Ohio Caught In Crossfire

The Bloodhorse reports (here) that the Ohio State Racing Commission has removed 160 days of racing in the state by eliminating winter racing at Beulah Park and the spring/summer meet at River Downs. I can't say that I am surprised. In an economy where banks are being closed, share prices have been cut in half, and unemployment is soaring, it makes sense that the thoroughbred product is being trimmed as well. What is unfortunate however is that one locality has to bear the brunt of the cut. It would make more sense that the loss be shared nationally by all tracks by everyone dropping one day to a four day or three day racing schedule thereby immediately reducing the total racing product. As it stands there is simply too much racing for what handle remains. Tracks have fixed costs to open their doors and by eliminating a day means a reduction in overhead. Fewer races also mean that the horse population has to squeeze into larger fields resulting in larger pay outs for bettors. To horsemen it means fewer choices in conditions so less sandbagging and more competition in the claiming box as horses have to drop down or sit out. To the general public racing becomes less frequent and therefore more noteworthy when it does occur.

The loss of dates however occurred because of the wrong reason, squabbling over ADW revenue. I have to side with the tracks on this issue. Simulcasters have the least overhead but take the lion's share of the take out. Simulcasters are the few entities in this sport who do well in relation to what they provide which is mainly a chair, a television, and someone to collect the wager. (Those who visit some of these simulcasters even argue that you don't even get a chair as the facilities are that dirty and run down.)

Let's face it simulcasters have a sweet deal and they aren't about to give it up. I can't see the simulcasters ever agreeing to a fee structure that actually represents what their costs are and then providing an adequate return. The only way to circumvent this conflict is to eliminate it all together by having the tracks take ownership of their state's hubs or having a national entity take ownership of all the simulcasting platforms whether they are online, television, or brick and mortar. By eliminating the middle man revenue can be retained and disbursed appropriately as the simulcasters would then function at cost to the tracks, funneling the rest into the purse structure or into other initiatives such as take out reduction, wagering rewards, or into financial incentives to keep fan favorites racing longer.

Perseverance!

Right Step Right Direction

This weekend Churchill put on a pair of events here and here to help several charities as well as to bring further awareness to breast cancer. I for one am glad to see things like this happen. Unfortunately neither article made any hint of what effect these two days had for attendance and handle which many tracks view as the immediate reward for their efforts. A lot of marketing departments are under significant pressure these days to put more fans in the seats and more dollars in the auto totes all while on tight budgets.

For those not familiar the NTRA Online Task Force put together a large document that was presented at the September NTRA Marketing Summit in Las Vegas. At the end the group put a strong emphasis on charity work. The reason for this is several fold. First, many members of the millennial generation are very interested in doing good and are supportive of those who make such efforts. Second, in light of all the negative press we have received this year showing what good the sport can create helps cast ourselves in a better light.

Where tracks need to focus their charity efforts is in their local communities. Wal-Mart makes a major point about affecting the neighborhood and then promoting it so that the public knows. It helps deflect all the flak they take over how they utilize their employees. Tracks should do the same, focusing on community projects that target the low income neighborhoods. Why low income? Groups such as Focus on the Family point out that the majority of those who gamble heavily are among the poorest in our population. It would make since then to return some of that money to our sport's most frequent customers in the form of food drives, neighborhood clean ups, and park and school yard improvements. Additional ideas would include health fairs to educate and blood drives with bone marrow registry to share and improve quality of life.

Do ideas like this cost a lot of money? In reality they do not. Many tracks are already very generous with complementary admissions. Giving them out in food or blood drives makes sense. Clean ups and other neighborhood improvements usually are very time demanding but financially speaking are low cost especially if places like the Home Depot are willing to donate supplies. The workforce for these events could easily come from the current fan base.

When you step back and take a look at it, charity efforts with a community bent is a win win situation for everyone.

Perseverance!

