Shrinking Starters - by Dan Liebman

Blood-Horse Staff — Tue, 12 May 2009 13:55:00 GMT

(Originally published in the May 16, 2009 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.)

Speaking to shareholders May 7 via conference call, Churchill Downs Inc. president and chief executive officer Bob Evans said, “The solution for tracks without slots is to cut purses, to cut races, and race days, or to cut all three.”

At its signature track, Churchill Downs in Louisville, Ky., the company has already cut purses and races, and a published report May 10 indicated the track would request to reduce its live racing schedule from five days a week to four for the remainder of the meet that runs through July 5.

The fact is many horsemen are electing to run instead in states such as Indiana, West Virginia, Delaware, and Pennsylvania, where Thoroughbred purses are augmented by revenue from other forms of gaming.

On May 9, the Saturday following the Kentucky Derby Presented by Yum! Brands (gr. I), Churchill had 62 starters in its 10 races, an average of 6.2 runners per race. During the first 12 days of the track’s spring/summer meet, the average number of starters per race was 7.55; excluding Kentucky Oaks and Kentucky Derby days, the number drops to 7.31.

Also on May 9, the average number of starters per race was 7.83 at Charles Town Races & Slots in West Virginia, 7.11 at Delaware Park, and 8.11 at Indiana Downs (for its nine Thoroughbred races; the track also ran three Quarter Horse races with 10 starters in each event).

It has always been the case that every starter translates to higher handle, which in turn equates to more dollars for purses. But in today’s pari-mutuel world, it is even more important to have larger fields because more than 80% of dollars are bet off-track. In the days when on-track attendance mattered most, a bettor might not be intrigued by a four-horse field (Churchill had two four-horse fields May 9) but still might wager on the local product. Today, there simply are many more options; thus, a bettor who sees no more than six starters in a track’s first five races—as was the case May 9 at Churchill—may simply turn away and play another track’s races.

Unfortunately, Churchill Downs does not release its attendance or handle figures, but even without the numbers, it is easy to assume that handle is down significantly.

Kentucky Gov. Steve Beshear’s latest quote about the horse industry, repeated often in the past few weeks, is, “What we don’t want to happen is to become the former horse capital of the world. This is our signature industry, and we will aggressively protect it. We will remain the horse capital of the world as long as I am governor.”

Kentucky’s racetracks have been actively seeking slot machines at their facilities for more than a decade. Looking back 10 years, on May 15, 1999, the Saturday following the Kentucky Derby saw 10 races run at Churchill Downs with 8.8 average starters per race. On the same date five years ago, the 10 races run on the third Saturday of the meet saw an average of 8.2 starters per race.

Like most other states, Kentucky has a budget crisis. Later this month, the new revenue forecast will be unveiled. Yet despite the fact slot machines at Kentucky’s racetracks would protect the state’s “signature industry” by increasing tax revenue and saving thousands of jobs, another legislative session has come and gone without the passage of a bill to aid the men and women who make Kentucky famous for its horses.

Budget forecasting is a tough job in any economy, but it is especially hard in light of today’s economic conditions.

Without slots, one wonders what forecast the horse industry in Kentucky would project for the next five years.

Even without slots, Kentucky may not become, as the governor says, “the former horse capital of the world.”

But, without his support, Kentucky horsemen will help see to it that Steve Beshear becomes the “former governor of Kentucky.”

Voice of Concern - by Dan Liebman

Blood-Horse Staff — Tue, 14 Oct 2008 14:15:00 GMT

They say actions speak louder than words. The public is taking action by wagering less on horse racing. And those actions are speaking loudly.

Data released for the third quarter of 2008 reveals that handle in the United States and Canada dropped sharply, 9.85%, during July, August, and September, and for the calendar year, is off 5.75% compared with 2007.

During the three-month period, total wagering was $3,489,171,872, compared to $3,870,348,046 during the third quarter of 2007. For the first nine months of the year, patrons wagered $10,754,907,211 on races in North America, down from $11,411,642,388 during the first three-quarters of last year.

Officials are quick to blame the economy, and why not? Global financial markets are in turmoil, while closer to home, the Dow Jones Industrial Average plummeted during the week of Oct. 6.

As Bob Evans, president of Churchill Downs Inc., pointed out, gambling involves discretionary income. People have to buy gas and groceries, but they do not have to wager on horse racing.

“People don’t have to go to the track,” Evans said.

True, but is it that people don’t “have” to go, or that fewer people “want” to go?

Alex Waldrop, president and chief executive officer of the National Thoroughbred Racing Association, indicated more than the economy is at work.

“Our industry’s difficult year continued during the summer as a harsh economy and other factors continued to negatively impact business,” Waldrop said.

Consider that the third quarter comes after the Triple Crown, which this year featured a Kentucky Derby Presented by Yum! Brands (gr. I) in which the winner, Big Brown, was admittedly on steroids and the second-place finisher, Eight Belles, tragically broke down and was euthanized.

Make no mistake, the struggling economy is a big factor, but our customers have told us they are wagering less, or not at all, because of such issues as the use of medications, wagering integrity, and safety concerns.

So it is the perfect storm for the fourth quarter of the year. First, people are upset with us as an industry. Second, they have watched Congress deal with a bailout package for Wall Street, seen the Dow Jones Industrial Average shrink 2,000 points in a week’s time, and are nervously and anxiously awaiting the outcome of a history-making presidential election.

The industry can work together to alleviate the public’s concerns over a myriad of issues, but dealing with a battered economy is much more difficult to address. All the promotions a racetrack’s marketing minds can come up with will not work when people are worried about the cost of living and the wild daily market fluctuations that determine their retirement funds.

A sign of the times is occurring now at Keeneland, the premier meeting of the North American racing calendar in the fourth quarter of the year. If any track was immune to the economy, one would have guessed it was Keeneland. One would have been wrong.

A local television weatherman said the weather in Central Kentucky Oct. 4-6 was the best it had been for an opening weekend of the Keeneland fall meeting in 30 years. So, when Saturday’s attendance dropped from 24,480 to 19,535, it was evident the economy and “other factors” were at play at Keeneland just as they had been during the summer at Del Mar and Saratoga (total handle down 7% and 10.3%, respectively).

For the first seven days of the Keeneland meeting, which included two weekends, attendance was down 2.5%, on-track handle dipped nearly 11%, and total handle dropped 17.4%. Per-capita wagering on-track this year was $81.23, compared to $88.97 in 2007.

Keeneland’s rich purses attract top horses, so when total wagering on Keeneland for a week—a week that included 11 stakes, six of them grade I—declines from $62.2 million to $51.4 million, it is time to take note.

Actions speak louder than words. Our customers are speaking.

What's Going On Here : bob evans

Shrinking Starters - by Dan Liebman

Voice of Concern - by Dan Liebman