Posts Tagged ‘aqha’

By Ray Paulick

One of the first projects that landed on my desk when I joined the Thoroughbred Times as managing editor in 1988 was a feature story on the Jockey Club, the organization historically entrusted with registering Thoroughbreds and being the keeper of the Stud Book. The article was accompanied by a lengthy mail-in survey of Thoroughbred Times readers. The story and the survey results were of great interest, for at the time I had no idea how broadly the Jockey Club reached across the entire industry and how unhappy rank and file breeders then were with the organization’s service, pricing and activities.

It should be noted that there was an agenda to the article. The Thoroughbred Times was then owned by Richard F. Broadbent, whose Bloodstock Research Information Services was facing new competition from a subsidiary of the Jockey Club. There were questions about whether a tax-exempt breed registry like the Jockey Club should create a subsidiary to compete with a private enterprise company like BRIS, which supplied statistical data to breeders, owners and various publications. A few years later, the Jockey Club helped form another for-profit company, Equibase, which competed with the Daily Racing Form to collect racing results (the Form eventually closed its track and field operations and became Equibase’s biggest customer). The Jockey Club has since started other for-profit businesses.

One of the things that struck me was the comparison between how the Jockey Club and the American Quarter Horse Association conduct their business. The Jockey Club is clearly a breed apart from its Quarter Horse counterpart. The AQHA, then and now, is a relatively transparent organization, one whose membership is open and whose leadership is democratically elected through regional and national elections. There is a board of directors, from which comes an executive committee and elected officers. The AQHA has term limits that prevent individuals from maintaining longstanding control of the organization. The AQHA web site publishes a great deal of information about its governance and membership rules, which can be read here.

By comparison, membership in the Jockey Club has always been by invitation only. Click here for an explanation about membership. It is "governed" by a rotating board of stewards, though that term is used loosely since the Jockey Club has been under the firm control of just two men since 1982, when Ogden Mills “Dinny” Phipps was named chairman and William S. Farish became vice chairman (pictured left). Click here to see the current list of Jockey Club members, stewards, and officers.

The AQHA is a huge organization that maintains the registration of more than five million Quarter Horses, with 135,000 registered in 2007 alone. There are nearly 350,000 AQHA members. According to Internal Revenue Service Form 990 for tax exempt organizations, the AQHA generated $54.4 million in revenue in the 2005-06 fiscal year, the most recent year available. At that time it had $73 million in total assets, including nearly $49 million in investment securities. Click here for the AQHA Form 990.

The AQHA, like the Jockey Club, maintains pedigree records, but also promotes the Quarter Horse breed through horse shows and publishes three magazines (the Quarter Horse Journal, the Quarter Horse Racing Journal, and America’s Horse) that had total circulation of over 400,000 in 2006.

The AQHA charges as little as $25 to register a Quarter Horse foal if done within seven months of birth. The organization is based in Amarillo, Texas, and its highest-paid officer, longtime executive vice president Billie G. Brewer, earned an annual salary of $424,928; treasurer Lee Callaway was paid $221,965 (both figures are from the IRS Form 990.) The two executive salaries represented 5.5% of the AQHA’s total payroll of $11,725,124.

The Jockey Club is also a rich organization, one that is exempt from federal taxes but also has several wholly owned for-profit subsidiaries. The Jockey Club’s 2006 IRS Form 990 states that it registered 37,300 foals that year. The Jockey Club generated $13.2 million in revenue in 2006, the most recent year the figures are available. It claimed $32 million in total assets, including $21.6 million in investment securities. Click here for the Jockey Club Form 990.

In addition, the Jockey Club claimed that its subsidiaries generated over $25.7 million in income for 2006 ($13.7 million by TJC Holdings Inc. & Subsidiaries, which is engaged in information services and software solutions; $4.9 million by The Jockey Club Racing Services, for the collection of Thoroughbred racing data; and $7.1 million by The Jockey Club Technology Services, Inc., for its technology services). Click here for more information on those subsidiaries, which include shared ownership in the data collection company Equibase, and full ownership of TJCIS (The Jockey Club Information Systems  and data supplier Equineline), and InCompass Solutions, which provides software systems for racetracks.

