TRIPLE CROWN REVIEW FROM A BUSINESS PERSPECTIVE

June 13, 2009 by

1. Television Ratings and Program Content

Two days prior to the Kentucky Derby, CNBC’s Melissa Francis anchored a one-hour primetime television program titled “Run for the Roses:  The Kentucky Derby and the Business of Horse Racing.”    The show was supplemented with four online vignettes hosted by Francis called, respectively, “The $4 Billion Industry,” “Online Betting,” “Big Hats and Strong Drink,” and “Jockey School.”

In addition, NBC and its cable channels promoted the Kentucky Derby and the Preakness on regular programming.   Jockey Calvin Borel, for instance, appeared on the Jay Leno Show.  ABC carried the Belmont telecast.

All of this favorable on-air exposure, especially by NBC, coupled with the attraction of Rachel Alexandra in the Preakness, had a desirable effect.   The race portion of the Kentucky Derby (6:09 PM – 6:57 PM) drew the largest audience since 1989 with 16.3 million viewers.   The national rating was 9.8 and the share was 23.    Each rating point equates to 1.145 million households and the share metric means that the Kentucky Derby attracted 23% of all the televisions in use during the telecast.   The audience is larger, of course, than the number of households as multiple people may be watching from each household.

Network television has, over the years, lost a huge portion of its audience to cable channels and the Internet.  The Triple Crown telecasts have followed the same precipitous declines.   Following are audience and ratings data for select years, as measured by Neilsen, for the Kentucky Derby.   The Kentucky Derby began a steep audience/ratings decline after 1975 and then the audience/ratings numbers began to rise after 2001.

Year        Viewers                             Household Rating                        Share of Audience

1975       26.74 million                               18.9                                                  54

1985        12.06 million                               10.9                                                 32

1995         8.13 million                                    6.0                                                 17

2000        7.93 million                                   5.8                                                  17

2005       13.58 million                                   9.0                                                 22

2009       16.30 million                                   9.8                                                 23         

The 2009 telecast of the Preakness had a rating for the race segment of the program of 6.8 and a share of 16, or 10.9 million viewers, up some 3 million viewers from 2008.   This was the best showing for the Preakness since 2004.   In 2009, the Belmont Stakes had no chance for a Triple Crown winner, unlike 2008, and the race segment of the telecast had a rating of 5.0.   This was a significant decrease from 2008, when Big Brown’s attempt to complete the Triple Crown registered a race-segment rating of 9.5.   However, compared to 2007, the last year with no Triple Crown sweep on the line, this was a respectable rating.   In 2007, the race segment had a rating of 3.1.

The reviews for the quality of the telecasts were overwhelmingly positive.   The program content was upbeat and interesting.    The colorful cowboys from New Mexico that brought longshot Mine That Bird, the likeable and emotional jockey Calvin Borel, and the filly Rachel Alexandra, all made for good television.  The only negative publicity surfaced when a couple of owners were revealed to be conspiring to keep the filly Rachel Alexandra out of the Preakness.

2. Wagering

Most racetrack experts expected the down economy to take a heavy toll on handle.   On the contrary, handle held up surprisingly well.   Betting handle was down just 0.1% for the Kentucky Derby, as compared to 2008, and off 4.1% for the entire race card.   For the Preakness, handle rose by 30% on the race and 18% on the 13-race card.    Betting handle for the Belmont was down from 2008, by about 10.2% from all sources.   Keep in mind, however, that 2008 had the second highest Belmont handle ever, both on-track and off-track.  Compared to 2007, the 2009 Belmont handle was up by 2%.

3. On-Track Attendance

Churchill Downs had its lowest Derby-day attendance since 2004, but still attracted a paid audience of 153,563 people.  On the other hand, the Preakness took a big hit.   The reported crowd of 77,850, 30.6% fewer attendees than in 2008, was the smallest number since 1983 and the first crowd under 100,000 since 1996.   As a result, in-state wagering on the Preakness declined by 15.1%, and this was attributable to a 30.6% drop in the on-track crowd.  The Belmont Stakes drew 52,861, which is much less than the 94,476 fans who paid to see Big Brown’s Triple Crown try in 2008.   A sharp drop-off was to be expected given that Mine That Bird had lost the Preakness and therefore could not be a Triple Crown champion.

The Maryland Jockey Club was accused of greed by a few sports writers for not allowing infield fans to bring in their own alcoholic beverages for the Preakness at Pimlico, and this policy no doubt kept away fans by the thousands.   Presumably, The Maryland Jockey Club rendered the policy in order to line its own pockets with the sale of beer, liquor, and wine.  No evidence was offered for this simplistic claim.

In reality, the alcohol issue is not a cut-and-dried decision.   On the one hand, Pimlico’s management wants to see a full infield, especially for the benefit of TV images.   On the other hand, management has a responsibility to provide a safe environment for attendees.   Pimlico could suffer considerably, from a monetary standpoint, should someone get badly injured in the infield while management stood by and let things get out of control.  Joe DeFrancis, a former owner of Pimlico, told the Washington Post:  “The fundamental problem is the full (beer) cans being used as missiles.”    Critics on the outside most likely do not know what Pimlico management was told by its attorneys and insurance companies about  infield-crowd liability or what they concluded on their own.   From a revenue viewpoint, the no-alcohol rule may be a loser, but a necessity unless some compromise can be found.

