What in the world is going on inside the Churchill Downs Inc. executive offices? It's slashed purses at Calder Race Course in South Florida by 17% and whacked almost $1 million from the fall stakes program at its home track in Louisville, Ky. Key management changes have been made at Calder and Fair Grounds in New Orleans, La., and press releases seem to be blaming horsemen for most of the problems.
Investors haven't been wild about Churchill Downs stock (CHDN), which closed at $46.45 Friday and hasn't seen $50 a share since May 1. It's 52-week high, $57.55, was achieved last December.
CEO Bob Evans and the TrackNet Media Group that was formed with Magna Entertainment to broker simulcast deals has refused to talk seriously with theThoroughbred Horsemen's Group, which is negotiating account wagering contracts with racetracks on behalf of local horsemen's groups such as the Kentucky or Florida Horsemen's Benevolent and Protective Associations. In fact, Churchill has filed anti-trust lawsuits against the organizations. Evans may be hoping that the longer he puts off dealing with the THG, the less resolve the horsemen will have to stick together in attempting to forge a better contract on account wagering.
That strategy doesn't appear to be working. To the contrary, it looks more like Churchill Downs' partner in TrackNet Media is bailing. Frank Stronach, the chairman and acting CEO of Magna Entertainment, sent out apress release a couple of weeks ago saying that Magna recognizes the THG as a beneficial national organization and is negotiating with THG.
For too long, horsemen have been losing ground and losing revenue as the percentage of dollars wagered that goes to purses has declined. The growth of simulcasting to non-pari-mutuel entities such as off-shore rebaters and account wagering companies has been at the expense of horsemen. It's important horsemen understand why the status quo isn't good enough and why they need to change the simulcast model, something the THG is trying to do.
SPEAKING OF WAGERING, hats off to Bloodhorse editor Dan Liebman forcalling out the Jockey Club after it capitulated to Evans and to Churchill Downs' biggest shareholder, Dick Duchossois, and decided to no longer provide the trade magazine with meet ending pari-mutuel handle figures. Churchill tracks under Evans and Duchossois have said that handle is no longer a meaningful statistic. Oh, really?
The decision by the Jockey Club to no longer provide this key economic indicator was disgraceful, but I wouldn't hold out any hope the poobahs there will change their mind.
NO ONE PREDICTED KEENELAND'S SEPTEMBER YEARLING SALE WOULD BE UP, so it's not that surprising to see a 13% drop in the gross receipts through the first six sessions of the 15-day marathon. That 13% equates to a $41-million decline in revenue that will not go into the pockets of breeders this year, and that red number only figures to increase as the sale reaches the second half. The drop in revenue will ripple throughout all kinds of Thoroughbred-related businesses.
The good news from the first four days (Books 1 and 2) was that the median held up fairly well, declining only 10% from $200,000 to $180,000. The home run horses, those selling for a million dollars and up, didn't materialize as often as they have in recent years, but the middle market was relatively steady. “Most of us survive off the middle,” one breeder told the Paulick Report. “Getting one of the big horses is like hitting the lottery, but it's not something you really plan on.”
Smart gamblers don't play the lottery, and intelligent breeders know there are far more people playing in the middle market than at the top. As long as the middle is healthy, so are the breeders. There is just a lot less icing on the cake this year.
Others who are selling throughout the September sale breathed a sigh of relief if their best horses sold well during the first two books out of fear that the bottom of the market may collapse once the sale reaches books five and beyond.
WHO HAS BOUGHT THE MOST HORSES SO FAR IN THE MONTH OF SEPTEMBER? It wasn't John Ferguson, or Shadwell Estate or the newly formed Legends Racing. Hint: It wasn't at the Keeneland September yearling sale.
September's busiest buyer so far (though not biggest spender) is a fellow named Mike Gill, the 2005 Eclipse Award-winning owner who has been on a claiming binge this month at Philadelphia Park. By our count Gill has claimed at least 30 horses in September at Philadelphia Park alone after similar buying sprees in Maryland and Massachusetts earlier in the year.
You remember Gill, don't you? He's the fellow who built a huge claiming operation earlier this decade, bought a training center, won a bunch of claiming races and then publicly complained when he led the nation in wins and earnings in 2003 and 2004 but didn't get voted an Eclipse Award as outstanding owner.
The whining did him some good. When balloting was conducted for the 2005 racing season, Gill was once again the owner with the most wins and purse money won. This time, in what may be the worst decision in the history of the Eclipse Awards, voters representing the National Turf Writers Association, National Thoroughbred Racing Association and Daily Racing Form gave Gill the award as “outstanding owner.”
Why do I say that it was the worst Eclipse Award decision in history? I've got nothing against claiming operations and recognize it is the bread and butter portion of nearly every racing program in the country. However, in my mind, the Eclipse Awards are about excellence, whether it's horses or people. Sheer numbers, especially at the claiming level, should not be misconstrued as excellence. In the category of outstanding owner, breeder, trainer and jockey, the leading candidates should be judged by how they performed at the top level of the sport, not the bottom level.
Gill, who was recently in the news because of some regulatory problems at his mortgage company, said he was getting out of the horse industry in 2006 when he accepted his Eclipse Award as outstanding owner. Many people had two words for him: good riddance.
“I'm going to miss racing, and I think racing is going to miss me, too,” Gill told Bloodhorse magazine.
Actually, Mike, we didn't.
THE PHILADELPHIA INQUIRER WON'T BE COVERING GILL'S EXPLOITS since it accepted the early retirement of Turf writer Craig Donnelly only a month after the paper, the nation's eighth largest, dramatically reduced the space allotted racing in its sports section. At that time, Inquirer editors told the Paulick Report it was keeping Donnelly but obviously they had a change of heart.
Newspapers may be an endangered species in the near future. Turf writers at daily newspapers already are.
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