TOO MANY CHEFS FOR RACING’S ‘ALPHABET SOUP’
By Ray Paulick
A Paulick Report reader commenting under the pseudonym of “another young owner” made the following observation in connection with yesterday’s article that surveyed top executive salaries at 18 industry non-profit associations: “Over $3.75 million a year and our industry has never been worse off… we have some great leaders!”
Actually, the aggregate of the 18 salaries was $3,911,096 and didn’t include bonuses, retirement plan contributions or other benefits.
But the point made by “another young owner” was not lost on me. When you consider that executive salary should only be a small fraction of an organization’s expenditures and that there are many more associations and businesses not included in our survey, it makes you wonder: What exactly are we getting for all that money?
Do we really benefit from and need a TRA and an NTRA, a TOBA, an HBPA and a THA, a TOC and a CTT, a Jockey Club and a Jockeys’ Guild? For the ultimate absurdity consider that we used to have two national organizations for racing regulatory bodies—neither of which really had the authority to do anything.
Perhaps when racing was healthy—a regional or local sport that didn’t participate in interstate commerce–there was little need to consolidate some of these redundant organizations. But today, as revenues are in serious decline among racetracks, horse owners, breeders and in virtually every other industry sector, the status quo will not work.
But don’t take it from me. Owner and breeder Satish Sanan, a no-nonsense businessman who has closely examined racing’s organizationally littered landscape, believes the industry will continue in a downward spiral unless it commits to changing its structure.
Sanan, a weekly guest on Steve Byk’s satellite radio show, “At the Races,” has been speaking out in his regular “Our Industry” segment about the need for a new structure. (Click here to listen.) Yesterday, in reaction to the Paulick Report’s salary survey, Sanan said: “If you look at the so-called alphabet soup organizations from TOBA to NTRA to horsemen’s associations, the THA, and the (Thoroughbred) Owners of California, you can add all that crap up, and collectively we are spending millions of dollars. Each one is doing one or two good functions, but not seriously impacting the growth of the industry. It goes back to, do we need this kind of structure and what the hell is it doing for our industry? We need a single structure and in that structure we have got to find a way to generate more revenue, put more money back into the business, hire the best talent.
“When the NFL and NBA created leagues, they brought people in, paid them millions of dollars, and put governance and structure in place and marketed the hell out of their sport and nobody complains about that because they bring in hundreds and hundreds of millions of dollars. Unfortunately, there is not an organization with the exception of maybe individual racetracks that are customer focused, customer centric, customer-service centric.”
Sanan said Breeders’ Cup–where he is on the board of directors and has led a strategic planning committee that is set to announce its final recommendations at a board meeting on Thursday—is the only association on the horsemen’s side of the industry that has focused on revenue growth. “I do not know of another organization that is tasked with growing the business,” he told Byk.
“The leadership of our industry should be thinking like a think tank and working together, talking about how do we transform this business, how do we go back to how this business used to be, how do we attract new owners, keep the existing owners, keep the existing horseplayers, have them bet more and make it more attractive to them and market the sport so we can attract new ones. I’m at a loss as to whose job it is and who thinks about these things on a daily, weekly, monthly basis. Can you name somebody? I (expletive deleted) can’t.”
Byk couldn’t either.
“We have got to streamline our industry,” Sanan continued. “There should be one horsemen’s organization, not 15. Period. There should be one panel that focuses on nothing but all the issues that are integrity-related: safety, medication, tote and wagering, and build confidence so we can attract new people. We need the best of minds with the most creative and innovative marketing programs to attract new horseplayers, new fans and market the hell out of the sport. Shoot, if this was my company I would be doing it.”
And that begs another question: Whose company is it? Who will take the lead here? Which organization will dissolve or be willing to merge with someone else. Which alphabet soup executive will focus more time on doing what’s right for the greater good of the industry instead of fighting to maintain whatever small chunk of turf he controls? Many of these executives are bright people, but the absence of a common-sense structure and industry-wide collaboration is a lethal combination.
There are too many chefs cooking our alphabet soup, and no one is buying it.