The Jockey Club’s IRS Form 990 lists its annual Round Table Conference in Saratoga Springs, N.Y., publication of its Fact Book, and providing financial support to other industry organizations among reasons for its tax-exempt status, in addition to its breed-registry responsibilities.

The Jockey Club charges $200 to register a Thoroughbred foal, considerably higher than the AQHA’s fee. Its last increase was in 2000, when it was upped from $175. The Jockey Club, which for many years was known as the “New York Jockey Club,” relocated its registration department from New York to Kentucky in 1988. 

Its highest-paid officer is president Alan Marzelli  (pictured, left), who earned $672,796 in 2006, 58% more than the AQHA’s top executive. The Jockey Club has three executive vice presidents: James Gagliano, with a salary of $256,885; Daniel Fick, $243,546; and Laura Banllaro, $243,804. IRS Form 990 also lists but does not itemize another $542,776 in 2006 pension plan contributions for those officers. The salaries represented 39.1% of the Jockey Club’s total payroll of $3,626,092 (exclusive of its subsidiaries, each of which have its own executive staff and employees).

The Jockey Club’s 2006 tax return came to light recently when an entity called “CTBA Boardwatch” (which generally concerns itself with the inner workings of the California Thoroughbred Breeders Association) distributed IRS Form 990 to numerous individuals. A number of those people contacted the Paulick Report and were outraged over the salaries paid to Marzelli and his three executive vice presidents.

I don’t know the going rate of executive compensation for a tax-exempt company in New York, where three of the four Jockey Club officers are based (only Dan Fick, a former AQHA executive, is located in the Lexington offices of the Jockey Club). Perhaps those numbers are perfectly in line with other non-profits. I would imagine, though, that the going rate for an executive staff is higher in New York than it would be in Kentucky.

It does seem strange to me that the Jockey Club continues to maintain a nicely appointed office in the high-rent district of midtown Manhattan, on 52^nd Street just off Park Avenue. I doubt that it’s gotten many walk-in customers seeking to register their foals since the registration department was moved to Lexington more than 20 years ago. It is conveniently located near the headquarters of Bessemer Trust, the Phipps family-run wealth management firm whose offices are just a few blocks away on Fifth Avenue.

I asked Jockey Club communications officer Bob Curran why the Jockey Club continues to have a New York office 20 years after the organization’s primary function was relocated to Lexington. A few days later I received the following statement from Jockey Club president Marzelli: “Beginning in 1989, when the first of our commercial subsidiaries was incorporated, The Jockey Club has created and developed a group of for-profit subsidiaries and strategic partnerships, each designed to serve specific segments within the industry by utilizing highly efficient, state-of-the-art technology platforms. We have built and managed this growing list of technology-based companies with a corporate office based in New York and operations centers in Lexington, Ky., and Mountain View, Calif.”

That didn’t really answer the question “why a New York office is necessary” although it did tell me something I didn’t know; namely, that the Jockey Club now has a division in California’s high-tech Silicon Valley town of Mountain View.

The bigger question is who is the Jockey Club accountable to. Is it simply Phipps and Farish and their hand-picked stewards? Is the breeders who have paid registration fees over the 100-plus years of its existence? Is the Thoroughbred industry at large? If there is accountability to the industry, why isn’t there more transparency in the operational and financial activities of the Jockey Club and its various subsidiaries? Why is its membership so restrictive and its governance so secretive?

James Gagliano, one of the aforementioned executive vice presidents, touched on some of these questions, during the Jockey Club Round Table in August in which he discussed some of the activities of the Jockey Club and its affiliate for-profit companies. Click here to read Gagliano’s remarks.

