MAJOR BREEDER CALLS FOR BREEDERS’ CUP RESIGNATIONS

by | 11.17.2010 | 12:46am

The following commentary on the Breeders' Cup announcement to suspend funding of 2009 stakes supplements was written by Rob Whiteley, who for 18 years ran Carl Icahn's Foxfield commercial breeding operation and now owns Liberation Farm, one of the Thoroughbred industry's largest and most successful breeding entities. He can be reached at [email protected]. As with any guest commentary we publish, the views do not necessarily represent those of the Paulick Report.

By Rob Whiteley

The decision by the Breeders' Cup management to completely drop the supplemental stakes program, totally confirms that the inmates are running the asylum. Dropping all 121 supplemental stakes clearly shows how encapsulated and insulated executives, who lack a comprehensive understanding of the industry or a conscientious concern for fiduciary responsibility to its broad-based constituents, can make ill-conceived judgments without proper oversight and supervision.  My friend John Gaines must be turning over in his grave at this level of arrogance and incompetence.

For Foxfield or for Liberation Farm, I have accounted for over $1 Million in fee support to the Breeders' Cup and much more than that when pro-rated fees for stallion interests are included. My partners have contributed close to another million. The amount returned to myself and co-breeders has been far less than 10% of that contribution. Meanwhile, those of us who pay through the nose to put on the show still have to pay inflated fees for standard tickets while regular race-goers at host tracks get kicked out of their boxes.  Who makes these decisions?  Why do we tolerate this treatment? Now we have this stunning, surreal announcement.

Breeders' Cup is not only mismanaged, Breeders' Cup is misnamed.  Breeders' Cup is an oxymoron.

How was this stunning decision arrived at? Who was consulted? Was the entire board polled and given an opportunity to provide input? Was comment sought from those of us who provide the funding for the program and for the hefty executive salaries? What, truly, are the fiscal realities of the balance sheet? How many million dollars of our money is the Breeders' Cup sitting on that could be used to maintain all or most of the supplemental program? How much were these non-stake holding executives' salaries cut back in the midst of what Greg Avioli called a ‘challenging environment?' What percentage of executive positions or lavish perks were eliminated, and how much overhead was cut?

Furthermore, why has this announcement been made shortly after we nominated our 2008 foals, rather than before? Have we simply been making donations? It seems to me that by paying our fees each year based on established expectations, we have an implicit but clearly understood agreement or contract that has now been violated? Whether this astonishing announcement represents mismanagement, fraud, or some other form of malfeasance, I for one want my 2005-2008 fees returned.

This final absurdity is a tipping point for me. Until the present Breeders' Cup management is gone, the Breeders' Cup Board is restructured in a competent way, the supplemental program is reinstated, our money is properly respected and wisely allocated, and the Breeders' Cup is redesigned to serve breeders, I will no longer nominate my 160+ annual foals to the Breeders' Cup program.

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  • LCM

    Rob
    I too had been questioning my “contributions” to the BC and decided not to nominate this year….I was hesistant at first, but not anymore. I’m so sick of these “supportive” organizations taking and barely giving. YES WHAT ABOUT “EXECUTIVE” COMPENSATION? These people (BC, NTRA, etc,) are WORTHLESS. What have they accomplished? We can’t even get BC day on network television anymore….YEAH THEY’RE VERY EFFECTIVE…… Every breeder that relies upon the “hope” of receiving any BC purses, should DEMAND a refund…. Talk about opportune timing….

  • wesly

    For the $800k or so worth of leadership we get from Ravioli we could make that cut and save 15% of the stakes money

  • eightfiveniner

    Congrats, Rob — you’ve been waiting for a chance to get on your soap box. So now that the going’s getting tough your first response is to call for Avioli’s head and say you’re not going to nominate. Sigh…

    Let’s remind people for a minute how the Breeders’ Cup board is elected, especially in light of the board making this decision, not management. The voting is proportional to how much money you put into the program and the big board of trustees votes for the small board. That’s representative democracy — imperfect as it is. The board voted to do this. The board was elected by the trustees.

    Let’s remind people that this board, including people like B. Wayne Hughes and Satish Sanan, has already cut management and overhead by half in the wake of forcing DG Van Clief and Fergie Taylor out in a purge two years ago.

    Let’s remind people that the current BC board has done more to innovate and try new things than at any time in the last 15 years.