Copyright © 2010, The Paulick Report
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Tags: at the races, Breeders' Cup, ctt, hbpa, Jockey Club, jockeys' guild, NBA, nfl, non-profit, NTRA, Our Industry, Paulick Report, Ray Paulick, satish sanan, steve byk, tha, TOBA, toc, tra
February 24th, 2010 at 7:03 am
I'm at a loss to imagine when this mythical period in US history occured when horse racing didn't involve interstate commerce was. Certainly not in the 20th Century, or the 19th, or the 18th.
Though given the balkanization of the product with more stringent state-bred programs it might become our future.
February 24th, 2010 at 7:39 am
Bravo! Someone needs to speak to the needs of the industry as a whole. Racetracks and most industry stakeholders are struggling and the alphabet groups are sucking more out for no services. We also need to stop the cannibalism between tracks. Larger ones are hurting the smaller ones with pricing models that don't make sense. It's going to take all sectors to come together to stop the downward spiral and get this industry back on track. Thumbs up to Sanan for speaking out about the waste.
February 24th, 2010 at 7:40 am
Well said.
February 24th, 2010 at 7:57 am
Brilliant!
February 24th, 2010 at 7:58 am
My compliments to Mr. Sanan. I hope the industry is listening.
February 24th, 2010 at 8:21 am
I saw where Avioli was listed at making over $500,000 at the Breeders' Cup organization. Aren't they running $2,000,000 in annual debt? And isn't S Sanan one of the so called leaders running the show at Breeders' Cup? A clean sweep of folks working at Breeders' Cup needs to happen as well. S Sanan is guilty of Pot calling the Kettle black.
February 24th, 2010 at 8:24 am
Knowing how the industry works, blue ribbon panels will be "empowered" throughout the nation…..and after six months of choosing members, three months of planning a schedule and another three months to coordinate meetings…..it will be decided to table the process for other proposal for top-notch blue ribbon panels. The walls are crumbling, but the executive paychecks are clearing every two weeks, so all is well in "paradise."
February 24th, 2010 at 8:40 am
“I do not know of another organization that is tasked with growing the business,”
Well said Mr. Sanan… there is none.
I do not know of another organization that is tasked with safeguarding the integrity of the business.
I do not know of another organization that is tasked with a harmonized, national oversight of the business.
The industry is listening… but the leadership of the industry isn't.
February 24th, 2010 at 9:07 am
The HBPA, being the largest, is like all large organizations….tough to manage. The problem with the HBPA is the lack of jurisdictional control. Several individual chapters are currently in litigation, have splinter groups branching, or have disappeared altogether. This is the "Horsemen's Benevolent PROTECTIVE Assoc. protective being the key word in this acronym. Protecting who from who? While the context of this article is about executive salaries, what is worse? The heads of the national associations getting fat financially, or the continual money being "lost" within the individual chapters. National needs to mandate background checks on all current board members, and any future applicants. Each chapter needs to be under strict audit requirements, and any violations need to be handle criminally, not in arb. Im not saying that every chapter is bad, but there are some that have the power and that power is abused.
February 24th, 2010 at 9:10 am
Makes sense to me…how about Sanan for commissioner?
February 24th, 2010 at 9:13 am
All this is a must, among the four legged changes that Sanan calls it. (Integrity, Revenue Model, Organization/Marketing and Regulation) The only way it happens is by eliminating the old guard (blue bloods) and changing the leadership to the next generation. As those actually in the industry know, they are out there. In Ray's article yesterday a few names from those organizations are actual very worthy of stepping forward. But its simply not just them! We need State buy in and uniformity. Which in my opinion is the only way this industry moves forward. State buy in however, comes at political loss. Which will be the biggest hurdle for us to climb over.
February 24th, 2010 at 9:25 am
Nice
February 24th, 2010 at 9:30 am
Great Article!
February 24th, 2010 at 9:38 am
I have a shocking statistic for you, Ray. I have a friend, who, like many of your readers, is of the opinion that racing doesn’t have any leadership.
