What's Going On Here : breeders' cup

Cut the Cup - By Dan Liebman

Blood-Horse Staff — Tue, 14 Jul 2009 17:47:00 GMT

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Breeders’ Cup announced late last year it was cancelling its stakes program, but then it rescinded that decision after nominators objected and dipped into its reserves to fund the 100 races at 40 tracks for $5 million.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.

Night Fever - By Dan Liebman

cdawahare — Tue, 07 Jul 2009 14:25:00 GMT

(Originally published in the July 11, 2009 issue of The Blood-Horse magazine. Feel free to share your own thoughts and opinions at the bottom of the column.)

In the midst of a stinging defeat for expanded gaming in Kentucky, it was discovered that people will still attend a racetrack - without slots - and have fun doing so. But not for the same old stale product.

Churchill Downs installed a temporary lighting system, and more patrons than anyone predicted turned out to watch three racing cards at night under the Twin Spires.
True, the Louisville, Ky., racetrack stumbled out of the gate, when the 28,011 that attended Friday, June 19, were met by long lines that left many disgruntled. But racetrack officials apologized, promised it would not happen again, and a week later 27,623 poured through the turnstiles to be greeted by improved customer service. Better yet, on Thursday, July 2, a crowd of 33,481 showed up to begin their holiday weekend with Thoroughbred racing.

True, some never opened their wallets to wager, but that is OK. On-track handle was up considerably, but it was also important to attract young people who preferred to listen to music, drink dollar beers, and visit a racetrack rather than a bar or nightclub.

A patron who had a good time not only will return but will encourage friends and family to join him the next time. And, while handle helps purses, a racetrack keeps more from admissions, programs, and beer than from a wager (which has to be shared with other groups), which helps cover expenses and encourages track officials to try other creative ideas.

Some wonder if the success of night racing might lead to a discussion of the Derby being run at night. This would not be done to attract more fans—the physical plant is already bulging on Derby day—but to attract a larger television audience.

While it might not make sense to alter the entrenched Derby, it could make sense to consider night racing for the Breeders’ Cup World Thoroughbred Championships. The 2009 Derby registered a 7.3 national television rating overall, but a 9.8 rating during the 6-7 p.m. race portion of the broadcast. The Breeders’ Cup has a more difficult situation, with racing spread over two days and multiple networks. Still, the 2008 overall rating of .7 is anemic by anyone’s measure.

It is hard not to think more viewers would see the Breeders’ Cup races if they were run during prime time. Just imagine the Breeders’ Cup Classic (gr. I) being aired at halftime of Monday Night Football.

Churchill Downs knows where the lights can be rented.

Get a handle
We were reminded again of the fervor with which Hong Kong racing fans wager when the largest handle there in six years occurred July 1 at Sha Tin. The crowd of 63,369, and more importantly, at 116 off-track facilities and through in-home wagering, bet HK$1.22 billion on the 11-race card, about $157.3 million.
That amount is similar to what was wagered internationally last year on the two Breeders’ Cup cards, when $155,740,327 was bet on 21 races.

The difference is the Hong Kong Jockey Club only staged 78 days of racing during its 2008-09 season, and residents there can only wager legally on horse racing and soccer, as well as play the country’s lottery. For the 78 cards, wagering in Hong Kong was down only 1.3% from a year ago.

In contrast, statistics released July 5 by Equibase showed wagering on racing in the United States fell 16.9% in June, continuing a trend that also saw purses drop 10.3% from the same month last year. For the first six months of the year, all-sources handle on U.S. races is down 10.5%, and purses have dropped 6%.

With high unemployment, and Americans clearly spending less, the fact handle is down only 10.5% may actually be interpreted as a good sign. Like commercial breeders anticipating the yearling sale season, it may be a time in which a negative has to be perceived as a positive.

Cup Cuts - by Dan Liebman

Blood-Horse Staff — Tue, 16 Dec 2008 14:24:00 GMT

The first Breeders’ Cup was held at Hollywood Park Nov. 10, 1984. But in January of that year, long before the first event day, nominators began receiving checks from another of the fledgling organization’s programs, the $10-million Premium Awards.

Calder Race Course was the first track to run a stakes enriched with supplemental monies from the Breeders’ Cup, with 428 stakes at 85 racing associations in North America designated to receive funds to boost their stakes programs.

An examination of the percentage of non-restrictive stakes at each track determined the allocations, with Breeders’ Cup and track officials then determining which races would have their purses increased. Nominated horses would run for the entire purse; non-nominated horses only for the money from the racing association.

In addition, foal and stallion nominators would receive awards, a way to earn back a portion of the dollars breeders pay to fund the Breeders’ Cup.

