The NFL Takes a Branding Hit, But You Might Want to Check the Narrative at the Door

Morning Consult put out a poll result today on NFL branding.

Via their tracking, "NFL's Brand Favorability Drops To Lowest Point Since Morning Consult Started Tracking: The NFL's net favorability has dropped from 30% on September 21 to 17% on September 28."

I have zero doubt their data is correct; however before everyone picks their favorite narrative, it's important for us, in my view, to understand branding.

In actuality, a brand does not get crushed by one, or even two missteps. United, or Coke, or hundreds of others snap back quickly from bad news. Bad branding, and resulting revenue losses are more of a boulder rolling down a hill, than an avalanche. It's why (old school) marketing firms estimate changing (or repairing) a brand can cost upwards of $50 million and take over 5 years.

The NFL has suffered from a lot of bad branding the last several years. They've had stars retire, they've saturated the airwaves and watered down the product, the games are taking longer to complete, the competitiveness of the games have been less than interesting, and ticket prices have increased; to name a few. This has caused a drip, drip, and people have been slowly losing passion for the events.

Then - boom. Politics enter the lexicon and it's another drip. Not an avalanche, but something that bothers people just enough to keep that boulder going. Because it's the latest thing that bothers them, they all answer with the latest thing that bothers them,

The above, in my view, is just the way things happen, in sports, or in business with brands. And for racing it's a cautionary tale.

In our sport you'll see a lot of customers (and horse owners) complain about the little things. They'll talk about trainers who win at big rates, rules that are more guidelines than rules, racing opportunities and the like. Bettors will speak about signal fee hikes, takeout hikes, short fields, cheap penalties for rule breakers, Churchill Downs cancelling a pick 6, the cost of data, or the fact that a bunch of horses without testicles win at Santa Anita with "h" beside their name in the form, and the trainer is given a pass.

Insiders often pick just one of these things and say, "it's a small thing, what are you complaining about?" But it's more than that. When taken in totality, it's a boulder gaining more and more speed, and when that happens, that boulder is hard to stop.

It's tempting to pick our favorite cognitive biased element as the reason for a decline in something. But when we truly examine branding it's never about one thing. It's about a lot of moving parts; parts that are moving in one anti-brand direction.

Have a nice weekend everyone.

Unintended Consequences

I had a scan of yesterday's news that was filtering social media channels about the Saudi 'government' allowing women to drive. It was expected, no doubt, by those who passed the new law that people would think more positively about that country. In terms of public relations, it was supposed to be a good thing. But, things like this don't do exactly what they're supposed to.

When you highlight something like this, it becomes news. And many consumers of the news learn something they didn't know about a topic before; in this case, the fact that women could not drive in a modern, rich country. The policy was supposed to improve outsiders thoughts towards the regime, but it can do the opposite. I bet if you took a poll today about freedom in Saudi Arabia, it would score worse than it did last week.

This phenomenon, highlighted by marketers and economists like Peters and Berger, was also seen with the War on Drugs. Upon the policy's inception, drug use actually grew, because the government was running a massive ad campaign highlighting different kinds of drugs - their effects, where they're sold, and how they're used. It was an infomercial, because a great many people watching had not even heard of half of them.

For horse racing, I think something can be learned.

Current horse racing policy, say with banning more and more allowed drugs, should not be trumpeted, but slowly and slowly improved from within.  The sport does not need headlines "Race Day Drugs Banned", because the general public's reaction won't be, "great, they're not giving horses drugs before they race", it will be "they were allowed to give drugs to racehorses before a race? What's wrong with these people?"

It's not dissimilar, in my view, with "wastage", or the fact that so, so many horses born and sold as yearlings this month won't make it far in life.  The general public's expectation is that they do make it far in life. By enacting policy that helps this problem, and trumpeting it to the world, the public won't think more of you, but less.

In a world of 140 280 characters,  there's plenty of room for good policy. But, how a business or industry manages the minefield is most important. For horse racing, whip rules, drug issues and wastage are all very important things to work on to bring horse racing more in line with today's urbanized world. But creating and forwarding a policy in the shadows that meets the public's expectations is, in my view, the best way to go.

Have a nice Wednesday everyone.


"Give Us the Free Market!"

"They can't tell us what to do with our horses. Get out of my business, because it's my business", is an often heard complaint from horse owners, and horsepeople.