However, I am unalterably convinced that our problem is not a lack of leadership but too much leadership.
In the process of writing one of my columns for Trainer magazine a couple of years ago, I went through the American Horse Countil’s Horse Industry Directory, and counted 183 separate organizations in Thoroughbred racing alone. That’s 183 separate egos. 183 separate agendas. 183 separate jealousies. 183 separate suspicions. 183 separate fears. 183 separate paranoias.
To quote an obscure gospel song I heard years ago, “Nobody wants to play rhythm guitar for Jesus; everybody wants to be the leader of the band.”
February 24th, 2010 at 9:43 am
Right on. While our multiplicitous chefs de jour are cooking the alphabet soup, they are also cooking our goose.
Until we have one national governing headquarters that can: (1) establish and enforce standardized rules and regulations for the racing industry; and (2) provide effective marketing plans that require all participants to work together for the common good and promotion of the sport, we will continue in a steady downward spiral.
February 24th, 2010 at 9:54 am
Yes, Yes, Yes…
Restructure with a central office, and make sure the customer requirements are represented.
With the savings from so many redundant horsemans organizations,most of which are funded from the high taxed customers, we could dramatically lower the take out too.
This approach is 20 years too late, but better late than never.
rwwupl
February 24th, 2010 at 9:54 am
Has Sanan not heard of the “order of chaos”?
February 24th, 2010 at 9:54 am
Well said Satish Sanan!
When I first began to buy thoroughbreds I viewed the industry leaders with great respect and assumed that they had a broad view of the business and a vision for the future of the sport and the industry. Over time I have learned, sadly, that there really is no long term vision or strategy for American horse racing, and that most of the movers and shakers in the industry are concerned first and foremost with protecting the profitability of their own segment, be it race track management, auctions/sales, stud farms or Jockeys.
I should have realized this early on when I was badgered to join at least 20 different organizations, each with its own staff, budget, Board of Directors, objectives and plan of attack. Years later I still don’t understand why we need all these divergent groups, and obviously, they have a vested interest in keeping us fragmented.
The next clue was the roster of lifetime professional staff that moves from organization to organization, rarely leaving a footprint, but always employed. I don’t see that many have any significant experience in the entertainment industry outside of horse racing or accomplishments beyond cocktail party smoozzing.
Finally a survey of boards reveals that most members are selected for the size of their wallets or their high profile within the business. Like board members of hospitals and museums, these board members are selected not for their knowledge, or expertise but mainly for their cache’. Are these boards qualified to do the job? Frankly, what does running a successful stud farm or sales consignment operation have to do with filling the seats at a race track or reviving the public interest in racing?
So where does that leave the industry? Fragmented, without a roadmap, wishing for the past, and largely resistant to a central authority or any cooperation on an overall strategy or plan to improve our future outlook.
We are facing a formidable task. The staffs of each of these groups will fight to the death to save their jobs and their Boards of Directors are just as driven to keep these fiefdoms in place because that is their source of stature in the horse world and stature is largely the key to their income stream.
I think the 2 most logical and untainted voices I have heard over the last 20 years are Satish Sanan and Arthur Hancock. One or two men of vision with the power to implement that vision, will whip the hell out of the plethora of committees approach every time. Just ask any old retired Sears executive how Sam Walton kicked their butt….vision and action.
February 24th, 2010 at 9:59 am
Clearly central authority is needed. But nobody is going to give up their six-figure salary for the greater good. As much as it is feared, the only way to unite the sport across state lines is to legislate away the current mess and replace it with something that (one hopes) is better. It might still be an unholy mess, but it would at least be ONE mess, instead of 183 messes.
February 24th, 2010 at 10:01 am
Excellent article!
I am probably the female equivalent of a chauvinist - but if more of these 183 (wow!) organizations were led by women than men, I think racing would have a much brighter future. Many social and psychological studies suggest that, in spite of the cooperation required when hunting those wooley mammmoths, the human male is generally hard wired to be competitive - to stand out from the rest, whereas the human female is hard wired to facilitate connections and relationship.
