RACHEL V. ZENYATTA: THEATRE OF THE ABSURD
Lexington advertising executive Fred Pope has come up with an intriguing proposal for a race between Rachel Alexandra and Zenyatta, one that would help explain how racing’s business model for simulcasting is broken and needs fixing. Will any one listen or act on the suggestion? –Ray Paulick
By Fred A. Pope
In an effort to deliver what everyone wants— Rachel Alexandra versus Zenyatta — NYRA recently hooked up with off-track bet taker TVG to supplement the purse of the Beldame Stakes by $400,000.
NYRA was reduced to this weak position because the premier track operator cannot make $400,000 from off-track wagering on the race.
That’s because of the upside-down, off-track revenue model, where casinos and off-track betting companies pay as little as 2% to the host track, while they keep up to 18% of the wager themselves.
If $20 million were wagered off-track on the proposed race, the purse account would have only gotten $300,000. The off-track bet takers would have gotten $3,400,000. That’s right, ten times more money just for taking the bet, than for the racehorse owners putting on the show.
Trying to put on a show for racing has become the Theatre of the Absurd. Host tracks cannot make the fillies’ owners “an offer they can’t refuse”. Perhaps the racehorse owners need to step in with some common sense.
Inside the Box Thinking
You are about to read a outrageous proposal for how the owners of the star attractions, Jess Jackson and Jerry Moss, can focus the sporting world on Thoroughbred racing and deliver the Filly Race of the Century.
When you do a Situation Analysis on racing today, you come to the painful conclusion that the host event gets nothing from off-track wagering on its product and nothing from the television networks for its product. Since the basic objective of providing the owners of the racehorses with a valuable purse, the strategy becomes crystal clear:
If you can make 20% from the wagers made on-track, but only 2% from the wagers made off-track, then you need to see how you can maximize the on-track wagers.
No off-track wagering and No televised coverage
Sheer madness? Maybe not, it seems to work for the NFL when they haven’t sold out a studium.
To make a statement for all racehorse owners about the upside-down, off-track revenue model that bled $500 million out of purses this year, the owners of these two magnificent fillies have a timely opportunity.
Jess Jackson knows how to market a product and Jerry Moss definitely understands the entertainment business, so let’s explore how these two racehorse owners can achieve for their sport what the industry around them cannot seem to grasp — You either control your product and its distribution, or someone else will control it. You can increase demand for your product by limiting supply.
We are about to revisit the revenue model of 1938, when Seabiscuit was a star.
Let’s Go Retro
Hell, Jess Jackson even saw Seabiscuit race at Santa Anita, so he knows the excitement and electricity that fans feel being on the grounds at a closed sporting event.
There are three tracks big enough to handle the crowd — Belmont, Churchill Downs and Santa Anita (I know the surface problem for Jess, but this is a different consideration).
I would go to those tracks and offer the race, with these conditions. The track would get all admissions, concessions, parking, programs, etc. The track and local purse account would get the on-track takeout from a quality-packed under card of races.
For the big event, the fillies’ owners would agree the race would have no set purse amount, but instead they would get 100% of the takeout from on-track wagers on the race. In effect, the racehorse owners take the risks.
By locking out all off-track wagering and televised coverage, if we can get a crowd of 80,000 and drive the on-track handle to $20 million, the takeout for the purse would be $4 million gross. If we paid back to 6th place, there is a huge incentive for the owners of other good fillies to enter the race and drive the handle higher.
To publicize the race, the two major owners could take the satisfaction of the winner being named Horse-of-the-Year and dedicate their share of the winnings to charities like the Susan G. Komen Race for the Cure and the Race for Education. A ban on cell phones and computers at the track will further boost the on-track handle.
A replay of the race the next day will allow fans to see the great race, but the attraction of a great sporting event would be live attendance.
The tracks would need their racing commissions to pre-approve a non-traditional day, similar to Breeders’ Cup days.
With all the advances in technology and expanded distribution of wagering, the host track should be able to make a lot more money today than they could in 1938. But, because the off-track revenue model fails to pay the host event for its product, the stakeholders of racing are back where they started.
The real “True Blood”
Last July 2008 the industry was “shocked†by a series of articles I wrote on this subject. But, obviously not shocked enough to fix it.
As a result, more than $1 billion has been sucked out of racing this year. The money is lost forever to the tracks, racehorse owners, trainers, jockeys and everyone in between. The lost money has not flowed down to breeders through the sales as reinvestment in racing prospects. The lost money will not be spent at the upcoming September Sales
This past year I have traveled to Arizona for the Racetrack Symposium and throughout the year presented the problem and solution to the heads of every organization in racing and breeding. To date, not one of these organizations have done anything to change the off-track model or push for the corrections to the IHA.
Each month about $100 million is bleeding out of our sport and the rate is accelerating very rapidly through the cannibalization of bets previously made at the tracks and now increasingly made through phone and Internet companies with no connection to racing.
The Future of Racing
If we can get quick passage of the correction to the IHA and the host event starts getting 50% of the takeout from bets made at other tracks; then gets up to 75% from non-racing bet takers, and finally the future of racing is when the host event can start accepting wagers direct from customers for a virtual “on-track” revenue model. We could have 15% of the wagers going to the host event.
Then on big race days, if we have $50 million in off-track handle, the revenue at 15% to the host event would be $7.5 million for the day. That’s how you bring Rachel Alexandra and Zenyatta, or Curlin and Big Brown together in races.
That’s when you have the star power to fill the seats and make racing a viable sport again. So that no matter where the bet is madej, or how the bet is made, the majority of the revenue goes to those producing the show.
Once the IHA is corrected, the opportunity for creative, innovative thinking on how racing is packaged and presented will abound, because the host event can make money on the show.
But, until then we will continue in the Theatre of the Absurd, where the off-track bet takers walk off with all of your money and your sport.
Tags: Beldame Stakes, belmont, Big Brown, Breeders' Cup, churchill downs, Curlin, fred pope, iha, jerry moss, jess jackson, nfl, nyra, off-track betting, Racetrack Symposium, Rachel Alexandra, santa anita, seabiscuit, Susan G. Komen, Theatre of the Absurd, tvg, zenyatta
September 2nd, 2009 at 7:03 am
The problem with a match race is that it isn’t a bettor’s race, so the on-track or off-track wagering would be insignificant. This is the kind of race bookies make with “spreads,” such as with basketball and football. People on track may make “souvenir” wagers, but big handicappers wouldn’t touch this on track.
I would also not encourage this nonsense of a match race any further. Quite frankly, it is just egging on a more absurd debate. After seeing Icon Project win by 13 lengths at Saratoga, I think that seeing Icon Project take on Rachel Alexandra on the dirt….anywhere.
The point may be moot, as it sounds like Jess Jackson is covering himself, in case RA puts in a tired effort in the Woodward. And maybe it is time the filly took a vacation, less her lustre be tarnished.
BE THANKFUL we have all of these stellar fillies and mares. No sense turning it into a “Godzilla versus King Kong” to make racing interesting. We are selling our sport short on such a notion and all of the trash talk.
September 2nd, 2009 at 7:05 am
Great idea, but for a brain dead industry that would rather steal each other’s crumbs then sit down to a full table, don’t bet on it.
September 2nd, 2009 at 7:18 am
Those with whom I have discussed Fred’s theory reject it on the grounds that tampering with the IHA would be too risky, because if racing failed to achieve its goals, the politicians might change the act for the worse and not the better, which could jeopardize our entire industry.
Guess what: we are already on life support!
I for one would be willing to take the risk.
We are all gamblers in this sport. This could be the ultimate gamble–pushing to change the act in our favor.
September 2nd, 2009 at 7:24 am
Of course, Rachel Alexandra vs. Sea the Stars would be a much more interesting race.
September 2nd, 2009 at 7:28 am
Whoa back! At last, the numbers see the light of day. we need an adjective an order of magnitude beyond absurd for this sorry mess. Why not split the 3.7 mill 50/50 instead of 300/3,400? Duh! Replacing 300K with 1.7 mill would do wonders for purses as well as pay owners for the use of every horse they enter. Only about 1 of us in 10,000 can buy a yearling nowadays. Increase purses by this much and who knows - a few more might try the waters.
As to a match race - forget it.
September 2nd, 2009 at 7:32 am
Pope for Czar.
September 2nd, 2009 at 7:47 am
Mr. Pope …. the reason no one has lifted a finger to put your ‘great’ ideas into place is because your ideas are not ‘great’ … in fact, they aren’t even good.
This is a case in point. How stupid would this industry be to set up arguably the ‘race of the decade’ and then NOT broadcast it live or allow the entire world to wager on it?
That would be the ‘theater of the absurd’.
Markets and pricing have a funny way of working themselves out in a capitalistic society. Pricing in the simulcast model has been moving towards the producers of the product for years. In fact, for many ADW’s there are a few tracks now that require host fees approaching half of the takeout. As technology improves and it costs less to accept a wager, that trend will continue … heaven forbid, even without amending the IHA.
But that’s not the real problem. The real problem is the takeout is too high to begin with, and the bettors think that the game is crooked because of drugs and potential past posting. Handle is dropping because betting on horse racing is percieved as not being a good value proposition vs other forms of gambling.
The solution is not for the owners of racetracks and horsemen to keep trying to grab a bigger piece of a smaller pie. That’s why the THG failed miserably.
You (and the industry) should be figuring out how to grow the pie. Try working to lower takeout, eliminate illegal drugs, fix the tote system, increase access to signals and wagering, and reduce racing dates.