$2 WAMPQ to Win

The reality with horse racing is that unless you are exceptionally lucky then the likelihood of your horses paying their bills is troubling. While there are no published statistics on thoroughbred investments from my experiences as an owner about 90% of horses in a given year fail to earn enough to pay their way. And while every racing circuit is different cost wise you can expect to pay around $48,000 a year to keep a So Cal horse racing on the major SA-HOL-DMR circuit. Needless to say the majority of horse owners use other ways to fund their passion for the sport.

If you hang around the exotic players long enough you are going to hear one of them says, "If I hit this pick-6 I'm gonna git mahself a horse!" Problem is how likely is that? There are many out there who play the pick-6 for years before hitting one. Those who hit more often usually play a deep ticket that gets ridiculously expensive. Mind you how many of those 1K tickets end up missing by one race? Consider also that there's a 25% take out. So on your $400 ticket, $100 goes right out the window. Finally if you are fortunate enough to hit then expect the IRS to take their cut of 25% immediately. All in all winning your next horse through wagering is a tough row to hoe. Is there another way?

Last Friday morning I decided to take my wagering bankroll for the quarter and try my hand at a different exotic wager. Let's call it the Wall Street Pick-6. I ended up playing a cold single by selecting a stock in chapter 11 bankruptcy. Chapter 11 is a reorganization situation where a company may or may not remerge as a profitable entity. Statistics are that 99% of companies fail to come out of Chapter 11. So our "horse" WAMPQ is effectively 100-1 (Arcangues anyone?).

Am I crazy? Probably so but let's consider a few things. First off there's no take out with this wager though it did cost $8.95 to place it through my online broker. During intraday trading on Friday WAMPQ win tickets were $2 a piece. I ended up putting $400 to win on WAMPQ which is equivalent in price to a 1x4x5x5x2x1 $2 Pick-6. Two singles? Wow that's brave. Some might even call it crazy. So which is a better wager?

Let's say the pick-6 we hit was the Ultra Pick-6 out of Santa Anita on Breeder's Cup Saturday. That pick-6 paid around $56,000. I think most would agree that's a score of a lifetime. What about lowly WAMPQ? Surprisingly enough if the "horse" should win then the $2 to win will pay $1,000 (WAMPQ is a convertible preferred security that liquidates at $1,000 if the issuing company defaults, which has occurred). And that two hundred times over is $200,000. If a horse's true odds are 100-1 and it’s going off at a price of 500-1, isn't that an overlay to consider? Arcangues won at 133-1 so anything is possible you know. So here's this gambler hoping that WAMPQ can get the distance. If that's the case I'll see you in the winner's circle.

Perseverance!

Infield Potatoes

That was going to be the original name for this blog however upon further review I began to wonder how many spud defying jokes one could handle. There's also the fact that I reside in Southern California which is a long way from Idaho. Finally you have to wonder if anyone would take my french-fried, scalloped, al gratin mash seriously with such a title. So as interesting as Churchill Downs growing 1000 bushels of russets in the 1918 infield may be one should pick a name with a little more due diligence.

Unfortunately all the really good racing related names are spoken for already (all the easy ones anyhow). So I considered something a bit more outside the gate such as "Vanned On" but then figured it would be seen as pretty tasteless by some. "Left at the Gate", "Three Wide", and "Riders Up" all passed through my consciousness but in the end I settled on "The Commissioner" which does not seem very horse related at all. Cue the explanation...

The blog's title spawns from two executives playing with Blackberries in the middle of a mini presentation I was giving at the recent NTRA Marketing Summit at Las Vegas in September. As the story goes I was talking about regulating thoroughbred partnerships when John Della Volpe of Social Sphere messaged Keith Chamblin of the NTRA saying "There's the first commissioner of horse racing." John mentions this briefly on his blog here.

Well as unlikely as my becoming the first commissioner of horse racing may be it makes for an interesting enough title. And to those who mislabeled me at the summit as a "Blogger" it looks like you are all now correct.

Perseverance!