Archives for March 2015

KENTUCKY DERBY DAY 2015 WILL BE A SPORTS EXTRAVAGANZA

Derby Day this year will be like none in memory for avid sports fans and bettors.

The usual huge crowd will show up at Churchill Downs and during the late afternoon and early evening the Kentucky Derby will draw a large television audience.  With an improving economy, betting is likely to set a record.

Before the media commentators have finished dissecting how the race transpired, the sporting world’s attention will turn to Las Vegas for the much-anticipated world’s championship welterweight match between Manny Pacquiao and undefeated Floyd Mayweather at the MGM Grand.

This will be the richest fight ever held, with an estimated purse of at least $200 million (60% to Mayweather and 40% to Pacquiao) and could be considerably larger.  The pay-per-view price will be about $90 with an extra $10 for high definition.  NPR pointed out that Mayweather will make more than the entire annual payroll of some Major League Baseball clubs.

The face value of tickets range from $1,500 to $7,500–the highest in boxing history–but buyers will pay a multiple of three or four times as much on the resale market (the MGM Grand made only a few hundred tickets available to the public).  Floor seats already have a starting resale price of $28,000.

Last year, people wagered $181million on the Kentucky Derby card.  No telling how much will be bet on the Mayweather-Pacquiao fight, but it will be significant.  Reports are that rapper 50 Cent (Curtis Jackson) has bet $1.6 million on Mayweather and Justin Bieber said he plans to put down $2 million on Pacquiao.  Filipinos are likely to back their popular fellow countryman Pacquiao with heavy betting.  Las Vegas should have a banner day taking bets on the two events.

The view here is that the Mayweather-Pacquiao fight will be good for Derby handle because Las Vegas will be packed with sports fans and gamblers.  Many people in town for the fight are apt to place bets on the Derby card and the usual crowd in town to celebrate the Derby are likely to bet the fight.  Now that’s symbiosis.

If the venerable “Run for the Roses” and the “Fight of the Century” are not enough activity for sports fans, the NFL draft begins on April 30 and ends on Derby Day.

Copyright © 2015 Horse Racing Business

THE POMPANO PARK LEGACY

When I stay in Fort Lauderdale during part of the winter, Gulfstream Park is my racetrack of choice.  The ambiance is relaxing and the track and adjoining upscale shopping complex is new and immaculate.

Another storied racetrack is not far from Fort Lauderdale, but it does not receive the same amount of publicity as Gulfstream.  Pompano Park, or officially Isle Casino Racing at Pompano Park, bills itself as the “Winter Capital of Harness Racing.”  The facility has a long and glorious past and one that has close ties to a prominent American industrial family with deep ties to both Detroit and the Bluegrass region of Kentucky.

Pompano Park was originally founded in 1926 but was quickly shut down by the state of Florida because pari-mutuel wagering was illegal in Broward County.  In 1964, Frederick and Frances Van Lennep of the famed Castleton Farm in Lexington, Kentucky, brought Pompano Park back after successfully getting a ballot initiative passed in 1962 to permit pari-mutuel wagering.

To digress slightly, Frances Van Lennep was the daughter of John F. Dodge, who co-founded the Dodge Motor Company with his brother Horace.  Her older half-sister, Isabel Dodge Sloane, owned top-notch Thoroughbreds under the Brookmeade Stable banner.  Frances Dodge began her equine career raising American Saddlebred show horses at her mother’s Meadow Brook Hall estate in Rochester Hills, Michigan (now the location of Oakland University) and she is arguably the most successful owner of American Saddlebreds of all time.

In 1940, Frances Dodge rode the immortal trotter Greyhound to a world record under saddle for a mile in 2:01 ¾ at the Red Mile track in Lexington.

I vividly recall visiting Castleton Farm in its heyday as a nursery for both Standardbreds and American Saddlebreds.  A visitor could see up close famous stallions of both breeds in their stately barn.

The then-modern Pompano Park thrived after its reopening by the Van Lenneps and routinely attracted the best stables and celebrities from entertainment and sports.

