to make the program the richest day of racing in the world.
Meanwhile, because revenue didn’t keep up with the increased costs at the Breeders’ Cup (nominations are down, and the additional races didn’t generate as much handle as expected), the organization is running at a deficit and is considering a cut in championship purses, among other things.
Perhaps the increased number of races and the expansion from one to two days was a mistake. There is a dilution effect when there now are, for example, four championship races for 2-year-olds (two on dirt, two on turf), as opposed to the previous two; as well as when there is a sprint division, a turf sprint division and a filly and mare sprint division; or a dirt (or synthetic) sprint, mile and mile and a quarter race.
The old mindset of keeping up with the sheikhs is no longer an option. Whether or not oil is a significant contributor to Dubai’s economy anymore, Sheikh Mohammed appears to have much deeper pockets than the Breeders’ Cup. Trying to match him dollar for dollar may have gotten the Breeders’ Cup into the financial hole its now in.
So the question is: If the Breeders’ Cup is fiscally challenged, should it reconsider all those new races added to the menu and think about going back to a one-day championship?
Copyright © 2009, The Paulick Report
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Tags: Breeders' Cup, dubai world cup, Paulick Report, Ray Paulick, sheikh mohammed
July 7th, 2009 at 4:24 pm
The idea to add additional 2yo races going long on turf was questionable because America does not develop young grass runners.
To compound this brilliant idea, the BC decided to run twice at Santa Anita, which has two grass courses, one made of turf, the other of synthetic materials.
America is the land of speed. If an additional race is contemplated, it should be a sprint for youngsters of both sexes.
July 7th, 2009 at 4:40 pm
Of course, it didn’t help much that the BC lost some $12 million, about 30% of its reserve, that was invested in the market. Water, or, rather, dollars under the bridge now, but it always seemed questionable to me that those reserves weren’t kept in something fairly liquid and safe, like money market funds or insured CDs.
Why not just let the BC be what it mostly was from the beginning, a moveable feast of North American racing championship races, with a few Euros coming over for the turf events and, occasionally, running in the Juvenile. If Sheikh Mohammed wants to outspend you, he will; either that or force you into stupid decisions (remember The Green Monkey?).
Speaking of stupid decisions, leaving most of NYRA’s Grade 1s out of the BC “win and you’re in” competition surely qualifies. And if the BC doesn’t return to Belmont by 2011, East Coast racing fans may forget about it entirely.
July 7th, 2009 at 4:49 pm
Yes. I think the BC should return to the one day championship format, with the 2 yo fillies, FM Turf and Distaff all on Saturday. Cut back the purses on the new races and run them as a Friday card, with the “Dirt” Mile as the feature.
I also like Barry’s idea of a 2 yo sprint race for both sexes. These races do not need purses of $1 million plus to attract quality fields, the prestige alone would fill these races. Same with the 2 yo turf races, and the FM sprint. Move all of these races to Friday, cut purses and then bring back the old Saturday championship day format.
July 7th, 2009 at 4:50 pm
It’s a somewhat pointless battle, since the two self-proclaimed World Championships aren’t really competing against each other.
Not only are they four months apart, Dubai also attracts a lot of HK, Japanese and Southern Hemisphere horses, regions that are virtually non-existent in the BC. On the other hand, because of its out-of-season position for Europeans and North Americans, the Dubai event never had more than two or three of the best Classic-distance horses from those regions take part.
By nature, racing can’t have one universal “World Cup” - and that’s just fine. Both events could complement each other, yet instead of concentrating on putting up the best product they can, the BC is compromising the quality of their races in the pursuit of the ultimately meaningless title of “richest day in horse racing”. I’m not quite sure what they’re afraid of, after all Arc weekend at Longchamp or the Melbourne Spring Carnival aren’t seen as second-class just because they’re fine with making the best out of what they can reasonably achieve.
July 7th, 2009 at 4:59 pm
Really is a raw deal.Why? Well I just love the sport, I have the hardest time dealing with folks who are for selfish purposes ruining the game.
In my old sphere of life I had power and influence.. That was trajically ended to soon.. Now Not just the USA is in Disarray-See The UK last week Worcester UK on a river–Has to shut down for lack of water-Today–I am not even going to try the course name was having vehicles getting stuck because too much water-
This Game is to good to mess up for foolish reasons-
July 7th, 2009 at 5:11 pm
One needs to look to the average sports fan - and the person who may be the new $2 bettor at the local track - to get an understanding that this bloated BC in one venue remains a terrible idea. The BC Classic is the marquee event, but it is lost in these long, long, long broadcasts that have more downtime than a NASCAR event under the red flag due to rain.
