Thursday, February 28, 2013

Pennsylvania Horse Racing Needs To Rebuild Their Brand


“Good to Great: Why Some Companies Make the Leap... and Others Don't” is a pretty good business book, written by Jim Collins. He and his team of 21 researchers sifted through 6,000 articles, generated more than 2,000 pages of interview transcripts and created 384 megabytes of computer data in a five-year project to try and find a common thread to a successful company.

Collins found there were a number of characteristics that successful companies possessed, but one element stuck out to me. By determining the goal of your business and implementing incremental policies with a passion that forwards that goal, they become additive and they help your business in a big way in the aggregate.

I thought about this while looking at horse racing the past week.

Tracks like the Meadowlands have been more customer friendly than others, and they’ve been passionate and additive about it. Back in 2001 if you wanted to bet the Big M at an offshore shop you could; in fact they were one of the few tracks available. If you had an ADW account you’d find the Big M because they wanted their signal exported (at a fair price so bettors could get something back). If you wanted full fields and competitive harness racing, you found it at the Big M. If you wanted a low takeout pick 4 the Big M was the only track to embrace it.  In fact, every track in harness racing that cards a Pick 4 now to bigger handles should thank the Meadowlands for branding that bet in our sport.

Even when the Meadowlands started to have field size issues in 2007 and carding 6 and 7 horse betting events, the bettors still tried to stick with them, because the brand was what it was. Only after a few years of stagnation, the short fields and a lack of willingness to change began to be too much for even the most loyal of customers. 

At that time the brand was hurt. But it didn’t go away.

This season bettors seem to be giving them a chance again. Handle has been good and the new team led by Jason Settlemoir seems back to doing the “little things” they always have.  They are protecting and rebuilding their brand. You can feel the fan and customer base pulling for them to succeed. 

Across the border in Pennsylvania, we see almost the exact opposite. Go to any chat board, or talk to almost any bettor out there. The bulk of them will have something unflattering to say about Pennsylvania racing.

“30% plus takeouts with all that slot money, are you kidding me?”

“They card races for horsemen, not us” 

“Cash bonuses for winning a couple of trot stakes, how does that help me?”

Pennsylvania racing’s branding from a customer perspective is almost all negative.

This is illustrated, in part, with statistics from the USTA’s Strategic Wagering initiative, which as you all know, guarantees pool size at several racetracks. 

Chester has some of the highest purses, the best drivers and trainers, a great spot on the dial in all of harness racing. The Open goes for upwards of $50,000, middle conditioned races are in the high teens purse-wise. Meanwhile, Balmoral and Cal Expo have virtually none of those ‘positive’ characteristics.  There are no $50,000 Opens, Tim Tetrick is not hanging around the drivers room, and their purses are well under $100,000 for an entire 12 race card.
When you dive into the numbers, they tell a story.

Balmoral and Cal Expo have $20,000 to $25,000 pick 4 guarantees almost each night. Each time in December these guarantees were broken, sometimes by more than $10,000. The pick 4 averaged over $30,000 at those small tracks.
What about powerhouse Harrah’s Chester? Their guarantee is only $5,000, or 1/5th Balmoral’s. Even with that low pool target, the pick 4 barely breaks the guarantee. One week in December the pool only drew $3,381, not hitting the guarantee by over 32%.

This should not make sense to anyone, but it’s right there in black and white. 

If you ask any player if they’re playing the Balmoral Pick 4 you’ll probably hear a “yes”. If you ask them about a Pennsylvania track they’ll say something like “I don’t play Pennsylvania tracks, isn’t the pick 4 takeout 35% or something?”

No, the pick 4 takeout at Chester is not 35%, it’s 15%, exactly what it is at Balmoral or Cal-Expo.

That fact doesn’t really matter because of the brand. Pennsylvania harness tracks are well known for having some of the highest rakes in all of North American racing. Even the Massachusetts state lottery has a lower takeout than a Chester superfecta. It’s been that way for years. One pick 4 at a low takeout that’s barely promoted cannot trump that branding.  

It’s not a harness racing only phenomenon. Out of the 69 thoroughbred tracks rated by the Horseplayers Association of North America, Penn National ranked 45th, Presque Isle 50th with Parx coming in at 61st.  The full list is here

This week the New York Racing Association Fan Council met and recommended that New York tracks should take some of the slot windfall and lower takeout. This was recommended to not only help churn (and as a result handle) but to also give something back to players as a marketing angle. 

Pennsylvania, I believe, immediately needs to do the same.  It doesn’t matter if the bean counters tell them they shouldn’t, because bean counters don’t need to brand build, nor do they have to foresee what happened in Ontario happening in Harrisburg.  It’s not like their purse structure depends on their small handles anyway. Most of the purse money comes from slot machines. 

After lowering takeout across the board to signal to customers that they are passionate about having them play Pennsylvania racing, incremental customer-friendly changes need to be explored. 

If they want to create a new bonus on a trotting stake, add a customer element to it with a guaranteed pool. Have some appreciation days for bettors, seed some pools. When issuing a press release, don’t tell everyone who won the Open (remember they don’t play your track so why would gamblers even care?), tell them that your $20k superfecta guarantee was hit and it paid $600 for a dime. Do the little things to change the betting brand. Tell them Pennsylvania tracks are open for business and ask customers for theirs.

Mark Hughes in “Buzzmarketing” wrote that it takes 6 years and $60 million to change a brand via Madison Avenue. For places like Pennsylvania it may take six years, but it certainly won’t take $60 million dollars. If the little things are done right to target customers, they can become additive, and they may set the table to allow Pennsylvania racing to go from not-so-Good to Great.

This article originally appeared in Harness Racing Update

1 comment:

Anonymous said...

Pocono raised the takeout to 30% on the exotics in time for the new season. Other places reduce takeout and a slots state increased? This will give players more reason to say unflattering things about Pennsylvania racing.