Do those things and then you (and everyone else) will be shocked at how much wagering increases, and as a result the purses will increase and racetracks will be more profitable. Until the industry wraps it’s head around this, the downward spiral will continue.
September 2nd, 2009 at 7:53 am
Rachel vs. Sea the Stars on dirt ? I don’t care if you bring back Secretariat from the dead ! No horse living or dead can beat Rachel on dirt. Rachel vs. Zenyatta ? Come on your not blind she barely caught an allowance winner at the wire and she is suppose to run down the greatest filly ever when colts can’t do it …. please. Let me know when Zenyatta breaks a 148 this year. Lol… catch Rachel…right.
September 2nd, 2009 at 8:01 am
Once again you have raised the real issue of horse racing-the ridiculous split that the online betting shops have.
Unfortunately, restricting them would probably lead to a huge increase in bookie related wagers, of which the the tracks get no revenue.
Therefore, it is of utmost importance that the racetracks either renegotiate the takeout split or buy the major online betting shops and control the revenue stream in its entirety.
Until then, racing is doomed.
September 2nd, 2009 at 8:03 am
Mr. Pope demonstrates that he has a great grasp on the world of 100 years ago. Perhaps Mr. Pope is right we should ignore the realities of the modern world and turn the clock back. I guess we’ve missed it all along, we don’t need to embrace TV or the Internet and figure out how to harness them to our collective benefit. What we need to do is put our head further up our…um in the sand and pretend we live in another time and place.
There are so many flaws in Mr. Pope’s thinking I’m not sure the internet has enough memory for me to fully explain each one.
I agree the model as it exists is broken. What Mr. Pope suggests though is the equivalent of suggesting that if the U.S. Auto Industry would just get back to Model T’s their problems would be solved. Ultra simplistic thinking lacking the creativity required of the modern/current age.
September 2nd, 2009 at 8:10 am
Tom Horn…fantastic post!! We could use more with your perspective. Couldn’t agree with you more.
To add one more element to your points I ask where are the creative minds of the Industry pushing for new wagering ideas (not to be read as new wagers). The NTRA is content to tell us that we have nothing to worry about related to new gaming legislation. How lame a response. Why is racing not pushing for approval of new ideas, whether that be “in race” wagering, exchange wagering (keep the positives of this restrict the negative aspects), once and for all get “instant racing” approved nationally (game based upon racing event), live virtual racing and other new ideas that are based upon horse-racing results….all of which would have a revenue/licensing aspect tied back to the Racing Industry.
Our focus must be away from the past and what was and towards the future in what can be!!
September 2nd, 2009 at 8:13 am
Draynay…. ” don’t care if you bring back Secretariat from the dead ! No horse living or dead can beat Rachel on dirt. Rachel vs. Zenyatta ?”
You, buddy, are totally out of your mind on that thought. First of all, Rachel Alexandra’s owner and trainer are dodging races beyond a mile and an eighth, so please don’t be blashphemous in stating that RA can beat any horse, alive or dead. Secretariat has a KY Derby record time that has not been matched or breached in 36 years and he also won the Triple Crown. He had no problem with a mile and a half and RA isn’t being tested beyond a mile and an eighth.
Draynay, obviously, you are a neophyte….and don’t have any sense of historical perspective that RA isn’t meeting the same kind of company that Secretariat, Seattle Slew, etc. met in their day.
The absurdity is that racing thinks it has to pull stunts and freak shows….that is the “easy” way out of developing a real marketing plan.
Bottom line…ADW companies have to take the risk, thus their high takeout, just like a casino. Better negotiations would help, but I agree with Mr. Irwin that tinkering with IHA could open a new can of worms.
September 2nd, 2009 at 8:18 am
My error… and apologies to Mr. Irwin on the IHA remarks.
I do think that IF all of the parties involved, horsemen, tracks and ADW companies can sit down at the table and present a unified plan, then the IHA could be amended to benefit all. However, the ADW companies can afford more lobbyists than racing can…. and MONEY drives Capitol Hill access.
September 2nd, 2009 at 8:19 am
Ray, well I wouldn’t argue the politics and business of the case, all of this omits that a Rachael Alexandra v Zenyatta match on dirt would not be particularly compelling. Match races virtually always go to the controlling speed, and in a straight 1 on 1 match, unless something very strange happens, that is going to be Rachael Alexandra. I’ll be absolutely astonished if Zenyatta ever shows up for a match with her.
Of course they should have met in the Breeders’ Cup - either the classic or Ladies Classic (or whatever silly name it has now) - but that won’t happen because of the all-weather. I’m all for saving horse’s lives - I’ve got a herd of rescues - but three different surfaces have diluted the talent, and either caused or at least facilitated ducking and diving. Actually if Rachael beats older horses in the Woodward, she could run on poly in either race, and if she gets beat, the surface would probably take the rap, and she would still be Horse of the Year.
September 2nd, 2009 at 8:26 am
You don’t build industry-wide financial models around the vagaries of one race. Or, even one meet. Simulcasting and ADW-based wagering exist for one reason: It beats the hell out of empty grandstands, vacant parking lots and track employees looking for a place to take a nap. The horse-racing product is simply not viable as a vehicle that can sustain revenue production sufficient to be profitable. Look no farther than the long list (not) of entities clamoring to buy Magna’s tracks.
September 2nd, 2009 at 8:58 am
“A ban on cell phones and computers at the track will further boost the on-track handle. ” ???
Well this is realistic! The host track would be lucky to get 800 patrons if cell phones were banned. Talk about absurd.
September 2nd, 2009 at 8:59 am
And let’s take our horse and buggy and hang out in the infield. This sport must look forward and not back to the “glory days” when Sir Barton captured the “Triple Crown.” The financial numbers tossed around in the opinion piece - especially in the last section - are absolutely absurd.
September 2nd, 2009 at 9:02 am
>> By locking out all .. televised coverage <<
Isn’t that de facto the case today with most races even the ‘big ones’ save for the Triple Crown? The much hyped Woodward will only be on HRTV and TVG, both fine outlets however their accessability to most of the US households is rather marginal.
The Beldame Stakes might get on MSG for the greater NY market but still the point is that tv coverage will already be slim.
September 2nd, 2009 at 9:09 am
Wow. This is the theater of the bizarre; and it is absurd.
80,000 people are going to go to a track and bet $250 a head? On what planet?
Jockey’s should ride horses, trainers should train horses, industry types should run their organizations with the three and four letter titles doing whatever it is they do ….. and betting decisions should be left to gambling people.
Please stop the madness.
September 2nd, 2009 at 9:32 am
Paulick is losing all credibility he has by supporting Pope’s ideas.
September 2nd, 2009 at 9:37 am
Maybe Pope can get racing to make it a felony if a horseplayer is caught with a cell phone or computer at the racetrack.
It should be no problem as Arizona racetracks made it a felony if a horseplayer makes a horse bet on the internet.
September 2nd, 2009 at 9:37 am
“By locking out all .. televised coverage.”
Isn’t this one of the mistakes that racing made in the past. When other sports clamored for TV coverage racing decided they didn’t need it and in the process hammered a nail in it’s own coffin.
Let’s not learn from history but repeat it! Sounds good to me. Now that’s absurd.
September 2nd, 2009 at 9:54 am
I cant think of anything more absurd than not televising the race.
Hey Pope, the NFL does a blackout in the local market if the game doesn’t sell out, not a nationwide blackout! duh
The problem with this race is Zenyatta has been handled with the kids gloves this year and is looking more and more vulnerable by the race. They want no part of meeting Rachel in any race, unless she runs over a foreign surface in their backyard.
September 2nd, 2009 at 10:09 am
Pope’s inane idea is the only thing absurd about the article. Offshore racebooks and sportsbooks like Bodog would welcome the idea though.
Ray, why you continue to put this clown on your front page is mind boggling.
September 2nd, 2009 at 10:33 am
Satish Sanan……Cot Campbell……Ray Paulick…….Thoroughbred Times……and other industry leaders praise Pope.
This is why the industry is in freefall.
I guess if someone says they can raise prices 300% and sales will not drop, hopeless desperate people will listen and follow.
September 2nd, 2009 at 10:47 am
I, for one, would like to keep hearing Pope’s ideas since nobody else seems to have any. Many of these comments here have missed the point that this TV blackout would be a one-time event which could indeed generate a huge amount of interest and likely make the six o’clock news.
And Pope was not proposing a match race. He writes, “If we paid back to 6th place, there is a huge incentive for the owners of other good fillies to enter the race and drive the handle higher.”
He is trying to shine light on our problems with a very innovative idea and all I am reading above are the same old tired responses about drugs and takeout. Please keep publishing any and all new ideas to help our sport.
September 2nd, 2009 at 11:11 am
Priscilla, you may be tired about reading the “old tired responses about drugs and takeout,” but you have to realize those two issues are among the ROOT CAUSES of the sport’s problems. If you don’t address them and instead waste time championing the Fred Popes of the world who try and devise inane marketing schemes every couple of months, then the root problems are never going to be solved.
How long is it going to take to get it into the thick sculls of the puppet masters that lowering takeout, fixing the drug problem, and reducing supply would be a terrific first step?
September 2nd, 2009 at 11:11 am
Mike D and ITP….
Why do I offer a platform for Fred Pope’s ideas and proposals? First, as Priscilla said, there is not a lot out there coming from anywhere else how we can improve the economics for owners. I’m not going to say who is more important in this game–owners or horseplayers, but we can’t move forward without either one.