    It’s a tough time for racing and a tough time for everyone. With the way things are going, the Breeders’ Cup is the least of our problems.

  • Denise

    I don’t think “off with their heads” is a completely accurate interpretation of the article or some posts. l do believe this industry has a problem with resolving issues in long term strategic planning mode and inclusiveness. And I could so many places with KY breeding versus other geographic locations and respective incentives…or live cover for that matter.

    Forgot to add, a little transparency might go a long way to…no matter the issue.

  • Les

    My paperboy is smarter than to borrow money at 5% and loan it out at 4% on 125% of the collateral value to a guy making $8 per hour.

    Having learned from the Hunts’ silver fiasco that nothing goes up forever, he assures me also, aside from all the points made by Rob Whiteley, had he been running the BC program all these years he would have had a “rainy day” fund for such days as these.

    He adds that from the many to the few is the formula for both the BC and a Ponzi scheme.

    Finally, like Rob, he will nominate no more – notta.

  • Beth Kinnane

    While this current board may have done some things to trim some fat, this is inexcusable. Every year breeders have to take a hard look at their foals and determine which ones they think are worth nominating at which are not. Add to that the cost of nominating a stallion. if you have 25 foals and want to nominate them, that’s $25,000. That’s a stud fee to a decent stallion, or a vet bill or a whatever other expense that has to be paid that is being deferred to the Breeders’ Cup. And often with very little in return for this investment. These fees are basically paid for marketing purposes. It’s quite convenient that they made this decision AFTER everyone has paid their 2008 foal nominations. We all know the economy sucks, that everybody has to tighten their belts right now. So, maybe cut back some on how much they are funded as opposed to eliminating them entirely.

  • Richard Coreno

    The apologists can attempt to explain away clear incompetence and arrogance, but the marketing of the sport is now less than national high school cheerleading competitions on ESPN. And the “free money” from breeders today will be banked by the politbureau at a severe cost to the industry in the future.

  • just a hossplayah

    “For Foxfield or for Liberation Farm, I have accounted for over $1 Million in fee support to the Breeders’ Cup and much more than that when pro-rated fees for stallion interests are included. My partners have contributed close to another million. The amount returned to myself and co-breeders has been far less than 10% of that contribution.”

    Two questions: 1) Not to be a smart alec, but does this just mean you don’t breed very good horses? Does anyone know how this compares to other breeders? 2) Where does it say that the point of nominating to the Breeders’ Cup is to run for the money later?

    Finally, the board and management should go because you didn’t like your seats? This seems like rich guy on rich guy crime.

  • bengal bob

    So the elimination of a fairly unimportant stakes program (that didn’t really send money to breeders) will be the straw that broke the camel’s back? Interesting. Of course, what does the BC really do for breeders anyway?

    This is a long overdue revolt. The people at BC (and NTRA) do not deserve continued financial support from the industry, and it’s good to see someone standing up to them.

  • Alison Thompson Murphy

    As a former employee of the NTRA/BC, and paralegal to Greg Avioli in addition to being a marketing assistant to Keith Chamblin, I can tell you with first hand knowledge that your fears and assumptions are well founded. It’s been 10 years since the NTRA brought in these executives. It is about time the supporters of both organizations start demanding responsible management.

  • Denise

    How does it go?……”SHOW ME THE MONEY!”

    Didn’t we just get another revelation of some FAT-CAT Wall Street sucking machine doing the ponsi scheme based on news media…not the regulatory system?

    This is just tragic.

    SHOW ME THE MONEY, you sucking, self serving uberlords.

  • fb0252

    Oh my…..!!!

  • […] money will anger every breeder in the game and severely cut funding for the event. Over at the Paulick Report there is an open letter from a breeder who echoes this sentiment and is now boycotting the […]

  • Blue Bellied Devil

    Rock On Rob! Rage against this machine who is so clearly out of touch with the breeders who fund their very existence. Earlier this year the BC sent a letter out asking for contribution to a very human charity that had nothing to do with the TB industry. Now come on!!!!!!

  • LCM

    Hey Alison,

    Do tell!!! I think we “breeders” should know whats really going on with money we’ve entrusted to these “leaders” of the industry.

  • One shouldn’t be shocked at the arrogance of these folks, but don’t you think they could have done just a little bit of consultation? Shame on the BC Board!