Someone with a passing interest (the Kentucky Derby and when a Triple Crown is on the line) is going to get lost in so many “World Championships.” I understand that Thoroughbred racing is not the Super Bowl, World Series or Stanley Cup Finals where only one champion can be crowned, but the TV package must become a much tighter presentation, hence - with the number of events - there is a potential to bring the show to a wider audience, but in increments.
What is preventing - for example - a three-day package of races over three consecutive Saturdays beginning - for 2009, as an example - October 24 and then held on October 31 and November 7. The Classic would be held with three other events on the last Saturday, the Juvenile held with four other races and the Turf held with four other events on the other weekends.
Each weekend could be held in different geographic venues, which will give more fans an opportunity to see world-class racing, have TV that resembles the time required for a baseball game and - if coordinated correctly - could have an added bonus to the venues of each hosting a “Win and Your In” series for its BC races, which could also air in a coordinated TV package. Heck, have the package sold in three-year increments, so tracks are assured of hosting each weekend in a cycle and there can be solid marketing for the entire show.
More has equaled less, but more can be more in the future with a wider view of the BC World Championships.
July 7th, 2009 at 5:17 pm
It’s not about the money. It’s about the track surface. California et. al. messed it up with the rush to Plastic Track, period.
July 7th, 2009 at 5:44 pm
Too many races diluted the quality. Combine that with the bonehead decisions to make a so-called Ladies Day, and you get Ugh. Get rid of the 2YO turf races and the filly/mare sprint.
July 7th, 2009 at 6:27 pm
Sheikh Mohammed has said the 2010 World Cup race will carry a $10-million purse…
Why the insanity?
To attract the participation from horses like Einstein, Mine That Bird, Summer Bird, Asiatic Boy, Dry Martini - over a foreign surface no less?
July 7th, 2009 at 7:49 pm
My suggestions for BC 2009:
a) Cut back to one day and card the races in the following order:
1) Dirt Mile, 2) Juv. Filly, 3) F&M Turf, 4) Juvenile, 5) Turf,
7) Sprint, 7) Mile, 8- Distaff, 9) Classic, 10) Marathon,
b) Cut purses to $3 M for Classic, $2.25 m for Turf, and $1.75M for remaining graded races, and add $250 K bonus to each full field
c) Offer a $2 Million bonus for any race in which Rachel Alexandra and Zenyatta both run (maybe they’ll both try grass as BC preps) and position that race as #9 terminating the Pick Six.
d) Reduce the Pick Six Minimum to $1 (no carryover)
e) Add a $.50 minimum Pick Five (no carryover)
f) Reduce Trifecta and Pick Four minimums to $.50
g) Reduce Superfecta and Super High Five minimums to $.10 (no carryover)
h) Televise races 8-10 on network (free) TV.
July 7th, 2009 at 7:51 pm
Sheik Mohamed has done a lot for racing we have to give him credit for that, a lot for his own benefit. While he might be able to set his purses higher than Breeders Cup, will this trend be happening for a very long time ? What will happen when he passes away. I sincerely do not see anyone in his family with the passion for the sport that he has. I believe once he is no longer with us, Breeders Cup and many Stallion Farms, and now possibly sales companies, will be able to compete against his group. It is happening in front of our own eyes as we speak in a smaller scale with Overbrook, Calumet, etc…
I know this comment is probably out of place, but Breeders Cup needs to stop trying to outspend the Sheik, and worry about giving us a good product, at a good venue, at a fair price, and wait….. How long ? who knows nobody lives forever. I just do not see anyone with his passion wanting to take over that operation, and keep it as successful. They have wonderful leadership world wide, deeper pockets that anyone, but is there anyone else within the family with his passion. I do not think so, Just ask Bill Young !
July 7th, 2009 at 7:54 pm
The Breeders Cup win and your in for attracting horses to help fill a Breeders Cup race. If you win a Grade I in New York your automatically going to run in the cup. The Win and you In should get a free pass and not pay entry fee. Pick a race from each division that would be toughest race to win. The 12 million lost through bad investments was bad. It should of been kept in a safe place. It’s not their money.
