(Originally published in the January 8, 2011 issue of The
Blood-Horse magazine. Feel free to share your own thoughts and
the bottom of the column.)
By Eric Mitchell - @EJMitchellKy on Twitter
Despite all the science that proves otherwise, we’re hoping the world is flat. The Thoroughbred world in 2011, that is.
The year will be considered successful if auction prices hold steady, handle remains where it is, and purses don’t drop further. Flat is good.
A flat market is not an unrealistic expectation for the public auctions. The 2-year-olds in training sales were up collectively in 2010, and the yearling market fared much better than most had anticipated. We can expect to see hundreds of fewer horses passing through the auction ring, which should go a long way toward balancing supply with demand. Sellers who have the option will be more selective about what they take to a sale, and those equipped to race what they have may find themselves spending more time on the phone with their trainers.
Where flat will be much harder to achieve is with purses and handle. Year to date through November 2010, purses dropped 8.45% and handle fell 7.8%. Complete statistics for 2010 were not available at press time.
Purses have the best hope of achieving status quo with the Aqueduct casino project finally having crawled free of New York’s political arena and now in the hands of contractors. About 1,600 slot machines of the 4,500 approved should be ringing by springtime with the rest up and running six months later. Chaos continues to swirl around the Maryland racing industry, but purse growth fed by additional slot machines is also expected in late 2011. The Cordish Co.’s Maryland Live! casino near Arundel Mills mall is expected to be open in late 2011 with 4,750 machines. Purses will also continue to grow in other racino states such as New Mexico, Louisiana, Oklahoma, and Florida, where Hialeah just got the legal go-ahead to implement slot machines.
The question is whether these growing areas can offset declines in states such as Kentucky, California, and Texas. Then there is the still unanswered question of whether slot machines serve the best long-term interest of Thoroughbred racing. For the short term, they’re essential.
Getting the North American handle to flat may be the toughest nut to crack. With the auction market soft, we can expect to see some horses racing longer, not only in 2011 but probably in 2012 too. The breeding market will take its sweet time rebounding, so racing fans should get to see many of their favorites perform longer.
Given the state of field size at many tracks, keeping horses in training—sound and able-bodied, mind you—should also be positive for the sport. Larger fields provide more value for bettors and attract a larger handle. But the number of horses staying in training will not be enough to offset the declining North American foal crop, which has dropped 11.4% between 2005 (38,359) and 2009 (estimated at 34,000). Of the foals of 2006, about 54% started in a race in 2009, representing 20,613 starters. If the same percentage applies to foals of 2009, then we’ll have 18,360 starters in 2012, or 11% fewer starters. The projected foal crop for 2010 is 30,000, which means the number of 3-year-old starters in 2013 will be about 16,200.
The average number of starts per 3-year-old in 2009 was 6.3, which has not changed much in many years, so either we’re facing significantly shorter fields in the next couple of years or we need to have fewer races. The Monmouth Park experiment did show us that a shorter, higher-quality meet will increase the handle.
Now is the time for racetrack operators, horsemen’s associations, and legislators to take a serious look at their racing calendars and legislative mandates regarding racing dates and prepare for reductions. We can’t keep demanding the same number of dates if we won’t have enough horses to present a viable product to the racing public in the very near future. With fewer races, the average purse goes up, the average field size goes up, the racing becomes more competitive, and the handle also goes up.
We’ll begin to see the effects of the declining foal crop this year, when the number of 2-year-old starters (roughly 30% of a foal crop since 2007) will be about 1,000 less than those that started in 2009.
So to see real growth, we need fewer races. But for 2011, we’ll just hope for flat.