Now, I am not here to defend a rather strange and sub-optimal betting delivery system, but I will continue to defend one simple point: Squeezing them won't grow horse racing.
Today at TechCrunch, Zack Kanter, the founder of Sedi (a company in the really tough ERP space) wrote a fantastic article about retail, and the various machinations of it. The article is really good, and if you're interested it's worth a read. One part of it, about backward (or forward) linkages caught my eye:
- "the increased margins typically evaporate over time. There are great examples of this in the automotive industry, where automakers have gone through alternating periods of supplier acquisitions and subsequent divestitures as component costs skyrocketed. Divisions get fat and inefficient without external competition. Attempts to mitigate this through competitive/external bid comparison, detailed cost accountings and quotas usually just lead to increased bureaucracy with little effect on actual cost structure."
As that happens, what you're left with are divisions that "get fat and inefficient without external competition."
The industry will never grow by trying to increase margins on the backs of the end user. It's completely short-sighted and untenable.