July 7th, 2009 at 7:58 pm
I would like to see a return to the one day Breeders’ Cup Saturday format of 8 races. Sure it’s nice to get a glimpse at possible future two year old stars and some horses that love to run long, but these races have very few graded prep events to support them. I hate to see horses run on the turf for the very first time, just because it’s the Breeders’ Cup and worth a lot money. The Breeders’ Cup wasn’t broken when they changed it to a two day format and added races, maybe it’s a good idea to take a step back and go with what worked so well in the past.
July 7th, 2009 at 8:04 pm
Richard’s 5:11 PM post gave me an idea. Instead of a three-day package of races over three consecutive Saturdays, what if we packed the 14 races into one Saturday afternoon. We could do that if we spread the 14 races over five different tracks. And one network could cover the whole thing from coast to coast.
So, the TV telecast would begin at noon ET with pre-race coverage. Then, Race 1 (say, the Juvenile) could go off at 12:30 from Belmont. Race 2 (say, the Juvenile Fillies) could go off at 12:45 PM from Calder. (I’m just making up tracks as I go, but I imagine we would want NY, Florida, Kentucky, Chicago, and California tracks represented.)
Race 3 would go off at 1:00, etc. until Race 14 would go off at 3:45 PM. Also, one track would hold Races 1, 6, and 11; another would hold races 2, 7, and 12, etc. with one of the five tracks only hosting two of the races (5 and 10).
The telecast would end at 4:00 PM ET. Four hours. Five tracks. Fourteen championship races. With races going off constantly, the average fan might be more interested.
I just now came up with this. Haven’t thought it through all the way, obviously. I’m sure there are a million details to look at, but for now, I think this might be worth a try.
July 7th, 2009 at 8:49 pm
The TV prod. costs for 3 Sat’s in a row or over 5 tracks - at least at the production value it is at now - would be outlandish. Unless you want to see simulcast feeds.
I would say that less is more if you want new fans to get in and understand the game via a special championship event.
The BC knows they need to step back. They reached, and like many businesses they could not and did not predict an economic melt down, or the ADW war, etc.
Slash the purses for the event and take an equal percentage from the ever growing BC Stakes program and move forward.
July 7th, 2009 at 9:19 pm
Ray,
Remember when you wrote this?
“That’s why it’s interesting and exciting to see the board of directors and executive staff overseeing horse racing’s Breeders’ Cup World Championships get serious about growing its revenue streams and making some changes to its nearly quarter-century-old format. The Jan. 8 announcement of the expansion of the Breeders’ Cup to two days, along with the addition of three new $1-million races—the Dirt Mile, Filly & Mare Sprint, and Juvenile Turf—is symbolic of the organization’s dynamic new leadership, one that is willing to take some chances.”
http://www.bloodhorse.com/horse-racing/articles/37002/going-forward
Funny how things change.
July 7th, 2009 at 9:35 pm
To Steve Zorn’s point of forcing Sheikh Mohommed to “make stupid decisions” you may remember that he didn’t buy The Green Monkey, he was the underbidder - not such a stupid decision after all.
July 7th, 2009 at 9:42 pm
The Breeders’ Cup announced in January that it would run at a deficit this year to fund both purses and the stakes program and that the deficit would be offset by reserves. That’s six-month old news that Matt Hegarty is re-reporting in his “outstanding article” on the eve of the election of new board members. Coincidence?
July 7th, 2009 at 10:02 pm
Henry John (or one of your several other aliases)…I do remember writing those words. And I’m willing to admit I may have been wrong at the time, that the additional races might not have been a good idea, and that the expansion may have diluted the championship. If the consensus of the board is that it was a mistake, I hope they will be able to admit it, too.
You might notice I wrote that “perhaps” the additional races and expansion to two days was a bad idea. I’m more interested in getting opinions on the subject from nominators and the wagering public, something I’d recommend the Breeders’ Cup do before making major decisions.
As for Matt Hegarty’s article, you’ve selected one sentence you say is dated from a long piece that breaks some news and summarizes very well the current challenges the BC now faces. I’ll stand by my characterization of the piece as “outstanding.”
July 7th, 2009 at 10:14 pm
My guess is that the purses and the two-day format are issues the board, with its new directors, will take a serious look at.
So long as the Paulick Report grants its commenters the privilege of anonymity, I’m happy to take advantage of that editorial decision. Please give us some advance warning if you plan to change the policy. Regular readers know transparency is one of your concerns.