Over the ensuing decades, the Premium Awards program has been worth a varying number of dollars, enriched different numbers of stakes, and was even sponsored for several years by Budweiser. Now, it has been discontinued.

In a memo to racing officials Dec. 11, Breeders’ Cup senior vice president Pam Blatz-Murff cited “anticipated losses in nominations revenue and the worldwide economic downturn” as causing a decrease in Breeders’ Cup revenue in 2009 of more than $10 million. The stakes program was cut, as was, the memo said, “more than $5 million in television and marketing spending.”

With premium stakes allocations now withdrawn, racing offices, Blatz-Murff said, should “rewrite your condition and stakes books to reflect this change.”

What a week for racetracks. In addition to the Breeders’ Cup bombshell, Santa Anita announced a 10% across-the-board purse cut and Calder was forced to eliminate three grade III $100,000 stakes races. This all comes on the heels of November’s significant drop in handle.

When the Breeders’ Cup began in 1984, its championship event day consisted of seven races with purses totaling $10 million. In 1999, the Filly & Mare Turf (gr. IT) was added, and the purses rose to $13 million. In 2007, flush with money from rising stud fees and profitable investment accounts, Breeders’ Cup expanded, adding three races and changing the event to stretch over two days. This year, the program expanded to 14 races featuring purses worth $25.5 million.

Now, with the stock market in turmoil and stud fees falling, Breeders’ Cup officials were forced to make some hard decisions. But it is difficult to know the full financial picture, because though funded for 25 years by breeders, the Breeders’ Cup does not issue an annual report to the industry.

Unfortunately, in deciding where to cut costs, the Breeders’ Cup has opted to cut a program that stretches across North America and rewards more nominators and horsemen in favor of two days of racing and a total of 14 races.

The Breeders’ Cup is one of the few ideas in racing that has actually endured, but it has not caught on with general sports fans. Few know it by name and the television ratings have never taken off. The Classic (gr. I) will never replace the Kentucky Derby (gr. I) as the race non-racing fans can identify with.

On the other hand, the stakes program was a way to enhance stakes at large and small tracks alike. Whether the race was increased from $20,000 to $25,000 or from $200,000 to $300,000, it was a chance for eligible horses to earn more and for owners, breeders, jockeys, and trainers to be rewarded for supporting the program.

Racing secretaries and stakes coordinators are understandably disappointed by the decision. Many breeders will be, as well. Tough times lie ahead for breeders. Now they have fewer chances to recoup some of their nomination money.

Scaling the event back to one day to save the Premium Awards would have helped more horsemen.

Policy Play - by Dan Liebman

Blood-Horse Staff — Tue, 05 Aug 2008 15:29:00 GMT

The Breeders’ Cup took important steps last week to help ensure the integrity of its races, while at the same time prodding those states not already on board to hurry and establish steroid policies for tracks its racing authority regulates.

Should a horse test positive for anabolic steroids at the Oct. 24-25 Breeders’ Cup World Championships at Santa Anita, the trainer of that horse will be suspended from the event for one year. The organization also instituted a “three strikes” rule that would ban a trainer from Breeders’ Cup races for life should horses in his care violate the steroids policy three times.

Perhaps more importantly, beginning Jan. 1, 2009, Breeders’ Cup will not help fund purses or hold Breeders’ Cup “Win and You’re In” races at tracks that are not following the model rules for steroid use established by the Racing Commissioners International.

With calls for uniform medication rules within the industry for decades, Breeders’ Cup officials are helping move racing in that direction.

While it is important for policies to be uniform from state to state, it is also necessary for the rules and regulations to be the same for claiming horses as they are for grade I horses. But headlines are made by “big” races and “name” horses, so the Breeders’ Cup forcing the issue is the right thing at the right time.

In this instance, the big race was the Kentucky Derby Presented by Yum! Brands (gr. I) and the big horse was Eight Belles, whose breakdown while galloping out after finishing second on racing’s biggest stage made the type of headlines the sport was not looking for.

But, in fact, her tragic death has become a rallying cry for an industry often criticized for holding many meetings but accomplishing little. Many positive decisions have been made to help right the plight of the Thoroughbred since the death of Eight Belles.

Organizations such as the Breeders’ Cup have gotten the message that the time is right for not only urgent, but clear, decisive, and strong action.

In the release announcing its new policies, Breeders’ Cup chairman Bill Farish said the organization’s board believed it was crucial to take a leadership role in ridding anabolic steroids from the sport. He is correct. In fact, it has a responsibility to lead the sport into new territory, and based on its new policies, it is taking that duty seriously.