Whether it's about out of competition testing, suspending the horse for positive tests, house rules, commission rules, jail time rules, federal oversight, or whipping rules, the drumbeat is pretty constant. "Don't tread on me."

Being a free market type (don't hate, twitter!) who believes when Adam Smith's invisible hand becomes visible we're a whole lot worse off, I get it. I truly do. But for horse racing, I think the arguments screaming for a "free market" are not only futile, but dangerous.

If you're asking for that free market, you're asking for a few things you might not like much.

A free market means the $40,000 purse at the track you're racing at will immediately fall to $5,000 or less because in a free market slot machine revenue doesn't go into a purse, but into someone elses pocket.

The yearling you're selling doesn't go for $250,000, but half that, because big bad NYRA is run on handle revenue, and big days aren't that big anymore.

The corporate track that owns your raceway isn't there to yell at, because they exist almost solely because they're holding out for (or already have) casino money. Board of Directors and shareholders of stocks in their 401k don't tolerate losses. When the market is "free", owning a horse track doesn't give them any edge, of course.

Twinspires and other entities probably don't look like they do because the UIEGA, passed by Congress in 2006 to protect horse racing, doesn't exist. Yes, handle gets crushed by internet competition, and in the free market handle pays for purses, so they go down too.

The TOC doesn't hold out and lobby for poker money, because politicians say, "why should they get any poker revenue?"

In a free market there's no Canterbury Park to get mad at for raising takeout, because the native tribe who shares market space and $75M for purse money by government decree doesn't have to any longer.

In the free market, your city track is probably Hollywood Park. And no one wants to build a new one to replace it.

The free market is a wonderful thing. Innovation and invention are spurred by it, new drugs and medical techniques that make us healthier and happier and living longer are being invented every day. Worldwide wealth is skyrocketing and poverty is declining. Preach it from the rooftops! It's a great thing!

But for horse racing, grab the collected works of Karl Marx and hug it like a warm blanket. And then embrace the rules, the meddling from the government and commissions, and animal activist do-gooders. It's the world in which horse racing lives, and we should all thank our lucky stars it is. Because although the state of the game ain't perfect, it ensures the sport is a whole lot bigger than the laws of supply and demand say it should be.

Have a nice weekend everyone.

Canterbury Park's Cautionary Handle Tale

Canterbury Park - the small Minnesota track that lowered takeout last year, only to raise it this season - concluded their meet recently. The numbers, year over year, are in: Thoroughbred handle was up 2.6%, and handle per betting interest was down 1.8%.

Last year, with the takeout decrease, handle was up 5%, and handle per betting interest was up 10%. 

Racetrack handle analysis (which tends to be pretty rudimentary) will conclude what it wants to conclude regarding the above. And, quite honestly, since reported racetrack handle numbers are where lines of best fit go to die (and people use cognitive bias to analyze these numbers), I completely understand that. But, we'll try and take a deeper dive.

Using some comparative analysis, regional tracks had a very good year. This season, Prairie Meadows was up 21.2% and Arlington up 11.3% per entry. Last year the weather in the midwest made it hard to race on the turf at two of the three regionals, and barns were nowhere near as plentiful. In 2016, these tracks were down 16% and 10% respectively.

So, last year, Canterbury's handle - up 10% - outperformed their regional friends.

This season - again comparatively - Canterbury Park did not rebound like their regional counterparts did, and vastly underperformed.

We can probably conclude with some certitude that a majority of the "new" money that entered the Canterbury pools in 2016 did not return. Anecdotally (which is never a good thing I suppose), I do know personally of about $400,000 in meet handle that this year was zero dollars.

When we factor in signal fees and SMF's the landscape gets even muddier. I don't think we can go a lot further.

What did we learn? Not much that we didn't already know, I guess. The marketing buzz of a takeout decrease, along with the churn gained from a takeout decrease, helped handles, at least some in 2016. And hurt it some in 2017.

Revenue was certainly up year over year - probably apples to apples several hundred thousand dollars - which I am certain is important to a public company being yelled at by a BOD. There's that.

But, for a racetrack who gets $6M earmarked for marketing from an $81M war chest of gaming money that's mandated to be spent to "grow handle", isn't using a few hundred thousand dollars a year to do exactly that fulfilling the mandate?

One conclusion that's easy to make, in my view, is that horse racing makes decisions on where they are, not where they want to be. Canterbury appeared to have momentum on their side in 2016, and for whatever reason, despite a perfect weather season with good field size, the momentum stalled. That, I think, isn't good for anyone who cares about the long term health of the game.

