CHURCHILL — DOWN OR UP?

Churchill Downs, Inc. is traded on Nasdaq under the symbol CHDN. For purposes of reporting EBITDA (earnings before interest, taxes, depreciation, and amortization), the company groups its businesses into five segments-racing operations, on-line business, gaming, other investments, and corporate. An entertainment division was added in 2009.

Churchill Downs, Inc. owns four Thoroughbred racetracks: Churchill Downs in Louisville, Kentucky; Arlington Park near Chicago; Fair Grounds Race Course and Slots in New Orleans; and Calder Race Course in Miami Gardens, Florida. In 2008, Calder obtained voter approval to install up to 2,000 slot machines and management recently signed a facilitating agreement with the Florida Horsemen’s Benevolent and Protective Association. In addition to the racetracks, the company has 21 off-track betting (OTB) facilities in Illinois, Kentucky and Louisiana. It also owns: Video Services in Louisiana, which operates about 700 video poker machines; TwinSpires.com (a telephone and Internet advanced deposit wagering company); and Bloodstock Research and Information Systems (provides data for handicapping and for horsemen). The company has a partial interest in Horse Racing TV and TrackNet Media, which sells digital horse racing content.

Churchill Downs, Inc. management has identified risks that may impinge on the company’s future profitability. Three main risks are:

•Significant competition from bricks-and-mortar operations in the United States and Canada and from web-based businesses everywhere, many of which are capitalized beyond Churchill Downs’ capability.

•The decline in popularity of horse racing.

•Extensive government regulation.

Churchill Downs, Inc. is atypical of publicly-traded American corporations in the way it is organized at the very top. Unlike most U. S. firms, at Churchill Downs the offices of chairman of the board of directors and chief executive are held by separate people. Only a small percentage of U. S.-based companies follow this division of authority, such as Ford Motor Company.  It is characteristic of European companies.

Churchill Downs has a 13-person board of directors, comprised of two inside directors (the chairman and CEO) and 11 outside directors. The board consists of people with a plethora of diverse and relevant experience working in and running companies. They come from backgrounds in heavy industry, technology, sports, finance, and other fields. Importantly, the board members are major shareholders themselves in Churchill Downs, so decisions made for shareholders affect their own pocketbooks. Overall, the board is meritorious in terms of business skills and knowledge, and in having a personal financial stake in the company. Notably, as well, several members, including the chairman (Carl F. Pollard) and the CEO (Robert L. Evans), are active participants in the Thoroughbred industry as farm owners, breeders, buyers/sellers at the bloodstock auctions, and sportsmen with racing stables. This blend of business experience and knowledge  with Thoroughbred-industry involvement provides dual insight at the top of the Churchill Downs organization. Lastly, there has been very little turnover of board members, which provides for continuity and institutional memory.

The quality of the management team at Churchill Downs or any other publicly-traded company can best be determined by the results it produces, especially  in relation to companies in the same industry. The number 1 measure of quality of management is stock price because it depends on investor expectations about future earnings.

Churchill Downs’ stock price is down by 43.2% in the past 52 weeks.  By comparison, the Dow-Jones Industrial average is off 46.3%.  Churchill Downs’ stock has traded in a range of $24.11-$52.98 during the previous year and it has a current price-to-earnings (trailing twelve months) ratio of 15.88. The company’s market capitalization is  $410.73 million. Churchill Downs’ PEG ratio (the P/E ratio divided by the projected 5-year growth rate of earnings per share) is 2.11. A lower PEG ratio tends to indicate that a stock is undervalued and a higher PEG ratio suggests that it is overvalued. The peer group for Churchill Downs is the gaming industry, with such firms as MGM Mirage, Penn National Gaming, and Las Vegas Sands Corporation. This group has an average P/E ratio of 8.88 and an average PEG ratio of .44. Thus, by comparing Churchill Downs’ premium P/E ratio and high PEG ratio to the industry averages, the conclusion is either that (a) Churchill Downs has superior growth and earnings prospects or (b) its stock is overvalued. Were Churchill Downs to be looked upon as an average stock in its industry classification, its share price would be about $16.78 instead of yesterday’s close of $30.10.  A  factor that is likely to have supported the company’s relatively lofty P/E ratio, vis-à-vis its peers, is that 31% of its stock is held by insiders and, during the past six months, insiders have purchased  more shares than they have sold by a ratio of almost seven-to-one.

