REPLENISHING THE FAN BASE

At the 2018 Jockey Club Roundtable, Ian Highet, the organization’s Secretary-Treasurer, reported that “Racing fans are 63 years old on average, which…is in line with PGA TOUR, NASCAR, baseball, and some other sports.  The average age of a TV sports viewer has been increasing for all sports over the past ten years, and racing is aging at a similar rate…”

Manifestly, the number one strategic challenge for perpetuating horse racing is to cultivate new generations of fans.  This, of course, has been a topic of discussion within the industry for years.

Many fans of horse racing will tell you they developed an interest in the sport when a relative took them to a racetrack.  For instance, my father took me with him to Churchill Downs when I was much too young to bet.  The obstacle to this approach today was illustrated in the McKinsey & Company presentation at the aforementioned Jockey Club Roundtable:

“…of the top 35 metro areas by population in the U.S., only five have a Thoroughbred track that we would describe as major league based on achieving a TripAdvisor rating of 4.5 stars…There are 12 cities with no Thoroughbred racetrack at all.”

The next-best-thing to actually experiencing horse racing by attending it in person is watching it on television.  Though television viewing in general has been in decline, and particularly so among younger U. S. residents, TV is still a powerful medium, especially when combined with effective social-media outreach.

According to McKinsey & Company, “In 2011, [horse racing was] down to 43 hours per year of Thoroughbred racing on national television.  The number of new fans introduced to racing through TV had declined.  Today, thanks to initiatives with the Breeders’ Cup, Keeneland, NYRA, The Stronach Group, FOX, NBC and others, there are over 200 hours of racing on national television.”

Horse-racing marketers have also made significant progress in the use of social media, especially during the Triple Crown season.  Yet they have a difficult task of supplying a continuous stream of fresh and attractive content once the public’s interest in racing ebbs after the Belmont Stakes in early June.

The ongoing reduction in the number of racetracks in the United States and the absence of tracks in a dozen of the top 35 population centers are major structural impediments to replenishing the sport’s aging fan base.  Television and social media are assuredly the way to go in attempting to compensate.  However, creating a new fan is only the first step.  The next step is to monetize a new fan’s interest by encouraging him/her to visit a racetrack or, if one is not nearby, to open a wagering account with an internet provider (if the state of residence permits online betting).

Expanding the number of horse-racing fans is a never-ending process metaphorically akin to hard-rock mining and requires an overarching national strategy with tactics tailored for local markets, similar to how multinational companies “think globally but act locally.”  The Jockey Club, McKinsey & Company, and other contributors have over the years provided the industry with actionable data-based strategic insights, but within the industry there are self-imposed impediments to effective strategy implementation.  This is the topic of next Wednesday’s post.

Copyright © 2018 Horse Racing Business

DECISIONS, DECISIONS: BET ON THE HORSES OR GO TO THE NFL GAME?

My favorite sports to watch and occasionally bet on are horse racing and the National Football League.  Eight days during the NFL season, I have entertainment choices that especially appeal to me:  Go to the local NFL game or stay home and multitask by watching the football on TV and squeeze in betting on some horse races as well.

Relative costs come into play…and horse racing is a great bargain by comparison to the NFL, even with moderate betting on the horses.

When I was in Saratoga recently, my trip to the racetrack with my wife cost approximately the following, excluding bets:

Two clubhouse seats (including track admission): $60
Parking: $15
Two programs:  $10
Non-alcoholic drinks and food:  $25

Total of $110

The racetracks near to where I reside are connected to a casino, so parking and admission are free, as is bottled water.  The outlays I incur are a program, betting, and food.

NFL attendance costs are dramatically different.  In 2017, CNBC calculated the average per-game monetary outlays at all 32 teams for two people.  For instance, total average costs for the Super Bowl champion Philadelphia Eagles were $268.38, with the components being:

Average ticket price:  $98.69
Price for a beer:  $8.50
Price for a soft drink:  $4.50
Price for a hot dog:  $5
Parking:  $35

NFL ticket and concession prices vary considerably depending on location and a team’s recent won/loss record.  A single premium ticket, for instance, to see the New York Giants play is over $500 whereas small-market teams are less expensive.

Where I live the average ticket prices and out-of-pocket expenses are about $250 for two people to see the local NFL team play.  (I acutally buy more expensive seats, but for the sake of discussion, assume the average ticket price.)

On a given Sunday, I can attend a game with my wife for $250 or stay home and watch on TV and also bet a few races via the internet during halftime or in the event the game becomes noncompetitive or boring.  About twice a year, I opt for attending a game, but most Sundays I stay home.

If I bet the $250 (on horse racing) I would have spent at the game, I might lose it all, in which case I would have broken even with attending the game.  But I might earn a profit…or at least not lose $250.

With sports betting on the horizon in my venue, I will soon be able to enjoy autumn and early winter Sunday afternoons and evenings by placing a few dollars on horse races from around the world and NFL games of my choice and watching the results from my well-worn comfortable family-room chair.  I rationalize the money it would have cost to attend the hometown NFL game as betting capital.

In addition, I don’t have to hear alcohol-fueled loudmouths at the game shouting profanities about how bad our coaching is, the referees’ bias, or the character flaws of the opposing team.  You’ve likely heard the same kind of invectives before…from losing bettors at the racetrack berating jockeys.

Copyright © 2018 Horse Racing Business

TECHNOLOGY DISRUPTED HORSE RACING, THEN SAVED IT

Steve Forbes, editor-in-chief of Forbes magazine, recently wrote about “High Tech for Legacy Industries.”  He said:  “One of the amazing aspects of new technology is how it can be applied with awesome results to traditional ‘legacy’ industries.”

As examples, Forbes pointed to Sam Walton’s pioneering use of mainframe computers and software to manage inventories and supply chains; technology being applied to make agriculture more productive; and horizontal drilling and hydraulic fracturing to vastly increase the output of oil and gas.

Without personal computers, tablets, smartphones, software, and the Internet, horse racing would have undoubtedly suffered more than it already has in the face of so many competitive forms of gambling and entertainment.  Absent the ability to bet remotely, a core of players would have gone to racetracks to wager, but not enough to sustain the sport for the long term.

While information technologies radically disrupted the horse racing enterprise by making it unnecessary for bettors to go to a racetrack, and thereby severely curtailed live attendance, the technologies saved horse racing as a business proposition.

With betting accounts made possible by readily available computer technology and software, people could wager without ever setting foot on a racetrack.  Moreover, the sport was able to expand to cities and states without brick-and-mortar racing facilities.

Additionally, bettors have Internet access to a wealth of past-performance data on websites like TwinSpires and Xpressbet and software programs to crunch the numbers.

(Technology also revolutionized the bloodstock side of the horse racing industry.  Various methods to select and buy yearlings that, for instance, rely on heart scans, bone scans, and stride and motion projections offer a far more scientific approach than in the past.  Historical backtesting of the effectiveness of various bloodline crosses can be done in a flash).

Thoroughbred horse racing is one of the most legacy industries imaginable, going back to the 1700s.  After nearly 300 years, the sport is still around in an age when the vast majority of people have no hands-on experience with horses.  Information-related technologies have kept it out of the dustbin of history.

Copyright © 2018 Horse Racing Business