BREEDERS’ CUP HANDLE TRENDS SHOW BRAND DILUTION

The 2013 Breeders’ Cup was the 30th annual running.  In 1984, the inaugural event, the Internet was not available to the average person, so off-track betting was achieved by telephone or at a racetrack or off-track betting facility via simulcasting.

As the following table depicts, $19.5 million was wagered in 1984 on seven Breeders’ Cup races held in a single day.  The handle, adjusting for inflation, was equivalent to $43.7 million in 2013.  The table demonstrates how handle has increased over the years in actual dollars and inflation-adjusted dollars.

                            Total Handle    Total Handle, 2013 Dollars

1984 (7 races)       $19.5 mil                    $43.7 mil
1994 (7 races)       $79.6 mil                    $125.2 mil
2004 (8 races)      $120.9 mil                  $149.1 mil
2013 (14 races)     $160.7 mil                  $160.7 mil

Total handle increased dramatically between 1984 and 1994, as the event grew in popularity.  In 2007, the Breeders’ Cup was expanded to two days and the number of races was increased from eight to eleven (14 races were held in 2013 and 13 will be held in 2014).  Yet, in real (inflation-adjusted 2013 dollars), handle was greater in 2007 ($165.4 million) than it was in 2013.   Moreover, the 2007 handle was undoubtedly depressed by the wretched weather at Monmouth Park.   (In actual or nominal dollars, total handle in 2007 was $147.3 million compared to $160.7 million in 2013.)

The next table illustrates Breeders’ Cup handle on a per-race basis. Between 1984 and 1994, when there were seven races, per-race handle soared in actual dollars and inflation-adjusted dollars, then climbed at a much slower pace between 1994 and 2004 (the number of races was increased to eight in 1998).  By 2013, the per-race handle had been cannibalized by the addition of six more races.

                Handle Per Race    Handle Per Race, 2013 Dollars

1984           $2.8 mil                      $6.3 mil
1994           $11.4 mil                     $18.3 mil
2004           $15.1 mil                     $19.1 mil
2013           $11.5 mil                     $11.5 mil

The forgoing historical wagering data for the Breeders’ Cup demonstrate that offering more of something is not always an improvement.  The trends in total handle and per-race handle suggest that the Breeders’ Cup brand has been diluted by adding races and extending the event to two days.  A return to the original one-day format with about eight races would be likely to foster better television ratings and more wagering.

Copyright ©2014 Horse Racing Business

THE BREEDERS’ CUP IS AROUND THE CORNER

The 31st annual Breeders’ Cup is fast approaching on Friday, October 31 and Saturday, November 1, 2014 at Santa Anita Park near Los Angeles.  While the Breeders’ Cup is not nearly as popular with the general public as the Triple Crown races, and in particular the Kentucky Derby, it is nonetheless one of the two times a year when horse racing is showcased in North America.

Since its inaugural in 1984 at the now-defunct Hollywood Park, the Breeders’ Cup has provided some scintillating races that are now historical classics.  For example, in the 1988 Distaff, Personal Ensign looked to be hopelessly beat until she put on a devastating rally in deep stretch to catch Winning Colors, who is one of only three fillies to win the Kentucky Derby.   Another memorable finish came in Sunday Silence’s win in the 1989 Classic, when the colt barely survived a late rush by the magnificent Easy Goer.  Tiznow and the Irish sensation Giants’ Causeway fighting for the lead near the wire at Churchill Downs in 2000 was a heart-pounding testimony to the gallantry of both horses, as well as to the Thoroughbred breed.   More recently, the celebrity mare Zenyatta nearly equaled Tiznow as the only two-time winner of the Classic, winning with her come-from-behind charge in 2009 and falling just short in 2010.  For the ultimate in gameness and heart, the 1994 Juvenile Fillies is the race to look to.  Flanders managed to defeat Serena’s Song despite incurring a career-ending injury during the race.

Some observers believe that the Breeders’ Cup unwisely watered down its offering by expanding the original 1-day, 7-race card to a 2-day, 13-race card in 2014.  Even a devoted fan of Thoroughbred horse racing would be challenged to sit through a three-hour telecast on Friday and a six-hour telecast on Saturday.

The Breeders’ Cup has also not achieved its claim to be a world championship.  Though some of Europe’s best horses have competed in the Breeders’ Cup over the years, many of the top horses in Europe and Asia have bypassed it to run in important autumn races in England and France.  Imagine the intrigue and buzz if the Breeders’ Cup could have attracted the great European champions Sea the Stars and Frankel.

The 2014 Breeders’ Cup Classic will be interesting with the expected presence of Kentucky Derby winner California Chrome, Belmont winner Tonalist, and the undefeated Shared Belief.  Only Zenyatta in 2009 won the Classic while being undefeated.  Horse of the Year is likely in the balance in the Classic.  This race–held in prime time on the east coast—does not have a Zenyatta to attract a huge television audience, but looks competitive enough to draw a sizeable audience of viewers.  Moreover, California Chrome has considerable residual name recognition from his popular wins in the Kentucky Derby and Preakness.

In addition to the Classic, the other races on the card appear to be good betting races full of talented and closely matched horses.

Despite the fact that the Breeders’ Cup may be watered down by too many races and is not truly a world championship, the event is still a terrific two-day celebration of some of the best in worldwide horse racing.

Copyright © 2014 Horse Racing Business

HORSE RACING’S FUTURE DEPENDS ON ATTRACTING MILLENNIALS

A seismic demographic shift is underway in the United States as the fading baby-boom generation gives way to the ascendant generation known as millennials. The future of the entire American racing industry will increasingly depend on the degree of success that racetracks and advance deposit wagering firms have in turning millennials into customers.

Businesses in the United States have long concentrated their efforts on baby boomers, simply because boomers represented the largest slice of the population.  But boomers (born between 1946 and 1964) have now been displaced as the largest population cohort by millennials (born between 1982 and 2000).  The U. S. Census Bureau reports that baby boomers currently comprise 24% of the population (75 million people), whereas millennials account for 26% (83 million people).

Leisure activities and brands that were favored by baby boomers can’t count on legacy loyalty from millennials.  Golf, for example, is in decline partly because of the number of players under age 35 who have given up playing, and the average student attendance at college football games–even including the power conferences—has dropped 7.1% since 2009, according to a recent analysis by the Wall Street Journal.  McDonald’s, a chain that started and prospered with the patronage of baby boomers, is struggling because it is being rejected by so many millennials.

Though millennials are the most educated generation ever, they have generally experienced relatively poor employment outcomes, many are burdened with student debt, and 15% of them live with their parents.  However, as baby boomers continue to retire and vacate full-time jobs, millennials will take their place and gain purchasing power.  Thus companies ignore them at their peril.

How to attract millennials as customers is an issue that consumer products companies must sort out.  Horse racing’s technical capability to be digitally conveyed and promoted over the Internet to mobile devices is a cornerstone for an effective millennial strategy.

Copyright © 2014 Blood-Horse Publications.  Used with permission.