The question going forward is whether Churchill Downs, Inc. warrants its share price and exceptional P/E ratio? Has the market correctly valued the company? According to Nasdaq, one indicator of whether a stock is accurately valued is short interest or “The total number of shares of a security that have been sold short by customers and securities firms that have not been repurchased to settle outstanding short positions in the market…A related measure is Days to Cover–calculated as the aggregate short interest for the month divided by the average daily share volume traded between short interest settlement dates…Many investors believe that rising short interest positions in a stock is a bearish indicator. They use the Days to Cover statistic as a way to judge rising or falling sentiment in a stock from month-to-month, and use the statistic as a way to compare investor sentiment between stocks.” Looking at the latest short-interest statistics for Churchill Downs, both the total number of shares sold short and the Days to Cover have declined sharply.  This indicates that more and more short sellers are unwilling to bet that the stock will move lower anytime soon.

In the past several years, Churchill Downs earnings have been on a significant downward trend-with earnings per share of: $5.86 in 2005 (including the sale of Hollywood Park), $2.21 in 2006, and $1.14 in 2007. For the first three quarters of 2008, net revenues increased by 7%, earnings were up by 48.6%, and earnings per share increased by 47.4% (the next earnings report is scheduled for March 5, 2009).  The reasons for the spike in 2008 earnings are twofold and extraordinary. Churchill Downs received a $17.2 million cash settlement for damage done to its Fair Grounds racetrack in New Orleans by Hurricane Katrina and the company’s online business increased owing to its acquisition of ATAB and BRIS, which were consolidated under TwinSpires.

The company’s capital structure is about 34% debt and 66% equity, so it is leveraged but not dangerously so.  It is arguable whether Churchill Downs would, could, or should opt to increase its debt load significantly in the present economic climate in order to acquire one or more of the Magna Entertainment racetracks once that company files for bankruptcy.  

Churchill Downs’ financial performance has been mediocre in the last several years and the economic downturn and the company’s disputes with horsemen’s groups in 2008 over advanced deposit wagering earnings exacerbated the problem.  The market has placed a premium on Churchill Downs stock,  plausibly for several reasons. First, management has settled some of the deleterious disputes that kept most ADW  companies from taking wagers on Churchill Downs tracks. Even so, the company’s antitrust suit against several horsemen’s groups remains. Second, investors are anticipating the effects of the slot machines that will be installed at Calder and the possibility of legalization of alternative gaming in Kentucky in the next few years. Realistically, the legalization of slot machines in Kentucky in 2009 is not expected. Third, Churchill Downs is broadening its focus “from horse racing tracks to casino gambling, online betting, and concerts.” In January 2009, the company created an entertainment subsidiary and assigned Steven P. Sexton, formerly president of Churchill Downs racetrack, to lead it. Fourth, the board of directors and the CEO are recognized by investors for their skill sets.

It appears from the outside looking in that the CEO is gradually but surely repositioning the company as a gambling and entertainment company rather than as a horse-racing entity, undoubtedly in response to its warning that horse racing’s popularity is ebbing. The company’s  individual racetracks are headed up by executives who are not from traditional racetrack-management backgrounds. Significantly, the new chief operating officer of Churchill Downs, Inc., William C. Carstanjen, an attorney from General Electric, Inc., has been with the company only since 2005 and had no prior racing background. He is now the second-ranking executive in the corporation. Mr. Carstanjen’s elevation may, in large part, be due to the board’s intent to put someone in upper management with the acumen to operate in the heavily regulated arena of alternative gaming.

Mr. Carstanjen’s promotion is a black-box risk for investors.  His job as chief operating officer is to “keep the railroad running,” so to speak by overseeing day-to-day operations, but is he also being groomed to eventually become chief executive officer?  If so, the risk escalates because there is nothing in his educational background and work history to suggest he has the capability to become a creative “big picture” strategic thinker in an ever-increasing technology-oriented entertainment/gambling enterprise. Only time will tell.

Investors will likely give upper management’s initiatives a chance to work and may cut management some slack because of prevailing economic conditions. If the actions look to be yielding improved profitability, then Churchill Downs stock should continue to command an unusually high price. On the other hand, if the plans falter, look for the stock price to regress toward the mean for its industry group.

Note:  Financial information used was as of the close of Nasdaq on Friday, February 27, 2009. 

Postscript:  To provide a benchmark for evaluating the results of  any company covered by Horse Racing Business, consider that one of  the world’s most renowned investors, Warren Buffett of Berkshire-Hathaway, reported this week that his company had its worst performance in 44 years with profits down by 62%.