So even science suggests horse racing - without a national governing organization (i.e., an Alpha Male) - can neither repair itself nor move forward.
February 24th, 2010 at 10:06 am
Well written, and true. Everyone agrees. BUT when and how will these changes take place? Ray, why dont you write a proposal? Ask for suggestions from your readers - you have a group of the very best minds in the business reading and responding to your columns. Arnold and Rob to name only 2!
February 24th, 2010 at 10:29 am
Were is John Gaines when you need him?
Had Mr. Gaines original conception of the NTRA survived, we would be in a different place today. Factionalization and egos always prevail in this business.
You need a front office with dictatorial power, but do you really think NYRA, Churchill Downs, and Magna would cede one pinch of their power? The race tracks have always been the obstacle. The other entities,e.g. HBPA, Jockey Club, NTRA, TOBA don’t have any power to cede.
February 24th, 2010 at 10:32 am
Do you want to guess how long overdue this kind of thinking is? The key words in this conversation are: knowledge of the subject; leadership; innovation; history. Our problem for a long time has been- what constitutes knowledge of our sport/business?
If you read the daily bugles and blogs, experts in our game are proclaimed if they own one horse or 200; whether they train one horse or 50; have bred one horse or 500; have been appointed to handicapper by a newspaper or wager with their own funds;
are one year or 20 year racing commissioner; have been appointed to the board of an alphabet group or just graduated from the Arizona racing school; or just a plain old billionaire with a good horse! We, in some cases, are much more generous with bestowing the title of expert on so many and expecting so much. However simple horseracing appears, it has endless complexities and requires understanding of the “why” of its history and operations. How many times do we encounter those in power appointing the favorite young lawyer or accountant because they in power think that theirs is the only understanding of the subject necessary to bring success. And how many times do we see stagnation, incompetence and humiliation from those embarking on such a steep learning curve? Horseracing has been incredibly resilient in this past decade of “experimentation”. In other sports and corporations they don’t let the lawyers and accountants fly the lear jet or rebrand the product without first ascending through the practical education of the learning curve. Why do we gamble with horseracing’s future with such reckless abandon and hope that it succeeds? Perhaps it is because there is no palpable skill set in use for the hire. It wouldn’t be tried in other major sports that have far more simple and transparent criteria in use. Horse racing is far more complex than the use of a bat or racket and ball but those sports use a ton more scrutiny by which to assess their leaders. And the spectators and pundits won’t let them get away with it. And perhaps that is why they are a ton more successful!
It can be fun and full of frivolity to be a leader when the game is going well. But the spots really show when it is not! Right now those spots are welts and the emperor has no clothes!
February 24th, 2010 at 10:49 am
So what’s new here? This has been discussed over and over again…at annual meetings, in TDN, BloodHorse magazine, etc. Instead of talking the talk, SOMEONE o(r as a group of leaders) needs to step up and WALK THE WALK. Throughout the years, Keeneland has known how to Walk the Walk, how to hire the right people to “make it happen”…..they stay focused and get the job done. Seems like the Thoroughbred industry should be sitting down w/Keeneland’s folks to learn the how to’s in running a successful operation. Undoubtedly this industry will continue to spiral downward if the powers that be, the suits, the big egoes, etc. don’t join forces soon and recognize they are all a part of the problem and need to have a meeting of the minds and together forge one powerful entity for the sport of Thoroughbred racing……….be the solution and not the problem. It’s sad to see this topic discussed over and over again, but nothing being done about it. Where’s the true LEADERS stepping up to the plate and doing whatever it takes to make it happen?? Brings to mind an old addage, “Lead, follow, or get out of the way!”
February 24th, 2010 at 10:59 am
I totally agree with Sanan’s criticism of the racing industry. What has also astonished me is how little influence the breeders have who take on the most risk and are the foundation of the industry courteousy of the Interstate Horse Racing Act of 1978. Unfortunately the plethora of organizations fuel conflicts among stakeholders. We need a leader who can persuade stakeholders to support a visionary agenda from which all stakeholders will benefit. Marketing, of course, is important. But realistic goals also are important.
