When Racing's Core is Not Sound, the Ancillary Goes Bad First

Back in the early 1990's I got my first real job. I was a pretty much an office gofer for a mining consortium.

One day a gentleman came in the office for a meeting. He had just returned from a trip to Russia. This fellow was there at the behest of the Russian government, to get his opinion on their state-owned zinc and copper mine in the southwest of the country. The story he told was very interesting - especially to a fresh out of school business major, who learned most of this man's craft in a textbook.

He had already studied the numbers and they weren't good. The mine was producing zinc at a cost per ton that was 25% higher than the revenue per ton. The only reason it was running was because the government was printing cash for the shortfall. However, because the industry in eastern Europe was not using modern western engineering, management techniques and technology - which could make a difference -  he still held out hope they could be helped.

While being driven to the mine and smelter by men with furry hats (who he was sure were in the KGB) he began to notice something odd: The closer he got to the mine, the fewer plants and trees he saw.  The terrain grew more and more bleak. When he arrived he figured out why. The smelter was an environmental mess; it was spewing really bad stuff everywhere. The city was equally decrepit; the living conditions poor.

Norlisk Mine, Russia

The mine itself was pretty much a disaster. There was no money placed into training and health and safety. The techniques that were being used in the plant could be found in a Dickens novel. Western filtering of heavy metals and arsenic - byproducts of a smelting process - were non-existent.  Injury rates were high, morale low. Management simply came in, punched their time clock, and went home.

He advised the government there was no hope for this mine unless millions were spent, or the price of zinc skyrocketed. It was too far gone in its present form.

What I took from his story was, yes, a failing business can be kept open for business if you have access to capital. But when all the capital is being used to bridge the revenue gap, there can be no growth. There's simply no money left over for ancillary (non-core) parts of the business. So, the workers are hurt, the management is not engaged, the environment that people and their family are living in each day, gets destroyed. How can your core business possibly grow?

This is something racing is faced with, over and over again, this century; whether it's California, who are focused on shuffling the pie, or harness racing, which simply trudges along.

If you examine either article, you see that these entities are still producing zinc (purses), but everything else has suffered. Harness racing is losing market share, because nothing is being spent on the ancillary to grow market share.  In California, almost everything has been done to prop up purses, but because the ancillary (backstretch monies, workers comp, marketing, new ownership programs, etc) receives a fixed percentage of a falling handle number, it's all getting killed.

California racing can not grow unless it has a growing core, and harness racing can't grow unless it has the same. When the core isn't sound, the fringes suffer first, and most savagely.