Monday, June 1, 2020

Same Store Sales Redux

If you're a stock player or CNBC or Fox Business watcher, you'll have heard the term "Same Store Sales" referenced often. This is a metric to analyze retailing, whereby sales between stores open one year or more are compared to see how management (and growth) of the chain or business has been going. If sales are only increasing because more stores are opening, it can be a red flag.

Here's something else you've probably heard before - the racing business is not much like the retail business, or perhaps any business. And Crunk's threads of late are both important, and evidence of that.

The 'wow' number in that string is the fact that (standardized) handle fell 5.6% in May, with 2,150 fewer stores (if we can say a store is a race). Although - and Crunk rightfully mentions this - NYRA has not yet begun and this paradigm will again change, I don't think you'd find a ton of people who'd have predicted this outcome; an outcome where so few races could be offered, with handle down so little. 

This has been firing on the demand side in harness racing as well, where Scioto has had $1M or more in handle each of their race days, after averaging around $200,000 normally. 

What this suggests - and we already know this - is the marginal cost of putting on the vast majority of races in the sport is super-high, and not economically feasible on its own. It's why so many tracks depend on slots. Without them, and without fail, the sport shrinks as same stores are shuttered; but, unlike in the real world, if that happens, gross sales might not fall very much, if at all. 

If you're interested in this analysis, give Crunk a follow and we can continue to learn what makes this crazy industry go. 

Have a nice Monday everyone. 

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