February 24th, 2010 at 11:00 am
TJC is the only logical answer. Maybe now that Alan M. is gone someone with some guts can step it up.
February 24th, 2010 at 11:09 am
1. Last Thursday the TOC and CTT (CA owners ands trainers groups) told the CHRB they were looking to merge. Congrats to them for that effort. I hope more states and regions of states will consider the same. Consider time zones as a dividing line.
2. The public and private companies that control large chuncks of racing product will be hard pressed to abdicate their profit and loss destiny to a non governmental central leadership. How can any BOD say okay to a “commissioner” that dictates racing dates and stakes calendars or require capital investment to upgrade their track, tote, TV, etc.
3. I think the power to effect change resides in the recognition of the racing product as universally top notch. I think the NTRA Alliance is on the right track. ‘You want your races graded and part of the series that’s on National TV? Then do it this way’.
4. There are too many tracks with alternate sources of revenue from slots to get them all in the same tent. Get 10 -12 top races put together in a series. Fix the top 10%, as one trusted advfsor said to me, the rest will follow. See ARCS.
The alphabet soup situation is borne of the fragmented regulatory structure that authorizes our sport and is sympomatic of the very problem we have in Washington. Consolidation is the start. IMO.
February 24th, 2010 at 11:10 am
Yes, yes, yes.
Interesting that Alan Marzelli, by far the most highly paid of the various alphabet soup executives, was also the most vehement defender of the status quo in the 2008 congressional hearing.
His confidence in his own powers of “persuasion” and “consensus building” was so absolute that one would have expected racing to be thoroughly reformed, well-managed, drug-free, and restored to widespread public esteem by now. Fat chance.
If there had been a BS meter in the room, Marzelli’s testimony would have registered off the charts - and everyone listening to him knew it.
Congress should amend the Interstate Horseracing Act and establish a means of sorting this mess.
February 24th, 2010 at 11:13 am
I’m sorry, New Breeder, but we in the industry have been arguing for 50 years about who is the “foundation of the industry”, which is one of the reasons we haven’t gotten anywhere.
The owners say it’s the owners.
The trainers say it’s the trainers.
The tracks say it’s the tracks.
The riders say it’s the riders.
Unfortunately, they’re all wrong. It’s the fans–and nobody ever, EVER asks them a damned thing.
February 24th, 2010 at 11:13 am
Again, power is the center. A National organization is NOT NEEDED. This is not football, or basketball. Racing DOES NOT have 20 teams individually owned. Racing has thousands of individual owners. Putting racing back on the map can ONLY BE DONE by NOT retiring name horses early. Interest in racing — How about Racheal Alexandra and Zenyatta. They have brought national attention to racing without the need of what is suggested in this article. Comparing racing to football, or basketball, is like mixing apples and oranges. Football, or basketball name players do not retire after 2 years. They have a strong following because the giants of the games remain year after year, much like horxse racing in the old days (Round Table, John Henry, Forego, to mention a few. A lot of excuses are made because the industry itself is self absorbed. Individuals are intent on making millions for themselves (they NOT being horse people) at the expense of the industry. Concentrate in the right area and evrything will take care of itself. Centralizing IS NOT the answer. If you want control at the expense of individualism, much like our government, then go for it. There is nothing wrong with racing today that more Racheal’s, and Zenyatta’s won’t fix. BUT, to have more Racheal’s and Zenyatta’s, you need more horse people like their oweners — Good Luck!
February 24th, 2010 at 11:14 am
Mr. Sanan is precisely correct. The rub is that much of redundancy refuses to yield even part of their kingdom for the synergy’s sake. The guys with the most juice – the JC – cling to nostalgia and resist any serious reform efforts to alter their favorite backyard hobby, others protect jobs and regulators and horsemen groups define best practice as that which is done within their own jurisdiction. All intuitively must know time is borrowed but the inevitability of decline hasn’t changed anything. To Mr. Sanan’s point, there simply doesn’t seem to be a Lenin out there. If a revolutionary type should surface, like the Romanovs, some pretty iconic names will have to go. How about you, Mr. Sanan, you wish to shuffle the cards?