Disclosure: Bill Shanklin is not currently a shareholder in Churchill Downs, Inc., but has owned the company’s stock in the past.

Copyright © 2009 Horse Racing Business.

Potpourri

1. David Logan, the chief executive officer for USA Track and Field since July 2008, recently was the featured speaker at the convention of the dietary and healthy foods industry. His speech, titled “Braiding the Noose,” was a blistering attack on performance-enhancing drugs and the people who provide them. Much of what Logan said could and should be said about horse racing.

Following are a few salient and verbatim excerpts:

  • …in many ways, the supplement industry has been assisting in braiding the noose.
  • Performance-enhancing drugs are threatening to choke the life out of the sport that I serve and love.
  • …it seems that nearly all the top stars of the last 10 years have been caught using drugs, were strongly suspected of using drugs, or were in prison. Marion Jones, Justin Gatlin, Tim Montgomery: These once-great sprinters continued the poisonous legacy of Ben Johnson. In track and field, if your 100-meter superstar isn’t clean, the sport isn’t clean. Ninety-nine percent of athletes could be clean, but it wouldn’t matter. Their transgressions overshadow and overpower the accomplishments of even Edwin Moses and Michael Johnson, in the memories of most.
  • While this battle for “clean” supplements rages on, I focus on waging the battle for the hearts and minds of our athletes, coaches, agents, and support staff to win the culture war against drugs. I am a person who likes simple concepts. This is pretty simple. I have two words for any person who uses, promotes or tacitly endorses the use of drugs by any athlete. GET OUT! Get out of our sport and out of our competitions.
  • I am personally committed to doing our part to reverse this cultural perversion. Our partners in this war, USADA and WADA, are waging the battle with ground-breaking science and techniques. The supplement industry can do its part in assisting us in the fray. The next time, do not be so quick to oppose reasonable and responsible federal regulation of your industry. Those who conduct ethical and legal businesses will ultimately benefit from the tightening of laws and increased scrutiny. If you say you can self-regulate, then, by gosh do it…We are cleaning our house; get your brooms out and clean yours!
  • It is an era when the best man or woman–not the best chemist–will win.

(Logan’s passionate admonition “GET OUT! Get out of our sport and out of our competitions” is similar in content and tone to what the outspoken Barry Irwin, CEO of the highly successful Team Valor partnerships, said in the February 14, 2009, issue of the Blood-Horse about trainers who repeatedly violate medication regulations:  “Don’t just give them a fine or suspend them, get rid of their asses, kick them out.”)

USA Track and Field has a “Zero Tolerance Plan,” complete with a 24-hour “Whistle-Blower Hotline,” where athletes, coaches, and the public are invited to call in confidence with tips on illicit drug use.

2.  In a related matter, on February 5, 2009, USA Swimming suspended Michael Phelps, who earned eight Gold Medals in the 2008 Olympics, for three months from competition and cut off financial support, even though his infraction of allegedly smoking from a marijuana pipe at a party was not a violation of the organization’s anti-doping rule.

3.  Major League Baseball is another sport plagued by drug-use issues.  Boston Red Sox slugger David Ortiz weighed in this week about the League’s pervasive and embarrassing steroid problem:  “I would suggest everyone get tested, not random, everybody.  You go team by team.  You test everybody three, four, times a year…”  MLB currently suspends a player 50 games for testing positive once, 100 games for testing positive twice, and  imposes a lifetime ban for testing positive three times, albeit he can appeal after two years.  Ortiz says to “ban ‘em for the whole year” for the first violation.

4.  My article of February 14, 2009, titled Racing’s Misguided Muhammad Ali Philosophy of Publicity, evoked reactions ranging from hostility about what I wrote to full agreement with what I said.  Contrary to what some readers posted, I never said or intended to imply that controversial issues in racing should be covered up.  In fact, I wholeheartedly agree with Barry Irwin’s unequivocal comment in item 1 above.  Make no mistake:  habitual medication cheaters in racing should be sent packing permanently (a metric is needed for an unambiguous definition of  “habitual”). 

The theme in my article is that racing’s many favorable aspects should be conveyed to the public (accentuate the positive or put your best foot forward), while racing’s shortcomings should also be addressed by industry participants but in an unemotional and factual way and presented to the public without sensationalized titles and copy.   Coverage of racing’s negatives that does otherwise tends to lapse into abusive ad hominem arguments that solve nothing and leave the public with unflattering impressions.   An example of how a negative might be addressed:  On February 16, 2009, the Portland Oregonian carried an article about breakdowns.  The reporter wrote:  “Nationally, some experts point out that 30 years ago, a fatal breakdown at a track was almost unheard of.”  Is this factual?  If not, the way for racing insiders to clarify the record  is to obtain hard data from 30 years ago and then dispassionately present the findings, rather than to counter with emotional assertions with no evidence to back them up. 

