Looking Forward to Flat By Eric Mitchell

 (Originally published in the January 8, 2011 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.

By Eric Mitchell - @EJMitchellKy on Twitter

By Eric Mitchell

 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.

9 Comments

Leave a Comment:

Thekid

I agree with less race dates.  Japan does it right, running only on the weekends. Less is indeed more, as demonstrated by Monmouth in 2010.  Less race dates would get the public more excited, since you would have to wait for the weekend to see a race.  Sounds crazy to some people in the U.S. but it works elsewhere, and we need to try SOMETHING.  The status quo is not working.

04 Jan 2011 12:53 PM
The_Knight_Sky racing blog

Mr. Mitchell wrote:

>>>Then there is the still unanswered question of whether slot machines serve the best long-term interest of Thoroughbred racing.

____________________________

Slots machines only delayed the inevitable....

Attracting horse racing fans, educating them, and creating a larger segment of winning horse racing customers.

The wagered dollar will continue to be the key to horse racing's prosperity.

04 Jan 2011 3:29 PM
Byron Rogers

I'm not sure that the impeding foal reductions and the subsequent reduction in the available racing talent will see less race dates, rather less race tracks.

When the racehorse becomes a desired commodity for racetracks to survive, Owners and Trainers will start to make decisions about where they race at particular times of the year resulting in many racetracks just not having enough horses to sustain racing at all. They will put up the shutters and be sold for development most likely.

The hope is that this lack of racehorses actually makes racetracks co-operate with one another to survive on a national level. Rather than having graded stakes races run within a minute of one another, they might put 15 mins between them so wagers can be made. Rather than running graded stakes race under similar conditions a week apart, maybe racetracks will get together and create a national stakes schedule so that the best talent can turn up to their racetrack for their key races.

04 Jan 2011 4:24 PM
Bellwether

18,360...2012...A FREAK COME N OUTTA THAT CROWD...STAY TUNED...

08 Jan 2011 4:29 AM
Denmark

I am really worried about the "fight" going on in Florida.  Having tracks compete daily is not a good thing.  And, it will be tried in CA.  What do you think?

08 Jan 2011 3:46 PM
LetItRideMike

I think the headline across from your blog reads "CALDER TO RACE YEAR ROUND" The Onion couldnt have done it any better than The Bloodhorse did, imo....

09 Jan 2011 3:42 PM
LetItRideMike

To "the kid ", the challenge to just racing on the weekend is that, in addition to losing most. of your best staff because they need full time work, many of our best tracks are on land so valuable they really cant exist as a racetrack with the land sitting idle 8 months a year when they are not racing, and 4 days a week during the few months live racing is held there.

09 Jan 2011 3:50 PM
Asst. Hotwalker

The day racing became an orphan to slots, was the day it signed it death warrant.

12 Jan 2011 6:09 AM
Zenyatta John

We need a national commissioner who will stagger post times for simulcast players plus every track need to reduce racing dates.

We are breeding less and less horses and there are more hands than every trying to get their cut.

17 Jan 2011 1:59 PM

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