February 24th, 2010 at 12:00 pm
#5 New Jersey Jake Says:
Makes sense to me…how about Sanan for commissioner?
_________________________
Only if Mr. Sanan understands that the only way horseplayers will “bet more”
is to lower the takeout rates.
A sweeping nationwide reform to correct the overpriced wagering product
can be corrected under a national office.
Until then, expect slots to prop up purses for two or three more years.
After the inevitable regional oversaturation takes place,and slots revenues decline at racinos,
we will certainly be asking ourselves why didn’t we do something !?
February 24th, 2010 at 12:06 pm
Sanan has my vote!
February 24th, 2010 at 12:21 pm
I agree we are not the NBA or NFL. We have more than just team owners (Owners Association) and players (Players Association). We of course have trainers, Track Owners, ADW Owners, Jockeys, Breeders, etc. The list goes on! Too many special interests. It is impossible to get the proverbial greased slicked pig back into the bag.
Also I certainly do not agree to “getting the top 10 or so in order” and the rest will follow. Our top 10 will be the same group that has lead us down this path to begin with, NYRA, Keeneland, CDI, California Tbred tracks, etc.
February 24th, 2010 at 12:21 pm
I’m glad my point was heard and elaborated on, these groups need to be held accountable for their actions. We need to stop funding them, i.e. the check off program for the NTRA and nominations for the Breeders’ Cup. It will only be a matter of time when there will be rival organizations who actually accomplish their mission statement, generate revenue, and justify high paying salaries.
February 24th, 2010 at 12:25 pm
Well ! I’ll be darned ! At last ! At last ? ? Or is it just more noise?
I believe Satish Sanan, Rob Whiteley, Edd Roggenkamp, Ray Paulick and others, can confirm that for a long time I have been advocating revolutionary change. Is it about to happen? I shall not hold my breath.
The vast majority in the Thoroughbred business has lost it’s capacity for outrage. Without such anger, there is lapse into indifference. So, those in power, hang on. The melancholy fact is, necessary change is not that difficult to bring about, but nobody of stature has the courage to step forward and lead.
The monster preying on us and bleeding us to death is the huge body of Alphabet fiefdoms.There are two ways to kill a monster. Cut off the head and/or starve it to death.
The head of this monster is The Jockey Club. Former president, Alan Marzelli carried away close to one million dollars in each of the most recent years. Can anybody even imagine what work he did to EARN and take that much money out of our business? Every dollar from the exorbitant registration fees you are forced to pay.
In case you are not aware of it - TJC is above the law. It is impervious to the rule of our Constitution. For people in this business, it is the same as an Established Church. You must pay for it’s upkeep or you are excommunicated. That is not bull. That is fact.
The very idea of an exclusive, private, by invitation only club controlling our business is the antithesis of American ideals and spirit. By it’s control of the Stud Book it exercises control over everything else. Decapitating the monster is not that difficult. I know how to do it. I don’t have the stature or the financial means to execute. I shall gladly share what I know with the person who steps into the role of our “George Washington”.
It is easier to kill-off the rest of the Alphabet monster. Starve it to death by cutting off the food supply. Stop sending them money. Don’t renew your subscription to TOBA, et alia. Make no exception for a national, state or local panhandler. Don’t nominate to Breeders’ Cup. All the parasites now living within the fiefdoms will die. It will quickly be seen just how irrelevant they are and always have been.
Instead of all the gang of miscreants, we certainly must have a single body as advocated by so many Thoroughbred industry people. It must not be a government appointed or controlled body. Keep the governments out of our business; they have helped to destroy it. The aim of the controlling body must be clearly stated. It must be run democratically. It can be done. Who will lead? That is the only question.
I confess to sharing the view of I Davis #18. I further confess that is why I am shufling towards the exit.