5. The recent announcement that Bessemer Trust (the wealth-management subsidiary of Bessemer Group) would no longer be a title sponsor of the Breeders’ Cup was a body blow to racing. Bessemer Trust began as an investment- management vehicle exclusively for the family of Henry Phipps, who was a partner of Andrew Carnegie. Bessemer Trust is now available to anyone who has at least $10 million to invest with the company.

The storied Phipps family legacy in racing goes back to Mrs. Henry Carnegie Phipps, Henry Phipps’ daughter-in-law. Bessemer Group’s present chairman is prominent racehorse owner Stuart Janney III, whose mother was a Phipps. His cousin is Jockey Club Chairman Ogden Mills Phipps. The fact Bessemer Group is abandoning the Breeders’ Cup sponsorship that it has funded since 2001 says a lot about the cost-cutting taking place in investment firms and about the Herculean task of selling sponsorships that the Breeders’ Cup management faces in the current recession.

6. Another key indication of the toll that the economic turmoil has had on horse racing is contained in the news release by W. Cothran Campbell’s Dogwood Stable on February 5, 2009. It read, in part:

Because of the current economic climate, Dogwood Stable, the pioneer in the field of Thoroughbred racing partnerships, has announced a 2009 marketing policy that will offer smaller ownership units, less markup, insistence on lower maintenance charges, and anticipated purchase prices of 60 to 70 cents on the dollar from previous years.

Dogwood president W. Cothran Campbell said that “We think we can buy at 60 or 70 cents on the dollar from previous years…And Dogwood Stable’s markup on these reduced prices will be lessened by 20 to 40 percent on the horses purchased.” Campbell went on to say that veterinarians, trainers, and suppliers will also be forced to reduce their fees.

If one of the handful of premier racehorse partnership organizations is drastically rationalizing its operations, look for a shakeout in the number of partnership companies, especially among marginal players.

And now two items on the lighter side…

7. The Fifth Racing Congress was held in Las Vegas from February 2-6, 2009. It was a joint effort of the Thoroughbred Racing Associations, Harness Tracks of America, United States Trotting Association, and affiliated groups. Besides the racing topics covered in the speeches and panels, one of the highlights was a luncheon address by Oscar Goodman, Mayor of Las Vegas, who is a character right out of central casting.  I have never heard a politician be so amusing and candid about his background–as a mob lawyer–and how he ran for office –against the wishes of his own family–and won despite plenty of media opposition in Las Vegas, San Francisco, and elsewhere. Goodman told the audience about how he bought into a racehorse named after him (Oscar the Mayor) and that his investment was a loser.  Goodman annually attends the Del Mar meet.  When asked a probing question about Las Vegas, Goodman said: “I take the fifth.”  Maybe what happens in Vegas really does stay in Vegas.

8. Thoroughbred breeding and racing has a roundabout connection these days to Harvard University. Dr. Drew Gilpin Faust is Harvard’s president, inaugurated in 2007. She has a doctorate from the University of Pennsylvania and is an expert in the U. S. Civil War and the American South. Her grandfather is the late Kenneth Gilpin, who was a prominent Virginia Thoroughbred breeder and the first president of the Virginia Horse Breeders Association, which was the forerunner to the present-day Virginia Thoroughbred Association. He bought Fasig-Tipton auction company in the 1940s and revived the Saratoga Yearling Sales in 1946. His son, Tyson, succeeded his father at Fasig-Tipton when the elder Gilpin died in 1947. The late Tyson’s daughter Drew was raised among some of the renowned owners and breeders of Thoroughbred racehorses. However, she rebelled against life as a Virginia society belle and set out on an academic career track that took her to the presidency of Harvard. Ironically, Dr. Faust’s ancestors include two past presidents of Harvard’s Ivy League rival Princeton, including Aaron Burr Sr. (father of the third vice president of the United States).

