Wednesday, February 20, 2013

Small Ball

There was a lot of chatter about Paulick's article which talked about corporate responsibility and some recent racing decisions yesterday. Even (it appears) former NYRA CEO Charles Hayward got into the discussion, which spurred even more chatter.

In the article, Baconater used Maker's Mark bourbon as an example, and it is a good one, in my opinion. Maker's Mark was having supply issues so they played small ball - they talked about changing the alcohol content of their product with the hopes of keeping sales just as they were. It was a seeming 'tinker', but that tinker snowballed. They backed off.

What happens in horse racing is similar. The 'tinkers' affect the brand, and turn into a real issue. If a faucet keeps dripping it can turn into a gush.

The problem I have with small ball in horse racing, is that not only do the tinkers rarely help change the industry, they deflect from the industry looking at their real issues.

New York is perhaps the best example of pure small ball. Let's raise takeout, which never works, to pay for OTB's that weren't working. This sounds like a George Costanza initiative at Vandelay Industries. If this policy didn't blow up it would've been shocking.

California was not dissimilar. The goal of increasing a purse, say from $30,000 to $32,000 is deemed the holy grail; like it somehow is going to shake the foundations of owner behavior and the sport itself. It was deemed worthy of annoying fans, and bettors when they passed the rake hike.

What really does a $2,000, or $4,000 bump in a purse do? Not much. For large stables it may turn their ROI up from 0.52 to 0.54. For mom and pops, the product itself, reinvestment in yearlings or people moving from other states the benefits are negligible. Is it worth hurting your brand?

NYRA had a nice bump in purses this year with slots. Is Aqueduct the holy grail? Was last year's Saratoga meet that much different than others? Did you hear anyone say "I don't want to race at Toga for a $70,000 maiden special weight, but at $75,000, count me in!"

I don't want to belittle slots in New York, because it is a major development, but as a rule, marginal increases in a purse will not set the industry free. It will help of course, but it's small ball.

Conversely there are big items that actually can help turn the industry on its head and nothing ever seems to get done.

In Canada, John Craig, a horse owner and lawyer petitioned the Supreme Court recently to allow more deductions on income for horse ownership as "farming income". He won. Perhaps sometime the $8,750 cap will be done away with, and if so, horse ownership could increase massively as an investment vehicle. This is "big ball" not small ball, yet one man, taking it upon himself did this work.

In the US, if the horseplayer tax that was implemented in the 1960's was done away with, handle might head north tomorrow by $4 or $5 billion. At 7% for purses, that's about a $350 million dollar yearly purse increase for horse racing. $350 million is about what slots in every jurisdiction in the US supplies purses with each year. This is big stuff.

Instead of the Flock of Seagulls at Hollywood Park, why didn't we invite Willie Nelson? Decreasing a tax that can help farming like the horseplayer tax reduction can with increased purses could've been part of it, no? More purses equals more feed, and help, and bedding. and paddocks, and barns, and pasture lands. It's what the whole Farm Aid thing was about.

Where was the industry the past 25 years on these huge items that can change the sport in a positive fashion forever for us as horse owners and horseplayers? It's seems they were focused on small ball, and small ball rarely changes a thing. In some cases it does more harm than good.


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