Have a nice Monday everyone.


So is Keeneland Now a Mini-Death Star?

It's been an interesting summer in Kentucky horse racing.

The big news, of course, was Keeneland completely doing a 180 from their strong historical branding to hike takeout rates. It was speculated at the time that this probably wasn't their idea, they were simply following a lead from Churchill Downs Inc, who did the same thing a few years earlier.  If there's one thing we know in this world -- accountants talk to each other.

In previous years it was speculated that these two tracks were in cahoots to stop Kentucky Downs from getting more days. As most know, Churchill wrestled the September dates from Turfway, and is very happy with those extra days and the smaller live handle. If Kentucky Downs wants more dates, good luck.

Now, boom.

Keeneland and Churchill announced this morning that they, "plan to partner on the construction of

two new facilities in Kentucky with live racing and slot machine-like devices near the border with Tennessee."

The key phrasing is, "on the border with Tennessee", meaning near the Nashville market. Meaning near Kentucky Downs.

I'm not one for conspiracy theories, (even though I must say it's fun to satirize the Churchill suits as Death Star denizens), but these two working so closely on things so anti-Kentucky Downs seems to fit more of a pattern of late.

Whatever the case, the new Keeneland looks a lot more like a death star corporate track than the track they worked so hard for years to be.

And it looks like there's no turning back. There's no Nick Nicholson in the wings; no white knight to change the way things have gone.

Let's just hope - for the sport in Kentucky and for customers everywhere - the damage is minimal.








Kentucky Downs is a (Glorious) Struggle


If there's something we learned about Kentucky Downs - other than the miraculous handle growth - is that comments from people like Rob are very common.
From what I see, Rob is a fine handicapper. Him struggling is no reflection on his skill, no doubt. We all struggle at Kentucky Downs - don't let anyone fool you on that. It's simple math and circumstance.

Kentucky Downs' races are not a six horse field at Santa Anita where you can like a Baffert maiden at 9-5, as the clockers extol her virtues. It's not a Saratoga race where you can have a strong opinion based only on who Chad Brown or Todd Pletcher is training.

When you put 13 horses - coming from all over, on a weirdly configured turf course, with a high breadth training colony - it takes a different mindset...... and some luck. This does not mean things aren't formful - they are - but it's much like old polytrack Keeneland, where you could take a stand on a price horse, configure some tickets right, and make a nice score. And like old Keeneland, your entire meet can be made with one single trifecta, or superfecta, or even a pick 3.

This is the lure of a place like Kentucky Downs. Where your average every day player is priced out of pick 6's, know that they aren't going to ever hit a Rainbow Six for a lottery ticket score, and are generally relegated to play short fields with short prices, it's a track they can sink their teeth into, and if they're right - even once - they can get paid.

My mindset at a place like Kentucky Downs is completely different than anywhere else. I go into each and every race looking for something to attack, then I build around it. After I submit my tickets, I know I am very likely to lose the race. I don't expect to win, or get mad when I lose, because with so many permutations and variables, losing is an obvious outcome.

I think Kentucky Downs is a struggle. If we realize it's going to be difficult, we are very likely not to walk away with eight winners on a card, and we take some shots, it's - and it's not even close - the best gambling racetrack in North America.

This is why, in my view, it keeps growing. It stands out; it's hard. The struggle - and getting paid for navigating that mental struggle - is why we patronize it.

Have a great Monday everyone. And congrats to CJ Johnsen and his dad - along with everyone else at Kentucky Downs - on their record setting meet. Your efforts deserve to be rewarded and I'm happy that horseplayers have responded.


Horse Racing's Managing Director's Retiring Pot Shot Speaks Volumes

Racing is now a quasi-government entity in a lot of places, but perhaps nowhere more so in North America than Ontario. Yesterday, the Managing Director and Special Advisor to the Minister in charge of the sport in the government sent a letter to the industry upon his resignation. One part of it turned some heads (emphasis mine).
  • Beware of WEG’s dominant position. In the proposed structures of administration not only are they a player, they are the scorekeeper and referee. They are becoming too big to challenge and yet it must be recognized their success depends in large part on the significant partnership with the Ontario government and its ongoing funding support. With so much of tax payers monies invested in this company, there needs to be careful scrutiny and accountability.
As we've often spoke about here, regulatory capture - in effect, the industry directing policy rather than having it dictated - has served racing pretty well.  But, this bureaucrat sees Woodbine's power not as an asset for the business but one that should be watched closely, or in the worst case feared.