The Pope proposal does not increase the price of the product to the consumers (only to the middle men). Indirectly, it can be argued that for those who receive rebates, turning the business model rightside up will make it tougher to receive them. However, if tracks/horsemen get their fair share, can’t they get into the rebate business for their best customers?
Back to the “why.” I’ve said before I am very concerned about the economics of this game as it relates to owners, who it’s estimated put up $2 in training costs and related expenses for every $1 they receive in purses. Racetracks without slot machines are not exactly cleaning up on the current business model.
No one to my knowledge is proposing solutions for these economic imbalances: not the national Thoroughbred Owners and Breeders Association, the state owners associations or the owner/trainer associations like the HBPAs, and not the NTRA, which has to serve too many masters to be effective at anything. For those with any memory, the NTRA evolved out of a Fred Pope proposal (the National Thoroughbred Association), which was attempting to create a sport modeled after PGA Tour golf, where the players have the most control. In racing, the horse and stable owners that own the “talent” (the horses) would have had control under the NTA. I was wrong when I said the NTA model was not the right solution, and supported the creation of the NTRA, which also brought on board racetracks, and institutional organizations like the Jockey Club. Pope said it would become a meaningless organization, and he was right.
September 2nd, 2009 at 11:12 am
Pardon my misspelling of skulls.
September 2nd, 2009 at 11:18 am
I am sorry, but we need MORE not less TV coverage and a tacky match race isn’t the gimmick or answer to all of the sport’s woes.
The problem is that most bloggers, thoroughbred racing figureheads and turf writers often don’t refer to racing as a “sport.” They call it an “industry.”
A few years ago, everyone was thrilled with ADW because they were happy to negotiate for whatever they could get because thet knew the ontrack attendance and wagering were on the decline.
Racing’s woes: Oversaturation of the sport regarding too many tracks, too many racing dates, too much bloodstock thanks to overbreeding greed, weakened bloodstock thanks to overbreeding greed, horse slaughter thanks to overbreeding and breakdowns thanks to overbreeding, drugs and lack of horsemanship. Lying to the racing public about drugs being beneficial and the Jockey Club funding a study that says Lasix is beneficial rather than funding a study as to how to make the breed stronger. The more, the merrier, as long as the money keeps coming in the form of stallion fees and foal noms.
Does anyone ever stop to think that the overall greed of some of the principal leaders and entities ruins the spoer for everyone who is a dan, once was a fan and any future fan?
How about the overall failure of the sport to even listen to its fans and small stable owners, breeders, trainers etc.??
September 2nd, 2009 at 11:20 am
Ray,
Ideas? Why is it that the idea of lowering prices/takeout to generate new business is laughed at by everybody in the industry including owners?
September 2nd, 2009 at 11:23 am
Ray,
Maybe it is just me, but a guy suggesting that I can’t take my laptop or blackberry to the racetrack in the year 2009 is completely out of touch with reality.
September 2nd, 2009 at 11:24 am
Typos… my apologies! Typing on a crackberry, when fired up, isn’t a perfect task.
“Does anyone ever stop to think that the overall greed of some of the principal leaders and entities ruins the SPORT for everyone who is a FAN, once was a fan and any future fan?”
September 2nd, 2009 at 11:24 am
ITP
Interesting that you would spend all your time in favor of ADWs. Wonder why that is.
September 2nd, 2009 at 11:25 am
Ray,
This $2 for $1 thing has always struck me as odd. I am a horse owner, and guess what. I expect to lose money. I expect the jocks to make money, the trainers to make some scratch and the groom to get their $400 or whatever a week. I expect to lose.
Why do owners look to the bettors for their cash, only? Why is Fred Pope constantly speaking of raiding our customers to fix pandemic problems in racing that are there because of the supply side of the business?
There are 200,000 registered foals in Canada this year, tbred and sbred. In 1975 there were 35,000. Since 1975 handle has fallen in real terms. How do we expect to support 600% more in supply with a decrease in demand? NOT by turning back the clock and bleeding our customers from what little they have left.
Our horse ownership problems are supply in nature, not demand. We could double purses tomorrow by cutting racedates in half. We dont even look into it.
We could cut vet costs tomorrow with a massive cost analysis and track pooling of vet care. We don’t.
We could curtail and regulate breeding, so that bad horses are not putting out so much supply that demand can’t keep pace.
We could organize a central office to look into purse poolings or meet changes.
We could do more for horse owners with slot money - approaching the billions upon billions instead of putting it all into 4 claimers at Penn National where no one wants to bet.
But no, let’s shaft the customer instead.
We reap what we sew. With leadership like this, I think we are going to be finished as a major sport, and gambling game before long. We can not expect the customers to fix the problems of horse ownership, propped up by slot deals and lack of leadership and foresight. Mr. Pope and others should concentrate on that, and leave the few customers we have left alone!
PTP
September 2nd, 2009 at 11:34 am
Ray,
In one of his threads a while ago, Mr. Pope, while saying he had the solution to raise revenue, got in an argument with me where he argued that “ADW’s are less than 10% of handle”. You also agreed with Pope that all ADW bet takers paid 3% to the host track.
Both of you were 100% wrong on these issues. Anybody that knows where handle is coming from knows that at the bare minimum, 30%, probably 40% is coming from ADW’s. Also, these ADW’s pay an avg of 6%, not 3% host fees.
If Pope’s ideas are put in place, this ADW handle will be decimated. There will be a huge ripple affect because lower pools cause lower wagering.
It just amazes me that people that know nothing about who is betting the money, where the betting is coming from, or how much they are paying and willing to pay are promoting grandiose ideas on something they have proven they have absolutely no clue about.
September 2nd, 2009 at 11:41 am
Just a Breeder,
I am not in favor of ADW’s.
I am in favor of lowering takeout to 10% on all wagers.
The industry is completely against this.
ADW’s understand takeout needs to be lowered and offer rebates/incentives to the players by giving back part of their %.
Since lowering takeout seems to be a joke to the industry, the industry is a joke to me.
September 2nd, 2009 at 11:43 am
I am surprised that many of the posters don’t understand that what Fred is proposing is not the new model for the future, but a statement to the industry at learge that the current model sucks so badly, that is requires immediate attention.
He is proposing a one off deal and I for one think it is a brilliant idea.
Anybody that cannot understand why he wants no cell phones or internet access is so that people don’t call bookies.
September 2nd, 2009 at 11:45 am
ITP,
Racings fix things flowsheet:
1. Hold the status quo on supply. Breeders don’t change, trainers don’t change, vets don’t change, slots deals dont change, costs don’t change, leadership doesn’t change. Discuss it, but don’t change when the fifty seven organizations get into a room and not even one of them want to give anything up to move forward.
2. Bleed more from demand by squeezing customers any way we can. Rally around that, because after all, it is not my money being squeezed. Hope that taking more from customers pays for all of racings ills.
When it does not work, go to step one and do it all over again.
Takeouts were 10% in 1938 when Seabiscuit was racing War Admiral. Now they are 22%.
Maybe when we raise it to 40%, all things will be well.
September 2nd, 2009 at 11:51 am
Why lower the takeout? It’s pretty low at most tracks on WIN PLACE SHOW wagers that I play and have been playing for decades and average about $500 a day in bets (takeouts haven’t changed much on WPS in the last 30 years). It’s the super exotics where they are high, right? Why not just play WPS?
I seem to recall a bunch of low take out experiments (Churchill tried something like an odd-even bet, Laurel had a trial run on low take out bets) and I don’t think anything changed. I think it’s bunk that lowering the take out is the solution. The guys who always lose now will always lose then too because they always swinging for the fences and strike out. Play the WPS.
September 2nd, 2009 at 12:14 pm
Ray,
This has generated a lot traffic and dialogue amongst a lot of horse racing fans and supporters of our industry – which is very good. Many of whom in my opinion do not really understand the problem with the existing revenue model, how did we get there in the last 30 years from a 50:50 split revenue model to what exists today, why do we need to change it, how does it benefit the industry as whole and then most importantly how do we go about changing it. Fred is absolutely right but fix needs to simple and quick. We need to fix it for the health and sake of our declining industry. We have only two choices:
1)Continue to manage the status quo or even its decline; or
2)Be bold, creative and innovative and fix it as it used be so that our industry as a whole can benefit and grow.
Otherwise, the purses will continue to decline, we will not attract new owners, the on-tract handle and attendance will continue to decline, the ill-legal rebate shops (parasites) that do not contribute a cent toward the purses will continue to grow, the sales at thoroughbred auctions will continue to decline and we will continue to be on the same slippery slope that we have been since the advent of off-track betting and ADW’s. The current revenue model is broken badly and needs fixing. If fixed quickly and properly, a little of the extra resources then available will help fix a number of other industry related issues including integrity (medication, tote system and auctions) and proper promotion of our sport.
Let us all work together to set up a series of public forums starting at Keeneland sale in September to Educate the public at large about the problem, communicate our simple solution and why, and collectively effectuate the change for the benefit of our industry and sport we love so dearly. You can count on my support.
September 2nd, 2009 at 12:17 pm
So the event the racing world (or at least its American part) is waiting for shouldn’t be available for anyone outside NYC or Louisville? And even the people in those areas will have to endure a strip search for hidden electronics before entering?
How exactly are 80.000 people supposed to come to this event if TV, ADWs and other tracks don’t have the slightest incentive to promote the race? Seabiscuit’s races glued masses to the radio, a point you miss when you describe your project as a throwback to those times.