  • Joe

    Apparently “random testing” meant that only half of this year BC starters were tested for hard to catch blood-doping agents during a predictable, short time frame. Were these tests done primarily for PR purposes, to prevent embarrassing positives and wreck the show? Could the BC have spent a few dozens of its outrageously priced tickets to test all potential runners often, at random times starting 4 weeks before the BC?

    Transparency is a dirty word. Trainers and vets operate behind a privacy shield. The Jockey Club has blocked public access to its fatality (and perhaps injury) numbers once it finally decided to keep track and take a look at the mayhem. Creating waves gets you fired. Until blogging took over, the code of silence was seamless. Voicing concerns about equine welfare and safety, exposing exploitation gone awry and abuse, the preventable waste of horses and naming abusers turned you into a moron, a traitor, an emotional mess or an anti-racing animal-activist whack job. Racing dug its own grave, one arrogant fat cat, one ostrich and one eunuch at a time. Racing “leaders” counted on a movie (Seabiscuit) to turn itself around.

    To stay in business, more horsemen have to start cheating and abusing. It’s too late and too little. Integrity cannot be mandated and a sport cannot regulate itself.

    Honorable, visionary members of the racing industry, true lovers of breeding and racing their genuine best, who value excellence in character and horsemanship, who only accept integrity, clean competition, responsible horse ownership and the humane treatment of all its horses, should quit the NTRA/BC/TOBA/JC/HBPA/AHC cartel and create a national racing association with a Jockey Club on integrity and off chemicals. This new racing association would embrace transparency, integrity, accountability, tough rules, racing without chemicals, breeding horses with genuine records. It would operate without fear of Congress and public outcry. They would elect a worthy national racing commissioner to unify and run the sport. Rob? Ray?

  • Alison Thompson Murphy

    LCM,

    The stories, mostly regarding the early years of the NTRA, are many: sexual harassment charges which resulted in two female employees being paid $$ after they quit (one had called a lawyer, the other didn’t have to), drugs in an executives shirt pocket when out in an NYC bar, out of control expense reports for excessive partying in New Orleans for the Eclipse Awards, a DUI while on a DC trip (and there was no rental car expensed), a trip to Alabama paid for by the NTRA which resulted in a deal being drafted between the company they visited and certain executives and their personal business associates (one of whom was later hired to work in the NTRA NY office). That deal did not include the NTRA, yet, to my knowledge, was never reimbursed as personal. There was an executive who was hired for $20k more than what they were willing to work for when hired by the NTRA (he wrote in an email that he would be willing to work for $40k. He was hired at $60k). (That person is still an employee). Shortly before the BC CEO search began, a third party contacted me to give him the documents which supported these stories. It was told to me about a year later that these and stories from other people were put onto the desk of a Board member who is highly respected. Of course nothing became of it. I had moved on long before then, so I really didn’t care either way. The board members were not blind to what was going on. They just didn’t seem to care. It’s just like what is going on throughout the country, right? Irresponsible Boards allowing executives to run the show.

    While I truly believe the demise of racing is due in part to the inept executives and paid consultants who have been involved with the BC and NTRA for the past 10 years, I would be foolish to hold them ultimately responsible. Not being vested in the industry, they simply are incapable of getting it. The responsibility lies entirely with the Board of Directors, who are comprised of horseman with vested interests in our business. They should have known better. The failure of our industry lies solely on these men’s bobblehead approval of business decisions made by the BC executives.

    Besides, there is a much more important issue going on with lost revenues from simulcast signals. But that’s a whole ‘nuther story!

  • Alison Thompson Murphy

    Oh, and one thing about ticketing and pricing. The Breeders’ Cup leases the host track facilities. As such, any box holders are taken from their boxes because the boxes are leased to the BC. On the contrary, ticket prices are largely the decision of the host track. For example, Monmouth Park was the party who decided to charge the outrages prices for the 2007 BC. It was not the BC decision. In fact, I was told by a reliable source that BC recommended that they not charge so much. So, while these two statements seem to be contradict each other, it is my understanding that these are true. Ticket pricing and ousting box holders really is not the fault of BC.