February 24th, 2010 at 1:48 pm
No surprises here. Satish Sanan and Rob Whiteley are spot on. Many years ago the Dinnies of the NFL (that’s Jim Squires’ appellation for the self-appointed leaders of our industry in “Headless Horsemen,” not mine) courageously selected Pete Rozelle to be their leader and then stood aside while he devised and implemented a coherent business strategy with their active support, participation and money. Does anyone really think that as long as Phipps, Farish, Humphrey, Nicholson, et al. control the game that it’s ever going to change? I don’t. John Gaines learned that. So did John Ed Anthony after TJC Roundtable in 1995. And Fred Pope when his intriguing NTA proposal was yanked away from him and recast by the Dinnies. And Barry Weisbord when his imaginative ACRS racing ideas were unceremoniously shot down. Now we’re 15 years and hundreds of millions of dollars farther out of sports and entertainment mainstreams and still wondering what to do about it. I nominate Satan, Whiteley, and Santulli to put their business hats firmly on, ignore the Dinnies, and lead us out of the wilderness.
February 24th, 2010 at 4:00 pm
#31. Hope that is a typo in your first nominee for the new leadership.
February 24th, 2010 at 4:38 pm
Knight Sky, I agree with you. Sanan, at least from what I saw of him here last time, still doesn’t get it.
He is in a dream world that horse racing is something other than gambling, and the customer is the gambler (not the track and not the horsemen).
To attract gamblers and grow the game, there needs to be visible long term winners.
You can put all the perfume and lipstick on horse racing you want, but to grow the game, it has to be recognized as a game of chance.
And the chance to be a lifetime winner is needed (thus we need lower takeouts), or we will continue to see horse racing in a death spiral.
February 24th, 2010 at 4:58 pm
#34 and #19–Concerning lower takeouts. Of course bettors, who are the customers of this industry, want lower takeouts, but how would this be possible? Breeders need to spent at least 25 thousand to maintain and train a racehorse before it sets one foot on the track. And if the stud fee is higher than 5 thousand dollars, the cost basis rises higher that 25 K. Then track trainers need to be paid. In NY the low end is $88 a day. The track and betting facility costs money to maintain. The takeout cannot realistically be the same as casinos’ who only have machines and facilities to maintain. The ADWs are paying more becaise they do not have as many regulatory fees nor do they contribute to breeders’ funds that give incentive awards. All stakeholders in this industry need to be realistic in their expectations or we are doomed to failure.
February 24th, 2010 at 5:03 pm
Amen! Very well written, this is what my husband and myself have been saying for the past couple of years along with a large group of friends that are in the industry. But, now how does one put this all into the works and quickly, we don’t have 10 years or even 5 for that matter! Implementation is key, it needs to be done thoughtfully but swiftly.
February 24th, 2010 at 5:20 pm
New NY owner, you have to understand that optimum takeout for the industry has nothing to do with the cost to put on the show. It is simply the amount that will result in the most money tracks and horsemen make at the end of the day.
I’ll say it again. Take slots. Slots do cost money to operate (full time employees, heat, etc.) But the industry has figured out that when the hold is 16% that less than half is bet than at an 8% hold.
So casinos make more money at 8% than at any higher percentages. In fact, higher holds result in more layoffs. But the hold percentage has nothing to do with the cost to run the casino.
Get it yet?
February 24th, 2010 at 5:59 pm
Yes, take-out is indeed the silent killer, high blood pressure of the business. Excessive levels of take-out, the actual margins from wagering for which everyone is vying, serve to eliminate the option of generating growth from existing consumers and a .10 superfecta or a .50 pick-3 won’t change it. Market development efforts like in-home delivery systems have improved margins but have yet to generate any real growth. Problem is that halving the hold at this stage means no one will be left standing to fight another day.
February 24th, 2010 at 6:06 pm
Why can’t CDI and Stronach work together to get some sort of start to uniformity in the sport? Have they done this?
February 24th, 2010 at 6:23 pm
I know, let’s start in little old Kentucky. I mean, the breeders and owners and tracks and jocks and politicians and bettors and bureacrats all want the same thing, right? Maybe someone can pull Mr. Evans away from his private Churchill ticker tape to lead the charge. Tally, hos.
