The American Pharoah "Experience" Starts About Now

There was an article this morning at Charles Hayward's site penned by a writer experiencing a strong American racing event for the first time, and what that "means for the health of horse racing".

I expect many around the world would be amazed at what's 'left' of this sport here in North America. But it is not surprising to us. We know 15 million or so watch a Derby, we know 10's of millions watched Zenyatta on 60 Minutes (and many tuned in for her Classic). We know sports' stories in a mad-TV sports and twitter world still exist, and in many cases thrive.

We also know that much of it has little to do with the immediate health of a sport.

This business - for years - has been filled with the knee-jerk. Things need to be fixed yesterday. Field experiments for takeout are a dirty thing, despite being done in some form by virtually every other business: Laurel lowered takeout for a week and lost money, don't you now. Tracks should be ripped up, then ripped up again. It's this business.

The truth of the matter, as I see it, is that nothing is simple. Most policies take time, whether they be the drip, drip of higher takeout, the time lag where people get in and out of the business because they're fed up with drugs, the worth or non-worth of a polytrack, or what have you.

The "American Pharoah experience" - if there is one - will take some time, and I suspect the monitoring begins right now.

The Dow Jones Industrial Average, as the baby boom was in full force in the 1950's, sat at about 500. In the mid-eighties - 30 years later - 1,000 was broken, a pretty nice double. In thirty years since, the Dow has touched 18,000, a whopping 18 multiple. We're not lacking for one-percenter's for this very reason. The thing is, while this wealth has been created for these folks, they are leaving it in the markets, or shifting luxury buys away from the sport of kings, and to other pursuits. Foal crops have been down, while the bloodstock target market gets richer.

In my view, if American Pharoah has coattails, it will lie in what happens this year, and next, and next, with bloodstock purchases. Did enough of the well-to-do who are pre-qualified to love competition see the headlines, see the media buzz, see the fun and excitement from America Pharoah? Will enough of them be touched to own a horse in this sport and try to duplicate the feat? Is it worth selling X shares AAPL at a crazy gain to take a poke on $4 million worth of babies? Did any of them get the metaphorical "bug"?

That, I feel, - not handle, not social media mentions, or hikes in TV ratings - will be the metric this sport needs to look at when evaluating the net worth of the column inches the last year. And I think it will take a lot of time.

Have a nice Wednesday everyone.

1 comment:

Unknown said...

As usual, a great take on the industry, Dean. The biz needs owners, pronto.

One of the best things that's happened at our little track out here in British Columbia is a stampede by almost 400 individuals who are paying $250 per year (all in) to have a piece of three or four horses in what is now known as the Hastings Racing Club. There's a ton of enthusiasm, owing in part to the fact that one of the Club's purchases (Square Dancer) went out and won his first three races, two of them medium-sized stakes and missed out on a third by a nose.

Give a red-blooded human being a taste of the winner's circle and you've got them hooked for life.

Keep up the great work.

Brian Butters
Vancouver, B.C.


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