Frances Dodge Van Lennep died in 1971 but her husband Frederick continued to own Pompano Park until his death in 1987.  The late John Cashman managed the racetrack for the Van Lennep estate until 1994 when the racetrack was sold to the forerunner of Isle of Capri Casinos.  (Cashman’s son Brian is the general manager and senior vice president of the New York Yankees.)

Until recently, I had not been to Pompano Park.  If you are aware of the history associated with the place, you realize that you are not at just any harness track.  Legendary horses and their human connections made this place special.

Copyright © 2015 Horse Racing Business

PERSPECTIVES ON THE JOCKEY CLUB INVESTMENT IN BLOOD-HORSE PUBLICATIONS

The Jockey Club and the Thoroughbred Owners and Breeders Association (TOBA) announced last week that the former had acquired a 51% stake in Blood-Horse Publications, the centerpiece of which is the weekly Blood-Horse magazine.  James Gagliano, president and chief operating officer of the Jockey Club, explained why the acquisition was made:

“The Jockey Club stewards believe that a publication with the history, influence, and brand recognition of Blood-Horse is a considerable asset for the Thoroughbred breeding and racing industry, and there are certain synergies that can make it an even stronger publication as the result of this transaction.”

I look at the Jockey Club purchase of Blood-Horse Publications from my own experiences as a business-school professor, a businessperson, and a marketing consultant.  In my view, the deal is unquestionably in the best interests of both the Jockey Club and Blood-Horse Publications, for the following reasons.

First, the Jockey Club has a deep and proven reservoir of business expertise in the executives who are responsible for day-to-day operations.  These individuals are not known to micromanage the various Jockey Club subsidiaries, but are there to provide oversight, guidance, and resources, as well as to facilitate the cooperation among the subsidiaries that promote efficiencies and synergies.

Second, the Jockey Club membership ranks are filled with people who are demonstrably committed to the advancement of horse racing, but who come from very diverse backgrounds.  While some individuals have been eminently successful in businesses that have nothing to do with horse breeding and racing, other members have earned their livelihood within the horse racing and breeding enterprise.  Such vast knowledge, divergent capabilities, and single-minded devotion to the furtherance of horse racing are unique among industry groups.  As a result, Blood-Horse Publications is in the hands of highly competent people who want it to succeed for the good of horse racing.

Third, in acquiring the majority interest in Blood-Horse Publications, the Jockey Club has purchased a venerable asset whose magazines have strong brand equity and a history of having editors and writers who produce award-winning articles.

Fourth, the Blood-Horse magazine has a critical mass of (paying) subscribers who, on average, are very affluent.  This fact appeals to some kinds of advertisers more than actual circulation figures.  Thus the magazine’s upscale audience can potentially be used to attract advertisers that one might not ordinarily associate with horse racing.  The Blood-Horse’s digital edition and its recently launched Spanish-language version position it to accommodate changing reader preferences and to reach an increasingly important demographic cohort, respectively.

Lastly, Blood-Horse Publications is now backed by a financially stronger organization than TOBA.

Though the Jockey Club and its members are sometimes criticized as being elitist or wanting to run racing for their own benefit, the facts tell a different story.  An objective and dispassionate examination of the record shows that the Jockey Club has spent large sums of money to strengthen the American horse racing franchise.  For example, the Jockey Club wholly or jointly owns and operates eight entities (nine with Blood-Horse Publications) vital to horse racing, convenes an annual roundtable covering contemporary topics, and showcases horse racing on television.  On at least two occasions, it has commissioned in-depth studies by McKinsey & Company, the premier management consulting firm in the world.

The preeminent non-racetrack organization in American horse racing has acquired the majority interest in the equivalent of the Dow-Jones Company of its industry.  With creativity and innovation, the entire horse breeding and racing industry will be better off from the combination.

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(Disclosure:  I occasionally write for the Blood-Horse as a sideline but I am not an employee of Blood-Horse Publications nor have I ever been.)

Copyright © 2015 Horse Racing Business