Thursday, November 29, 2012

The NFL And Horse Racing's Ecosystems

NFL Football is a $9.5 Billion dollar business. If you're like me, that sounds low. Racing, from feedmen to racetracks and venues, ADW companies, horses, farms and all the rest certainly has a lot more money than that invested into its sport, yet from the demand side it seems so small when we compare it to the NFL.

However, the NFL "Shadow Economy" one of betting, office pools, and fantasy football shows that the $9.5 Billion number is low. The spin off effects are dazzling.
  • The amount wagered in Vegas on NFL games: $1.34 Billion
  • The amount wagered offshore on NFL games: $380 Billion
  • The number of people playing fantasy football, a form of wagering: 33 million
  • The number of people added to fantasy football each year: 2 million
  • The amount of money spent on fantasy football: $800 million
  • The amount of money changing hands for fantasy football leagues: $1.18 Billion
Those numbers don't include the money spent on office pools each year either.

All in all this so-called "$9.5 Billion dollar business" attracts (conservatively) $400 billion in wagering, and another several billion in hard revenues. 

One might wonder why they don't try and "get more of that money" and do it all themselves; open up their own casino, ban fantasy football unless you sign up on NFL.com, and all the rest. It's because that money is drawing eyeballs to the sport, selling jerseys, and adding to TV revenue. They're fine with these "soldiers" working for them on all the marketing front lines. It's a part of the ecosystem that keeps everyone employed:
  • Gambling is a shadow industry that operates independently of the NFL but relies on football games to bankroll casinos and its gamblers. In turn, the NFL benefits from the intense fan interest that gambling helps to generate. Many fans have far more riding on this weekend’s game than regional pride.
    “The NFL knows a meaningful part of their fan base is interested because they can bet on the games. And if they can’t they would be far less interested in getting tickets, going to games and buying merchandise,” says Finn.
Racing does not seem to feel the same way about its "ecosystem". You'll often read from insiders like Fred Pope or the TOC that ADW companies "don't pay enough". You'll also read racing should have its own exchange and crush betfair, it should block its races from youtube under copyrights, video should be behind paywalls, people making their own past performances for sale should be sued....... racing should protect itself at all costs.

With gambling the number one revenue driver, by a mile, there may be some merit to those policies. But racing can't complain that the fan base is dwindling, and betting is falling, while those anti "top line" growth policies are embraced. 

When policies are brought forth that hinder ADW's from promoting the sport to new customers, betfair is hindered in doing similar to the world, and your "mavens" in the media world are not allowed to innovate and resell, you are not allowing the ecosystem to flourish.

The NFL's ecosystem is alive and well and it is helping that sport thrive. Racing, although a whole different ball of wax in terms of a business model, hasn't seemed to figure out what their ecosystem even is, let alone how to properly exploit it.


1 comment:

Pacingguy said...

I would love to see a system like TAB in Australia where the gambling was done by outside companies and they pay the purses and the tracks for the expense of hosting the races as well as a profit. Then the ADWs can make whatever profit they can. Only have multiple companies so they must compete with each other.