Are you satisfied that the Jockey Club is properly and responsibly representing the best interests of the Thoroughbred industry? Let us know in the comment section below, or take the Daily Paulick Poll about the Jockey Club and its activities, located on the left-hand column of the Paulick Report home page.

Copyright © 2008, The Paulick Report

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By Ray Paulick

National Thoroughbred Racing Association CEO Alex Waldrop said his organization neither opposes nor supports a U.S. House of Representatives bill that would criminalize transportation of horses with the intention they be slaughtered for human consumption. A letter from Waldrop expressing the NTRA’s neutrality was entered into the record on Wednesday by Bob Goodlatte (R-Va.) during a markup hearing of the House Judiciary Committee on H.B. 6598, known as the Prevention of Equine Cruelty Act of 2008.

The bill, introduced in July, is sponsored by Democratic Judiciary Committee chair John Conyers of Michigan and 11 other House members.

In his letter to Congress, Waldrop said the NTRA supported 2003 anti-slaughter legislation, which failed to pass. He did not reference support or opposition to current legislation before the House (H.B. 103) and Senate (S.B. 311) that would prohibit slaughter and transportation to slaughter plants.

Those bills will prohibit slaughter, while H.R. 6598 criminalizes transportation of horses to slaughter plants for human consumption by amending federal criminal law and calling for fines and imprisonment. There currently are no slaughter plants operating in the U.S., the two in Texas having been shut down by a court ruling and a plant in Illinois shuttered after a state law was passed. There has been an increase in the number of horses being transported across the borders into Canada and Mexico, however, and this law provides enforcement for federal officials to end that. Horses confiscated would be under the jusisdiction of the attorney general, who, according to the bill, “shall provide for the humane placement or other humane disposition of any horse seized.”

Waldrop’s difficulty in supporting or opposing the bill stems from the makeup of the NTRA membership, which is funded in part by organizations such as the American Quarter Horse Association and the American Association of Equine Practitioners, which have opposed anti-slaughter legislation. 

Passage of the bills seems a longshot with time running out during the current session of Congress.

Following is the text of Waldrop’s letter, citing the NTRA’s neutrality and concerns with the bill:

By Ray Paulick

Last Monday was the National Museum of Racing’s big day, when induction ceremonies were held for the newest members of the racing Hall of Fame. This year’s inductees included trainer Carl Nafzger, jockey Edgar Prado, and a full complement of horses.

A number of previous Hall of Fame inductees usually show up for the annual ceremonies, giving racing fans a rare opportunity to meet and greet many of the sport’s riding and training legends. It’s a wonderful day for the fans, many of whom travel a great distance to see the ceremonies.

It’s also interesting how the racing Hall of Fame induction usually come right on the heels of the Baseball Hall of Fame ceremonies in Cooperstown, N.Y., and the Pro Football Hall of Fame induction in Canton, Ohio. Both of those events, not surprisingly, attract larger crowds and get far more media attention. Racing takes a back seat to other sports in that regard.

Frankly, the National Museum of Racing is not a very professional organization, from the standpoint of how it spends its money. Its philosophy of only honoring jockeys, trainers and horses also seems short-sighted.

According to www.CharityNavigator.com, a Web site that rates how various charities perform and how they spend their money, the National Museum of Racing gets "zero" stars out of four (and an overall rating of 22.09) for its most recent tax year published, 2006. The museum spent more on administration — $1,163,140 — than it did on programs to support its non-profit mission — $818,730. It spent another $261,455 on fund-raising. The museum lost money in 2006, with expenses of $2,243,325 and revenue of just $2,021,371.

Museum executives say they have a difficult challenge, located as they are in a small town. Not that Cooperstown, N.Y., or Canton, Ohio, are thriving metropolises, but Saratoga Springs is a sleepy town during the 46 weeks that the Saratoga racetrack is not in operation.

