AN ILLUSTRATION OF WHY PARI-MUTUEL HANDLE IS IN DECLINE

Recently thumbing through a 2015 Gulfstream Park program, I came across a list of the company’s officers and operating officials.  The job titles vividly provide an example of why horse racing is in so much trouble at the retail level.

Listed under “Gulfstream Park Racing Association Inc. Officers” were the following five positions:  CEO; President; VP, Operations; Secretary; and Director, Finance.

Note the glaring omission—nobody mentioned for sales and marketing.

Listed under “Operating Officials” were President and staff positions, such as track handicapper, director of human resources, and track superintendent.  Three vice presidents were identified:  Vice President, Racing & General Manager; Vice President, Administration; and Vice President, Communications/Media.

Again, the glaring omissions:  sales is not included at all and there is no one in marketing at the rank of vice president.

Nowhere in the entire enumeration of personnel titles did the word “sales” appear.  The only reference to marketing was “Director, Marketing.”

Implausibly, the person in charge of communications and media holds the title of vice president but the chief marketing executive does not.  One can make a strong case that, in fact, communications and media should report to marketing because advertising is a key marketing function for a consumer-products company.

The slight of sales and marketing demonstrate how–at a premier racetrack company–the business functions responsible for bringing in customers are either not deemed important enough to be mentioned at all (sales) or are relegated to a subordinate role (marketing) below the rank of vice president.

This is more than semantics.  Position titles indicate the importance that a company attaches to business activities.

In an industry in which revenues (pari-mutuel handle) have been in a long-term secular decline, sales and marketing should be front and center and be staffed with the most capable people possible.  A company can’t “administrate” or “manage” or “engineer” itself out of a deteriorating commercial situation.  The only way out is via skillful marketing (such as product development) and savvy/aggressive sales efforts to get customers.

Little wonder that racing’s customer base and pari-mutuel handle are shrinking.

Copyright © 2015 Horse Racing Business

CURRENCY EFFECTS ON SELECT YEARLING AUCTIONS IN THE USA AND EUROPE

The increasingly strong U. S. dollar is one of the prominent economic developments of 2014 and 2015.  The buoyant dollar should have a telling effect on upcoming select summer and fall yearling sales in the United States and Europe.

The following list depicts countries in which Thoroughbred yearling buyers often come from and the respective percentage change of their currencies versus the U. S. dollar in the past 52 weeks.

Argentina (Peso) -10% change
Australia (Dollar) -16%
Brazil (Real) -28%
Canada (Dollar) -13%
France (Euro) -24%
Germany (Euro) -24%
Ireland (Euro) -24%
Italy (Euro) -24%
Japan (Yen) -16%
Mexico (Peso) -15%
Saudi Arabia (Riyal) 0.0%
South Africa (Rand) -13%
South Korea (Won) -5%
Turkey (Lira) –15%
United Arab Emirates (Dirham) 0.0%
United Kingdom (Pound) -12%

What the palpably strong U. S. dollar means, of course, is that yearling buyers from the vast majority of the forgoing countries will face consequential price increases at Keeneland and Fasig-Tipton.  By contrast, United States buyers at, say, Tattersalls in Great Britain and Ireland will benefit greatly.

While currency valuations ebb and flow, the U. S. dollar will likely continue to be strong when the select summer and fall yearling sales get underway.  This is a bearish sign for select yearling sales in the United States, but should be a nice boost for yearling sales in Europe.

No time in recent history has provided American buyers with the opportunity to go shopping for the best European-bred yearlings at historically bargain prices.

Copyright © 2015 Horse Racing Business

KENTUCKY DERBY DAY 2015 WILL BE A SPORTS EXTRAVAGANZA

Derby Day this year will be like none in memory for avid sports fans and bettors.

The usual huge crowd will show up at Churchill Downs and during the late afternoon and early evening the Kentucky Derby will draw a large television audience.  With an improving economy, betting is likely to set a record.

Before the media commentators have finished dissecting how the race transpired, the sporting world’s attention will turn to Las Vegas for the much-anticipated world’s championship welterweight match between Manny Pacquiao and undefeated Floyd Mayweather at the MGM Grand.

This will be the richest fight ever held, with an estimated purse of at least $200 million (60% to Mayweather and 40% to Pacquiao) and could be considerably larger.  The pay-per-view price will be about $90 with an extra $10 for high definition.  NPR pointed out that Mayweather will make more than the entire annual payroll of some Major League Baseball clubs.

The face value of tickets range from $1,500 to $7,500–the highest in boxing history–but buyers will pay a multiple of three or four times as much on the resale market (the MGM Grand made only a few hundred tickets available to the public).  Floor seats already have a starting resale price of $28,000.

Last year, people wagered $181million on the Kentucky Derby card.  No telling how much will be bet on the Mayweather-Pacquiao fight, but it will be significant.  Reports are that rapper 50 Cent (Curtis Jackson) has bet $1.6 million on Mayweather and Justin Bieber said he plans to put down $2 million on Pacquiao.  Filipinos are likely to back their popular fellow countryman Pacquiao with heavy betting.  Las Vegas should have a banner day taking bets on the two events.

The view here is that the Mayweather-Pacquiao fight will be good for Derby handle because Las Vegas will be packed with sports fans and gamblers.  Many people in town for the fight are apt to place bets on the Derby card and the usual crowd in town to celebrate the Derby are likely to bet the fight.  Now that’s symbiosis.

If the venerable “Run for the Roses” and the “Fight of the Century” are not enough activity for sports fans, the NFL draft begins on April 30 and ends on Derby Day.

Copyright © 2015 Horse Racing Business