The Breeders’ Cup’s hard line on steroids is one of several firsts currently happening in the industry.

Thoroughbred auctions at Fasig-Tipton and Keeneland are being conducted this summer and fall under new conditions of sale, prompted by recommendations from the Sales Integrity Task Force.

Like the Breeders’ Cup has said it is watching trainers and veterinarians, the Task Force is watching breeders, consignors, buyers, and agents. It has taken some steps to help ensure the integrity of the Thoroughbred auction place, while realizing it has taken only the first steps in that process.

A monitoring committee has been established by the Task Force, with Fasig-Tipton chairman and former Breeders’ Cup head D.G. Van Clief Jr. as its leader. It is not easy to reach a consensus when self-regulating, but Van Clief ensures integrity in the process.

Other important matters, such as the disclosure of surgeries of young horses before they are sold, are being discussed by the members of the group.

*******

In New York, the first $100,000 allowance race was run at Saratoga after the New York Racing Association instituted a new policy adding purse money to distance races (nine furlongs or more) with more than six (dirt) or eight (turf) starters. The idea, conceived by NYRA chairman Steve Duncker and refined by racing secretary P.J. Campo, is a great step in promoting durability in the breed.

Hand Cupped - by Dan Liebman

Blood-Horse Staff — Tue, 03 Jun 2008 13:42:00 GMT

I watched parts of the Indianapolis 500 May 25. But I wonder how much less of it I would have viewed had the first 75 laps been on one network and the last 125 laps on another.

Just a small inconvenience? I don’t know. I might have just tuned out because of the silliness of making me—or is it asking me or expecting me—to do such a thing.

If you decide to watch the Saturday portion of the 25th Breeders’ Cup World Championships—formerly Breeders’ Cup, formerly Breeders’ Cup World Thoroughbred Championships—this year from Santa Anita, you will have to do just such a thing. If you tune in on Friday, a third network comes into play.

You can argue an event with extremely low ratings should try anything new. Well, its organizers are.

So, on Friday, Oct. 24, five races for female horses—formerly distaffers—will be aired on ESPN2. The following day, the first 2 1⁄2 hours will be shown on ABC before the action switches to ESPN for another 3 1⁄2 hours.

(The Walt Disney Co. owns ABC as well as 80% of the ESPN family of companies.)

The Breeders’ Cup switched networks two years ago after a long run with NBC, apparently in an attempt to woo younger viewers, more of whom are attracted to ESPN programming. So far, that effort has been unsuccessful. The 2006 and ’07

ratings were nearly identical, last year’s 0.75 rating equating to roughly 1.05 million viewers.

The Friday card has been strengthened, in the view of some, but with poor previous ratings on Saturday, it is hard to imagine many new viewers tuning in on a Friday afternoon.

The Breeders’ Cup has made many announcements since last year’s event was held at Monmouth Park: last December that there would be three new races in 2008; in mid-February that Santa Anita would play host again in 2009; and later that month, that Friday would consist of five races for females and the Distaff (gr. I) would be re-named the Ladies’ Classic.

It became apparent a deal could not be worked out with Churchill Downs to play host in 2009, but waiting just a few weeks would have allowed Belmont Park to have been considered once the New York Racing Association was awarded a new franchise agreement.

As for the addition of new races, this writer must be among the minority who preferred the old model of the Breeders’ Cup, when a larger slice of the organization’s funds went to stakes races around the country throughout the year. More nominators and more horsemen were rewarded by pumping up stakes, many at small racetracks, where the odds of coming up with a horse good enough to compete in a championship race are high.

Now, with branding playing a larger role, Breeders’ Cup officials have opted to create more races to make the championship event stretch over two days. In 2008, we will be introduced to the Turf Sprint, Juvenile Fillies Turf, and Dirt Marathon. This comes on the heels of the first two-day Breeders’ Cup in 2007, when the Juvenile Turf, Dirt Mile, and Filly & Mare Sprint were run for the first time. This year’s two days will feature 14 races worth a record $25.5 million.

Many in the industry have criticized the grouping of the five races solely for fillies and mares on the Friday card, and the change from the distinctive name Distaff to Ladies’ Classic, akin to changing the Kentucky Oaks (gr. I) to Ladies’ Derby. If both days are of equal importance, why have the fillies and mares competing when fewer people are watching?

While several announcements have been made, there has been no word yet on race sponsorships for this year. Interestingly, a check of the Breeders’ Cup Web site does not show Dodge as a corporate partner, meaning it may have powered its last Classic (gr. I).

Though celebrating its 25th anniversary, Breeders’ Cup 2008 will contain many firsts. Only time will tell if the new features make a difference.