February 24th, 2010 at 9:27 pm
In the words of Carole King:
And it’s too late, baby, now it’s too late
Though we really did try to make it
Something inside has died
And I can’t hide and I just can’t fake it
February 24th, 2010 at 10:53 pm
Horse racing has become a boutique sport. Yonkers Raceway Empire City Casino took in over 6 billion in wagers in 2008 from local patrons. NYSOTBs took in 1 billion in wagers in 2008, 60 percent was out of state wagers. The horse tracks that are surviving are subsidized by casinos. Gambling people prefer casino betting. How do we prevent horse racing from vanishing altogether is the question that needs answering. Horse racing in Japan, Australia, South America and Europe seems to be holding its own. Do those cultures support and value the sport more than Americans do? Turkish investors have just bought some of our successful stallions like Yonaguska, Lion Heart, Johannesburg and Dehere.
February 25th, 2010 at 12:11 pm
when the revolution comes it won’t be led by insiders and their respective leaders.
most are all silent conspirators to the status quo.
their only real differences–their relative popularity amongst their peers.
Significant change to the sport will originate from external power centers.
There are two primary external groups attempting to change the sport:
1. Race fans whose organizational structure is currently a loose confederation of like-minded advocates of racing.
2. animal rights fans, who are highly organized.
The first battle will be led by a coalition of each group who will take on raceday medication.
February 25th, 2010 at 1:32 pm
They have much the same problem in Britain with the British Horseracing Association, where
overheads (including executive salaries and office rents) are out of control and no one asking
any questions.
February 25th, 2010 at 2:42 pm
Also, it permeates every aspect of the industry from the State Racing Commissions to the labs that charge exhorbinant fees to do testing that is redundant to say the least….
We routinely have people with NO EXPERIENCE making therules, flunkies who could not get a job with any police force in the country doing the investigations, and Stewards whose hands are tied by the order of the commissions left to enforce the duplicitous rules….
bizarre and amazing !
February 25th, 2010 at 2:46 pm
What is truly amazing is that in spite of knowing how totally screwed up racing is, and how it only seems to get more so by the day, that anyone still chooses to participate… the love of horses is a very strong addiction indeed…..
February 26th, 2010 at 10:12 am
We are on the road to change. Economics will insure it to happen,because the present course is unsustainable.
The primary source of money is the customer. The customer goes to gamble. If the customer perceives he can not win,he will not go.
Cut the take out, send home more winners and you will have more customers… and more money for all involved. All other factors will adjust accordingly.
Marketing should focus on the customer… Most other businesses do just that.
February 27th, 2010 at 12:51 pm
For all of Mr Sanan’s good comments and thoughts especially about think tank issues a central point not mentioned by him or many other leading figures in thoroughbred racing is the business of pari-mutuel wagering itself and by this I mean gambling- its ins and outs, angles and mentality. I’ve long held that true gamblers, good gamblers,&sharp gamblers know more about pari-mutuel wagering’s business than industry operators . No offense is intended- it’s just the way it is. If racing is going to reverse its current slide in wagering ,it must somehow begin to understand the business of pure gambling and in doing so look critically at the positive and very negative effects of simulcasting.One of the worst business decisions ever made was to allow Las Vegas bookmaking shops to contracturally enter the pari-mutuel world. When this happened some 15 years ago it wasn’t long before low end shops poached high end players by offering rebates- something that tracks could not do under existing takeout structure. In essence a bare bones distributor could give a better deal to the player than the operators putting on the show and who had all the expense. This ridiculous model spawned a multitude of copy cat off shore and out of the way secondary pari-mutuel organizations (SPMO’S) that continue to this day . Other consequences of ill advised pari-mutuel access to SPMOS included risk free bookmaking layoff and entry points to the pari-mutuel system by computer robotic betting programs that raid pari-mutuel pools of their “value” effectively reducing payouts to all other bettors- thus reducing churn and creating hugh money settlements in the direction of SPMO’s. Until critical thinkers who really know gambling figure this out and more, then I fear that all other changes racing undertakes will go for naught.