Posts Tagged ‘thoroughbred times’

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

I always subscribed to the theory that you can’t tell a book by its cover. For that reason, I was always impressed but never really that surprised when one of the grumpiest people I’ve ever had the pleasure to work with also turned out to be one of the most charitably minded.

Today, on this day of giving thanks, instead of focusing on an equine charity, the Paulick Report is writing about someone in the equine industry who has been a tireless champion for a charity that anyone who’s ever heard ringing bells outside of a grocery store is familiar with: the Salvation Army. 

I first met Ron Mitchell when we were colleagues at the Thoroughbred Times in 1988. Ron was all business, someone who learned the ins and outs of the horse world working at a bloodstock agency before entering the journalism profession. Like many journalists working at trade publications, Ron always seemed to know more about a story than he could write. Maybe that’s why he always seemed so grumpy!

I left the Times in 1991 to work for the startup daily paper, The Racing Times, and Ron shifted his notebook to the Bloodhorse magazine shortly thereafter. We were reunited in 1992 when I was named chief editor of the latter publication.

During my 15 years there, Ron had his responsibilities shifted at various times. He always accepted each new challenge with the same stern face and gruff attitude, then dove into his position with great dedication and a sense of pride and ownership for what he was doing.

It’s that same sense of pride, combined with a belief in social responsibility toward his community, that has driven Ron (pictured, Vickie Mitchell photo) to stand outside a Lexington, Ky., grocery store hours at a time several days a week during the holiday season over the last 15 years, ringing a bell and encouraging people to donate to the Salvation Army kettle. He says he does it because it’s always been a great source of news tips from people in the Thoroughbred industry who shop at the Kroger grocery store in his Chevy Chase neighborhood. But I’ve never believed that.

Just as his career in journalism has been transformed from manual typewriters to laptops and a black and white newsweekly tabloid to a 24/7 Internet site, Ron’s methodology for raising money for the Salvation Army has gone digital.

You’ll still find him at the Kroger on Euclid Avenue, where he’s been the “Curlin” of bell ringers – earning more money for the Salvation Army than anyone else in Central Kentucky. But Ron’s going the social networking route with his efforts to help those less fortunate, and has established a fund-raising page online. Donors can designate where their funds go: to the Salvation Army in Lexington, or to one in a city or neighborhood of your choice. 

Be assured that your generous donations will be put to good use. As Ron said of the Salvation Army: “I did extensive research on charities and concluded that the SA does the most with the least. They do not fritter away their money on high-paid executives and they have a program that emphasizes assisting their clients with personal self-improvement and trying to get them back on their feet. The SA is not a ‘handout’ organization. Although they are not considered an ‘equine charity,’ many current and former workers within the Bluegrass horse industry utilize the many services offered by the SA."

If you can’t make it to Ron’s Kroger in Lexington, consider a donation to your local Salvation Army bell ringer. Better yet, go online to Ron Mitchell’s personal Salvation Army fundraising page and click on Ron’s "Donate to My Kettle" button to make a donation there.

You might even coax a rare smile out of him!

The Paulick Report will spotlight a different charity each day of Thanksgiving week, when we traditionally take time to reflect and give thanks to the blessings we have and to help those less fortunate. This is a difficult time for many Americans, and charitable organizations are feeling the effects of the global economic crisis. We hope you’ll spend a few minutes to learn about some of the charities that make us a better industry, and consider giving to these or to others that we won’t have the opportunity to publicize. Remember that no gift is too small.

Copyright © 2008, The Paulick Report

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I felt a little angst when a friend called Monday night to say that “someone at the Thoroughbred Times is reading the Paulick Report, because they ripped off your story about past-posting on a race from Philadelphia Park and didn’t give you any credit.”

I was in the middle of a dinner celebrating my son’s 20^th birthday at the new Malone’s restaurant in the Palomar Center in Lexington (highly recommended, by the way, certainly up to the standards of all the Malone’s and with an appealing outside bar with large plasma screen TVs showing horse racing), so I didn’t get a chance to read the story until sometime later in the evening.

When I did, I was shocked and even more filled with angst when I read the article, written by the interestingly named Frank Angst, a ground soldier in the trade publication army of the Thoroughbred Times I’d crossed paths with on a number of occasions during my tenure as editor in chief of Bloodhorse.

Believe it or not, there are ethical standards among journalists, just as, I suppose, there are among horse traders. One of those standards is that publications that run exclusive stories should receive attribution or credit whenever another publication does a “cover your ass” rewrite, which is clearly what ground soldier Angst was ordered to do from on-high. To quote the leading media critic Howard Kurtz of the Washington Post and CNN’s Reliable Sources, “Making a couple of calls to confirm a story that a journalist would not otherwise know about doesn’t excuse the obligation to give proper credit.”

Dick Jerardi, an Eclipse Award-winning writer for the Philadelphia Daily News (and an occasional Thoroughbred Times contributor), found the past-posting article of interest and wrote a story for his paper, giving attribution to the Paulick Report.

