Business of Racing : Pairing Metrics & Profit Motives

Andy Grove, the late CEO of Intel, used to speak quite a bit about metrics and decision making. Although he believed (like just about everyone) you needed sound measures, according to him it wasn't near enough. You had to measure the effects of something, but you also had to measure the counter-effects (consequences) and model the two together.

Most businesses today achieve paired and even multi-variate metrics because data is easier to access and mine and model, and of course: because of the profit motive. If you're not getting better you're losing market share and getting worse.

Where Grove's single metric malaise is most often noticed is where the profit motive doesn't really exist. As an example, Marc Andreessen talks about setting time to service targets for EMS drivers and measuring only that (something commonly done); of course the drivers stick close to urban centers and the numbers are hit, but service suffers.

In horse racing - not an EMS or government business but one we'd think should work on profit motives - we see the lack of paired metrics often, do we not?
  • That Jackpot pool is huge right now - but what about the long term effects as bankrolls are kept out of play?
  • Lowering minimums can give us a short term handle bump, sure, but what happens to payoffs and long-term gross handle?
  • It's great to attract that power barn to your track with tons of stock, but what's the effect on *other* entries and field depth as trainers avoid competing against 25% win drop and pops?
It might be easy to argue horse racing has dropped the ball big time on this, and there certainly is some validity in that, in my view. However, the bigger question to me: Is horse racing a real business; is it driven by a profit motive?

For a hundred years it was a monopoly. It was built on government partnership in a sheltered industry. Since then, the metrics managed to have not changed much. In fact, just this week the Meadowlands announced their gross handle metrics in the lens of more horses and foals, because it's what they need to do to show the subsidy is still working. California isn't looking at handle, it's looking at political survival. We can go right on down the list. 

For those of us who adhere to the Grove principles in business we find racing is lacking. But, perhaps it never had a shot in the first place. 

Have a great Thursday everyone. 

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