Friday, December 30, 2016

Arguing for Slices of Revenue, Episode 61

Racing sometimes makes me shake my head. Or as the kids with their fancy phones say, smh.

Yesterday in the TDN the HBPA's Eric Hamelback spoke about the biggest challenges and solutions for horse racing.

"A critical step is ensuring that owners are fairly compensated for their property and their horses’ images and statistical records being used for wagering in this tech era by entities that benefit without contributing toward the care and upkeep of our horses"

This was similar to what was said way back in 2010.

Looking at the logic of the statement is a little difficult, because, well, it's difficult to decipher in the real world.

A reseller gives you approximately 50% of what they generate from handle revenue, for purses and for tracks to put on the races. Some of these resellers are the racetracks themselves. They use statistics and images of horses to generate revenue, because without them both you and they get nothing. It's a factor of production that's already being compensated for through simulcast agreements.

More broadly, maybe the point is that the Jockey Club makes money from selling data, and they are not directly putting it into purses. But even then, with over $1 billion in purses per year, the net profit from the Jockey Club from this data revenue is a tiny percentage of that.

More importantly, however, is the simple fact that 'horses images' et al, don't drive any revenue. If it did, Frank Stronach would not be having to pay NBC to show the $12 million Pegasus Cup, NBC would be paying Frank.

We're back to the beginning in this strange, circular argument. It's - for it seems the umpteenth time -  some faction in racing wants money, from a place that generates no money.

In the racing press when someone yells for more money, it's often presented like it's some grave injustice being righted, and the stalls will be soon laden with 14 carat gold straw.  It's a fantasy. Revenue will grow - for the HBPA, purses, and others - when racing grows gross revenue. This nitpicking that someone gets more or less of a percentage of almost nothing, means exactly that -- almost nothing. It's a complete waste of time.


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