Thursday, July 16, 2009

When less isn't more ... which is most of the time

Steve Zorn -- a casual but respected online acquaintance of mine, blogger on the subject of the horse racing business, and managing partner of New York-based Castle Village Farm -- wondered in his latest posting whether it's time for the racing industry to engage in some "serious downsizing."

These thoughts have been raised by more than just Zorn. Short field sizes at Churchill Downs and the California tracks this year have led to questions about whether there's simply too much racing. So have declining on-track attendance numbers. And now, declining handle.

Trouble is, as the economy makes its way through the roughest stretch since World War II, if not the Great Depression, it's difficult to really get a grasp on what is a nightmarish downward trend for horse racing that will continue regardless of economic recovery and must be stemmed, and what is just a remarkably predictable decline in an entertainment industry (particularly as measured by handle), fully explainable by the staggering economy.

The U.S. economy shrank 6.2 percent in the fourth quarter of 2008 and another 5.7 percent in the first quarter of 2009 -- is it a surprise that a recreational expense like gambling on horse races would decline for the year thus far by around 10 percent amid such contraction and job loss? Particularly when one response to the down economy in some jurisdictions has been to cancel race dates?

Handle on dark days at any given track is a highly predictable $0.

Decisions made out of fear at the height of a recession are decisions prone to be deeply regretted later. The vast majority of the sharp decline in handle is almost certainly a product of recession, not of racing's problems, though racing indeed has myriad issues that demand addressing.

My current profession, the newspaper industry, is busy laying off journalists left and right, eviscerating its product. When the economy improves, and it will, "readers" will have become "former readers," many of them never to return. It's because we will have shown that when times get tough -- and there's no less news to report, indeed, perhaps more -- we'll just shrink staff and the news product and leave our subscribers paying more for less.

How often has that been a successful business model?

I hear and read much about how over-saturated the racing industry has become. Fingers often get pointed at the lesser tracks, and at conflicting schedules diluting fields throughout a given region.

Indeed field size is important, particularly to horseplayers. But from what I see (check the entries at the everyday tracks where there's racing year-round, i.e., Charles Town, Mountaineer, etc., are the ones that aren't short on horses. So from a horseplayer's perspective, those should be good races to bet, whether the ponies are stakes horses or $4,000, NW2L claimers.

Zorn notes that though the economy is suffering and the costs of buying a horse have declined (desperately bad news for breeders who sell to make a living), the cost of maintaining the horse in training are not declining. Certainly true.

But is it going to be more economical to prep and maintain a horse in race training when there are fewer opportunities for him to earn his keep?

Zorn attempted to draw a parallel between professional baseball and racing. He notes that in the 1948, there were hundreds of minor league baseball teams with attendance of 39 million. By 2007, there were only 160 minor league teams remaining, with attendance of 42 million.

I don't believe the major-minor league baseball analogy is much of a success story for racing to emulate. Among other things, the population of the United States essentially doubled between Zorn's stated dates of 1948 and 2007. (Census 1950 showed 151 million Americans; 2000 showed 281 million and rapidly growing; over 306 million as of 2009.)

That minor league baseball attendance "grew" from 39 million fans in 1948 to 42 million fans in 2007 is actually not "growth" at all -- it's a stifling contraction. Drawing 42 million in attendance in a nation of 300 million suggests considerably less popularity (almost a 50 percent reduction) for minor league baseball compared to attendance of 39 million in a nation of 151 million.

And lost in that contraction of minor leagues were the very roots of the game of baseball, and, I believe, no small amount of its populist appeal.

I grew up in an area where Class D teams were prevalent back in the 1940s and 1950s. Mickey Mantle played his first professional baseball games for the New York Yankees' Class D affiliate in Independence, Kan., in the county of my youth (albeit long before I was born). He was later promoted to the Joplin (Mo.) Miners. At both assignments, it was a short drive for thousands of southeast Kansans, northeastern Oklahomans and southeast Missourians and a few Arkansas natives to see future greatness. And in those days, fans of what was then America's inarguable pastime, took advantage.

Players who would one day be World Series heroes (and thousands who'd never throw a pitch or catch a popup in a league higher than Class D or Class C) rented rooms in the community. They were fixtures at soda shops -- or bars -- and became local celebrities. Major League teams had fans across the country not because of ESPN and DirecTV, but because their players had shopped at a Chanute, Kan., five-and-dime or walked the streets of Bartlesville, Okla., then in the evenings performed live before appreciative audiences in the coziest of venues, in the smallest of communities. Like those 1949 Class D Independence Yankees (four future big-leaguers!) of the Kansas-Oklahoma-Missouri League, in Riverside Stadium, where 33 years later I would play football as a member of the opposition from Coffeyville, and later still would report on many a sporting event for The Coffeyville Journal.

While it was really the Korean War (and resulting player shortage) and the advent of televised Major League baseball that would drive the Class D and Class C leagues out of existence, for the first half of the 20th century, minor league baseball was woven into the fabric of American small towns. The papers covered the games and the players like they were favored local sons. The stories old-timers tell of bigtime ballplayers getting their start in tiny burgs across the country are true Americana; and are (or were, for those no longer with us) told in no less reverent tones than the stories of those who "once saw Seabiscuit race at Narragansett Park."

Where's Narragansett Park now? ... Mostly under concrete. ... And another Seabiscuit haunt, Bay Meadows? A recently removed pile of rubble, destined to become an office complex and business center, you know, when they get around to it. ... And yet another, Hollywood Park, seemingly doomed to a similar fate, and it is not because there's too much racing, but because the general public cares about racing too little.

