PROTOTYPE OF A HATCHET JOB

In the wake of the recent Ernie Paragallo conviction in New York on 33 of 34 counts of animal cruelty, Bonnie Erbe, a journalist and television host voiced her take with a newspaper opinion piece titled “A Lesson for All Who Breed Animals.” Ms. Erbe’s harangue is a particularly egregious example of the one-sided negative articles that have been written about horse racing. Consider the dialogue in just part of the essay:

“Thoroughbred racing is a dying sport because it relies on slots and gambling to keep it afloat. But gamblers no longer need rely on race tracks for a fix. There’s Internet gambling, casino gambling, heck, even buying lottery tickets, if bettors are so inclined.

If breeders’ incentives went away and interest in thoroughbred racing were allowed to die a natural death, untold thousands of horses would be spared the hell on Earth of being brought into the world, to be overworked, over-raced and then sent off to slaughter.

Thoroughbreds are hardly the only equines or animals that are over-bred. The American Quarter Horse Association is the largest equine breed registry in the world.

And we all know millions of cats and dogs are killed at shelters each year because there are too many of them.

Nonetheless it’s a simple fact that if thoroughbred breeding were restricted, fewer horses would be shipped to slaughter.”

Following are a half dozen brief observations concerning Ms. Erbe’s assertions and proposed remedies.

First, racing may be a sport in a downsizing mode but it is hardly “dying.” In spite of a severe recession that has taken its toll on sport, entertainment, and gaming in particular, pari-mutuel handle on Thoroughbred horse racing in the United States is still over $12.3 billion annually–which is more than movie-theater revenues. Harness racing adds at least a couple of billion dollars more. In such venues as Hong Kong, Japan, and Sweden, horse racing is enormously popular and pari-mutuel betting handle is buoyant. Like horse racing in the United States, Major League Baseball is not nearly as popular as it once was either, owing to competition and other factors, but no knowledgeable observer has concluded that it is dying.

Second, Ms. Erbe used a broad brush to paint all people who wager on any kind of gaming as needing a “fix.” Talk about a generalization. This is like saying that everyone who drinks an alcoholic beverage needs it for a “buzz.” While some gamblers overdo it, the vast majority do not. Many people like the intellectual challenge and/or entertainment of handicapping horse races or playing poker or blackjack, within their means.

Third, the Paragallo case did not concern racehorses being “overworked, over-raced, and then sent off to slaughter.” The poor animals were malnourished on the Paragallo farm.

Fourth, linking the entire Thoroughbred and Quarter Horse enterprises to the Paragallo criminality exemplifies guilt by association, slander at its cowardly best of countless animal-loving good folks. No racing owner, trainer, fan, or whomever, with a functioning conscience, would look at the pictures of Paragallo’s neglected horses without a sense of extreme sadness and moral outrage. However, Ms. Erbe chose to use the Paragallo incident, a sample size of one, to generally indict people who own Thoroughbreds and Quarter Horses (Standardbreds evidently got a pass). There is no reference whatsoever to the numerous people and organizations who work mightily to make for safer racing and to save former racehorses from slaughter; people like Texans Dallas and Donna Keen, who both train racehorses and operate a rescue facility at a deficit that they cover out of their own funds. One can easily find a litany of such efforts in the racing sport/business, which Ms. Erbe perhaps neglected to research and mention in her condemnation—or maybe she did know but chose not to provide these facts in order to bolster her denunciation. Would Ms. Erbe think it fair to disparage the morality of all money managers over the Bernard Madoff fraud? Should we ban investing because Madoff and others like him ruined so many lives?

Fifth, Ms. Erbe correctly said that “millions of cats and dogs are killed at shelters each year because there are too many of them.” Would she prefer that we curtail or outlaw dog ownership because irresponsible people won’t have their animals spayed or neutered? Maybe the United States should adopt the strict one-dog policy of many Chinese cities? The Associated Press reported in 2009 that China’s enforcement measures in Guangzhou were being “instituted in other parts of China with reports of often cruel results, including allegations of authorities sweeping through neighborhoods and beating pets to death in front of their owners.”

Sixth, Ms. Erbe regaled with this histrionics-laced logic: “If breeders’ incentives went away and interest in thoroughbred racing were allowed to die a natural death, untold thousands of horses would be spared the hell on Earth of being brought into the world, to be overworked, over-raced and then sent off to slaughter.” This is like saying that “untold” millions or billions of people would be better off if human reproduction were to be curtailed or stopped entirely because some among us are born into abject poverty and/or are denied basic rights by oppressive governments. Ms. Erbe’s solution is based on her (superior?) judgment about who should be born and who should not.

The usual recipe in attack articles like Ms. Erbe’s is to use emotionally charged words, intersperse a grain of truth here and there, paint an entire industry with a negative brush and do so on the basis of an unrepresentative sample, engage in guilt by association, provide as few metrics as possible, and avoid a balanced analysis of the facts.

Ms. Erbe is a skilled crafter of syntax. But at least in her article on horse racing, her reasoning was specious. Moreover, she did not even attempt to present a two-sided evaluation. Call it fashionable bashing.

Like all human endeavors, horse racing has its strengths and weaknesses and the sport is sometimes embarrassed by the actions of deviants. To be sure, perfect it is not. Yet a modicum of research would find that the industry has many benefits and is seriously pursuing multiple initiatives to address its recognized areas for improvement. Problems in racing should be discussed openly, but in a thoughtful and factual way in order to develop realistic alternative courses of action.