  • bold ruler

    This is completely irresponsible — not the Breeders’ Cup decision to suspend the stakes program, the dialogue in this forum. First, this is clearly a board decision and Mr. Whiteley starts his op-ed here with the premise that is is the decision of an out-of-touch management team, shifts to ad hominem attacks and goes on from there. The board that voted unanimously to do this must have some people on it that understand commercial breeding — do Reynolds Bell and Helen Alexander “lack a comprehensive understanding” of the industry, Mr. Whiteley? Care to share with us who got your votes for the Breeders’ Cup board? I’d wager a few of the folks who voted to promulgate this policy were on it.

    Then the original post starts a series of name-calling and innuendo in the comments.

    There’s a place for rational discussion about this topic but it seems the Paulick Report is not it.

  • figuress

    people on the board did not know about this until the press release

  • Les

    My paperboy called back after thinking it over and suggested Rob Whiteley, a man with brains, horse expericence and the long term good of the game at heart, run BC.

  • Maggie Jacobs

    It’s not just the BC that needs change, take a look at the NTRA & TOBA – we have stopped supporting them a few years ago when we realised they don’t do anything for us. They have all these great plans and are very eager to take your money but do they deliver?
    My other question – where does the people serving in positions/on committees and commissions come from – they have never been to a day at the races or know what a condition book is, why do they get to make decisions in this industry that affects the hard working breeder/owner/trainer?
    Replace them with people who know which end of a horse to feed –

  • Alison Thompson Murphy

    Bold Ruler,

    Name the place for rational discussion! One of the problems all these years has been no place to vent! What a perfect place for nameless/faceless people to state what they feel. What is being said in these blogs simply parrots what has been said in the shed rows for years. You can be assured that what I say is the truth. And, unlike you, I put my name in print. The others seem to have an opinion that is a reaction to the news. If you can’t handle it, then you are a perfect candidate for the Breeders’ Cup board!

  • Dave C

    Bold Ruler,

    What are you afraid of? It’s people with your attitude who allow such nonsense to exists in the first place. This seems to be the perfect place to out the criminals and start fresh.

  • Alison T.M.: Very impressive. Especially your accountability (providing your full name).

    Good thing there’s no such thing as “paralegal-employer confidentiality” – otherwise, all we would read would be press releases!

    George Kaufman, if I remember correctly, said it right the first time – they’re peddling gold bricks to each other.

    Darned shame you weren’t in a positon to be in the right place at the right time to be able to blow the whistle on Bernie Madoff.

  • Doug

    Hey “eightfiveniner” (see blog response # 3), pull your head out of the sand long enough to recognize that it is not a true democracy at the BC. Yes the industry elects a group of Members and Trustees in a democratic fashion. But of the 48 person group of Members, 12 people who vote on who becomes a Director DO NOT have to stand for election EVER. They include 6 Founding Members, 2 past presidents (D.G. & Basset) and 4 (FOUR) employees all of which vote annually on who gets to be a Director and make 100% of the decisions on behalf of TBC including the ones that led to this most recent fiasco. So before you start espousing the wonderful democracy over at Breeders’ Cup, Ltd., get your facts straight and spend a little time getting up to speed, kiddo….(& by the way, try & guess who tells the 12 permanent Members & Trustees who they have to vote for in the Director elections each year).

  • bold ruler

    I’m really not afraid of much — snakes, disfiguring accidents, the usual. I do think the suspension of the stakes program has become a flashpoint unfairly for many of the ills of this business. I’ve been in it on a number of levels — as an owner, fan and briefly in track management years ago — and I’m always amazed at the unproductive anger. Lots of people who truly love the sport and wish the best for it lash out at the people in leadership positions when those people are NOT the problem (see McGrath, Brian and Smith, TIm)

    There are two main issues. First, the world of legal gaming has changed exponentially since the good old days that many yearn for and no one has come up with a viable solution to compete with the massive expansion of casino-style gaming, poker and on-line wagering (short of slots at tracks). Second, the structure, or lack thereof, of horse racing makes it nearly impossible to effect any meaningful change. Rob Whitely can stamp his feet and gnash his teeth all day long and Bob Evans, Frank Stronach, et al aren’t going to blink an eye. They’ll humor him for a while and then do whatever they damn please.

    Finally, yes, it is possible to discuss this rationally without impugning the character of people involved. Some of the same people who were so disturbed by Stacey Bearse’s email to Ray have no problem buying into the worst sort of innuendo, rumor and character assassination of others and that is unfair and unproductive.