Since this is another round of bookie-bashing, let’s remember that betfair wanted to cooperate with American racing. American racing decided to snub them, and even now that they bought TVG the powers that be in racing don’t seem too interested in betfair’s expertise or co-operation.
Btw: Both RA and Zenyatta are owned by billionaires! They could just as well start their horses for a jar of pickles if they felt like it. Purse money has nothing to do with how either of these two is campaigned (case in point: both are likely to skip the $6 Mio. BC Classic).
Ray: horseracing enjoyed several centuries of success with a business model based on horse ownership as an expansive hobby rather than an investment. It wasn’t until tracks felt the need to fill 500 races a day that the destructively self-perpetuating theory of horse ownership as an investment took hold.
September 2nd, 2009 at 12:17 pm
Am I reading this correctly - Pope is proposing a Rachel v. Zenyatta race with no live TV coverage because that’s how it was done in Seabiscuit’s day? Pardon my ignorance, but didn’t most people not have TV’s back then?
If I come up with equally bizarre ideas, is Paulick Report going to give me a platform, too? I promise my ideas will be innovative (but just ignore their absurdity).
September 2nd, 2009 at 12:31 pm
PTP: excellent points, although they will obviously be ignored for the umpteenth time.
Mr Sanan: why do you have to reform the revenue system before you start fixing the medications mess? What’s one thing got to do with the other? How ’bout fixing the problems you can fix instead of pointing to those you can’t?
Guess we’re looking at another decade of annoying the industry with those “tired” calls for lower takeout.
September 2nd, 2009 at 12:40 pm
The typical track mentality: “If only there was a way we could go back in time!”
Reminds me of Uncle Rico in Napoleon Dynamite.
Sorry, but you have to deal with terrible modern day inconveniences like everyone being able to see your product.
…and figuring out how to make this math work: getting 2% of unlimited customers vs. 20% of 50,000 or so.
September 2nd, 2009 at 12:44 pm
Pope,
We should make it fun too.
How about all 80,000 have to take the train to the track and men are required to wear Zoot Suits and Fedoras?
September 2nd, 2009 at 12:49 pm
WPS,
On one level you are correct that a smart horseplayer should restrict his wagering to straight pools because it costs less. But you miss the bigger picture. The straight pools still extract anywhere from 14%-18%, depending on location, while our casino competitors can get away with extracting anywhere from 2%-10% on slots and table games. The lower the takeout, the more money customers who do cash tickets will make. Please read the “Arithmetic of Racing” chapter in “Ainslie’s Complete Guide to…” to get a better idea on the effects of takeout and payoffs. If you had ancestors who played the horses 60-70 years ago, you’re being charged at least 25%-50% more placing win, place and show than they were.
FYI, Churchill’s invention of odd-even was about as exciting as watching paint dry. And Laurel’s experiment lasted a grand total of 10 days, hardly enough time to generate conclusive data.
The argument that we need progressive takeout rates is absurd. Back in the days when there was only straight wagering and a daily double, the takeout was the same for all four pools.
September 2nd, 2009 at 12:54 pm
And all the naysayers have been so successful with the way things are, that OF COURSE we need to reject any notion such as Pope’s as silly, absurd, unworkable, can’t do. The next thing someone will suggest is lights at Churchill and Friday night racing. Sounds like the Thoroughbred breeding and racing industry to me. Nothing new, folks, just the same old horse manure. Horse prices stink, takeout is absurd, stud fees are beyond hope, purses reach new lows, drugs are rampant and cheating trainers unrepentant. So let’s do what we always do, gather at some bar or shit sale and tell each other how bad things are, agree that it’s “their fault” and remain closed minded.
It’s what we do best.
September 2nd, 2009 at 1:06 pm
Harkening back to the days of Seabiscuit is silly. Can anybody here name one struggling industry that saved itself by turning the clock back 70 years?
I apologize if this sounds rude, but horse racing doesn’t need any more middle aged or geriatric men espousing their “new” ideas. (I say this as a member of the middle aged generation.)
Instead, racing needs a new generation’s ideas. And what has racing done to attract a new generation? I don’t know how to attract them, but I’m fairly certain that locking out off-track wagering and no live TV coverage is NOT the answer.
.
September 2nd, 2009 at 1:27 pm
My God, does anyone read anymore? Are none of you familiar with Jonathan Swift? Have you never read (or at least heard of) “A Modest Proposal”, the (I assumed) well-known pamphlet published in 1729 wherein Swift suggests that the Irish could solve the problem of the abject poverty of their country by selling their children to the wealthy as food? Swift goes into great detail about how much money this would actually produce if implemented and various methods of cooking the children so as to maximize their flavor. Maybe if Fred had described his idea as a “modest proposal” rather than an “outrageous proposal” you might have caught the joke…but some of you I suspect would not. Really, if the “no cell phones” bit didn’t tip you off that this was satire, I don’t think anything else would.
All he’s doing is pointing out (again), using the details of his fanciful Rachel v Zenyatta match-up, the absurdity of the law under which simulcast outlets/ADWs/rebate shops are able to make large profits with little risk or capital outlay, at the expense of the tracks, owners, trainers, jockeys and everyone else directly involved with the risk and expense of actually running a horse in a race.
September 2nd, 2009 at 1:31 pm
Satire? No…Funny, yes.
September 2nd, 2009 at 2:00 pm
I am surprised to hear that tracks in the USA part with their signal for as little as a measly 2% of the off-track revenue - who agreed to that??!!
I just thought I would let you know that in India — where the first simulcast was in the ’sixties — the host track receives 27% of the wagering turnover at each remote location. There’s no reason tracks in the USA cannot negotiate a more favorable share of the offtrack wagering dollar.
September 2nd, 2009 at 2:29 pm
When vendors make more than the people putting on the show, (please fill in the rest).
September 2nd, 2009 at 2:30 pm
Did someone say free parking? And 50 cent hot dogs? And $1 beer? Andddddd a jockey bobble head doll????
Woweeeee…. Count me in… I cannot get to the bank fast enough to get a 2nd mortgage and all the cash left on my Discover card so I can bet on Rachel at 10 cents for $2 to show…
What a joke! Zenyetta wants no part of a real racing animal this year. She will finish worse than 2nd in the Breeders Cup. My guess is that the foreign horses will dominate again on the artificial “grass” surface. So the argument is moot.
Hair-brained schemes will not be considered. Not by anyone outside of this article. The extra $400K offered by Betfair-TVG will not do it. Zenyetta will have a lot of excuses when losing the Cup. Rachel will not be one of them. When Rachel wins this next race vrs older males it should seal hoss of the year for her.
Racing has zero interest in improvement or progress. Enjoy it while it is here. A lot of your wishes for reduced product will materialize over the next 5 years. I am guessing that we may even be able to join and take advantage of the market style wagering offered by Betfair in the very near future. Racing, as it exists today, will have less integrity than professional wrestling without changes. Changes they refuse to make.
Watch them die, attend the funerals, raise a glass to memories like Rachel and move on. I just turned 56 and followed racing for over 30 years. My last wager was in 2002. Anyone remember the big event that year? And the lying promises made about change following that? Seven years later not ONE change. Crooked jocks still riding. Crooked trainers still training. Races still past-posting. Not one track finalizes odds before the 1/2 mile pole. One race recently could not be decided until the following day. For those wondering, insiders printed a winning million dollar plus pic-6 ticket after 5 of the races were official. Imagine that! How many continue to rob the pools today who don’t get caught. Tracks only report 1 in 10 cases of past-posting. It is not automatic and there is no one watching. No one… Not one track voted for an independant body to oversee security of pool transactions.
My point? There is no point in wasting value time debating the absurd. Let it go. Let it die. That is what racing desires more than anything.
The survival of the fittest is the ageless law of nature, but the fittest are rarely the strong. The fittest are those endowed with the qualifications for adaptation, the ability to accept the inevitable and conform to the unavoidable, to harmonize with existing or changing conditions. Show of hands now. How many think this describes the horse racing industry? Me, either. LMAO.
Our natural environment is indifferent to the survival of mankind, even Americans. On a large enough time line, the survival rate for everyone drops to zero.
Thanks for the read. Got a poker game. ONLINE! lol.
September 2nd, 2009 at 3:00 pm
Maybe one day people will grasp the idea that takeout can’t be adjusted in the right direction until racetracks are back in control of the money thats bet ON THEIR RACES…
September 2nd, 2009 at 3:07 pm
“Maybe one day people will grasp the idea that takeout can’t be adjusted in the right direction until racetracks are back in control of the money thats bet ON THEIR RACES…”
With tracks in control of wagering:
1930 takeout - 10%
Up pretty much every year until the IHA in 1980. A 100% increase.
Tracks had 50 years to understand the gambler and be progressive on take. They didn’t; they just raised it thinking it would net them more money. There is no reason to believe they will get together now and become gambling enterprise experts and lower things like Betfair.
The only direction that takeout goes with horseman groups and tracks controlling it is “up”
JMO.
September 2nd, 2009 at 3:07 pm
The Woodward Stakes
Post time: Saturday 09/05/09 at 5:50 p.m. EDT at Saratoga Race Course in Saratoga Springs, N.Y. Purse: $750,000. Distance: 1 1/8 miles. Television: MSG Plus, TVG and HRTV. Radio: WQKC 1450-AM.
Zenyetta need not apply. LMAO!
