The "Video" Might Not Affect Horse Ownership

Barry Irwin's missive on the TDN is making the rounds. His three main points/arguments:

•  For racing to exist, the owner is the key
•  The advent last week of PETA’s report on the operation of Steve Asmussen has our game in peril because for the first time there is video evidence for all to see of how sordid, uncaring, unethical and illegal the caretakers of our horses can be. 
• Once a game is found to be covered in scuzz instead of quality, the desire for further participation by owners is going to evaporate.

The above possesses a number of assumptions: Horse racing needs a person to buy a horse to survive. A video was released that will stop people, potentially, from buying horses. The video being public stops new people from buying horses.

I think he sounds good, but he is assuming something that I believe just is not true. He assumes horse owners are irrational.

As long as a purse exists, there will be horse owners. Social Inclusion has a potential $8 million or more in purses to race for in 2014 alone. If he wins a couple of them, he could be worth anywhere from $10 million to $30 million, or even more in the horsey brothel.  Is an owner really going to say "I don't want to pay, say, $2 million or more" for that chance? No, because they are rational investors.

The horse ownership equation is based on some metrics. The return on investment, probably around 50 cents on the dollar, has to be buttressed by the entertainment/ego component along with the shot at getting a big horse worth millions. Some may find that equation irrational in itself, but it's the way things work.

Rational investors do their due diligence. Really, this is the "first time there is video evidence" and "the desire for further participation by owners is going to evaporate"? I'd think not. Anyone who claims a horse, or spends millions at a yearling sale know what the costs are, the risks are, and the people who are in the industry. Heck, to learn that, all they have to do is read the TDN for one of Barry's articles over the years. Seeing this video is nothing new to a whole lot of people who are investors in horse racing, or for the people who have researched the possibility.

Horse racing investors, like any investor, or anyone who runs a business are usually ahead of the curve anyway. Remember the health care law debate in 2008? If you turned on CNBC during that time, you'd see CEO's saying "I want to see how this shakes out before committing funds to new hiring or expansion".  They weren't Obama haters - some were his donors - they were just acting rationally. They wanted to see how much their costs would go up and what changes they would have to make to keep their company on sound financial footing. They were acting before laws were passed, just like they always do.

Horse racing is no different. To try and make us believe that all of these investors, or potential investors in horse flesh were suddenly awakened by a video from a fringe group is asking us to believe they are irrational. They aren't.

I don't disagree with Barry. I do believe the way the business has been run discourages horse ownership. I do agree with him that this business - one with a culture where "unloading a lame horse" on someone is considered smart, while doing something tantamount to that in regular life could land you in jail - is not attracting the best owners. But I think this has been happening for a long time now. It's not new.

If I am right, perhaps now in 2014, the "video" may end up being a leading indicator for a resurgence of horse ownership. If it somehow leads to some fundamental change, perhaps things will get better, quicker than we think. Why? Because horse investors, like most, aim and fire; they don't fire and aim.