It sounds like something Yogi Berra would say, but in this recessionary economic time, many companies were in healthy financial shape until they weren’t.
It is hard to imagine a company or business anywhere in the world that hasn’t been forced to make major decisions over the past 18 months due to the numerous factors that have impacted global financial markets. This certainly includes racetracks, sale companies, racing organizations, and breeding farms, as well as any business that supplies or serves them.
In the past week the Breeders’ Cup has elected new board members and announced it will continue the development of a strategic plan to chart its future course.
This much is known:
- Breeders’ Cup announced late last year it was cancelling its stakes program, but then it rescinded that decision after nominators objected and dipped into its reserves to fund the 100 races at 40 tracks for $5 million.
- Due to a lowering of most stud fees, and the decision by some breeders not to have mares covered—as well as the deaths and pensioning of some stallions—revenue from foal and stallion nominations has decreased significantly the past two years, a trend that may continue for the foreseeable future. Breeders’ Cup nominations account for about 40% of revenue, and those revenues are off as much as 20%.
- As with most other organizations, Breeders’ Cup has seen a decline of about 25% in the value of its investment portfolio, an eight-figure hit.
- Breeders’ Cup will operate this year at a deficit estimated at $6 million.
Something has to give.
No one ever needs corrective lenses for hindsight, but many openly questioned and criticized the Breeders’ Cup when it rapidly expanded the number of year-end event races that make up its World Championships. In 2007 the eight races became 11, and a one-day event was stretched over two. Last year three more races were added.
Suddenly, the purses for the championship races had risen in just a few short years from $14 million to $25.5 million, the level at which the races are currently scheduled for this year.
A big jump occurred in 2006 when the Breeders’ Cup Classic purse was raised $1 million to $5 million; the Filly & Mare Turf, Juvenile Fillies, and Turf were all raised $1 million; and the Juvenile and Mile (all gr. I), which had been bumped $500,000 in 2003, were raised another $500,000.
The three new races in 2007 each carried a $1-million purse, and last year three new races with total purses of $2.5 million became a part of the program.
What the organization should consider:
- Announce immediately that purses for this year’s event will be scaled back. Owners will still show up to run for a $3-million Classic or $1-million Juvenile. Yes, many nominators will not be happy. But these are extraordinary times, and owners cannot expect to run for the same purses as when times were good. Handle is dropping, causing tracks across the country to trim dates and cut purse levels.
- Announce immediately that next year’s event will be returned to one day and the six races added the past few years will be dropped from the schedule. At that time, the purses for the eight remaining races will be raised to their former levels. Horsemen will be able to continue pointing for 14 Breeders’ Cup races this year but will know next year’s event will consist of only eight.
- Speed up the process of naming host sites. The reasons for running two straight years at Santa Anita seemed contrived, and many horsemen were displeased with the decision to run for two consecutive years on a synthetic surface. The 2012 Super Bowl will be played in Indianapolis, but the Breeders’ Cup has not announced a host beyond Churchill Downs in 2010.
Breeders’ Cup is going through nothing different than many other companies. Nominators anxiously await the strategic plan from its newly constituted board.