Price Wars

If you follow horse racing closely, you are no doubt aware that a large number of Mid-Atlantic racetracks and OTBs are being denied the right to offer simulcast wagering on races run at Gulfstream Park in South Florida, Fair Grounds in New Orleans and Santa Anita Park in Southern California -- three prime winter racetracks.  Basically, the two sides have failed to reach agreement concerning the rate to be paid to the three tracks for wagers placed on their races at certain facilities located on the Eastern Seaboard.  The dispute is a familiar one to tracks and horsemen.   It also is familiar—and maddening—to our fans.

Frequently, I hear from horseplayers who are infuriated by their inability to bet on certain racetracks due to these disagreements between industry players.  Some fans clearly believe it is my job as the head of the NTRA to force or negotiate a resolution of these disputes so that wagering can continue unabated.  It is occasionally suggested by fans that I have neither the backbone nor the intellect to fix the problem.   You can debate whether I possess the necessary guts or brains for my job but one thing is for sure – the economic forces driving these disputes defy quick resolutions or easy answers.   

You see, the reason for these disputes is almost always the same.  Racetracks, because they spend millions to operate live racing venues, and horsemen, because they understandably need higher purses to cover at least a portion of the costs associated with owning, training and racing their horses, all want a larger share of the fees derived from wagering at remote distribution outlets such as other tracks, ADWs and OTBs.   But distributor tracks, OTBs and ADWs likewise have costs associated with their operations leading to their desire for a significant share of the fees.   In the end, these are market-driven decisions that only the affected parties can resolve for themselves and external threats or attempts at coercion are unlikely to achieve a different or more timely result. 

Racing is not alone in its struggle to adequately price its product.  The news media is full of stories about price battles between TV channels like the Food Network and Home and Garden TV (HGTV) and cable service providers like Cablevision.  Just this week, 3.1 million Cablevision subscribers in New York, New Jersey and Connecticut have been denied access to celebrity Chef and noted Thoroughbred owner Bobby Flay and “Design Star.”  At issue is the price Cablevision will pay to Scripps (owner of the Food Network and HGTV) for the right to distribute those channels.  Scripps says it costs money to produce these channels (sound familiar?), and it is demanding an undisclosed increase in fees.  Cablevision says they are demanding too much.  Scripps even took out a full page ad in the New York Times apologizing for the interruption but also urging fans to contact Cablevision and let their views be heard.

Similar disputes have erupted between networks like Fox and cable service providers such as Time Warner Cable with price being central to the dispute.  Networks that traditionally relied primarily on ad sales to cover production costs are jealous of the cable TV industry revenue model which allows cable service providers to derive revenue from subscriber fees in addition to ad sales.  As ad sales decline, networks and their local affiliates are no longer willing to provide their content to cable companies for free and instead are now demanding a share of the subscriber fees.  Look for these media battles to continue and to grow in intensity as Internet distribution platforms expand and offer yet another form of competition. 

So, if you’re a fan, you’re probably thinking to yourself, “I don’t care about revenue models or costs of production.  I just want to bet Gulfstream Park.”  And you’re right.   Industry problems should never be shouldered by our customers.   Yes, it’s true that it is a very difficult marketplace right now.  And in this environment, it is not easy for content providers and distributors to find common ground on pricing issues.  Nonetheless, we need to resolve our pricing disputes as quickly as possible or be prepared to suffer the consequences when customers look elsewhere for new content or different ways to spend their money.

9 Comments

Leave a Comment:

David

Why not allow the simulcast to continue to the OTB's, other distribution channels, etc., and collect all generated fees in an escrow or holding account, to be apportioned to the parties by an independent arbitrator?  That way the fan doesn't lose the opportunity to bet his or her favorite track and the tracks, horsemen's groups, and remote betting facilities do not lose 100% of the fees otherwise generated by allowing the bets.  

08 Jan 2010 5:03 PM
Cigar16

Racing think tank ideals often touch on the subject of the over saturation of racing.

I do not want to be of a volatile opinion but being a part of this industry for over 20 years I can say IMHO that the Mid Atlantic cooperative has no clout.

Horrible fields, poor stakes schedules, and the inability to draw high level horses leave their product high and dry. Why? Because places where the character of class racing exists is where the HORSES and competition are held in the highest esteem.

Not where slot machines are GOD, not where whining horseman and stingy track management squabbling every other week is the norm, and not where cranky, know little about racing OTB people in attendance cannot get a program or a drink past 6pm.

Quite frankly off the top of my head,(Monmouth not included)RACING (not the employment loss factor) for the future can definitely do WITHOUT any of the Mid Atlantic tracks in their current and most likely permanent state, and suffer no ill effects.

It would actually benefit the pools and infrastructure at race tracks such as Keeneland and the such where racing at its finest THRIVE.

08 Jan 2010 5:19 PM
ArchieA

Great line from Daruty explaining why Tracknet is justified in raising the percentage it wants for each dollar wagered on their tracks.........