This is not much different than we anecdotally hear from our friends in Kentucky who speak about one large corporation dictating policy, rather than living and abiding with it.

In Ontario, Mr. Walling went even further, proposing that Woodbine's internet betting arm (HPI, a near betting monopoly in Canada, probably doing $400M or more in handle a year) should be taken over by the sport, not run by Woodbine:
  •  Because of this market participation and dominance, I would recommend that HPI be operated by Ontario Racing; thus being operated for the entire industry with the revenue generated being used to support O/R and the industry. To me, the WEG role continues to be the biggest challenge to the Industry.
Whoa. How about that shot - of all racing's problems and challenges, one of their own heads the list.

This betting platform is well known to betting customers like S.H. for their increasing of takeout rates on simulcast, and other assorted player maladies.
Now as players we certainly don't want betting arms taken over by the government, ugh, but there are some powerful people who sure do.

Regardless, Mr. Walling's words are pretty eye and ear opening. I don't think I've heard such strong language ever used, and Woodbine (and racing in Ontario) probably needs to take action.

Have a great Thursday everyone.

Tuesday Horse Racing Musings on Gun Runner, DQ's and Handle

I hope everyone had a good long weekend.

Opinions make horse races, and, well, this is one I disagree with; not on HOY (I don't follow that race) but on the most likely angle.
Gun Runner ran a 142 TFUS figure in his explosive Woodward. Even if we add an eighth of a mile and he runs a slower 138 for that distance, it's faster than Arrogate has been since Dubai, or before that, at Gulfstream. Right now he's simply the faster horse.

Arrogate can surely return to peak form and again be faster than Gun Runner. But hoping for something to happen is not for favorites.

As an aside, it feels like a lifetime ago Gun Runner dodged the Classic because he was simply "a decent miler."

Someone on twitter (CJ or maybe Isolated Tops) said that it sure is fun to watch a horse develop, when they don't head directly to the stud barn. Gun Runner was a solid third in the Derby. If Nyquist and Exaggerator had some traffic trouble, bled, or scoped sick and he converted, we likely would've never gotten to see a 142 TimeformUS figure. His first crop would've been gestating right now.

Thanks for sharing the pieces on the TDN. Part I - How racing is getting older, and part II - What the sport may do about it. I had a good time learning and studying them - partially for a presentation I made at a conference - and enjoyed writing them. The responses were all pretty good, which doesn't happen very often with me.

I see Jeff Platt updated the Playersboycott.org site, along with their twitter feed. This it to cue up the horseplayer boycott of Keeneland. Boycotts and the like represent an interesting time for horse racing. On one side we have customers standing up on principle, against those who stand up for the sport, no matter what they do. You'll see it on twitter or facebook in the coming month.

Kentucky was always my favorite state for the horseplayer. Churchill had great takeout and seemed to care about the longer term, the commission seemed to hold tracks accountable, and Keeneland, of course, was a horseplayer's friend. Now we have lower takeout, horseplayer friendly Kentucky Downs (opening up Wednesday) and two tracks who want to stop them from getting more dates and have lower payouts. How this business changes in the harvesting age.

Saratoga had yet another good meet, proving once again people love the big meets; especially the Spa. They had good weather and some good fortune, but it's more than that - people are not looking at the smaller signals near as much as they once were. Note to execs - the Spa (and NYRA) continue to have strong handle, this despite tons of carryover super high 5's or jackpot bets. Yes, it can be done.

Handle in 2017 has been decent, overall, for racing. No, it's not growing per se, but it is near to holding inflation and/or population growth in check. That's a positive.

Pennsylvania moved to suspend the horse as well as trainer for a positive test. Pennsylvania - Parx, some of the harness tracks - are fighting an uphill battle. They've unwittingly branded themselves as a place for the cowboys to ply their trade. This is one step to attack that narrative. In my view, this is the first of many changes we'll be seeing in the Keystone State over the next couple of years.
DQ'ing a horse, but leaving him up for betting purposes is an opinion that's logical and sound. But it amazes me that when I write about - in harness or thoroughbreds - the traditionalists go batty. I mean, it doesn't even start a debate, it finishes it. I believe Paul is right. There's a million dollars or more bet into a pool, and you're placing a horse for a $2,000 difference for an owner? 

Have a great day everyone.


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