The story by Frank Angst is not the kind of journalism my old friend Mark Simon, the longtime editor of Thoroughbred Times, expected from his employees 20 years ago when he hired me as the weekly magazine’s managing editor, and I doubt that Mark’s standards have changed very much. So I sent Angst a few angry emails Monday night that he’s had plenty of time to respond to, and hasn’t. (Note to Frank: It’s 2008. If you’re not checking your inbox 24/7, you’re no damned good.)

This is the same Thoroughbred Times and same Angst that was so anxious to report my demise from Bloodhorse last August but failed to run even a brief note about the start-up of the Paulick Report a few weeks back (neither, incidentally, has the Bloodhorse, though traffic reports on the Paulick Report web site show Bloodhorse IP addresses  as a frequent, daily visitor…perhaps looking for news leads?).  Someone once suggested that there is something  Machiavellian about the trade press, that the ends (keeping the trade publications in a cozy, friendly relationship with the industry they cover) justify the means (parsing and lifting from non-trade press). That led me to run a picture of the Italian diplomat and author Niccolo Macchiavelli, especially since Frank Angst isn’t famous enough to have a photo on the Flickr web site.

I never read The Prince, Macchiavelli’s most famous written work (I’m sure I’m not the only one who likes to say something is Macchiavellian without knowing what the hell we are talking about), but I do know something about the Thoroughbred trade press and the cozy relationship it has with advertisers and industry organizations it covers. I plead nolo contendere to charges that I was influenced at times during my 15 years at Bloodhorse, succumbing occasionally to brow-beating from advertisers, members of the organization’s board of trustees, its parent at the Thoroughbred Owners and Breeders Association, or from a publisher whose frequent jaunts to Margaritaville were made possible by a contented, free-spending group of advertisers. I’ll never forget the chilling words one of the Bloodhorse trustees said to me when I first met him: “We can’t tell you what to do or write. All we can do is fire you.”

The trade publications, for example, are not going to report on something that nearly every breeder in Central Kentucky already knows – that top older stallion Seeking the Gold has been shooting blanks this breeding season and may be finished – because 1) the farm that stands the stallion, Claiborne, is a  major advertisers at Bloodhorse and Thoroughbred Times and hasn’t sent out official word yet through a press release, and 2) the stallion is controlled by Dinny Phipps chairman of the Jockey Club, and the people who run the two publications don’t want to do anything to upset Phipps since they enjoy being invited to the Jockey Club Dinner in Saratoga Springs, NY, in August.

Of course, in the Jockey Club’s Macchiavellian manner of controlling as much of the industry as possible (did I just insert Niccolo Macchiavelli again?), one of the members of the board of trustees at Bloodhorse is Bill Farish, who has a double-barrel blast of lucky sperm as the son of Jockey Club vice chairman Will Farish and son-in-law of Dinny Phipps. The chairman of the Bloodhorse board is Stuart Janney, the cousin of Dinny Phipps.

As someone once said to me, “Why should the Jockey Club buy the Bloodhorse when it already controls it?”

The lifting by the Thoroughbred Times of the Philadelphia Park story wasn’t the first time in the brief history of the Paulick Report and certainly won’t be the last time something like this happens. I’m happy to say I may even be influencing their coverage.

In the wake of our breaking story last week on the election of the Breeders’ Cup board of members and trustees, the Paulick Report headline read: CLAY CANNED IN CUP ELECTION.  A short time after that story was posted, the Thoroughbred Times apparently did another hasty rewrite, but with the bland headline:  BREEDERS’ CUP ELECTS 12 TO BOARD OF MEMBERS AND TRUSTEES.

Later that night, apparently someone at the Thoroughbred Times with at least marble-sized testicles changed the story headline to read: CLAY NOT AMONG 12 ELECTED TO BREEDERS’ CUP BOARD OF MEMBERS, TRUSTEES.

Bloodhorse.com apparently transitioned the other way in its brief rewrite and headline treatment. Its original headline, posted hours after the Paulick Report broke the election story, read: CLAY LOSES BREEDERS’ CUP BID. Sometime later, it was changed to the milquetoast: FOUR NOT RE-ELECTED TO CUP BOARD.

Perhaps someone thought the latter headline told the story more accurately than the former. It’s more likely that someone reminded the editorial side of Bloodhorse how much money Clay’s Three Chimneys Farm spends on advertising on its web site and magazine.

The Paulick Report will not be beholden to industry organizations like the Jockey Club or to major advertisers. We are operating on the simple premise that the Thoroughbred industry needs and deserves independent reporting and analysis. Similar to listener or viewer supported operations like National Public Radio or Public Television, we believe we will receive support from readers like you.

By Ray Paulick

Copyright ©2008, The Paulick Report

CORRECTION: THE ORIGINAL VERSION OF THIS STORY INCORRECTLY STATED THAT A.P. INDY "HAS BEEN SHOOTING BLANKS" DURING THE 2008 BREEDING SEASON. ACCORDING TO STATISTICS PROIDED BY WILL FARISH, A.P. INDY HAS COVERED 113 MARES AND HAS 80 OF THOSE MARES IN FOAL. THE PAULICK REPORT REGRETS THE ERROR.