These are not the golden days of thoroughbred horse racing.
Attendance is down, betting is down and purses are down, largely as a result of competition from other forms of gambling, such as casinos and poker, the poor economy and a steady decline in interest in the sport.
And as the industry has struggled, the overall quality of thoroughbred racing has declined, according to industry players and observers.
“There’s no question that racing has gone downhill in most areas,” said Rick Violette, president of both the National Thoroughbred Horsemen’s Association and the New York Thoroughbred Horsemen’s Association. This is true even at Saratoga, which he described as “an animal of its own. The quality has suffered a bit, although this year they’ve done a good job of putting out an excellent product.”
The numbers reflect that product: Meet attendance at Saratoga through week four was up about 2 percent from 2010, while on-track handle was up about 7.9 percent.
Violette and others said that Saratoga is one of the country’s healthier tracks, because it hosts big events such as the Travers Stakes, and because it has a short racing season. Other tracks that fit that description have also fared fairly well, while the smaller, less attractive tracks have struggled.
“Some tracks have too many racing days, and they don’t offer anything special,” said Mark Simon, editor of the Lexington, Ky., based Thoroughbred Times, which publishes a weekly newsmagazine on racing. Simon noted that New Jersey’s Monmouth Park was given new life in 2010 after adopting a condensed schedule, dropping from 141 days of racing with $331,000 in purses each day, to 50 days of racing with $1 million in purses each day. Attendance and handle both soared.
Shot in the arm
Earlier this month, the Jockey Club presented a study that examines the reasons for thoroughbred racing’s decline and includes recommendations for how to give horse racing a shot in the arm. Ideas for improving the industry include increasing television coverage and creating a free-to-play website. One of the biggest proposals calls for “fewer, better races and better scheduling to increase field size and showcase the best product.”
The Jockey Club is the breed registry for all thoroughbred horses in North America. The group commissioned the consulting firm McKinsey & Company to conduct the study.
Experts agreed that the horse racing industry might benefit from offering fewer races and better coordination of scheduling among tracks. One big concern, they said, has been the steady decline of the foal crop. In 1986, 51,296 registered foals were produced in the U.S., but next year only about 24,700 foals are expected to be produced. Another issue is that European horse owners have taken some of the best mares overseas.
“We’ve seen the decline of racing at the upper end of the sport,” Simon said.
“The size of the foal crop has shrunk significantly,” said Jeffrey Cannizzo, executive director of New York Thoroughbred Breeders Inc. “When you have fewer horses, you have fewer top-tier horses.” What people within the industry want, he said, are “bigger fields and competitive races.”
Violette agreed. “You can only have so many good horses,” he said. “I don’t want to sound elitist, but the racing game is not for everyone. It’s an expensive game. Not everyone is supposed to be breeding horses.” He said that a contraction of the foal crop might be a good thing, because it might mean that lesser breeders and horses have exited the business.
“Sometimes less is better, and that has to be looked at seriously,” Violette continued. “The boutique meets and events are the most successful, they’re the highlights of the industry. But tracks also operate on a day-to-day basis. They don’t just play the World Series. Not every place can be an A racetrack.”
Jason Wilson, vice president of business development for the Jockey Club, said that there are advantages and disadvantages to a decline in foal production. “Having high foal production is going to lead to owners wanting to race owners that maybe should not race,” he said. “On the other hand, foal production is a barometer of interest in the industry. Will we get to a point where foal production is so low that we don’t have a pipeline for good horses and good races?”
Less is more
According to the Jockey Club, horses are starting races less frequently, and shorter fields are on the rise. In 1990, each horse made about 7.9 starts per year, while in 2010, each horse made about 6.1 starts. The top three Kentucky Derby finishers in 1990 averaged 25.3 lifetime starts; in 2008, the top finishers averaged 8 lifetime starts.
Meanwhile, field size has dropped by nearly one starter per race, from 8.9 to 8.2 in that same time period. One goal, experts said, would be to increase field size but reduce the overall number of racing events, which would make the races that do happen more exciting and competitive, and a better showcase for talent. With fewer opportunities to race, marginal horses would be less likely to be given starts.