This race will fill the race track. Many established fans will see or watch online. Not one new potential fan will hear or see this race. None will be curious enough to read about something they have not already been introduced to. It is huge. It is history. The potential to even create new history is huge. Second filly to ever attempt this race. And is the established fav to win it!
For the general public, you offer local am radio? My god, the Paulick-Hope supporters must be peeing themselves right now.
Never argue with fools - first, they’ll try to get you down to their level and then defeat you with experience.
If you don’t know where you are going, any road will get you there.
Folks, this is the depth and density of the stupidity being tauted by this article and regularly shown by this industry.
R.I.P.
September 2nd, 2009 at 3:23 pm
For God’s sake, this article is stupid. It’s scary that industry “leaders” are on here saying this is a good idea. This article makes one thing abundantly clear: racing desperately needs some new blood.
September 2nd, 2009 at 4:34 pm
It seems to me that Mr. Pope and his supporters confuse a racetrack’s customers with its vendors. A racetrack, at its most basic, is a business that sells a single product: races. Its customers are gamblers (horseplayers) who wager on the outcome of those races in the pari-mutuel fashion. The track coordinates those bets - the sum of which is called handle - and takes a portion of those bets (takeout) as its revenue. Pretty simple.
Now, to operate a successful business, you must have a product that your customers want to buy. A racetrack could, theoretically, own and maintain a stable of horses - say 500 - and run those horses against each other every night/weekend/month, whatever. We see the problems inherent in that business model, right?
The racetrack instead takes a portion of its expected revenues and offers prizes (purses) to the winning owners of horses entering its races. Bigger purses attract both more runners and better horses, both things that the track’s horseplaying customers like. The horsemen (owners primarily, but also the trainers representing them) are the track’s vendors, supplying the horses for the races.
Tracks realized that new technologies would allow for truly incremental revenue streams, meaning that those new revenues would not exist without the technology. (We’re talking here of both simulcasting and ADWs). For access to those streams, tracks agreed to share revenue with those technology partners, simultaneously increasing handle but decreasing the host track’s percentage of revenue. What happened is that technology not only increased access to revenue but the transportability of money. In the new world, horseplayers could buy from either the racetrack or the racetrack’s partners, and invariably the partners were creating a better product for the horseplayer. Historical tracking of bets, complex wager building, access to dozens of tracks, discounted handicapping tools and many other enhancements attracted the betting dollar of the horseplayer. The coup de grace was rebates; ADWs attracted many bettors – including the biggest – by effectively lowering the price (takeout) the horseplayer had to pay to place his bets.
How does Mr. Pope confuse customer and vendor, then? He assumes correctly that an increase in purses will drive horsemen to the track; in a sense, horsemen will buy more participation. But he then claims that higher average prices, restricted access, “Big Brother†security measures, and eliminating promotional incentives will increase handle, as if money was no longer transportable and horse racing the only game in town. Horsemen cannot do much more with their thoroughbreds; horseplayers can do a lot more with their money.
The racing associations, tracks, and horsemen made the deal to get the monopoly on legal internet gambling in the United States, visions of handle dancing in their heads.
But it takes much, much more to compete in the wider entertainment marketplace, and the industry is doing relatively little to compete. Mr. Pope’s idea boils down to “let’s have a big race day where our gross margins are higherâ€. I don’t think that’s going to work.
Finally, so I cannot be accused of having no ideas of my own, here are some ideas which I’ll have to develop at a later date:
1) Increased bet bundling – Churchill’s Matrix bet that combined 3 win bets with 6 exactas and 6 trifectas enjoyed some success (1% of handle at launch). Bundling speeds lines and increases the probability that any one ticket will result in a payoff. Psychologically, that’s huge for horseplayers of all acumens.
2) Refunds on losing tickets – to make the price of a bet lower at the track, allow losing tickets to be returned for a small refund, say $0.05 on a two-dollar bet. This is effectively a 2.5% reduction in takeout, but it could be used promotionally and gets people back to the windows. Downside – might be illegal.
3) Volume pricing AKA marginal takeout pricing – Charge normal takeout rates up to a certain target for each betting pool, for example the average for that class of race at the previous years’ meet, say $100,000. To attract incremental handle, charge only 5% on all handle (per pool) above $100,000. If that pool reaches $200,000, then (assuming normal takeout of 15%), the blended takeout is only 10%. This way, the price decreases only if the discounting succeeds in increasing handle. Classic win-win.
September 2nd, 2009 at 4:45 pm
LoL. Who ya talk’n to, Mike Dorr? You are making a lot of sense! Don’t you know that when you do that the racing industry cannot hear or see you! Fact!
LMAO!
September 2nd, 2009 at 5:09 pm
It’s a great idea but it too risky. Zenyatta ’s trainer is liable to opt out at the last minute if he fees he might get beat. The Jackson team have backbone but the Zenyatta team need to prove their’s. I just can’t see it happening. We have the Breeders Cup for that. If the voters of HOY just put the word out that whoever wins between the two on BC day is HOY. Problem solved.
September 2nd, 2009 at 6:06 pm
Paula Says:
September 2nd, 2009 at 8:13 am
“Draynay…. †don’t care if you bring back Secretariat from the dead ! No horse living or dead can beat Rachel on dirt. Rachel vs. Zenyatta ?â€
You, buddy, are totally out of your mind on that thought. ”
Paula, Draynay is just pulling your chain. He knows, like anyone who follows horse racing knows, that on 9 June, 1973, no horse ever made could have beaten Secretariat.
He just likes to beat people over the head with Rachael Alexandra. If she ever loses, he’ll be doing the same thing with the new favor of the month.
But on to important stuff… I just skimmed this but is this fella seriously proposing that the winner of a RA/Zenyatta match race automatically receive HoY?
Certainly at this point Rachael probably deserve it, but Zenyatta ?
In any given race, the best horse doesn’t always win, you know, or even finish.
It’s VERY possible RA or Zenyatta could stumble and break a leg.
Should the other horse then be named HoY by default? Or for that matter be denied the title out of misplaced sympathy for the fallen horse’s trainer and owners?
Don’t see how that would benefit horse racing.
September 2nd, 2009 at 6:12 pm
How can anyone believe this is a good idea. This is the stupidest idea I ever heard. I feel as though someone wrote a parody of just how stupid the racing industry is. Could you imagine if Fred Pope was given control over MacDonald’s or Walmart? Out of business in 2 months.
September 2nd, 2009 at 6:15 pm
Another important thought. Santa Anita service is being overhauled right now so there is no telling how the surface will play. Rachel wins this week she is HOY. They should put her away till next year. She is an amazing animal. Zenyatta also great mare but on powder puff schedule. She needs to ship to Belmont.
September 2nd, 2009 at 7:10 pm
There is only one big race day in America where the revenue from wagers exceeds the purses — Kentucky Derby Day. That’s because the Derby purse is relatively small and Churchill Downs gets a premium for it from off-track bet takers. On every other big race day, the tracks put the racehorse owners’ purse account in the hole. It doesn’t have to be that way, the revenue from wagers should exceed the day’s purses.
Today’s article was tongue-in-cheek to show how absurd the off-track revenue model has become, to the point that a host track and/or some enterprising racehorse owners, could occasionally make more money by banning off-track wagering and off-track video to drive attendance and on-track wagering. There’s more than one way to skin a cat, and racehorse owners with exceptional talent can do what the Breeders’ Cup does every year, negotiate to lease a track and get all the takeout from wagers. For those who took it too seriously, my apologies.
There are still some folks who think the tracks put up the purses. And, then there are a lot of people who just want racing to be better, less expensive and provide better customer service like any good business. But, every good business has a sustainable revenue model and that’s what we’re trying to do by correcting the IHA.
For those in the industry concerned with some of the posts, please consider the anonymous nature of the medium. A few may be connected to bet takers who obviously do not want to change the IHA. We haven’t heard from any posters who want to see the IHA changed so that the host tracks can accept wagers direct, so you might expect ADW’s are represented. When the host tracks do start accepting wagers direct, they will use price competition, so horse players will get discounts and perks. Those posting their real names are transparent and more meaningful.
As Barry Irwin noted, a whisper campaign that says we cannot risk amending the IHA should also come with an understanding they may have a vested interest in keeping the IHA the way it is now. There’s nothing wrong with people on the boards of the organizations having an investment in a bet taker, but it should be transparent and disclosed when they are deciding whether to support or oppose fixing the IHA. The real risk is not moving fast enough on the IHA.
Satish Sanan is a serious racehorse owner, breeder and a big time horse player. He has a good idea for an open debate during the September Sale period when a lot of owners are in Lexington. Then the merits and any problems will be out in the open and discussed.
There isn’t an active Thoroughbred racetrack or racehorse owner in America who won’t benefit from correcting the IHA. That will give racing the benefit of expanding distribution beyond the host track for the first time, and fulfill the goal of the IHA.
September 2nd, 2009 at 7:18 pm
Fred,
I’ve got a good one for you…….
How about Jackson and Moss announce that Zenyatta and RA will race against each other only if the track they race at lowers takeout to 10% on all bets the entire card they race on.
I’m ROTFLMAO just thinking about this ever possibly happening.
September 2nd, 2009 at 7:25 pm
I got a better one–how’s about Santa Anita rips out that piece of carpet excrement, puts back the freaking dirt and the Breeders’ Cup is the biggest and best in years?
September 2nd, 2009 at 7:26 pm
RA match-race with Zenyatta? A ridiculous idea, and lopsided mismatch.
