Friday, September 28, 2012

The Reinvestment Plan

It's clearly been a tough week for NYRA. We had the story on Monday that the politicos might be trying to get them out of managing the NY Racing franchise, the $250k art story, and today there's a not-so-flattering story about the early season breakdowns.

What I find, and I know many of you do too, is that this is not just a NYRA story. This is a story that happens virtually everywhere in our sport and has for a long, long time.

If you have a racetrack, or you are the head of a horsemen group, and you're getting a windfall through slot machines in say 2014, wouldn't you want to plan in 2012 in a different way?

Wouldn't you want to invest in, say, Trakus so it's ready for day one?

How about HD programming?

How about "on day one of the slots churn, purses will go up yes, but takeout will go down too, so our customers feel a part of this windfall and are not left out"

How about planning a marketing plan to be started day one, so it's off and running and each new entrant into the slots parlor learns about, or is given an introduction to horse racing?

All of those things do more than just invest in your customers, and your core product (betting), they give you a positive buzz, and positive word of mouth.

Racing just never seems to plan right, when these windfalls come about. NYRA's $250k spend on art in 2010 to be released in 2012, instead of spending $250k on a Trakus, for example, is nothing earth-shattering in our sport. It's just another example of the way things are done. It's a metaphor for our reinvestment, and priorities, not at NYRA but as an entire sport. 

Tracks aren't only to blame.

Over the last five or ten years racing (and horse owners) has been asked again and again to sock away some slots money for a rainy day slush fund, to be used to promote the sport, look at new technologies like betting exchanges - do some things we've never done to compete. The answer is always "don't touch my purses" and "no".

Google has earned great praise for its "20% rule". This rule allows google engineers to use 20% of their time (one day per week) for projects that interest them. It is a de-facto 20% reinvestment plan into their business.

A few years later over 50% of google's new products, including gmail, were the result of this policy.

Hundreds of millions of revenue, and hundreds of millions of dollars in share price are the result of reinvestment in some form.

Racing can choose to continue to spend money on murals, or propping up a stakes purse, or offering $30,000 purses for $10,000 claimers that throw the entire economic system of horse ownership on its head, as their slot plan.

Just don't expect to achieve any long term customer growth from the demand side if they do. What's even worse, if that windfall is suddenly taken away, you have nothing left to fall back on.

2 comments:

Anonymous said...

Quite an astue commentary to-day.
Should be MANDATORY reading for all individuals (ie.drivers, trainers etc) and harness organizations, (hello COSA and OHHA)here in Ontario. Some time ago, when it was initially suggested 5% of purse be redirected to marketing the sport an extremely high profile driver/trainer was quoted as saying no to any such reduction in purses because his goal is to make as much money as possible AND as fast as possible. An asise to that person....You know who you are sir, and shame on you....

Tinky said...

Good post; too bad that is was rhetorical given that the U.S. racing industry has a long history of being astoundingly short-sighted.