And that's a very different problem.

So horse racing today is wondering whether less is more. Usually, it isn't.

With simulcasting and the ability to wager from home (for many horseplayers, though not for me in North Carolina) there's less reason to attend the races in person, except for special events. ... Of course, it used to be that racing was special. Back when many of the best horses ran on for season after season, building a fan following. And you didn't have to wait eight or 12 or 15 weeks for the next time your favorite horse would race.

So it isn't that there needs to be less racing; there needs to be better racing, and more racing by top horses, and better-marketed racing. Some say fewer races will make it easier to make those reduced dates seem special. Maybe, but I doubt it.

However, Churchill scored an undeniable hit with lights and Friday racing at night. Welcome to the 21st century.

To paraphrase another great Yankee, Yogi Berra, if the fans don't want to come out to the racetrack, you can't stop 'em.

Rather, somebody needs to convince 'em to get started coming out again.

And "Welcome to the new American horse racing -- now with fewer opportunities to watch!" just doesn't strike me like all that great a sales pitch to potential fans who already find our sport all too easily ignored.


  1. Well said. I miss the full, vociferous grandstand of the late 1980s at Woodbine.

    Woodbine have a high level of racing. The best turf course on the continent and night racing on Wednesday nights. It's well marketed but where is everyone?

    So many options for the shrinking entertainment dollar.

    I hope the economy returns soon. It's lonely by the rail!

  2. The problem that racing supply far exceeds demand has been acute for decades now, it has absolutely nothing to do with the current economic climate.

    The days when gambling alone could attract large crowds to the local track in every city have ended with the advent of OTBs. Ever since, racing has clung to one band-aid after another, trying to ignore the most basic of economic principles. In the age of online betting, nobody needs the local AA-level track to run 200 days per year; and ignoring this simple fact has been the main catalyst behind such catastrophic “innovations” as slots racing.

    CD won’t be able to attract 30.000 people to average cards five times a week. If anything, this experiment proved that large attendances CAN be attracted if tracks offer something special, as in running fewer days and putting more emphasis on every single one of those.

    The hatred for places like CT or Mnr is because these are the tracks that absolutely should be dead by now. Because they are artificially kept on life support, they steal business from tracks that in open competition probably would be viable.

    If we have learned anything at all from those successful Asian racing jurisdictions (Singapore, HK, Japan, Macau) it’s that, yes, less is more in racing. Much more.

  3. Charles Town and Mountaineer aren't being kept any more artificially alive than all the Pennsylvania tracks, Louisiana and other locations with alternate gaming revenues. Anyone who wants to bemoan their improved purses due to slots or other gaming need only to have matched them to keep their business. It isn't like what they're doing is secret or couldn't be duplicated.

    Handle hasn't been consistently going down over the past few years. Just a quick scan of shows quarterly handle was up 2Q 2007, up in 1Q 2006, handle down slightly overall in 2005 primarily due to cancelled dates and meets due to weather (Hurricane Katrina, namely), though handle was up overall in 2002 and 2003, etc.

    The news isn't consistently bad.

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  5. "Charles Town and Mountaineer aren't being kept any more artificially alive than all the Pennsylvania tracks, Louisiana and other locations with alternate gaming revenues." - absolutely true, and I would like them all to either survive without it or die. Let's see what will happen in PA when the politicos end the slots racing charade.

    Non-slots tracks (i.e. real race tracks with a focus on racing) can't match those purses. It's like competing with Dubai in the airport business - if your competitor doesn't care about the bottom line, any attempt at matching them is essentially suicidal. The WV or PA tracks aren't viable, they just don't care for viability.

    While overall handle hasn't been in a steady decline, the trend that few tracks operate a profitable racing product has been the case for several decades now. So has the fact that very few if any minor-league tracks operate profitably.

  6. Lost in the concept of downsizing is the impact this will have on the economy of the affected States. The economic impact goes much deeper than simply tracking handle and anyone wanting to suggest downsizing should address this in their solutions. Do you have jobs for all the grooms, blacksmiths, van drivers, tellers, etc. for each of the "AA" tracks when they close? Do you have logistics figured out for closing tracks for part of a year and racing on a circuit? Do you really think people in the industry can simply shutdown for months at a time or move around the country like gypsies?

    And the point about CT is absurd. Ask anyone in the city of Charles Town what they think about the track and I'm sure you will get a different opinion. Before Charles Town added gaming, the city was nothing more than a track and something resembling a small town. The commercial and residential growth in CT has been nothing short of amazing and the town continues to grow and prosper.

    Anyone in the game knows things need to change but shortsighted "solutions" are not going to fix the problems.

  7. That doesn't mean that such tracks shouldn't be allowed to find a way to stay in business.

    Say I own an independent bookstore in a small college town and I find it difficult to stay afloat selling only reading materials. But I realize the college kids are driving 30 or 45 minutes to hang out for hours at Starbucks.

    So I clear out space in my building, set up a coffee bar and some tables, and hire a handful of baristas -- from among the recent liberal arts grads at the college who have no other job opportunities, of course.

    Suddenly I'm handling twice as much business in coffee sales as I ever did selling books. I'm happy, the coffee drinkers are happy, and while it certainly creates a different atmosphere in the building and might be considered an inconvenience to some of my books-only customers, isn't that better for them than if my bookstore went out of business entirely?

    It isn't exactly the same scenario. But it isn't exactly different, either.


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