“A ban on cell phones and computers at the track will further boost the on-track handle.” Patently absurd.
I’ve said it before, and I’ll say it again: The only thing close to a silver bullet for this diseased industry is peer-to-peer wagering (aka Betfair). Handle would soar – for years to come – and exotic wagering pools would not be cannibalized. Very big gamblers would be lured back into the game (given a reasonable takeout rate), and countless new players would be attracted and cultivated. The churn would increase dramatically, and purses would skyrocket.
September 2nd, 2009 at 7:55 pm
Hey Fred, so you were kidding. Meanwhile, you were applauded by some of the highest profile industry nitwits and nitwit horsemen out there before you just came clean. It just goes to show that racing is in trouble because of its leaders.
The game is in big trouble, and it starts with pricing and understanding the customer (the bettor).
The real money will bet on anything if the odds are right, and at today’s takeout, the odds are right very rarely without a rebate.
September 2nd, 2009 at 8:10 pm
“When the host tracks do start accepting wagers direct, they will use price competition, so horse players will get discounts and perks.”
*********************
This happens in Canada at HPI. They have very high takeouts. 27% on triactors. They do give an average rebate of around 1% to account users. They also ramp up takeout on tracks that have triactors that have takeouts of less than 27% to 27%.
In other words, the only example out there prove you to be wrong Mr. Pope.
Just look at the takeouts of tracks that get a big chunk from slots. They are amongst the highest in most cases.
If you think that if tracks controlled the wagering that they would lower pricing for customers to the point that the best rebate shops do or even close, you are dead wrong.
September 2nd, 2009 at 8:10 pm
Cangamble, I think they got it and get it.
We’re just trying to give you a good product, the pricing will take care of itself.
September 2nd, 2009 at 8:12 pm
Mr. Pope… I, for one, am not connected to ADWs, but it is a form of betting I do utilize, though not through Twin Spires/Churchill Downs whom I detest. What you propose is beyond ridiculous for the era in which we live. I am sorry if that seems disrespectful, but truly… at first, I thought the media black out idea WAS sarcasm.
And for those who say NO ideas are being proposed by anyone?? I do not know what you mean, as many fans, small stable owners and others have been trying to get through to the “chumps” at the NTRA, Breeders Cup, TOBA, Jockey Club and tracks for a decade!! As the internet has grown as a medium, bloggers have taken up the cause and have taken the place of turf writers, who are all but extinct these days. There is very little objective reporting on the sport, as the trase publications fear loss of ad revenue. So, the internet hs become the one place where many of us are able to “vent” our frustrations and toss ideas.
The sport and the breeding industry keep in place a lot of bad management who have sat on their cans doing nothing for a decade. and even longer. The heads of the NTRA and Breeders Cup are more reactionary than proactive… and both have been given a fair amount of time to do something positive and little has been done. I won’t even begin to tell you what I think of the farce know as The Jockey Club, because there isn’t enough space here to explain the damage they have done to the breed. And the greed and divisiveness among rival track owners and competing wagering and t.v./simulcast broadcasts are also too much to chronicle here.
I am certain I will never work in the sport or industry (other than my small stable ownership and limited bloodstock work) because my own opinions are often at odds with the status quo; however, I do LOVE racing and wish the Hell that the people who have more at stake and more invested than I do would sure give a damn about the sport as much as I do. Even half the effort on their part would be a start. Why should I continue to support and fight for a sport and noble horses I revere when those in power think that nothing in either racing and breeding is broken except the “bank??”
Mr. Sanan, I would be honoured to attend a forum during the sale at Keeneland. Please keep us posted.
September 2nd, 2009 at 8:33 pm
We’re just trying to give you a good product, the pricing will take care of itself.
*****************************************
Take care of pricing and a good product will take care of itself.
The industry hasn’t taken care of pricing outside of rebate shops for over 70 years.
September 2nd, 2009 at 8:53 pm
Does Mr. Pope realize that if (insert any track) replaced it’s normal card with a full card of 5K claimers all with 12 horse fields at 10% takeout, it would out handle the normal card instantly. Give it time and handle would skyrocket. So long as it’s promoted well and not boycotted by the rest of the industry.
September 2nd, 2009 at 9:51 pm
In the battle between the realities of the marketplace and pandering to owners by telling them they deserve a bigger slice of the pie, pandering generally wins in Central Kentucky. And it is usually a good career move.
September 2nd, 2009 at 10:20 pm
All you have to know about the Horseracing Industry Is that any Track that has receved Slot Machines the Horseplayer has received ZERO!
FREE PPS,Lower takeout……………………………………….
September 2nd, 2009 at 10:23 pm
Mr. Pope,
The more you peck on your keyboard, the more I think I’m going to be playing a lot more golf by next spring.
September 2nd, 2009 at 10:24 pm
Product creation, distribution, product consumption.
This simple equation and the importance of each piece of it are sadly overlooked and/or misunderstood by the leadership of our Sport/Industry as evidenced by the comments of Mr. Pope, Mr. Irwin, Mr. Sanan and Mr. Paulick posted here today.
The days of product creation (the tracks and horsemen putting on the show) directly for the customer (product consumption) are long long gone. The tote companies, the tracks and the horsemen failed to stay current with the dynamic evolving needs of the customer and new players (3rd party distributors) entered the game. Now you want to coop the distribution partners ideas and/or cut them out of the mix. They’re here and they intend to stay. Not because they say so but because the customers now feel allegiance to them and the value added services these distributors have provided to them (that Racing’s leadership FAILED to acknowledge and provide).
There are ways to change the status quo but it requires the Industry’s leadership to recognize and respect the distribution partners who’ve created and built relationships (through good old fashioned service of customer needs) with the end user customer. The longer Industry Leadership fails this test the longer our collective future will be in doubt. Tracks, Horsemen, Handicappers/Players, Distribution Partners these are the parties of substance. Discussions that are absent any one of them will yield no meaningful positive long-term results.
September 2nd, 2009 at 11:25 pm
Today’s society: If it’s not on television = it didn’t happen and nobody cares.
September 3rd, 2009 at 1:56 am
It certainly is interesting that you, Mr. Pope, find it fun to waste your readers time by writing articles you don’t believe in. It’s hard to detect the tongue-in-cheek aspect though, because a lot of what industry people like you say sounds like it could only be a bad joke. Take this example: “We’re just trying to give you a good product, the pricing will take care of itself” - sounds pretty tongue-in-cheek to me.
I ask Mr. Paulick to be extremely cautious about allowing more of your “thoughts” to be published on his site, such callous disrespect for the readership shouldn’t become a regular feature of the PR.
By the way, I’m not linked to any ADW’s, other than as a customer. My name is Martin Wunderlich. Does that tell you anything? No? Well, that’s why I comment under my blogger alias. The alias links to my blog, same as with PTP or Cangamble; does that give us enough identity to be potentially “meaningful”?
September 3rd, 2009 at 1:58 am
Yeah that’s it. Just lower the takeout to 10% and that will solve every problem that ever existed related to racing. This is really getting old. It’s impossible to have any kind of intelligent discussion about anything around here without it becoming a platform for the myopic visions of the “lower the takeout” crowd. All of us would like to see a lower takeout but that is just one of many problems confronting the sport and clearly does not rank at the top of the list.
September 3rd, 2009 at 2:14 am
Mr. Pope,
In your imaginary journey to yesteryear, did you happen to notice the level playing fields for both horseplayers and horsemen that existed at that time? If the IHA were changed to allow host tracks to accept bets directly, do you envision any scenario in which direct takeout would be lowered for all bettors pool-by-pool, race-by-race, continuously (as was suggested earlier) as handle continued to rise until — at some specified point — the full 10% of Seabiscuit’s day could be restored?
Mr. Paulick,
All bettors of horse races willing to play the game are racing’s best customers and should be treated that way. Will re-baiting your readers with further early April Fool’s day celebrations become the norm?
September 3rd, 2009 at 4:46 am
I am 56, was a “pro” player for 30 plus years, stopped after 2002 pic-6 scandal changed nothing.
I have been an active member with Youbet since year 1 of their inception. I have accounts with 4 other services. 1 is offshore.
I represent no one in this industry but myself. Some of you think pricing is broken, others are passionate about other glaring problems.
One thing is obvious. All of you are backing a loser. Racing, as it exists, cannot/will not adjust pricing below current levels. As temporary fixes like slots fail due to economy and government redirection of profits, the only direction take/break will travel is higher. That, my friends, is a historical FACT!
And the industry will not/cannot clean up the sport. That would require admitting the problems and investing in the solutions that would require giving up control to third outside parties. The reality is what it is.
If you are a winner, a survivor, then you must use a skill that the industry does not have, the ability to read the signs, handicap, if you will, and adjust your personal decisions based on that reality. Our own limited debates will change nothing. Look around you. No one with any real decision making power is listening. Do you see any positive changes?
Do you want to force a major change? It has been slowly happening for years. Keep your wagering dollars in your pocket until the situation is positive for you. ALL successful punters follow this mantra. If the odds are not right, if the situation cannot be trusted, if the odds are not known, if the costs are too high, if pertinent data is denied, keep your money in your pocket and watch.
That is exactly what I do. Stronach’s empire is crumbling. Courts have already ruled his actions questionable and have allowed minor investors to sue him and other major investors for questionable loans being moved from legitimate sources into the racing empire and then filing bankruptcy. This is one very interesting drama unfolding before our eyes. Deception and theft run very deep in this industry.