“I can definitely see having less racing,” said trainer Gary Contessa, whose website touts his ability to “pick inexpensive horses for clients that go on to be great race horses.” “There’s no question you’ll have better fields. But you’ll also put the little guys out of business. A lot of people count on racing for their livelihood.”
Contessa has cut the number of horses he has in training in half; at one time he trained about 140 horses, but today that number is between 60 and 70. “I didn’t want to play the low-level claiming game anymore. I’d had enough.”
According to the Jockey Club study, overall betting handle has fallen 37 percent since 2003, while attendance is down by as much as 53 percent at tracks. But there are some positive signs. For instance, betting handle on Grade I and Grade II races — the industry’s top-tier events — has increased by 23 percent per race over the past decade. However, the report notes Grade I and Grade II races are “only a small proportion of races” and that “the vast majority of races are struggling.”
“There are pockets of strong and robust health in the industry,” Wilson said.
The Jockey Club report found that the number of starters is down 23 percent — from 82,314 to 62,994 — since 1990 and that race days are down 14 percent from 2000. Compounding these problems is the fact that there is a large number of overlapping races, which confuses fans and reduces overall handle; on April 4, 2009, Oaklawn, Keeneland and Aqueduct each featured a Grade I stakes race within a period of 21 minutes, and the report suggests that spacing out those races could have resulted in handle that was between 4 percent to 9 percent higher.
Wanted: New Fans
Wilson said that all of the recommendations contained in the study are things that can be implemented fairly easily. Many of them, such as the creation of a social game, are designed to draw new fans to the sport.
Experts agreed that increasing television coverage is an important step. “Our largest problem is that we’re not a televised sporting event,” Cannizzo said.
“We’re in the dark ages when it comes to television coverage,” Contessa said.
Dan Silver, a spokesman for the New York Racing Association, said that NYRA has already taken steps to implement some of the recommendations in the Jockey Club report. This summer, the organization teamed with NBC and VERSUS to offer national television coverage of the Saratoga meet and also launched a social media game called Play Saratoga on NYRA’s Facebook page. NYRA is also planning upgrades to its wagering platform, NYRA Rewards.
Silver said that one of the issues NYRA faced was the closure of New York City Off-Track Betting last December, but that the organization has put initiatives in place to try to recapture that lost business, such as expanding phone operations in response to high call volume demand.
Through the first six months of 2011, revenues from wagering activity were down 1.6 percent, according to NYRA.
Violette said the ideas in the report are interesting, but that no single recommendation will fix racing’s problems. “There’s no magic wand” he said “It has to be a comprehensive effort.”
Thoroughbred racing in New York is in better shape than in other states, Cannizzo said.
Saratoga has been stable, and the Aqueduct Racetrack in Queens is preparing to introduce video lottery terminals, which should boost revenues considerably and increase the funds available for breeding and racing. Another encouraging development were the strong sales posted at the Fasig-Tipton New York-bred sale at Saratoga earlier this month. Total sales were up about 83 percent over the previous year, and the average price of a yearling rose 38.7 percent, to $54,238.
“A lot of people are interested in buying and owning horses in New York,” Cannizzo said. Racing is a business, and when handle and purses drop, that’s a sign that there’s less money to invest in horses.
Contessa said that in the past, racing depended on wealthy families and individuals who ran high-quality stables and bred top-tier horses. Today, horses are often owned by groups of middle-class and upper-middle class investors, who lack the funds or inclination to finance a large-scale breeding operation.
“You don’t have stables like that anymore,” he said. “Now, horses are owned by construction guys, gas station attendants. The big money has left horse racing. The bigger breeders got out of the game. Purses have not gone up with expenses. If you look at the price of feeding and caring for a horse, it’s probably gone up 100 percent, while the purses have gone up a smidge. It’s a tough game to stay in.”
“I’d be surprised if more than 2 [percent] or 3 percent of horses make money,” Simon said. “No one is making a whole lot of money racing horses.”
Categories: Business