Ernie Paragallo and his ilk do not represent horse racing any more than despicable small-animal abusers represent families who cherish their dogs and cats as family members.

Whenever you see a hatchet job like Ms. Erbe’s, try to contact the author. Be respectful, don’t be emotional or insulting, focus on facts and examples, and ask for a fair assessment in the future. It won’t matter to people who have an ax to grind, but some may listen.

Copyright © 2010 Horse Racing Business

For the full text of Bonnie Erbe’s article, click here.

INTERNET EMPOWERMENT

A condensed version of this post appeared in the Blood-Horse. Reproduced with permission.

The Internet has reduced the power position of experts in virtually every commercial endeavor. Prior to widespread consumer access to the Internet, experts had an asymmetric, or lop-sided, information and knowledge advantage over their customers or clients. The expert continues to know more than the layman about a particular subject, but the Internet has markedly narrowed the gap because consumers are better informed.

Physicians and lawyers, for example, are highly educated in their respective fields. Yet, mostly free technical information has become instantaneously available to patients and clients at reputable websites like WebMD and DearEsq and the well-known LegalZoom is essentially an online law firm that provides legal forms and consulting services.

The bestselling book Freakonomics provides a superb empirical example of the Internet’s rationalizing effect on business transactions. One of the authors, Steven Levitt, a University of Chicago economics professor, conducted a carefully controlled study using public data on 100,000 home sales in suburban Chicago. Three thousand of these were transactions in which real estate agents sold their own homes. The study’s purpose was to determine how well the experts–in this case, the real estate agents–did in selling homes for their clients as opposed to selling homes that they personally owned. The key finding was that an agent typically held out for a better price on his or her own house. To be exact, real-estate agents kept their own homes on the market an average of ten days longer than clients’ homes but got an extra 3-plus percent selling price, which would amount to about an $8,000 premium on a $250,000 house. However, importantly, a follow-up inquiry found that, with the proliferation of information on websites like Realtor.com, the realtors’ average premium in selling their own homes has been reduced by one third.

Freakonomics reported similar results for sales of term life insurance. With the appearance of Quotesmith.com in 1996 and other such websites that allow the consumer to search for the cheapest rates, the amount paid out by buyers for term life insurance shrunk by $1 billion per year.

The same kinds of Internet-enabled effects are occurring in many facets of the racing and breeding industry. For example, a farm buyer can quickly find out how much a parcel of land previously sold for by going to the local government website that maintains records of property-tax assessments and real estate sales. Prospective investors in racing partnerships can discern how much a managing partner paid for a colt or filly at auction and therefore can calculate the percentage markup that the managing partner is taking. Pari-mutuel bettors have the capability to conveniently shop around for the best deal of the moment from an advance deposit wagering company or for the racetrack with the lowest takeout.

The search capability of the Internet has vitiated the longtime information advantage of experts over clients and sellers over buyers. This is a development much to the benefit of consumers.

Copyright © 2010 Horse Racing Business

INTERNET BRAND BUILDING

A condensed version of this post appeared in the Blood-Horse. Reproduced with permission.

The National Thoroughbred Racing Association (NTRA) is pursuing a leading-edge media strategy by streaming prominent stakes races live at NTRA.com. This is an increasingly effective way to reach younger viewers in particular.

The validity of these statements is shown by the results of a recent scientifically conducted study by the Retrevo Pulse Report headlined under the caption “Is the Internet Killing Cable TV?” (Retrevo is a consumer electronics shopping site that provides contemporaneous information from the Internet about what products to purchase, when to buy, and where to acquire them.) Over 1,000 people “distributed across gender, age, income, and location in the United States,” were asked the question: “How much TV do you currently watch on the Internet/online?”

For the entire sample, the answers were: some, 51%; most, 8%; all, 5%; and none, 36%. When answers for respondents under 25 years of age were isolated, the results showed a stronger preference for online viewing: some, 54%, most, 23%; all, 6%; and none 17%. Thus almost one-fourth of the “under 25” age group said they do “most” of their television viewing online.

There were marked gender differences in online viewing across all age groups. About twice as many men versus women said that they do “most” or “all” of their television viewing online, 17% for men and 9% for women.

A question was included to determine enhancements that would encourage additional online viewing: “What would it take to get you to watch all your TV shows online?” The top responses were: HDTV, 20%; premium shows like HBO, 19%; and live sports, 15%.

The upsurge in online viewing is made possible by evermore sophisticated mobile communications devices, faster broadband, proliferating wi-fi, and free access to television programs on websites like Hulu and ESPN360. The Retrevo study confirmed that another important cause is the escalating price to consumers of cable and satellite television service. Retrevo asked: “Have you considered cancelling your cable or satellite service?” Fifty-seven percent of respondents said that they are happy with their service and another 17% indicated that they have not contemplated cancelling “because I would not be able to watch my favorite shows.” Yet 26% have already cancelled or are considering doing so.

The research indicates that online viewing will expand with inevitable improvements in the visual quality of programming and more access to popular television shows. Online viewing is following a pattern similar to cell phone usage. As cell phone service improved, long distance became part of the package, and prices declined, subscribers increasingly took out their landline phones altogether.

Racetrack owners did not embrace television in its early years and the sport paid a lasting price vis-à-vis other sports that dominate today. It appears that NTRA is determined not to repeat this Luddite blunder when it comes to online viewing. The racetracks need to quickly join in by streaming all their races on the Internet for free.

While online viewing is in its infancy, the practice is accelerating and the future is evident.

Copyright © 2010 Horse Racing Business