Copyright © 2009 by Horse Racing Business

RACING’S MISGUIDED MUHAMMAD ALI PHILOSOPHY OF PUBLICITY

“You’ve got to accentuate the positive and eliminate the negative, latch on to the affirmative, don’t mess with Mister In-Between”

          Johnny Mercer/Harold Arlen

On July 22, 1963, fearsome World’s Heavyweight Champion Charles “Sonny” Liston, an ex-con nicknamed “the Big Bear,” knocked out former champ Floyd Patterson in the first round to retain his title. The 2001 movie Ali, starring Will Smith as Muhammad Ali, depicts the brash 22-year-old former Olympic Gold Medalist boxer Cassius Marcellus Clay Jr., who later changed his name to Muhammad Ali, taunting the victorious Liston from ringside and challenging him to a title match.  That part of the movie is fiction because Clay was watching the Liston-Patterson fight on a giant-screen, closed-circuit television broadcast at Freedom Hall arena in his hometown of Louisville, Kentucky, along with thousands of other fans who had paid dearly to get in, including Yours Truly, to see less than one-round of boxing.

On my way out of Freedom Hall, I was walking along with a friend in the flow of the chattering crowd when Clay suddenly appeared near me with an entourage and members of the media tagging  along.  Being a somewhat brash youngster myself, of about Clay’s age, I called out something like, “Hey Cassius, how are you going to fight Liston?”  Always a consummate performer, the 6-foot-4-inch Clay approached me with alacrity, followed by a mass of people, and the show was on.  In a state of feigned or real excitement, he began to shout what he intended to do to “that big ugly bear.”  He pumped his right fist into his left hand and carried on for what seemed to be at least a couple of minutes, with me and the crowd laughing and encouraging the histrionics.   The young Clay/Ali radiated the magnetism that made him a superstar and one of the world’s most recognizable persons, even today.

At the weigh-in for the first Liston-Clay match on February 25, 1964, in Miami Beach, Clay acted so bizarre and out-of-control that some observers, including a physician and apparently Liston himself, thought he was scared to death and/or mentally unhinged.  That night, after evading the powerful Liston’s sizzling punches and surviving blinding linament in his eyes from contact with Liston’s gloves, the 8-1 underdog Clay won the title when Liston could not or would not answer the bell for the seventh round.  Bedlam ensued and Clay wildly proclaimed “I am the greatest,” and “I am the prettiest.” 

Ali grew up watching, on early television, a professional wrestler named Gorgeous George, who played a wretched villain so well that fans packed the arena to see him get his comeuppance.  Ali shrewdly adapted George’s approach to entice paying customers, boost television ratings, and psyche opponents.  In the Gorgeous George/Muhammad Ali school of thought, any publicity is good publicity, as long as it sells.

Maybe so for boxing, but certainly not for horse racing.

Yet in recent years, the publicity that Thoroughbred horse racing has received has been more bad than good.  What’s worse, racing has tended to exacerbate the problem.  How so?  Whenever the sport has experienced low points like the tragedies of Barbaro and Eight Belles, it has overreacted and overcompensated, to its detriment.  In its zeal to “show it cares,” racing has unintentionally shone the spotlight on the sport’s vulnerabilities.

Here are some recent cases in point of how the racing industry is its own worst enemy in disseminating images and words for public consumption.

The general public is, of course, most aware of horse racing in the United States during the five weeks of the Triple Crown.  Many people who never watch another horse race all year, tune in the Kentucky Derby.   Thus the telecasts of the Kentucky Derby, the Preakness, and the Belmont Stakes, provide a very limited window of opportunity for racing to present itself in the best light to a large audience of casual viewers who know little or nothing about the sport.  Typically, each telecast tries to build up to the actual race through feel-good human-interest stories. 

Some of these glimpses are beneficial to the sport of racing.  Two, for instance, that come to mind are the tie-in between Afleet Alex and Alex’s Lemonade Stand in 2005 and the explanation of how Colonel John got his name in 2008.  But occasionally, one wonders what the producers were thinking.  In 2008, the Kentucky Derby telecast had a vignette that amounted to regaling an international audience with a soap opera.  We were told about a horse trainer whose tale of woe and redemption involved:  a badly broken man-woman relationship, substance abuse by the couple, the effects on their innocent young daughter, and the murder of the mother by a drug dealer.  Almost everyone appreciates redemption, but is this really the story the racing industry should be telling to a worldwide audience on the sport’s showcase day in America?  Especially a story that reinforces preexisting impressions of racing’s seamier side.  To compound matters, the subject trainer also had a history of medication rules violations with his horses and his Muhammad Ali-like bragging on his own colt and trashing of his colt’s competitors were unflattering.