July 7th, 2009 at 11:13 pm
In my previous comment, I meant to specifiy the $.50 minimum for rolling pick fours. It might make sense to keep the minimum for the Pick four ending in the 9th race at $1. The intended strategy is to provide as many opportunited for as many bettors as possible and thereby incentivize maximum participation at a time when disposable income is harder to come by. The additional TV coverage on the final three races should focus on the exotic will-pays and the on-line betting audience. ADW sponsorship should be considered.
July 8th, 2009 at 1:46 am
For the past 25 years as a huge fan of racing, I just don’t understand this big mess. Let’s start with the ‘Synthetic’ tracks in California. Safety first they said, and they rode that train until they past the law requiring the major Cal tracks to install a synthetic surface, but ironically, all the California Fair Circuits, you know, the ones where all the ‘cheap’ horses run, do not have to have synthetic? Wait a minute, are not the ‘cheap’ horses more apt to break down then the better stock down South…what happened to Safety First…God forbid we cancel a few races a year! And what the heck is the East Coast thinking cancelling hundreds of turf races this year due to the track conditions….shouldn’t they be considering a sythentic track. It is all backwards to me.
But its ok Churchill and Belmont, just keep sealing those tracks over and over and we will keep having major breakdowns on big days and it might not take people until 2011to forget about horseracing RUN A BREEDERS CUP AT DEL MAR SOMEDAY PEOPLE!
July 8th, 2009 at 5:47 am
I assume the two year old turf races were created to bring more interest to overseas horsemen. What this did do is force the graded stakes committee to become extremely soft while grading terribly weak two year old turf races run throughout the year in order to strengthen the appearance of the two BC turf races for future grade one status. In my opinion, considering there are now two BC races for both two year old fillies and colts without a dirt or sprint option is a huge oversight and one must question the abilities of the BC decision makers. The decision to run back to back synthetic is also a disgrace and may end up costing us Rachel and others. It is conceivable that a superior dirt two year old from last year would not have competed in the BC juvenile while winning classics this year and again not running on BC day.
July 8th, 2009 at 6:18 am
The Breeders Cup should have stayed with its original format and not be concerned about the Sheikh. He is doing great things for racing but the Breeders Cup need not see the Dubai Festival as a rival one has to go one better. The management of the Breeders Cup reminds me of the management of NYRA in the 70’s and 80’s - arrogant and clueless.
July 8th, 2009 at 8:08 am
Lots of interesting stuff here! For those that have not been around long enough to remember, the BC was established to enhance pedigree in this country as well as formulate a signature day of racing in America. The fact that they took all the NYRA GRI stakes and held them for auction is a foregiveable exercise in view of the early success and perceived fairness to a national audience. The BC was not formulated by a cadre of non-horse people making million dollar paychecks and bonuses. It is a fact that it was pitched over a two day period originally but that idea was abandoned because of perceived press coverage over a prolonged period. It was not created using meaningless extras or substitute races. It was developed using a support system of selected developmental events, as was our allowances system before it was derailed by a meaningless claiming crutch used to handicap handicappers. This nonsense of a competition with the Sheik is a non-starter and baseless. Money alone does not make a classic! The Dubai system of events can and should be a convenient arrangement of stakes by which to grow and fuel the BC, not viewed as an adversarial declaration of a dollar war. What has been established in Dubai is admirable and salute to the international horse herd by a country with no pari mutual wagering. The temporary dilemma with BC is completely correctable if they return to basics and quit placing a premium on mediocrity and trying to create experts from the also eligible list. There is lots of opportunity to not only save it but to reach far beyond its present position.
July 8th, 2009 at 9:24 am
The Breeders Cup could be 4 mil and the two year old race turf could be 500. They need to keep the main races at 2 mil. Run the 2 mil races on Sat. The Big Event needs to be on Sat. Santa Anita iis the best place to run Breeders Cup. Just need to get rid of the plastic or make better plastic.
July 8th, 2009 at 10:24 am
Wow, 2010 World Cup will be worth $10 million?
July 8th, 2009 at 2:03 pm
Our talent pool does not produce 14 champion level horses so we should not be running 14 BC races. All it does is degrade the quality of other key races. (The foundation races) The BC should be about pitting the best vs the best, not creating as many options as possible to have horses duck and dodge like every other weekend during the year.
The dirt mile is a horrible idea. All its done is dilute the classic field. Mast Track and Well Armed specifically dodged the Classic because of this race. It should never go beyond a G3 purse as to not affect the Classic.
The filly sprint is a horrible idea. Any filly good enough to win that race should be in the actual Sprint in the first place.
