Archives for August 2012


The horse racing industry in North America is full of organizations with their own special agendas. For this reason, it is difficult for racing to unite on any given issue. The saying that “it is like herding cats” is true in the case of fragmented racing. The latest infighting is over the abolishment of race-day furosemide (a.k.a. Lasix or Salix).

A president of the United States by the name of Lincoln once had something very profound and cautionary to say about “A house divided against itself cannot stand.”

A popular and valid lament is that racing lacks the ability to have a centralized authority to advance its welfare. Unlike the major sports leagues, a racing commissioner or president with sweeping authority is not possible because each state with racing makes its own rules and runs its own show.

During and after the 2012 Triple Crown season, racing in the United States was repeatedly pilloried in the media over various concerns, mainly medication. The most persistent and influential critic was the New York Times. A number of individuals from within the racing enterprise provided a rebuttal, mostly ad hoc. No one coordinated the efforts due to the absence of a strong central organization for the entire industry. NTRA evidently does not have the resources and/or the skills to do the job.

It is no doubt true that the last thing racing needs is another organization. However, maybe this is the time to consider an exception owing to the vacuum of leadership in the above-mentioned media attacks.

The major racing-industry organizations and racetracks could, in everyone’s best interests, create and fund a non-profit whose sole mission would be to advance racing’s image to the general public. The bylaws would be such that the bureaucracy would be limited to only a handful of employees, who would run day-to-day operations and outsource public-relations needs. In other words, the organization’s mission would be focused like a laser and built-in safeguards would assure that the administrative costs would not increasingly siphon off the funds available for image-building.

A significant player in American racing told me that this concept would not work because existing racing interests would not support it over parochial concerns. He may be right. But, to use a boxing metaphor, the racing enterprise will be KO’d for sure if it continues to lean defenseless against the ropes while the media pummels it. That is not the famous “rope-a-dope” tactic that Muhammad Ali used to sucker George Forman into expending his energy, but rather, that is being a dope.

Copyright © 2012 Horse Racing Business


Imagine that J. Paul Reddam had made a different decision and elected to run I’ll Have Another in the 2012 Belmont Stakes. A Hollywood ending would have the colt bravely fighting through his physical maladies to sweep by the field in the stretch to become the first Triple Crown champion in 35 years.

In the wake of this story, the media and industry insiders would speculate that the stirring achievement is just what Thoroughbred racing needs to spark fan interest. Reddam would be hailed as a sportsman and the offers for his colt would escalate to the tens of millions of dollars.

An alternative scenario with a grim outcome would also be a realistic possibility. In this version, I’ll Have Another is not only defeated, he suffers a career-ending injury or worse. He is vanned off in front of a stunned worldwide audience.

The finger pointing would begin immediately as Monday-morning quarterbacks second-guess Reddam for his decision to run his charge. Editorials excoriate the I’ll Have Another brain trust and cite the incident as proof positive of an industry debased by drugs and populated with owners and trainers mostly in the game to make a buck.

A third scenario is what really transpired. Weighing his options and the possible results, Reddam decided against a Triple Crown run for glory. Most fans were saddened that I’ll Have Another would not have his chance to join the pantheon of racing immortals, but understood and were grateful that the colt’s team took the prudent course of action.

The theme that should have prevailed afterwards, in the media and elsewhere, is about how owners like Reddam put animal welfare above fame and money. Indeed, while horse racing has its problems with medication abuse and rogue trainers who cheat the game, the sport is not the corrupted entity portrayed in particular by the New York Times during the entire 2012 Triple Crown season.

In its latest salvo, the New York Times chose to ignore any semblance of fair and balanced reporting and instead doubled-down on its previous exposes by trying to make something suspicious out of I’ll Have Another’s normal and routine veterinary care in the weeks and days leading up to the Belmont. I’ll Have Another’s veterinary treatment was then used to segue into a broad indictment of the U.S. racing enterprise.

In the parlance of game theory, or the scientific study of decision-making, a “lose-lose” outcome is one in which no one involved benefits. The New York Times managed to create such a public-relations denouement for all of the humans participating in I’ll Have Another’s abbreviated time in the limelight, and for horse racing overall. However, thanks to the largely unheralded stewardship of the Reddam crew, the winner of the first two legs of the Triple Crown is alive and well.

