TRUE GRIT

Buyers sometimes pay six-and-seven figure prices for impeccably-bred and well-conformed yearlings and 2-year-olds, only later to find their blueblood charges bested on the racetrack by a horse that sold for five figures or less…or did not elicit any bids at all at auction.  John Henry, Seattle Slew, and Sunday Silence are examples.

The ostensibly most gifted athletes, human and equine, are not necessarily destined for accomplishment because they may lack the fortitude and drive to succeed up to their natural abilities.  A large-scale project at the United States Military Academy demonstrated the power of what the researchers call “grit.”

A University of Pennsylvania psychologist, Angela Duckworth, led a team that over 10 years’ time studied West Point cadets, 11,258 in all, with the objective to determine what is the most important trait for success.  Success was evaluated over a cadet’s four-year experience at the Academy, an experience that commences with a brutal six-week boot camp.

“Grit” was the personal characteristic most correlated to success, which was defined as “passion and perseverance for long-term goals of personal significance.”  (Grit was measured on a 12-point scale.)  Grit trumped cognitive and physical abilities.  While brain power and physical ability were essential to success, grit was more significant.

When a bloodstock agent and his or her clients bid at an auction on unproven racing talent, what they cannot know is whether a prospect has grit, whether he or she will persevere when bumped during a race or when winded and tired in deep stretch.  A sale catalog has no information whatsoever on potential “true grit.”

That’s what makes horse racing so challenging and gives a buyer without the deep pockets of a sheikh or a hedge-fund manager a shot at the big-time.

Copyright © 2019 Horse Racing Business

NOSTALGIA

The Wall Street Journal recently asked six accomplished people to write a short essay on “What Makes You Nostalgic.”  One was Michael Lewis, author of such bestsellers as Moneyball, The Big Short, and The Fifth Risk.  Much of what he said about baseball could very well be said of horse racing:

“There’s money to be made off exploiting other people’s nostalgia. Baseball, unlike other sports, is selling its connection to the past.  I think that’s why baseball is nostalgic.  People naturally associate baseball not just with childhood but with their relationship with their father.  If what you’re selling is continuity and a connection to the childhood experience, then it is scary to make changes.  If you make those changes, you do indeed undermine that feeling of nostalgia.  It’s not irrational for these sorts of institutions to be resistant to change.  The interesting thing is that baseball is so unmodern.  The modern world is all about embracing change and disrupting.  The truth about baseball is if there’s no continuity, it’s kind of boring. It’s slow; it’s not the pace of modern life. Basketball is the pace of modern life.”

Horse racing is slow-moving, if one goes to a racetrack and bets only the live races, as in the days before simulcasting. There are long lapses of time between races, followed at most by a couple of minutes of action.  

Many avid horse racing fans were introduced to the sport when they were way too young to bet, typically by a close relative, and most often by a father.  For them, to use Michael Lewis’ phrase about baseball, racing is “a connection to the childhood experience.” 

Years ago, a beloved father would sometimes take his two teenage boys to Churchill Downs on his half-day off from work. That is how this son, now approaching the final furlongs of life’s run, developed a lasting fascination with an “unmodern” sport. 

Horse racing’s showcase event, the Kentucky Derby, is a throwback to many yesteryear’s ago.  When Churchill Downs hosts “the Run for the Roses,” on the first Saturday every May, as it has been doing since 1875, you can cut the nostalgia with a knife.  Likewise, the annual gathering at Saratoga Race Course in upstate New York has been trading on wistfulness that began with the track’s first meet just weeks after the Battle of Gettysburg in 1863.

Simulcasting has disrupted the business side of racing and rendered it much more convenient and decidely faster paced, but racing aficionados occasionally seek out the traditional ambience–the sights and sounds and smells of the real thing–up close and personal. Just like old times with Dad.

Copyright © 2019 Horse Racing Business

2019 BREEDERS’ CUP: SOME GOOD METRICS AND SOME CONCERNING POST-EVENT OMENS

From the standpoint of key business metrics, the 2019 two-day Breeders’ Cup event was a success.  However, post-event indicators—the average and median sale prices at yesterday’s Fasig-Tipton November Sale–may reflect bloodstock buyers’ dampened optimism about American racing’s future in the wake of so many high-profile horse fatalities. 

The most important measure of performance, betting handle, increased for the Breeders’ Cup by a robust 10.5% over 2018.  All-sources handle exceeded $174 million.

Announced attendance was 41,243 for the Friday card and 67,811 for Saturday.  Announced attendance for sporting events may differ from actual attendance, as event executives tend to count liberally.

The television result for the Breeders’ Cup finale, the Classic, was consistent with past years.  The TV rating for the 8-9 PM (in the eastern U. S. time zone) program was 0.3, which equates to 2.08 million viewers.  The Breeders’ Cup has an almost impossible task in driving up television ratings because college football season is in full swing.  The college football telecasts that were opposite the Breeders’ Cup telecast on network TV (as opposed to cable) drew ratings of 0.7 and 0.8.

Three days after the Saturday Breeders’ Cup, the Breeders’ Cup Distaff winner, Blue Prize, sold at the Fasig-Tipton November Sale for $5 million and the Turf Sprint winner, Belvoir Bay, sold for $1.5 million, both as broodmare prospects.  At the sale, a weanling sold for $750,000.

While these figures demonstrate some buyers’ optimism, the overall sale results were markedly down from 2018.  The average sale price was $531,336, a decline of 16.9% from 2018, and the median price was $300,000, a decrease of 8.4% from 2018.

One can’t read too much into a one-year drop in sale prices, as a number of factors could have accounted for the declines.  It could be that the quality of horses offered was not nearly as good in 2019 as in 2018.  Yet it makes one wonder if the withering criticism that American horse racing has come under in 2019, reinforced by the Mongolian Groom breakdown in the Breeders’ Cup Classic, had an effect on buyers’ expectations for the industry.  In a buoyant economy (with stock market prices at all-time highs, record-low unemployment, increases in real wages, and tepid inflation), a 16.9% fall off in the average sale price does not comport with what would be expected.

Copyright © 2019 Horse Racing Business