Thursday, August 11, 2011

For the Long Term

A lot of us, including most of you who comment and give the blog a read, love racing. Most of the time we get into discussions about the long term health of the sport. Usually the decisions made in racing are very short term in nature - like a quick bump of purses hoping things will get better, cutting off an ADW which does not pay a high signal fee, or signing a status-quo deal after a horseman and track dispute. However, at times, there are some decisions that are made that want to change the way our sport operates, with a long-term vision in regards to its health.

Yesterday the Hambletonian Society announced that in 2018, no horse will be eligible to race in the premier event, unless they are sired by a horse four years or older.

The hope is that, in the long term, we will see more and more excellent three year olds not have their careers cut short, allowing them to go on and perform for fans, and the people who love watching great horses race.

This is a very bold step. The Hambo Society is stocked and supported by breeders and owners who make their living's buying and selling three year old stock for stud. Once you get the taste of the $8M syndication apple after less than 24 months of owning a colt, it's something you want more of, and you continue to spend on that cycle, trying to recreate it. For them to come right out and take this stand, it took some guts.

They will be criticized for this, and they will be hammered for it by some, but they have a friend in their corner: The long term health of the sport. They are trying to fix a problem on the betting and marketing side which has been complained about for 20 or more years. The funny thing (and I have always said harness racing is a leading indicator to what happens in thoroughbred racing, and I believe it) the runners could do better with this policy than the square gaiters - it's an absolute crime what the handicap division has become in that sport.

Similarly, chats about takeout usually degenerate into an "us versus them" argument. But once again, this is not about the short term, it's about long term customer cultivation. Dropping takeout will not save racing (just like having stars race after their three year old career will not save racing), but for the long term, pricing your product to make the most money, and to generate the most betting interest is a sound business practice for the sport. It takes time, patience, some hard work, and a willingness to know you are doing the right thing.

I received this from Balmoral Park a couple of days ago. It's a grid of pick 4 handle since they dropped their takeout in 2010 to 15% (click to enlarge):

$7,000 and $8,000 pools have become $24,000 and $26,000 pools.

I remember chatting with someone soon after this initiative took place. I was stoked at the way the handle was starting to grow very early on, but this insider multiplied 25% of $8000 and compared it to 15% of $12,000 and said "horsemen make more money for purses before, so they should go back to the way it was".

It's not about the short term, it's about the long term and I am very glad we have people in our sport like the Hambo Society and Balmoral Park. They are not thinking about tomorrow, they are thinking about many tomorrow's.

Notes:

There is always a marketing angle that astounds me in this world. Betfair's astounds me. H/t Equidaily.


The Confederation Cup goes this weekend and the two heat event is a must see for fans. Each year the track goes all out, the stands are full, and the racing is fantastic. I am going to miss it this year, but will be watching via the internet. Full field and posts are here.

Word is coming out of California that takeout will be lowered - no one is sure what bets, or by how much.

Samshu Bluegrass has passed on at age 30. I enjoy looking at old sire and dam lines, and foal production, and there is a link to her wonderful career on SC. I look at the sires chosen for her, and wonder what a hot sire breeding would have done in terms of foal ability. On the Road Again, Goalie Jeff, Magical Mike and Precious Bunny were never really hot sires.

There is a lot of hand-wringing from New York racing and its supporters (or apologists depending on your POV) regarding Santa Anita given the Breeders Cup in 2012. Some points make sense to me, however it seems the BC wants to race in good weather and near prime time for the Classic - something I tend to agree with. Santa Anita is perfect for that, while Belmont, or most any east coast track without lights, has trouble guaranteeing either. Regardless, I find it somewhat funny that some folks are saying the BC is out of touch. They have made better decisions than any racing jurisdiction I know of. This event is growing and expanding.

Have a good Thursday everyone.

3 comments:

ITP said...

I'm confused as usual.

The rule reads that a sire now has to be 4, which means that if you retire at 3, the stallion will be 4 when he starts breeding. So his babies are fine.

No horse retires before 3 unless they have a problem. The new rule has this..."with the exception of foals by those sires which were retired for reasons of unsoundness or another serious medical condition which prevented racing competitively as a four-year-old."

If I read the new rule correctly, it doesn't change anything.

Pacingguy said...

DON'T NEED TO POST. Just a correction, the stallion must be five years or older to be eligible for the Hambo.

Pull the Pocket said...

I prolly should have wrote 5, but I thought the gist was there. I am too lazy to hit "edit".

Aside, I got an email from an ILL analyst on the takeout at BLMP and the pool sizes. It's here:

PTP

>>>>>>>>>>>>>>>

Let me explain my thoughts on why the Balmoral Pick 4 at 15% outperforms the marketplace.

Winners get 13.3% more at 15% than at 25%. Based on our average payout of $2,668,the player gets an additional $314 at 15%. The 25% payout would have been $2,354. This creates more long term winners. This fact cannot be understated. And if you think this extra $314 came at the expense of someone else, think again. We have now tripled our Pick 4 handle in 18 months. That made every vested interest a winner.

Balmoral Park makes more money.

Balmoral horsemen make more money.

Tracks that simulcast Balmoral make more money.

Horsemen at tracks that simulcast Balmoral make more money.

The handle formula of X at 25% has become 3X at 15%. $7,698 wagered on the Pick 4 at 25% in January of 2010 has become $26,191 at 15% in a relatively short 18 months.

Larger pools create larger interest which increases handle not only on the Pick 4, but other races as well. The average Balmoral race in 2011 outhandles the 2010 Balmoral race in a down market.

This allowed us to guarantee our pools ( Thanks USTA ) which has helped immensely.

It took five long months of growing pains through May 2010 to get to the same profitability with the lower rate. In our case short term pain became long term gain and we continue on our tremendous roll. Because Balmoral Park had the guts to ride out the storm in a falling market, we get to tell a great story about doing the right thing and making everybody a winner.

We are now in the enviable position of giving Big M Pick 4 players a reason to stick around after August 20.