“We don’t think it’s appropriate to sell to Mid-Atlantic today at the same rate that was received five years ago,” Daruty said. “What product do you buy in your daily life that you’re paying the same today that you did five years ago?”

So using Daruty's logic.....at some point in time, Tracknet should be charging $1.00 for each $1.00 wagered on it's signals.


08 Jan 2010 6:20 PM
Bill

Alex,

Why not advocate for the fans right now and publicly call for independent arbitration. You respond to this problem by pointing to the cable TV industry but industry is thriving compared to horse racing. Need we remind you that the all sources handle for 2009 was the lowest in 12 years? Are you really just whistling on the Titantic? As the head of NTRA you really must publicly call for action. We need you to stop wringing your hands and I try to do something. We need you to call for arbitration now.

09 Jan 2010 10:33 AM
Nick

I am saddened by the familiar rhetoric perpetuated by Mr Waldrop...same ol...same ol..."there is nothing we can do". Why then, are you taking the handsome sum your position demands?

YOU are in a position to make change. Grow yourself a spine and DO SOMETHING!!

Racing recycles the same execs around the positions of importance and NOTHING EVER GETS DONE!

If not you, Mr Alex Waldrop...who?

Really...who?

09 Jan 2010 5:32 PM
MachoUno6789

So, you got to wonder if the Tracknet Media group has offered to reciprocate the payment it  seeks with the tracks in dispute by offering to pay the same percentages of handle? As it is, I live in the Mid-Atlantic region and have not seen or bet on a Gulfstream race so far this year or Fair Grounds race this past winter for the 1st time in about 15 years. I don't appreciate it as well as the thousands and thousands of other fans in the mid-atlantic region. If the dispute remains, surely racing and its industry will suffer another major loss in handle in 2010 due to this seeming act of piracy. Everybody wants more money and think they rightly deserve it. Racing has to remember that it has a growing list of competitors now and has done nothing to promote itself. Unlike 10-20 years ago when a Saturday afternoon of racing was the only gambling thing to do, now there are slot parlors, on-line gambling, and places looking to legalize table games. If Racing doesn't get its act together as a whole, AND in a hurry, the "Sport of Kings" may eventually end up as a distant memory or a side show in a circus. The fairest thing to do is have an impartial economist type group create a model that can be agreed upon and accepted by all and not allow one group who throws its weight around by blacking out its product at a time of year when it is really the only game in town. This act only hurts the entire game as a whole and everyone in the industry should be concerned.  

10 Jan 2010 8:23 PM
RDM

Mr. Waldrop while you may not be able to force a settlement, you can keep pressure on the two sides by keeping it in the press.  Explain to the fans exactly what is in dispute ($'s apart).  Detail how much purse money horseman are losing each day.  Implore the Racing Form to take a stance.  Provide email addresses of the parties involved so Fans get express their opinions directly.  WE need your leadership on this dispute.  Any type of action is better than none.

10 Jan 2010 8:45 PM
Bob Hope

Track Net Media is a high priced, unnecessary bureucracy that is at the root of the problem.  They only provide arrogant insulation for Churchill and Magna.  They have compounded the problem that threatens small tracks.  

 

{Edited For Content by Moderator} 

11 Jan 2010 7:47 AM
Larry

The fact that there are only 8 comments 3 days after posting speaks volumes. And is most disconcerting.  Any blog on who is the better filly will have over 100 comments in a matter of hours. If is not Mr. Waldrop's job to intervene, and I am not saying it is, just who's is it? Rhetorical question actually. And that, it seems to me is one of the major reasons the sport and the industry that lives off of it is in a state decline. Nick's comment; Racing recycles the same execs around the positions of importance and NOTHING EVER GETS DONE!      

Sure seems to ring true when you have been in it as long as I have and look down the list of "Industry Leaders".

The following are some comments made by Utube viewers on the jockey's fight the other day at Philly Park;

Ugh horse racing. Glad it's dying. Shame what it has become. Did they give money back? hehe

Aaaa horse racings a joke now. This doesn't surprise me. 75% of it will be gone in 5 years.

racing no=No attendance,no handle,top horses retiring early,sky high takeouts,horrible customer service. Now fighting LOL. Was at Philly the other day. No one was there.

Where is racing's PR people?? If I were in charge I would have a whole department of people gleaming and producing great racing clips, people and horse stories posting them on Utube. So the great side of racing far out numbers the negative side.  Have people follow important blogs and correct misinformation. Produce shows such as Jockeys and give them away if you have to.  Seems to me that this is the new standard business model for any industry that wants to survive in the information driven age.

The tragic death of Eight Bells and Barbaro and the poor way in which it was handled by industry leaders has had a much larger and far reaching negative effect on the industry then the industry leaders anticipated.

11 Jan 2010 7:06 PM

Recent Posts

More Blogs

Archives

Tags