2yo turf races are a horrible idea. We don’t produce that many good turf horses to begin with. Look at the PP’s forlast years 2yo BC turf races, they are filled with glorified allowance horses. There are not many legit preps for those races anyway.
The marathon is the only addition that should be commended, but with that weak purse its nothing more than an afterthought on the card. I say make it a real marathon of 2miles and put a million+ behind it rather than 500k, the cheapest race on the card.
Lets also face facts about another thing, the BC should not be run over a synthetic surface. Our talent pool is so ridiculously thin as is, having good horses skip the event or not able to run to their best because of the surface is absurd.
One day, core races, core surfaces. Its so simple it will never pass the vet with the BC.
July 8th, 2009 at 3:11 pm
Back in June 2007, when I tried to get elected to the BC Board of Trustees, this comment of mine appeared in another industry publication:
“The drive to keep up with the Maktoums in purses should be curbed. Trying to match purses is like an arms race. Their resources far exceed our Thoroughbred industry’s. Ergo, we cannot win. We don’t need multi-million purses on Championship Day. Increasing the percentage to breeders and spreading the funds over more races in the year would be a fairer use.”
That went over “Like a fa…………………………..well, like a lead balloon”. I got 700 votes!
Incidentally, the idea Sheikh Mohammed is doing ‘a lot’ for racing or the industry, is a delusion.
It does not help many that he spends billions buying the proven sires or every stallion prospect in his aim to breed Derby winners. Then outrageously high fees are quoted to ordinary breeders. Also, it is obvious that as he will now have so many homebreds, he is not too likely to be a big buyer of horses produced by others - unless their track exploits suggest they might be Derby prospects.
We would be better served if he honored his commitments. AFTER Street Cry hit the top, it was announced that all who gambled by breeding to him in his initial seasons would be rewarded with the right to breed the same number of mares at his original fee of $30,000. That was ignored when he did the arithmetic and realized he would have to breed about 300 mares at the lower fee. That would still have produced nine-million dollars, but he decided he wanted more. Then his frontmen say the Sheikh wants the customer to have the best of the deal!!!!
July 8th, 2009 at 4:46 pm
Redmond, what?? Darley did honor the 30k SC fee for ONE YEAR for previous breeders. Not forever. Darley’s fees are not unreasonable, nor is their support, or terms. Just who DO you think brought S&N back to the industry?
And without Mo, Central KY is a parking lot sooner …rather than a bit later. He is the single entity that has had more effect on the economic health of breeders, consignors, and sales cos. than any other for the past 25 years.
July 9th, 2009 at 7:15 am
I stand by my statement that Darley did not honor their announced committment. They did not honor it for any year, even one.
I bred two mares to Street Cry and it was confirmed I could have two seasons at $30,000. I submitted the two mares previously bred to the horse and a third mare which is a stakes winner and Graded placed. All three were rejected as “not good enough”. The original committment did not make any conditions for acceptance. They reneged.
Barbara,
If “Mo” - as you affectionately call him - is the entity with most effect on our economic health, shall we blame him for our current condition? Then, I could agree with you. I can make a case in support of your claim!!
July 9th, 2009 at 12:10 pm
To Garrett; I bred two mares to Street Cry on the same year you did, one mine and one belonging to a client and they honored the $30K for that year. Maybe you need to switch deodorant !
July 9th, 2009 at 1:20 pm
Mr. Ocampo,
So you bred two mares. My guess is it has more to do with buying power rather than body odor. Anyone who has “clients” is far bigger than a small, private farm like mine, hence more likely to breed more mares at inflated fees. Also possible deals were granted based on willingness to kiss ass.
Whatever the reason, they reneged on a commitment. They had the opportunity to redress, but refused on grounds NOBODY had been granted the privilege, therefore if they did it for one client they would have to do it for all.
Which leaves me asking: “Where is the truth?” Is it with you, Mr. Ocampo, or with the Sheikh’s people?
July 9th, 2009 at 1:53 pm
Lowering breeders cup race purses to $1M and under and reducing ticket prices to something reasonable sounds good to me. Sheik Mo and his rivals at Coolmore have both made a lot of really poor auction buys. Sheik Mo paid millions for Act Of Diplomacy(Storm Cat) only to have him break his leg in his 3rd this year and have to be euthanized after winning 0. Both seem to be poor judges of horses and have bought lots of them over the years that turned out to be worth lots less than they paid for them. Spending millions to help horses and horse rescues would be much better than wasting it at auctions.