Shuffling Around the Recipe in Pennsylvania & The Dreaded 'Monetization'

Good day racefans.

Over in good old Pennsylvania there have been a couple of interesting developments.

First, Philly Park Parx is cutting winter dates and sinking money into a fall festival of racing.

"Parx Racing and the Pennsylvania Thoroughbred Horsemen’s Association (PTHA) announce the creation of a new, annual $20 Million Parx Racing Fall Festival that will commence on Saturday, Aug. 29, 2015, and continue through Oct. 20, 2015. By doubling purse levels throughout the two month festival, Parx and the PTHA have created a signature racing meet that will attract top horse racing talent in the industry, increase the field size of the races, enhance betting interest, and draw new fans to the racetrack."

What we have noticed empirically, is that when purses go up, it is not strongly correlated to increased handle. Some people inside the sport, and some pure fans, can't seem to get their head around that, but it's not really that much of a paradox. If you serve up six horse fields going for $50,000 instead of $35,000, while asking players to play into 30% juice, your handle probably won't increase much. It's like a restaurant increasing the wages of their serving staff and improving service, but still serving bad tasting pasta, at $35 a plate. The bump from better service does not fundamentally change your restaurant.

What Parx is doing is preferred, however. They are splitting off a meet and creating a separate meet with some buzz. I believe all slots tracks should've been doing this since forever. When I have brought this type of short meet up there were crickets; mainly from the argument "the horsemen won't go for it". But I did, and still think, it's a good idea.

Parx could really create buzz by lowering takeout with the shorter meet/festival. That's the Kentucky Downs model. But they won't because well, they're in Pennsylvania.

Meanwhile in the Keystone state, we are seeing slots revenue further wean.

"Up to 250 slot machines could be placed at OTW parlors under certain regional restrictions. The state tax rate on the slots-only facilities would be 54%, none of which go to support purses and breed development programs."

Fewer dates and a decrease in revenue off new machines seems to be the general elixir.

Racing in Pennsylvania has always been a 'what might have been' for me. So many riches, so little long-term vision.

Moving on to the Mike MacAdam column about the changes to Saratoga, and NYRA and Chris Kay in general, it's been quite the buzzsaw (there are 50 comments on it at the Paulick Report).

It seems people have given up; that racing 'companies' can and will do everything that they want for the short term. That's fine, but the meme that this is taught in business school and it's just the way it is perplexes me. What a load of nonsense.

Companies market and position themselves in the marketplace with the long term in mind all the time. It's a massive part of business. Travelers Insurance doesn't charge people to use these charging stations (even non-customers), they do so because it makes for good business. Ball teams are not sponsored by the local mill because they're "monetizing", they do so to be a part of the community they reside in. In my town growing up, the big Toronto 'corporation' didn't have management deliver turkeys to miners Christmas morning to monetize some offshore investment in a turkey farm.

And Frank Stronach doesn't do what he often does in this sport to 'monetize', that's for sure.

NYRA seemingly wanting to charge for the air that someone breathes at Saratoga and CDI masquerading as the big bad wolf, are outliers, not doing "what everyone does".  Travelers Insurance could monetize a charging station, but it would hurt their long term business so they don't. CDI and NYRA might be hurting theirs too. There's no need to throw up one's hands and say 'that's expected' from these 'corporations'. It's not.

There's a fine line to walk between monetizing and pissing off people so much, the drip drip becomes a wave, and the wave becomes impossible to stop (think the long-term destruction of the betting base with seven decades of marginal takeout increases as an example) . Good "corporations" walk it finely and with skill. If you love the sport and want to see it flourish, demanding the same of horse racing entities isn't even remotely radical.

Have a nice Monday everyone.


Sal Carcia said...

Well said about corporations and the impact of monetizing everything, Dean.

Ron said...

If the Philly field size goes up similar to the way Monmouths sky rocketed during the 2010 meet, then it will be a great track for the rebated bettor to play.

On a side not. Santa Anita produced handle gains. Horseplayers will never learn.


Pull the Pocket said...

Thanks Sal.

Ronnie, what are we gonna do with you? :)

CA did close to $3.5B in 09. They'll probably do around $3B this year (even with more dates at DMR instead of the fairs and HOL). Racedates change, many things change. They even allow more rebaters through small ADWs now. That they were up 2.3% since January 1st, with population growth and inflation needing to do about 3% increase just to break even, it's no great shakes.

I agree Parx should do well with the meet. I won't play it - I am allergic to PA racing - but I suspect a proper meet, instead of the parade of 6 horse fields 24/7 should have a few people giving them a look. It will be interesting.



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