  • john greathouse

    a previous board member questioned (when knaves like us) supported the idea that this, BC, was as much ours as theirs stated “well it’s our money” and she actually believed that it was
    great job Rob and Alison

  • Faith

    Bold Ruler:

    There’s a place for rational discussion about this topic but it seems the Paulick Report is not it.

    Didn’t follow the last sentence could you elaborate?

  • Erin

    Three cheers for the idea that this industry needs MORE outlets for conversations like this, and the fact is PR is one of very few that currently exist!
    Just like in other business sectors, it is the independent media that must be relied upon to promote transparency, to reveal to the public what’s really going on, if public corporations/orgs won’t do it voluntarily.
    Accountability can’t be enforced or expected if we are all left so ignorant as to not know what direction to point the finger.

  • john greathouse

    Alison
    Q?? Why would the Host Race Track set the ticket prices since the BC leases the track. What good would it do for the host to set the prices since they don’t get the money?

  • Barbara

    I wonder if those board members can even sit down after having their asses chewed for the past few days…but I see it looks like they recognized the error of their way and will reverse course on the stakes program. Wondering if a head will come rolling by shortly?

  • Alison Thompson Murphy

    John,

    I do not know the answer to that question. It didn’t make sense to me, but it came from a BC employee after I was griping to them about the $$s I lost hedging on selling my 2007 breeders tickets to the wall street racing fans. I also spoke to my friend who works in the PR office at Monmouth. He confirmed that they set the ticket price. I’ll try to find the correct answer.

    On a side note, it had been awhile since i lived there. The climate had changed. There weren’t as many Wall Streeters who liked racing as there was 20 yrs ago. The event was a tough sell at any price (with the exception of the locals who are very loyal. To them, the price was too high). Ironically, it was this very lack of interest in racing by my peers which drew me to KY. I wanted to get involved in what was then the movement to form a national marketing entity. I loved racing and felt I knew the very people who weren’t coming to the track. When I (and many others brighter than I) tried to get solid marketing ideas flowing at the NTRA, it fell on deaf ears. So, when I went back to my hometown track to find that my peers were still not interested in racing, it became painfully obvious that nothing had changed with the start of the NTRA. Nothing. It’s really very sad.

  • john greathouse

    Alison
    deaf ears I can understand…NTRA and the CUP Committee are kinda like our Gov…take what you can get and the hell with the real world…one always wonders if these people could really exist in a society that had to pay its own way…yet they think they are doing just that…amazing…today they have seen the error of their ways and now all is forgiven..btw…they still haven’t addressed the problem with the druggie!

    ps…I just can’t comprened the deal with race tracks setting the price of the seats??for what benefit??can’t be real

  • Three cheers for Rob Whiteley. His protest led the rout of the BC Board. There are a few good people on it, but the rest are a parcel of rogues.That bunch could not give a valid response to justify their rotten decision. Nor will they be able to justify the outrageous salary increases and bonuses they voted to give Avioli and his pals – who gave them such lousy advice.

    Just because Rob has successfully led a revolt should not mean closure on the whole issue of Breeders’ Cup and it’s governance. Farish, D G (Double Grab) Van Clief, and cohorts have been rigging the Board and Trustee elections for several years.

    Ray, if you want details of my assertion, tell me. I have “the stuff”.

  • A BAD TEST ! Mr. Avioli has had a lot of bad tests….and costly cover ups but this is what you get when you handicap from a bad PP. He shouldn’t be eligible for the BC !
    Mr. Phipps and company, let’s quit the horse #@!# get back to letting horsemen run the breeding and racing industry and let Madison Ave and the lawyers hustle somewhere else !

  • Can any sane person tell us how a refugee from the disastrous failure, NTRA, was considered qualified to run Breeders’ Cup?

    What does Avioli know about managing a multi-million portfolio? He was second in command to Smith when NTRA blew 50 millions.

    If BC Directors were so naive they could not see Avioli’s inadequacies, they should resign en masse. Instead they voted him a big salary increase AND a BONUS !

    Does anyone out there know enough about BC Bylaws to tell us how to start a recall election? Only a revolution can help the breeders get value for the money they entrusted to a bunch of incompetents.

  • […] on a $2 win bet. It just goes to show that nothing in life is truly free, not even a sure thing. Major Breeder Calls For Breeders’ Cup Resignations – Imagine you had thousands of dollars in the stock market and the NYSE sent out a press […]

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