Copyright © 2012 Horse Racing Business

Originally published in the Blood-Horse. Used with permission.


(Part I of this article can be found on the posting of August 2, 2012.)

Fasig-Tipton will be conducting its 2012 Saratoga Sales of select yearlings on August 6-7 and its sale of NY Bred yearlings on August 11-12. Whether you are a buyer, seller, or just an interested party, you are likely to find this thought-provoking two-part series on auction strategy and tactics intriguing and potentially useful.

(Robert L. Losey, Ph.D. is a financial consultant who taught finance at American University in Washington, DC and equine finance at the University of Louisville, Ky. Dr. Losey has bred and raced horses since 1972. His e-mail address is


 Logistics and Tips in Setting Reserves

Using an Agent

You can choose to place your reserve through the auctioneers, bid yourself, or have an agent bid for you. When an owner bids openly on his own horse, some potential buyers may drop out of the bidding, feeling they are being “run up.” And, if your agent bids for you, the auctioneer may not know what your target price is and whether the agent represents you or is a potential buyer. Auctioneers argue that placing the reserve through them allows them to better manage the situation. If you do use an agent to bid, it is a good idea to discuss your target price with the auctioneer before the sale starts and to identify your agent to the auctioneer.

All-the-Way or Live-Money-Only Bids?

If you place a reserve through the auctioneer you can check either the all-the-way (ATW) or the live-money-only (LMO) box on the reserve form. If you select the ATW box, the auctioneer will bid the price up to your last bid, while if you check the LMO box, the auctioneer will advance the price to your last bid only if there is a live bidder to bid against. A disadvantage to the ATW method is that the seller will pay a commission on the full amount of the reserve, while the commission will be lower if the bidding stops at a lower price using LMO. However, if you buy back your horse, you’ll find that a potential buyer will start the negotiations from a price below the buyback price, thus a potential disadvantage of the LMO method.

Round-Number Bias

At Thoroughbred auctions, sales at $10,000, $20,000, $50,000, (and other “very round” numbers) occur much more frequently than nearby prices. Studies show that bidders at auctions tend to assign “very round” numbers to what they’re willing to bid. The lesson for sellers is that making your own last bid at prices below these “very round” numbers makes good sense.

Should You Reveal Your Reserve Price If Asked?

There are cogent arguments for either a yes or a no answer to this question. If potential buyers know your reserve and it is in their price range, they are more likely to show up when your horse goes through the ring. Then again, if a potential buyer is willing to pay X dollars and you say that your reserve is exactly that amount, she may look elsewhere on the theory that there is no chance she would end up with a bargain. And, if you do reveal your reserve, make sure you don’t confuse “my last bid” with “the reserve price.” If you tell someone your “reserve” is $50,000 and then you bid $50,000, you may shut out someone who understood that they could buy your horse for that price. Moreover, that potential buyer may spend his $50,000 on the next horse through the ring and not show up back at the barn.

Should You Raise Your Reserve If You Have Lots of Lookers?

Economics 101 would suggest that if you have lots of repeat lookers, which probably will translate into lots of bidders, thus suggesting a competitive market, the resulting price is likely to be a “fair market price.” Lots of bidders means that it is less likely that your bid will make a difference (unless you bid too high). Bid at your own risk in this situation.

Leaving Money on the Table

Has your consignor or partner ever advised you not “to leave money on the table,” the implication being that you should push the top bidder to his top dollar? If you or your consignor can read people’s minds, go for it. If you don’t have ESP, this is a formula for generating lots of (costly) buybacks.

Should You Be Less Willing to Buy Back Your Cheaper Horse?

Change the example used above from a $50,000 to a $5,000 horse and ask if the seller should try to push the price from $4,800 to $5,000. You’ll make $200 more if you’re successful, but a buyback could easily lose thousands due to commissions and other fixed costs in getting to the next sale. Moreover, the appreciation in a cheaper horse’s value is less likely to cover carrying costs. Typically, you should bid on the $5,000 horse only if you’re reasonably sure that there is better than a 90% chance your bid will result in a sale at a higher price. Not surprisingly, the market has figured this out: sellers buy back a lower percentage of cheaper horses.

Copyright © 2012 Horse Racing Business