I stopped serious wagering in 2002. I am semi-retired and play poker with some success now. I follow the industry very closely. Keep a hand in but not my money. I hope to live long enough to see only 5 or 6 tracks left that form a single group no longer controlled by seperate state governments but a ruling body like that used by the NFL. And market style wagering like that used by Betfair in Europe.
All of you will join me. Some by choice, others by necessity when the current conditions steal your last dollar. The money tree is dying. And with it all those who feed upon it.
R.I.P.
September 3rd, 2009 at 8:01 am
Bob Lee, pricing needs to be fixed………..all the other problems don’t matter much. The industry needs new customers, and after witnessing the monstrous success of online poker and Betfair, it is pretty clear that the ONLY way to get a new sustainable audience is by lowering the price of the bet.
Once that happens winners will be created, not the whales that the industry will not use as PR that the game is beatable, but winners who actually play on a level playing field with all other players.
This will create more more bettors. Not to mention that lower pricing means players will last longer, and if they last longer, they handicap more forms, watch more races and are more apt to get family and friends involved as well, or at least expose family and friends to horse racing.
Fix the pricing and more people will care about problems like drugs and uniform rules. The bigger the audience the bigger the demand to fix the sport. Right now, who really cares about fixing it? A bunch of bettors who are destined to lose anyway because they have no chance to beat the takeout in the long run without rebates? The bettors who get rebates don’t have enough of a voice to create changes, in fact, they don’t have enough of a voice to admit they win. The industry frowns upon them speaking out. The industry can’t even promote the few winners that beat the game (which would be great PR and get more new blood playing), why?, because they would be promoting rebating (which is the same as lower takeouts pretty much).
It is a completely dysfunctional industry that needs to listen and react to the customer, not the track and the horsemen.
September 3rd, 2009 at 8:30 am
With no wagering through simulcasting outlets it would seem that every track and horsemen’s group throughout the country would collectively be paying to enrich a few owners.
September 3rd, 2009 at 8:46 am
What a joke!!
80,000 people to the track for a race almost nobody outside of racing has even heard about. 20,000,000 bet on the race at the track, not a very likely scenario.
As far as the take Belomnt gets, 2% is not an accuarte number and Pope knows this.
Go ahead play with the numbers all day long.
Than come back to reality and think up with a realistic idea.
September 3rd, 2009 at 9:13 am
Lay down with dogs-Get up with fleas.
September 3rd, 2009 at 10:02 am
“There is only one big race day in America where the revenue from wagers exceeds the purses — Kentucky Derby Day. That’s because the Derby purse is relatively small and Churchill Downs gets a premium for it from off-track bet takers.”
Another factor is that the Derby is marketed out the wazoo to mainstream / non-racing fans and it’s the one race a year where non-racing fans wager.
September 3rd, 2009 at 11:48 am
Paula ??? Secretariat is the end all be all ???? The horse was great for 5 weeks !!! As a 3 year old he never won more than 4 in a row and lost to very average horses. After Belmont he never won another G1 on dirt. He even lost a G2 after Belmont. Rachel is undefeated taking on the best of the best and winning EVERY RACE. Get your facts straight the Derby is one race compare the whole year and Rachel comes out on top.
September 3rd, 2009 at 11:51 am
I’m not connected to ADWs either, except as a consumer. What Pope is proposing when he says “correct the IHA” is that the government mandate a redirection of the ADWs and OTBs profits to the host tracks and owners. According to this article, they now want up to 75% of the profits handed over to them. That would be the immediate result of “correcting the IHA” but the ultimate goal of Pope and his boys is to run the competition out of business (with the government’s help).
I like my wagering account. It offers me convenience, good customer service, promotional offers, and so on. Does anybody think they’re going to get better service and so forth from the tracks and owners? Keep in mind, these are many of the same bozos that have been running TB racing into the ground for the past 3 decades. Now they want us to believe they’ll suddenly start doing a great job if the government will just redirect most of the ADWs and OTBs profits to them.
Although not in this article, Pope has previously claimed that this issue is the only problem with TB racing. If we do things his way everything will be magically cured.
Anybody with half a brain knows TB racing has a number of problems, many of them already listed by other posters here.
And Mr. Pope, my name is Mary Lathrop.
September 3rd, 2009 at 12:10 pm
Racing has no marketing, so it seems. Unless it’s the Derby, mainstream America has not a clue what is going on in racing. It’s not even reported in most newspapers. When I mention the name Rachel Alexandra or Zenyatta to anyone not in horse racing, no one knows who they are. I have yet to say those names to anyone that were not horse racing fans that I didn’t receive a question mark look. I even have mentioned Zenyatta’s name to people who somewhat follow horse racing and they did not know who she was. No wonder horse racing has no following and is in decline. And what Dennis wrote about the Woodward is right - no one can even watch it on TV unless they have TVG or HRTV. Mainstream America knows very little and cares very little about horse racing, no wonder it’s a dying sport.
Golf, the most boring sport on TV, has more publicity and more TV air coverage than horse racing.
September 3rd, 2009 at 12:25 pm
Opening up the IHA is not practical unless you have a consensus in the industry. The least bit of opposition will kill the initiative. This is political reality. If you do have consennsus you don’t need the federal gov’t you can do it within the industry. The issue facing the industry route is anti-trust laws. Fred’s proposal is not a new idea. The idea was the next agenda item on the THG’s plate. Unfortunately the lawsuit filed against the THG basically neutered that organization. Contrary to some the THG was successfull in getting a more equitiable split on ADW wagers in Ky. and Fl. The THG was responsible for getting an increase on simulcast fees paid by NYCOTB. No host track had been able to. Do you suppose the quarter % increase is what bankrupted them?
Where is the CZAR!
September 3rd, 2009 at 12:38 pm
With tracks in control of wagering:
“1930 takeout - 10%
Up pretty much every year until the IHA in 1980. A 100% increase.
Tracks had 50 years to understand the gambler and be progressive on take. They didn’t; they just raised it thinking it would net them more money. There is no reason to believe they will get together now and become gambling enterprise experts and lower things like Betfair.
The only direction that takeout goes with horseman groups and tracks controlling it is “upâ€
JMO.”
Takeout was 20% in 1980?….
Takeout has increased since 1980… yet betting expanded faster than ever… the industry finally boomed, but tracks don’t have control of millions bet every day… you dont think that a track that handles 100,000 a day wouldnt of had to increase takeout if they were in control of the 2 million that was bet off-track?
September 3rd, 2009 at 12:57 pm
Only to Draynay, because he is one of the rabid fans of one horse ruining all serious discussions of any other aspect of racing….. I have no interest in a horse trained by a trainer with a record of drug suspensions and owned by one of racing’s worst megalomaniacs Racing’s problems aren’t solved by one race, one animal or one megalomaniac owner.
.
The rest of those in and around racing need to cease being afraid to proffer opinions, but we all know…the penalties for speaking one’s
mind in this sport and the breeding side means “blackballing” by the same people who allowed the sport to decline on their wtaches.
September 3rd, 2009 at 1:10 pm
“As a 3 year old he never won more than 4 in a row and lost to very average horses. After Belmont he never won another G1 on dirt. He even lost a G2 after Belmont.” — Draynay
I can’t believe you’re that obtuse in thinking grades mean anything. The 1973 Marlboro Cup was not graded, but so what. Among those Secretariat defeated in that race were Key to the Mint, Riva Ridge, and Cougar II — all Eclipse Award winners — and Canadian Horse of the Year Kennedy Road. He also avenged his loss to Onion. Does anybody think Rachel Alexandra, as great as she is, will ever beat four champions in one race?
One of the most idiotic critiques I’ve ever read.
September 3rd, 2009 at 1:38 pm
Oh Draynay - as usual, so fast and loose with your “facts.”
Secretariat never won a Grade I on dirt after Belmont - True. But you, in your oily way, neglected to mention that he did win the Grade I Man O War on turf.
Haven’t seen Rachel run on that - and really - isn’t greatness determined even more by being to run on anything?
You also neglect to mention that Big Red did win two other Grade I level races that happened to be brand new and ungraded due to being inaugural editions
.
the Chicago Invitational (against spear carriers) and the inaugural running of the Marboro Cup against the best older horses in the country - including Derby/Belmont winning stablemate Riva Ridge.
You also didn’t mention that after each loss post Belmont - in the Whitney and the Woodward - he came back with track or world record performances in the very next race.
When Rachel runs 1:45.2 in a mile and an 1/8 - then you can start comparing.
Until then - back to your mom’s basement with your computer and your jammies, Cheeto Boy!
September 3rd, 2009 at 1:42 pm
David Switzer — ”The issue facing the industry route is anti-trust laws.”
David, if we lobby Congress to amend the IHA in such a way that a floor is established on the amount paid to the host event, it will be exempt from anti-trust concerns. We can do this under the Noerr-Pennington doctrine, even if doing so reduces competition. Congress has the ability to establish federal price controls.
Dairy farmers produces too much milk, which creates a “buyer’s market” and drives milk prices lower than it costs the farmer to produce the milk. Congress puts in price support to assure the agricultural base of that industry. Ours is the same, but instead of raising the price to the consumer like milk support does, the price to the host event’s ultimate customer would not go up. There are folks here who want you to believe that not allowing the current discounts through bet takers means the price does go up, but when the host events have the margin to offer discounts and perks on “their own product” they will use price competition to gain an advantage over the racing competitors.
