Watchmaker & Industry Suicide

Mike Watchmaker - unbeknownst to him I imagine - started a brouhaha of a semi-regular variety yesterday with this tweet.

This spawned the usual responses; those with circular logic, memes that we all need to get along and knit peace quilts, and that those who agree failed sharing in kindergarten. But, brass tacks n' all, Mike is about right.

As a dude who had a 15 horse or so stable, with a few yearlings and racehorses, you learn this pretty quickly. Upon dispersing stock, the horses were all purchased and raced, the feed men still had horses to feed, the vets had horses to treat, my trainer filled the lost stalls with new horses. Trainers and grooms for those horses got paid. Our leaving did not upset the ecosystem. That's what happens when you sell assets. If you have a lawn cutting business, there is someone there to buy the equipment, or buy your book, and it's the same in racing.

If I was betting $10M a year, at say Kentucky Downs, I am contributing about $500,000 to purses for that track (along with another $500k to keep the lights on). Kentucky Downs races, what, about 5 days a year with $500,000 in purses per day? If I leave, one full race day gets cancelled, because I am not replaced. I have no book to sell, no asset to sell. Purses and profits go down, by perhaps as much as 20%, and much more if the place did not have alternative gaming. In fact, in that case, the whole meet might get scrapped if I left.

Unfortunately, these arguments get mixed up. If you say the above, it comes out that owners 'don't matter.' Of course we do. Owners are playing a losing game; they are not buying horses as an investment, because the ROI is terrible. They are playing the game at many levels for ego, the thrill, the joy, the entertainment of owning horses. This is why, I and some others, were annoyed with Churchill a couple of years ago at the Derby. These owners for that day are partaking in their Super Bowl. It's the reason they buy horses. That they were shuffled around, and (in their view) mistreated, they were saying, "I lose thousands and thousands of dollars in this sport and you're nickel and diming me?" It wasn't about rich guys wanting perks. It was about the passion of owning, which is not based on dollars and cents, being attacked.

Similarly, it is why I and others get so upset with takeout hikes or source market fees or ADW taxes to "raise a purse", promulgated by so many short-sighted alphabets and executives. Even if lowering payouts to horseplayers worked to raise purses (if it did, Italy would be the best place to race a horse on earth when they raised the trifecta juice to 41%; instead of imploding) that $5,000 extra for a MSW is meaningless. So, an owner loses 41% instead of 42%, with that bump. Whoop-de-doo. Conversely, what that does to the customer - like the guy or gal keeping Kentucky Downs in business above - is get him or her to leave, and he or she is never replaced.

Horse racing has a lot of work to do to increase ownership. It needs to be better run, to make the ownership experience - owners will always lose money in the aggregate, anything else is delusional - better and more worthwhile and fun. But it can never be made better at the expense of the betting customer. That my friends is industry suicide.

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