The Sport of Racing is More Like a Factory Than We Think

There's been a lot of talk lately about getting things in the economy rolling. Most of the focus has been on service industries - restaurants, bars, salons, etc - but in the same vein, this is spoken about for heavier, more labour intensive industries, as well.

I read some who talk about opening a factory in stages, or a letting a pulp and paper plant operate at three quarters capacity. That not, as most of you know, how it works. There's no Mrs. Factory hitting a switch, controlling production. Economies of scale provide pass/fail decisions on operations, and if production is cut from X, something has to give. Mainly, with a plant not being operated at capacity it should not open, or it would alternatively have to raise prices bigly; and doing that, when others are not, is a profit and loss statement death sentence.

It strikes me that this lower supply strategy is something most-preferred for horse racing in some cohorts.

We want tracks to open - just not those tracks. If those tracks weren't open the industry would be better off.

We really need horses to race without lasix. If we kill off the drug there's a good chance that those horses won't race at those tracks. It's a big win.

Where do horses go to race who can't race at the elite tracks? Where do the horses go who need lasix? Where does the money go from slots, in places like West Virginia, where those tracks are. The casino money is as green there as it is in New York.

Where do all the mom and pop horsepeople go to ply their trade? Race Chad Brown horses in the Acorn?

I get the wish to shrink and make this game "better". But to me it really is just a wish.

Horse racing is an ecosystem with revenues that come from all over, through traditional (handle) and non-traditional means (subsidy). It's the small trainer in the backwoods in overalls, and Chad Brown or Todd Pletcher in $100 ties. And they are much more dependent on each other than people think.

Horse racing is a pretty unique business, but it's still a business. Without it operating at a high capacity, it'll be, in my view, a lot smaller than the C suite thinks. Sometimes I wonder if they think about the larger picture, when asking the sport to shrink.

Have a nice Wednesday everyone.

The Elusive Scheduling of Post Times, Not So Elusive?

On April 22 Brian DiDonato wrote an article published in the TDN about Oaklawn and Gulfstream post times overlapping, "With Just Two Tracks Running Post Times Still Collide". It shared a emblematic picture that angers so many, so often.

The story contained quite a few quotes about how difficult it is, even for these two tracks, to schedule off times. Tractors on the track, horses getting loose, Equibase, and each other were all blamed. The problem seemed overwhelming.

Fast-forwarding a couple of weeks, Michael Antoniades sent me an email about Arkansas Derby Day noting the off times:





GP - Gulfstream Park
OP - Oaklawn Park

Saturday post times May 2 ET

GP1. 12:52
OP1. 1:05
GP2. 1:22
OP2. 1:36
GP3. 1:52
OP3. 2:07
GP4. 2:21
OP4. 2:42
GP5. 2:53
OP5. 3:13
GP6. 3:23
OP6. 3:46
GP7. 3:58
OP7. 4:20
GP8. 4:30
OP8. 4:53
GP9. 5:06
OP9. 5:25
GP10. 5:37
OP10. 5:59
GP11. 6:09
OP11. 6:36. Derby
GP12. 6:46
OP12. 7:11. Handicap
OP13. 7:52. Derby
OP14. 8:34

When confronted with a problem the sport seems to so often anti-Harry Truman it; with bucks stopping everywhere but where intended. However, when it comes right down to it, in practice perhaps some of the problems are not as insurmountable as we think.

Thanks for the email Mike. Good job Gulfstream and Oaklawn. And have a nice rest of the day everyone.

Arkansas Derby - Off With Their Pirate Heads!

Yesterday's Arkansas Derby (ies) is in the books and Shades won both splits rather handsomely. If you have a Derby type colt, or last year's Derby colt, or any horse really, Baffert is your man. The superlatives are in plain sight this morning, so no need waxing poetic on those performances. They were good.

We'll talk about this:

According to @Equibase, handle today at @OaklawnRacing on 14-race program was $100,750 on-track & $40,906,451 off-track (via advance deposit wagering). Going into 2020 meet, Oaklawn media guide says previous single-day wagering mark was $16,221,639 on 2019 11-race Rebel day card

— Ray Paulick (@raypaulick) May 3, 2020

Yep, that was a $42 million handle.

For last year's Arkansas Derby card, total handle was $11.8 million, with an estimated attendance of 45,000, who bet $2.33 million, or about $5 per person. Yes, this year's handle was quadruple!

Yesterday's card happened during the COVID crisis, of course, but looking at just the demand side, here are some COVID barriers to this year's handle:

• There weren't 45,000 fans, there were zero. 
• There weren't a hundred tracks running, where people could bet the card from. 
• OTB's - thousands points of sale - were all shut down.

About $41 million was bet over the internet or phone, at distribution outlets (ADW's) only.

This was allowed to happen because these distribution outlets make margin. With the margin, they have invested in carriage fees and TV networks (that showed the race yesterday on NBCSN), call centers, wagering platforms, and marketing and investing in the customer through rebates.

Racing, as so often is the case, gets stuck on something - usually an anachronistic point, or a wish - rather than dealing with the reality of a situation, or the practical.We see it almost every single day with distribution outlets, or partnerships that need to be used to sell racing's product. "The splits are horrible, these ADW's are pirates, off with their heads!"..... you can recite them by heart.

In my view these have been impractical points all along. People delivering your product - into people's homes, on their phones or tablets - in new and exciting ways was never done by the sport itself. And you can't turn back time.

Racing gets stuck, year after year, with the same silly questions. After the 2019 Arkansas Derby the sport asked, "yes, but what slice of that $11 million do I get?". After this year's it's, "yes, but what slice of the $41 million do I get".

The question that needs to be asked, and has needed to be asked since forever, in my view, is: "How do we turn that $41 million into a hundred million"? It's the only way to ensure everyone makes more money.

Have a great Sunday everyone.