No American track currently has the margin of profit, nor the ability to accept wagers direct, but they will if the KTA, TOBA, NTRA and Breeders’ Cup join hands and ask Congress to help our industry by correcting the IHA.
Thoroughbred racing is not a public utility. It is a regulated, private business of tracks and racehorse owners. They produce the racing product and the should be able to determine the price and distribution of it.
Methods of distribution change and evolve. The bricks and mortar of the largest bet takers in racing, the NY OTB’s, cannot survive their overhead costs even thought they paying the lowest off-track fees to out of state host tracks — 2%. If those OTB’s close, we need the IHA to allow the host events in other states to accept wagers direct. Why? Because technology allows them to do it now, but did not when the NY OTB’s were established. Times change, distribution channels can be changed.
The bubble of the internet business models of 2000 exploded. The creation of the current business model and margins of ADW’s is a new, brief blip on racing’s distribution time line. It is time for the host events to do what is best for them, and it is time for the heads-in-the-sand organizations in the industry to come forward and help them do it in order to save the agricultural industry.
The IHA provides racing the opportunity to fix itself right now. The IHA is the racing industry’s legislation. It doesn’t change the game for any other industry, just ours.
Why would individuals in this industry be so obstinate to pass up this opportunity to not only save the sport, but to finally enjoy the original promise of the IHA — to permit the host event to accept wagers across state lines.
Help me fix it, or better yet, you guys forget I brought it up and fix it yourselves.
September 3rd, 2009 at 3:39 pm
“No American track currently has the margin of profit, nor the ability to accept wagers direct”
**************************************
I consider Woodbine to be the model at which you are referring to Mr. Pope. They do accept bets direct and pretty much have a monopoly in most of Canada when it comes to Canadian customers who want to wager into North American pools directly.
They offer a paltry rebate average of around 1%, and have an average takeout of 22%.
And the result is that their weekday handles are sometimes comparable to Mountaineer which offers around half the purse money daily.
Give the tracks and horsemen total control and they go after quick fixes which wind up biting the industry in the butt in the long run.
If the tracks and horsemen got a bigger cut, they would be content for a while as their bottom line would go up for a few months, maybe a year. In the meantime, those getting rebates will evacuate, there will be no buzz from winning players, and if you think that industry has a problem with growth now, just wait, it will be deader than a ever before.
There will be absolutely no reason for bettors to look at the entries with race track owners and horsemen in control.
September 3rd, 2009 at 3:42 pm
Fred,
You are absolutely right. It can be fixed and fixed quickly. The “anti-trust law” issue being quoted by David Switzer is a red herring and being thrown about by a number of entities including HBPA just to confuse the issue. There is nothing stopping us from fixing the IHA as you have suggested. For God’s sake, let us put our personal agendas aside and do what is right for the industry. This is the only “Silver bullet†solution we have and we must use it soon. Fred, you can count on my unyielding support.
Satish
September 3rd, 2009 at 4:53 pm
Hey folks, in case you haven’t noticed, Congress is a bit busy right now addressing health care, as well as a piece of serious labor legislation. I imagine if you even attempted to contact a Congressman’s office this week, you would likely get a busy signal. People have been having difficulty getting through to talk about saving the wild mustangs, an issue that has been up this week. I can’t imagine how an amendment to the IHA could occur in the immediate future, unless the NTRA PAC has been flashing around a lot of money on Capitol Hill.
I know politics: horseracing, gamblers, and fans are the last thing on Congress’ collective mind for the immediate future… so what are you going to do until you have their attention??
September 3rd, 2009 at 5:35 pm
A match race between Rachel and Zenyatta would be a total mismatch simply because of the conyrasting style of the horses.
Rachel could set a dawdling pace and have tons left in the stretch while Zen always needs a genuinely fast pace up front to close strongly.
Think back ages to the Santa Anita Derby when Silky Sullivan overcame a 40 length lead by Old Pueblo to win.
If the race had just between the two only Pueblo would have dictated the pace and never been caught even if they ran double the distance.
September 3rd, 2009 at 6:23 pm
Cangamble, think this through.
Currently there is not a track in America that cares about the homogenous racing product they put up on the satellite, because they don’t get anything from off-track bet takers for it. They have no margin for marketing, so they spend nothing to sell their product and nothing on customer service. Same goes for offering discounts — they have no margin, so they don’t compete for your business.
Like you say Woodbine has a monopoly in Canada, so who can blame them for exploiting a monopoly? Of course you can blame them, but it is like blaming the airline that charges high rates in a captive market.
Stay with me, if we change the IHA to where tracks accept wagers direct, they will have high margins for the first time, but unlike in Canada, they also have to compete with ten other tracks in the simulcast market so how are they going to get business from off-track bettors like you?
1) They will try to differentiate their product, by packaging more of the races that you want.
and/or
2) They will start using price competition to get your business. (Yes, discounts and perks)
Some horse players seem to think I care what a host event charges for its product? I’m a marketing guy, I think you charge for your product what the competitive market will bear. And quite frankly, no one is going to tell the host event what they can and cannot charge for “their product”. My guess is the host are going to charge as much as their competing tracks are going to allow them. If one track isn’t fairing well, they will drop the price until the phone rings.
The host tracks have never had the margins to try anything normal. The off-track revenue model has always been upside-down since the day it started.
When the IHA is corrected, horse players are going to be number one with host events. Why? Because for the first time the host events can make money by catering to you. Whatever it takes to get you business, they will do, just like the casinos.
Under the current off-track model, they don’t have to give a damn about you, because you are not their customer.
September 3rd, 2009 at 7:33 pm
Mr. Pope, Woodbine, through HPI does compete with the other tracks they offer, many Canadian tracks. And they would much rather the HPI customer bet Woodbine over Fort Erie, Hastings, or any American track.
To me, there would be no difference in how Woodbine operates and disses the consumer now or how your future IHA will operate. You are giving them way too much credit.
Look how tracks treat their immediate on track customers now. They get to pay full takeout (and it hovers collectively in the 20-22%) range, yet the tracks sell their signals to their non customers for around a third of that.
What makes you think the tracks will not take whatever they can get whenever they can get it from their customers as quickly as possible when they’ve been doing this for years, even prior to simulcast wagering?
September 3rd, 2009 at 9:05 pm
Fred Pope Wrote:
“1) They will try to differentiate their product, by packaging more of the races that you want.
and/or
2) They will start using price competition to get your business. (Yes, discounts and perks)
Neither of these two things are EVER going to happen with current track management.
Fred, you are truly living in a dream world. Wake the hell up…. Shake yourself….something…
September 4th, 2009 at 9:59 am
Cgriff, thanks for setting the record straight for Secretariat. He was also sick when he ran the Whitney and Onion beat him. I swear, Draynay thinks Rachel walks on water. i guess we all have our favorites.
September 5th, 2009 at 8:32 am
With all due respect with each post from Fred Pope I’m more and more afraid for the future of the Sport and our Industry. Fred, “hello is anybody home?” Your view of this is overly simplistic, misguided and out of date. Now I know you want to believe otherwise given that your ideas originate within touching distance of New Circle Road. And we all know that no idea worth it’s salt comes from anyone other than the blue-blooded circles of the New Circle Elites but you’re wrong.
If implemented your ideas will further cripple an already sick Industry. There are ways to address what ails us unfortunately your prescription will likely kill the patient!!!
September 5th, 2009 at 5:12 pm
Until one wagering company controls all pools and shares them proportionately with every track it covers, then it’s all hot air. There are way, way too many stakeholders in North American racing - until there is mass rationalization and compromise for the good of the industry, not the respective stakeholders’ shareholders, I’m afraid we are all banging our heads against brick walls.
At least Pope gets people talking, even if the ideas are unrealistic…
September 5th, 2009 at 5:15 pm
@Fred Pope
“The bricks and mortar of the largest bet takers in racing, the NY OTB’s, cannot survive their overhead costs” - no wonder if they have 87 company cars on their payroll. Inefficiency at its best!
September 8th, 2009 at 10:45 am
Its like any other sport that has grow nto the next level, you have to be able to make races were the best of the best race and the owners, jockeys, and tracks get a bigger piece of the pie. I like what Fred has proposed because it will allow the money to be distributed rightfully. Let say all the the way down to six place. Look at boxing, MMA, Basketball, Football all of those owners, promoters and atheletes get a piece of the big pie. If horse racing is going to go to the next level It has to get in the game and creative when there is opportunity.
September 8th, 2009 at 10:55 am
To Cale B- The patient is dying already!!!!!!!! you can learn to live with the illness with limitations or you can think out the box and going Germany and get a treatment that could possibly cure you even though its not approved by the Food and Drug. What would you choose……..?
September 15th, 2009 at 5:53 pm
No horse living or dead could beat Rachel? WOW. Even secretariat!!
How did this decent filly get this kind of lemmings? This filly as good as she is, is WAY OVERRATED. I guess that is what good marketing does for you. A horse that has never run the classic distance, beat a 50-1 Kentucky Derby winner and beat the likes of a DeTara is all of a sudden a great horse? Man oh man. This industry must be really really thirsty for a star.
The truth lies in between. She is probably not overrated but she is definitely NOT THAT GREAT.
She is more just a decent solid filly.
September 15th, 2009 at 5:56 pm
This Rachel wouldn’t beat Zenyatta if the mare was carrying 150 pounds, racing backwards on an 870 yard race let alone Secretariat. Please people stop drinking the KA. This is the biggest marketing hype in horse racing history.