Bounce Back - By Dan Liebman

Blood-Horse Staff — Tue, 11 Aug 2009 17:36:00 GMT

The general economy in the United States is starting to show signs of recovery, elements of which are necessary to improve individual industries, such as the business of breeding and racing Thoroughbreds.

On Aug. 6, the U.S. Senate approved a measure already passed by the House for $2 billion in additional funding for the program known as “Cash for Clunkers.” Though the program, which provides a hefty incentive to trade in old vehicles getting bad mileage for newer, more efficient models, is a short-term stimulus, it does seem to be working to help dealers sell cars and encourage consumers to spend money.

The following day an announced fall in the unemployment rate was unexpected, so even though the economy lost 247,000 jobs in July, the rate improved from 9.5% to 9.4%. During all seven recessions in this country since 1970, unemployment has continued to rise for months following the official end of the recession. While most economists believe the unemployment rate will hit 10%, the fact that it is slowing is certainly a positive sign.

At the close of business Aug. 7, the Dow Jones Industrial Average registered 9,370, a new high for the year. The index, often used to measure the health and direction of the stock market, sat at 8,776 at the end of 2008, dropped to near 7,000 in February, and then saw a big jump in July as confidence in the economy grew.

The racing and breeding industries have not been immune from the economic pains gripping not only this country, but most others around the globe. Handle began dropping early in 2008, and purses naturally followed suit. The trend continues.

In July the amount wagered on U.S. races dropped 13.4% from the corresponding month a year ago, and year-to-date, handle is down 10.9%, according to Equibase statistics. Purses paid to owners decreased 7.35% during the month and for the year are down 6.27%.

In 2008 U.S. handle declined 7.2% from 2007 to $13.67 billion, its lowest level since $13.115 billion was estimated to have been wagered in 1998. The 2008 figure represented a 9.9% drop from a record $15.178 billion wagered in 2003.

Purses did not start falling until the third quarter of last year. They were actually up 2.63% through August 2008 but at the end of the third quarter had fallen 2.37%. That is not surprising, however, considering September 2008 is seen as the tipping point when unemployment reached its highest point in five years, the housing crisis deepened, and several major banks failed, most significantly Washington Mutual.

Purses last year dropped 1.3% to $1.16 billion, the first time that figure had decreased in three years. This year’s decline in purses will certainly be more dramatic.

The downward trend in purses is not solely because less is being wagered on races, but because the public is also retreating from alternative gaming, which helps fund purses. Not only are racinos feeling the pinch, but so, too, are Nevada casinos. The latest revenue report from the Nevada Gaming Control Board, for May but released in July, showed casino winnings down 8.3%, the 17th consecutive month of decline. A larger drop was seen in the race books, off 12.3% for the month.

Racing industry officials are quick to place the blame for the declines in handle and purses on the economy. Certainly the recession is a major factor, but many other issues have also contributed, such as disputes between tracks and horsemen over advance deposit wagering; issues with large gamblers, such as use of illegal medications and a refusal by some to bet on synthetic surfaces; and a lack of funds to market racing in its competition with other sports and gambling options.

The U.S. economy will rebound; it always does.

Decisions made today will affect whether the Thoroughbred industry will rebound along with it.

Get a Handle - by Dan Liebman

Blood-Horse Staff — Tue, 09 Sep 2008 14:39:00 GMT

The single most significant number relative to a racetrack’s business is handle. Pure and simple. It not only fuels the second-most-important number—purses—but is clearly reflective of the acceptance of a track’s racing product by the wagering public.

In August 2007, Churchill Downs Inc. announced it would no longer publicly release handle figures for its four racetracks because it did not consider them an important metric of how the company as a whole is performing. Instead, it would discuss its complete financial reports during its quarterly earnings conference calls.

That decision, and the logic behind it, is ludicrous. But now comes an even more preposterous decision.

The Jockey Club Information Systems has discontinued providing The Blood-Horse handle numbers provided it by Equibase, making it more difficult to report racetrack’s meet-to-meet numbers.

Equibase was founded because, prior to its existence, racing’s data was collected by Daily Racing Form, a privately-owned enterprise. Racing wanted to collect and own its data, as it should.

Equibase is a joint venture of the Thoroughbred Racing Associations, an organization comprised of racetracks, and The Jockey Club. To get the business off the ground, The Jockey Club provided $3.6 million in 1990, and the collection of data began the next year. Today, countless tracks provide their fans programs displaying Equibase past performances.

For several years after Equibase came into existence, it had chart callers at racetracks along with those from Daily Racing Form. This meant each race had two data collectors, which caused discrepancies in information. In 1998, the two reached an agreement for Equibase to collect the data; Daily Racing Form shut down its track and field operations.

Until now, there never appeared to have been a conflict of interest between the racetracks and Equibase. But obviously with TRA member tracks owning half the company, it can exercise leverage over what data is made available.

Equibase and Jockey Club officials claim there is a distinction, with racing information being data it collects and handle being data supplied by racetracks. In fact, the tracks are still supplying handle figures, but The Blood-Horse, rather than obtaining those numbers through a previously provided tool, would now, it is told, have to add the figures from race charts.

The Blood-Horse news story in August 2007 announcing Churchill’s change in policy contained comments from company spokeswoman Julie Koenig Loignon. According to the story, though Churchill would not release the numbers, Koenig Loignon noted the figures are public information and available through other sources, such as Equibase and state racing commissions.

They are available from Equibase, if one wants to add up numbers from hundreds of charts. As for state racing commissions, they do not get the information in a timely manner.

Handle numbers are important to handicappers wishing to see the size of pools they have wagered into. But they also are important to owners, trainers, and breeders who wish to see how a track’s business is doing. And they are important to the media, which not only has a duty but an obligation to report statistics and trends to the industry.

In the last week, numbers were released by several racetracks following the close of meets, among them major players such as Saratoga and Del Mar, and a smaller track, Evangeline Downs. Others also routinely provide similar figures.

Tracks that release such information, understanding the industry’s right to know, should be applauded. Those that do not, such as those owned by CDI, despite being a public company and government regulated, should have a board of directors that insists it do what is right.

Equibase and The Jockey Club Information Systems should realize they are not helping the industry by their decision.

What's Going On Here : handle figures

Bounce Back - By Dan Liebman

Get a Handle - by Dan Liebman