By Alex Waldrop, President and CEO of the NTRA
week, it was my pleasure to speak to a very passionate, engaging (and some
might say courageous) group of young men and women who make their living in the
Thoroughbred industry. The next generation of leaders in our industry is
already meeting monthly with the goal of devising a long term plan for racing
and breeding through the year 2020. As you might imagine, they are wisely
looking beyond the current economic crisis to find ways to make sure
Thoroughbred horse racing and breeding thrive and prosper well into the
future. In that context, they asked former NTRA/Breeders' Cup CEO, D.G.
Van Clief and me to each address the following question: Do you
think the Thoroughbred industry would be better off with a Central Office and a
commissioner? Here is a synopsis of what I said.
I see it, the league/commissioner idea is a great concept, grounded in the notion
that racing is first and foremost a sport and should be governed as a
sport. Unfortunately, I am not optimistic about its chances for full
a true league to work and for a commissioner to have real power, there must be
a willingness and an ability of all participants (tracks, owners,
trainers and jockeys) to (a) pool significant media and other intellectual
property rights (TV, trademarks, merchandizing, etc.) and submit private
commercial interests (race dates, race times, simulcast sales and pricing
decisions, ADW revenues, etc.) to a collective league structure (a la the NFL)
and then (b) submit all decisions related to these commercial matters to the
will of the whole and allow such decisions to be carried out by the league's
commissioner. Due to the regulatory restraints inherent in our sport that
I will discuss below and the varied economic interests of racing's participants
(not to mention some potentially insurmountable anti-trust limitations), I
don't think it is realistic to expect horseracing to be governed in this manner
at this time.
I stressed with the group, by offering this view I am not defending the status
quo nor am I trying to protect my status or the status of the NTRA. It is
simply an observation that from a pure economics perspective, tracks and
horsemen don't "need" each other the way team sports need each other.
can and do conduct their separate businesses pursuant to a very valuable state
granted monopoly to conduct pari-mutuel wagering in a designated market.
Likewise, horsemen should and will always control when and where their horses
run (think Jess Jackson and Rachel Alexandra). And jockeys are not likely
to become full time employees and give up the winner-takes-all economic model
that the top jocks now enjoy. I make it a point to "never say never," but
the preeminence of pari-mutuel wagering to racing's economic structure - and
racing's lack of substantial television rights fees which by and large are the
glue that hold major sports leagues together - mean the league/commissioner
model is unlikely to be in racing's immediate or perhaps even long term
I do see great promise in a more business-like central governance
structure. The NTRA, in cooperation with tracks, horsemen and
regulators, is in the process of establishing a central governance apparatus
through the NTRA Safety & Integrity Alliance and ultimately through the creation of an Interstate Compact
which hopefully will be adopted in all major racing jurisdictions sometime in
the not-too-distant future. This is where the progress is being
made on a daily basis and I spent a fair amount of time helping the group
understand the need for and importance of these efforts.
I told them, given our industry's reliance upon pari-mutuel wagering as our
principle source of revenue, the horse industry will never escape state
regulation. States simply are not going to allow wagering to occur within
their borders without significant regulation to assure consumer
protection. Since the federal government has so far declined to intervene
and a private regulatory authority such as the British Horseracing Authority
runs afoul of U.S. laws against delegating regulatory powers, we are left with
no alternative but to deal creatively with our circumstances. That is
precisely why the NTRA chose to proceed with the creation of Alliance.
Indeed, through the efforts of the Alliance accreditation process and the
cooperation of tracks and horsemen in most major racing jurisdictions, we have
already made great strides by working more cooperatively with states to achieve
much of the same uniformity that other businesses and sports enjoy.
I stressed to the audience that the NTRA's consumer feedback tells us that
horseplayers may not care about the formation of a league office with a
commissioner. What they appear to want is greater integrity and
uniformity (and they want lower takeout and fuller fields but that is for
another blog). For them, how we get there is not their principal concern
- we just need to get there. That's why the NTRA launched the
Safety & Integrity Alliance one year ago this month - it was the quickest,
most reliable way to implement change of the kind our customers want.
Rather than bemoan our inability to accomplish what some might think is
the perfect solution - a league - the NTRA is moving forward through the
Alliance to effect meaningful change today.
will the Thoroughbred industry be in 2020 from a governance perspective?
I can't say for sure but I am growing more confident every day that by that
date the Alliance will mature into a fully functioning self regulating
authority setting the highest industry standards for safety and integrity and
working hand-in-glove with state governments through a nationwide interstate
based upon my observations at the meeting, the industry will undoubtedly be in
the hands of a new generation extremely well equipped to deal with future
about you? Where do you stand on the issue of industry structure and
governance? What am I missing?