Tuesday, April 2, 2013

Strategery

I saw last evening that Trakus has been discontinued at Woodbine, although it will stay on for the thoroughbreds. This is clearly due to the loss of revenue from slots which took effect on March 31st.

In racing, the strategic management moves when revenues dry up tend to be one or both of: Decrease spending on your end product or raise prices

We are seeing the first of those moves at Woodbine, we saw the second of those in places like California and other places who've raised takeout over the years.

Conversely, the strategy is different with other organizations - at least those managed at a collective level.

As most know, Dairy Farmers and their marketing arm have been in place, working the market since 1934. A portion of each litre of milk sold goes into a fund, managed by the Dairy Farmers, and it is spent on awareness, marketing and new products.

Late last year, in response to a declining market for dairy products, a fee increase to Dairy Farmers was passed to increase their presence in marketing channels. 

This year $67.3 million will be spent on marketing to end users; a $7.3 million bump.

Racing does not have such an organization of course. The Racing Development and Sustainability Plan that was rejected in the Province was probably in the $7 million range a year - a fraction of what 13,500 dairy farmers spend. As well, Woodbine has to look after Woodbine, horsemen have to try and get racedates and so on.

However, it is very emblematic, in my opinion, what happens when other organizations go through some adversity and get together to fight for a share of the market (with subsidy money or not), rather than fighting for disparate shares of a market; or even worse, fighting each other.

(h/t to @darrylkaplan for the link)



2 comments:

Pacingguy said...

The difference is the Dairy people were still making a profit when business dropped. It is easier to spend money while making a reduced profit than spending money when loosing (when you ignore SARP).

Christine said...

A pity there isn't such an organisation!