But let’s compare the National Museum of Racing to what the American Quarter Horse Association runs in Amarillo, Texas, which is certainly not a major U.S. city, either. The AQHA Foundation and Museum has annual operating expenses of $4,175,793, but spends only $723,865 on administrative expenses, a considerably smaller percentage of what the racing museum in Saratoga spends. The AQHA puts $2,754,691 into the program and invests another $697,237 in fundraising. CharityNavigator.com gives the AQHA a rating of three stars (56.25 points). For 2006, the AQHA Foundation and Museum raised $8,546,735, more than double what it spent.

So the National Museum of Racing gets very poor rating for how it spends its money. If the museum had dynamic leadership or cutting edge programs you might say it would be worth it to spend so much on salaries for administrators. But that isn’t the case. The museum is anything but dynamic.

Anyone who has been to the National Museum of Racing more than once in the last several years will find many of its displays old and tired. Most of the Hall of Fame plaques, which are written up long before a jockey or trainer is retired, are outdated. And the policy of only admitting jockeys, trainers and horses reflects poorly on the museum, which is out of step with museums in other sports that also honor broadcasters, journalists, and team owners.

Even the election procedures for the Racing Hall of Fame are inferior to other sports. Modifications were made in the Racing Hall of Fame election process when complaints surfaced among some voters, but the changes left the Hall of Fame in the embarrassing position of having no one elected in some years, and further changes were made. Now, the rules ensure one human or equine will be elected in every division, but critics say some divisions have more than one worthy inductee, and that the rules should allow more than one to be elected per division in a given year. The best example may be the filly and mare division, which saw the induction this year of Inside Information. However, there are several other worthy candidates, including Sky Beauty and Silverbulletday who were shut out in the voting.

Futhermore, it’s amazing and sad to me that someone like Joe Hirsch, the longtime executive columnist for Daily Racing Form, does not have a place in the Hall of Fame. There is no home in the museum for some of the great owners and breeders, either, or for stallions like Mr. Prospector who made such an important mark on the game. The trustees who run the museum have never warmed to the idea of expanding the ranks of Hall of Famers.

Aside from jockeys, trainers, and horses, the only others recognized in the museum are “exemplars of racing,” and there have only been five individuals given that honor for their contributions to the game since the museum was established in 1950: George Widener, Walter Jeffords, John Hanes, Paul Mellon, and Martha Gerry. There doesn’t seem to be any specific guidelines for that distinction, either. Apparently, museum president Stella Thayer made the appointment of Martha Gerry on her own in 2007, independent of museum trustees.

Exemplars are recognized by the following statement: “In all endeavors, and certainly in all sports, leaders emerge, from time to time, possessing rare and admirable qualities. Thoroughbred racing is fortunate that such dedicated leaders – Exemplars is a more appropriate word – have played a role so influential in this sport that they are forever recognized and heralded.

“The individuals named below served Thoroughbred Racing all their lives in a variety of ways. Respected by their peers, admired by racing’s officials and by the public, and looked upon by all as true Exemplars of Racing they are, in order of their unanimous election by the National Museum of Racing’s Hall of Fame Committees:”

Martha Gerry campaigned a terrific horse in Forego, and by all accounts she was good for the game, serving on the New York Racing Association board and as a member of the Jockey Club. She was also a significant financial contributor to the National Museum of Racing, according to a press release. For the life of me, though, I don’t see her in the same category as the others who were honored as exemplars, and I think there are other individuals who have made greater contributions to racing who have not yet been so honored.

The National Museum of Racing and Hall of Fame is uninspiring and capable of being so much more than it is. Under its current leadership, however, it’s doubtful we’ll see any change.

Perhaps someday, somewhere, someone else will see the need for a truly dynamic museum for racing and breeding, one that recognizes leading owners and breeders, outstanding journalists and other individuals who have made a significant impact on the sport.

Copyright © 2008, The Paulick Report

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