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Wednesday, July 24, 2013
A burning question

By Paul Moran
Special to ESPN.com

SARATOGA SPRINGS, N.Y. -- While racing issues are seldom addressed by the Wall Street Journal, the newspaper called attention last week to the opening of the summer meeting at Saratoga by asking this question: Is there too much racing?

Such issues are easily moved to the back burner when the grandstands at Saratoga and Del Mar are filled with enthusiastic fans that populate comfortable places on the socioeconomic curve. This is as far removed from Aqueduct in February or Parx in any month as racing gets.

Still, the question is legitimate. Is the racing industry oversupplying the demand for its product?

How much is enough for all concerned?

This is one of those nagging issues that haunts the sport but is seldom discussed. The easy, and probably correct, answer is yes. The more thorny issue is how to address and eliminate the surplus. How much is enough for all concerned? There is no easy answer.

Before the explosive expansion of casino gaming, when Nevada stood alone as a destination for gamblers who preferred slot machines and table games; before state lotteries and interstate lotteries; before racinos, racing was the sole source of gambling related taxes to state and local governments and the idea of winter racing in cold climates was absurd, an anomaly confined to Bowie, in Maryland. The stream of tax revenue ebbed and flowed with the seasons. Interruption of tax revenue makes most politicians queasy. For politicians, more racing meant more revenue just as expanded gaming has filled coffers with money intended for altruistic purposes but is seldom allocated for education and social programs.

Competition for the gambling dollar has brought money to compliant governments and stagnation to the economics of racing. Most racing enterprises are dependent upon gaming revenue generated from slot machines and in many places would not otherwise survive -- an uncomfortable if nevertheless necessary marriage of convenience. Betting handle is at best flat year-to-year. The live audience, with the exception of those at Saratoga, Del Mar, Keeneland and and a on smattering of big days, has moved off-site. The advance deposit wagering platform is the new OTB parlor. Pari-mutuel taxes, meanwhile, have never been more confiscatory.

Over time, the expansion of racing has resulted in a second and even third tier of competition that has become engrained in the sport's economy. Breeders filled the demand for horses. Some owners saw opportunity for horses of limited ability and ancillary businesses were developed to serve demand. All horses, champion and the lowest level of claimer, eat, require shoes and the service of veterinarians -- and that's just scratching the surface.

In New York, admittedly the most expensive racing market in the nation, the cost of maintaining a thoroughbred in training , be it a Grade 1-caliber competitor or a bottom-level claimer, is about $60,000 and far more claiming horses with limited earning potential populate the backstretch than horses of stakes class.

Over the last 40 or so years, late autumn, winter and early spring has become the backbone of racing in New York and many other markets. Fully half the racing year -- and there were 245 days of racing in New York last year -- are held at Aqueduct, where a Christmas break is the only real respite from what is usually a tedious game for players only slightly improved by expanded purses resulting from casino revenue.

It is not easy, however, to simply cut back -- no matter the market -- without considering the ramifications and the economic damage such a move would guarantee.

There is a population of horses that must be considered first. These horses are bred and purchased to race and elimination of opportunity would place severe pressure on owners to support horses whose earning potential would be substantially reduced if not eliminated. This raises many possibilities, most unpleasant, some tragic.

As ill-advised as year-round racing is, a meaningful reduction in the number of racing days would take a toll greater than the potential benefit.

Most breeders would suffer irreparable damage in the face of a diminished marketplace as would others whose livelihoods are directly tethered to horses and their care. The racing industry in New York is a $4.1 billion annual enterprise. A reduction of racing days would inflict a deep economic wound.

Owners, most of whom lose money, would find less opportunity to earn a profit or at least cut losses to manageable levels, initiating a domino effect that would affect trainers, grooms, stable help and all others in racing's food chain.

Most of those who work at racetracks would find their employment become seasonal.

As ill-advised as year-round racing is, a meaningful reduction in the number of racing days would take a toll greater than the potential benefit and even the willing would find opposition from government aghast at the thought of diminished revenue.

Confrontation of this issue requires a touch more deft than is commonly found in this industry. While the concept of seasonality is a ship that has sailed in most places, a shortened week in large markets may help in keeping players from burning out. But there is little else by way of solution that would be meaningful. The answer to the question posed by the Journal is probably: Yes, but deal with it.

The strength of seasonality is obvious during a summer's day at Saratoga. In the first four days of racing here, substantial crowds here have seen some very interesting two-year-olds and watched Princess of Sylmar stand up and beat her chest with a crushing victory in the Coaching Club American Oaks. The heat wave has subsided. The fields are big. Life is good.

And no one is thinking about Aqueduct in February.