Friday, August 10, 2012

Kentucky Downs Gets the Model Right

Corey Johnson at Kentucky Downs announced their takeout rates, purse structure and stakes program for their boutique meet this past week. The highlights: 
  • Takeout rates are cut. They are the lowest in North America, below both Keeneland and Churchill.
  • Purses will be a stout $409,000 per day.
  • Stakes races are added, now totalling seven, including the Gr III Kentucky Cup
What we see here is a model that makes sense, and some promotion that fits like a glove.

We have a track that is subsidized by instant racing, but instead of stuffing all the cash into purses, there is a mix. The takeout reduction this year, and maybe next and next, might result in a small loss of revenue, but by using some of the instant racing money for lower takeout, and adding it as a marketing vehicle, it's telling players everywhere they are open for business. Hopefully, like Balmoral Park has shown, handle will grow and players will notice over time.

In addition, Kentucky Downs exemplifies what makes thoroughbred racing neat, when compared to harness racing, which tends to be watered down. They have a really unique turf meet which fans like. If they did it all summer it would be just another racetrack. By offering decent purses for the short meet they may attract more and more good stock, and more and more fans to the track and to the crowded simo screens in an ever increasing muddy market. A unique short meet is promotable.

Conversely, harness racing is always a fight over dates. In Ontario for example, with summer tracks like Dresden, Hanover, Hiawatha and on and on, imagine what would've happened if we did this, instead of getting as many dates as possible? What if those tracks were scheduled not against each other, but to enhance each other with festivals, and unique racing? What if we in Ontario did not try to punish customers with 26% rakes, but instead put money into value at the windows along with some neat racing?

Kentucky Downs is doing exactly what it's supposed to be doing - trying to attract not just horseowners and trainers, but customers too. I watch it every year (it really is a cool place) and I plan to again.

Now, if only other slots tracks would work on the same model. Customers matter too.

Notes:

There was an interesting tweet the other day by Steve Fezzik, the sports bettor.  Insiders talk of so many items when trying to grow racing. There are a million suggestions. Steve breaks down what a sports bettor like him wants - a shot at some value. I went to a restaurant the other day - it was a high end chain, but nothing spectacular - and I had a nice meal. The food was good, the service was good too. However, I got my bill and noticed that my pint of domestic was $9 and a glass of house red $10. The total bill was $120. I could get similar food and service across the street for $75. Price means so much in our every day lives, it should be no surprise to anyone that it means a lot in horse racing too. We don't live in Albania, we live in a capitalistic society.

Darryl Kaplan had an impassioned plea for saving Ontario's racetracks in the last edition of Trot. He's correct, having a track instead of another strip mall is preferred to everyone I know, anyway. The problem, as usual, comes down to dollars and cents, and some common sense. If the market cannot sustain it, we won't have those tracks. If we had put some slots cash into turning those tracks into a destination we might not even be having the discussion. But of course our business did not have that vision. We took the money and ran, hoping they'd be here forever. We can't turn back the clock, and even if we could we probably would not have made it happen, with racings fiefdom's fighting instead of building a business.

5 comments:

kyle said...

They hurt themselves adding too many new super-exotics. The worst is the High-Five. A) Terrible invention. B) What kind of handle is that going to attract?

Pull the Pocket said...

That's a more than fair criticism Kyle.

PTP

kyle said...

What they did with the exactas was excellent. They should have gone deeper with their cuts in the straight pools. And they should have limited their additions to a low-take pick 5. Those would all have appeal to the simo market.

Michael J. Arndt said...

How exactly does lower takeout serve to make a player profitable at a track unlike any other, with banked NASCAR style turns, an uphill stretch, and races where neither rider nor horse have ever raced on it before ( Oh, and they only race 6 days a year)??? No one has an edge on that track except those who handle the horses.

Pacingguy said...

I don't necessarily advocate two week meets but certainly our all year tracks are ridiculous. I have said we need less racing, but don't necessarily think we need less tracks; we need tracks racing shorter meets. Purses can increase due to simulcasting increasing purse accounts during dark days.

Of course, as long as there are slots, horsemen want to race as many days as possible. Why would they care about diluting mutuel pools? Handle is meaningless at most of these tracks.