Simply put, this segment did nothing to burnish racing’s image, already tarnished with allegations of drugged horses, cheating trainers, and rigged outcomes?   Quite the opposite, in fact.  Five weeks later, in the Belmont Stakes, Kentucky Derby and Preakness winner Big Brown, sans steroids, was eased and finished dead last.  On-air commentator and Hall of Fame jockey Jerry Bailey candidly (maybe too candidly) said, “It makes you wonder.”

In the past several years, the racing fraternity has rightfully been distraught over the tragic injuries to Barbaro in the Preakness, George Washington in the Breeders’ Cup Classic, and Eight Belles in the Kentucky Derby.  As a consequence, the industry has been proactive in such important areas as banning medication, improving track surfaces, outlawing toe grabs, and assessing the effects  of  inbreeding and line breeding on durability.  

However, the industry, through its Eclipse Media Awards,  keeps rewarding people for writing articles and doing television reports on the very subjects that have posed a public relations nightmare.   Consider a sampling of titles and subject matter of some of the winning entries in the past three years:

2006:  “Barbaro” (an HBO national television feature about the colt and his breakdown).

2006:  “A Nightmare Right from the Start” (a newspaper article  in a three-part series on the Barbaro injury and surgery.  Honorable Mention also went to an article on Barbaro).

2006:  “Man Whose Job is Saving Barbaro” (a newspaper article).

2007:   “Death and Durability of the Racehorse” (a three-part newspaper series on racehorse injuries).

2008:   “A Rose for Eight Belles” (a touching but emotional essay.   The runner-up article was “Eight Belles’ Breakdown:  A Predictable Tragedy”).

2008:  “Tragedy on the Track ” (the winner in the Audio and Multi-Media Internet category).

Unquestionably, these were interesting and well-crafted contributions by talented writers and producers.  But why so many awards to a theme that dwells on the most negative aspects of racing?   Why some of the titles that are self-indicting and convey mea culpa?  Tell people the bad about racing over and over and over and they believe it,  like Pavlov’s dog learned to salivate to a ringing bell.  Wouldn’t one or maybe two awards on the topic of breakdowns have served the purpose?

If you demur, ponder the following questions:

  • Were the 2009 Super Bowl champion Pittsburgh Steelers to return to the Super Bowl next year, would the National Football League allow the game’s telecast to delve into how the 2009 Super Bowl MVP, the Steelers’ Santonio Holmes, has a background encompassing marijuana sales and possession, domestic violence, and assault?  
  • If the NFL had an equivalent to the Media Eclipse Awards, would the League office sanction an award being given for an article or television program titled “Crippling Injuries and Paralysis on the Gridiron” –dealing with collisions that turned players into paraplegics and quadriplegics?
  • Would Major League Baseball allow the World Series telecast to explore steroid use by players from the present and past?
  • Would the National Basketball Association permit announcers to examine, during game 7 of the League championship, the recent case of the NBA referee who was allegedly on the take from gangsters? 

Am I suggesting censorship?  Yes, absolutely, but call it brand management–always be prudent in what you say and convey about yourself and your product offerings and never intentionally weaken brand equity. 

The racing industry is under no free-speech obligation to provide “fair and balanced” treatment in its own radio and television programs and in the awards it hands out.  There is enough public-relations fallout from newspaper writers who equate horse racing with dog fighting, television commentators who zero in on catastrophic breakdowns, and so on ad infinitum, without the industry piling on.  For instance, yesterday’s Wall Street Journal began its otherwise favorable review of the television show “Jockeys” with a gratuitous aside:  “…the new reality series filmed in part at Santa Anita track near Los Angeles does not, cannot, show the darkest underbelly of the horse-racing world…”

Racing needs to do a much better job of  oversight in what is said on the telecasts it is involved with, in formulating specific criteria for its Eclipse Awards, and generally in presenting the sport in a positive way.  This is not to suggest that subjects like drugs, injuries, and breakdowns should not be broached; dispassionate factual reports, without sensationalized titles and content, are necessary and useful in telling the public what steps racing is taking to correct its shortcomings. 

In the wake of the Eight Belles’ fatality, Steve Crist of the Daily Racing Form rationally pointed out that a breakdown had not occurred in the Kentucky Derby since about 75 years ago.  This statistic does not make the pain any easier, but it does put things in perspective for the public to evaluate. 

Effective public relations avoids giving someone with malice the figurative rope by which to hang you.  Accentuate the positive and work to eliminate the negative by improving track safety, coming down hard on drugs…  Then put your best foot forward in communicating to the public.

Copyright © 2009, Horse Racing Business.