4. Conclusion

In the aftermath of the demise of Eight Belles in the 2008 Kentucky Derby, horse racing was roundly criticized from inside and outside the enterprise.   The public-relations fallout was considerable.   Then, the severe worldwide economic downturn took its toll on business per se and leisure activities like pari-mutuel wagering were affected greatly.   This combination of negative publicity and economic turmoil is a recipe for disaster.   Still, by any objective measure, whether it is TV ratings, betting handle, or on-track attendance, the 2009 Triple Crown race portfolio, on balance, performed way beyond what would be expected given the circumstances.

In my view, much of the credit goes to NBC, which did a superb job of promoting the Kentucky Derby through the CNBC one-hour special, in its Internet podcasts, with mentions on network and cable news programs, and via advertising.   This drove up ratings for the Kentucky Derby.  Underdog Mine That Bird’s improbable win, Calvin Borel’s appearance with Jay Leno, and the addition of the filly Rachel Alexandra in the Preakness fueled more interest.   Although there was no chance for a Triple Crown winner after the Preakness, ABC’s telecast of the Belmont had some draw because Calvin Borel had the opportunity to be the first jockey to win all three Triple Crown races on two different mounts.

With a mediocre economy and no Triple Crown to gin up an extraordinary climate of excitement, the business results from the three races were satisfactory, to say the least.

Copyright © 2009 Horse Racing Business

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THE BELMONT STAKES, 1919 and 2009, AND THE EPSOM DERBY, 2009

June 6, 2009 by

Between the influenza pandemic of 1918-1919 and World War I, millions of lives were lost.   The Great War was settled by the Treaty of Versailles in 1919 and the flu would run its course in 1920.   The Eighteenth Amendment to the U. S. Constitution of 1919 outlawed the manufacture and sale of alcohol, beginning in 1920, and helped set the stage for the “roaring ‘20s.”

On the sports front, 1919 would long be remembered for historical “firsts” in Thoroughbred horse racing and Major League Baseball.

Ninety years ago, on Wednesday, June 11, 1919, Sir Barton won the initial American Triple Crown, although the term “Triple Crown” was not commonly applied to the winner of the Kentucky Derby, the Preakness Stakes, and the Belmont Stakes until 1930 during Gallant Fox’s victories in these races.   Charles Hatton, a Daily Racing Form columnist, helped to popularize the term “Triple Crown,” but he did not coin the phrase as is sometimes stated.   The English Triple Crown began in 1853 and was referred to as such.   Hatton’s role was to get the descriptor Triple Crown into common usage in the United States.   Canada, Japan, and several other nations also have their versions of the Triple Crown. 

In 1919, the Kentucky Derby was run at its present-day distance of 1 ¼ miles.   By contrast, the Preakness Stakes was 1 1/8 miles and the Belmont Stakes was 1 3/8 miles, compared to 1 3/16 miles and 1 ½ miles, respectively, today.   In addition, the races at Belmont Park were run clockwise, whereas at Churchill Downs and Pimlico they were run counterclockwise.

On May 10, the chestnut colt Sir Barton under jockey John Loftus led wire to wire to win the Kentucky Derby to defeat his stablemate Billy Kelly and seven other entries.   Sir Barton was coupled in the betting with the highly regarded gelding Billy Kelly, ridden by Earle Sande, who had selected his mount over Sir Barton.   Billy Kelly had won nine out of ten races as a 2-year-old, including his only meeting with Sir Barton.   The plan in the Derby was for Sir Barton to be a rabbit.   The book Boots and Saddles (written in 1956 by the son of J. K. L. Ross, who owned Sir Barton and Billy Kelly) stated: “Strategy for the Derby had been carefully worked out…Sir Barton, the speed horse, was to take the lead at once and set as swift a pace as possible, thereby killing off any front runners such as Eternal or Uncle Fire–the only two in the field …whom we considered had any chance of defeating Billy Kelly.   When Sir Barton had run himself and other challengers into the ground, Billy Kelly was to come on and win.   However, in the unlikely event that Sir Barton did not tire, Loftus was instructed to do his best to win.”

Sir Barton, in fact, did not tire and he easily beat Billy Kelly by five lengths on a heavy track.   He carried 112 pounds, which was the second lightest impost and 10 pounds less than the two highest weighted colts, Under Fire and Eternal.   Billy Kelly carried 119 pounds.  The Derby triumph was Sir Barton’s first win.

Eight days later in Baltimore, the Preakness Stakes was the next stop for Sir Barton but Billy Kelly was not entered.   Eleven colts and one filly contested the race.   Sir Barton and two other colts were assigned 126 pounds and conceded as much as 17 pounds.   Sir Barton was coupled in the betting with his stablemate Milkmaid, the sole filly in the race with an impost of 109 pounds.

Sir Barton’s trainer, H. Guy Bedwell, instructed Loftus to “Get to the front as soon as possible and stay there.”   Sir Barton led at every pole and was ahead of Eternal by four lengths at the wire.   Over the course of the Kentucky Derby and the Preakness Stakes, Sir Barton had never been behind.

On Saturday, May 24, Sir Barton tuned up for the Belmont Stakes with a win in the 1-mile Withers Stakes at Belmont Park over five others.  This time, Sir Barton trailed Eternal until the stretch where he passed him and won by 2 ½ lengths.

June 11 at Belmont Park presented Sir Barton with the opportunity to sweep what would later be called the Triple Crown by winning the Belmont Stakes.  Only two colts were entered to take him on and all carried 126 pounds.   The race was considered for all intents and purposes a match race between Sir Barton and Sweep On.   Sir Barton laid in second place until the stretch and then he seized the lead and drew off over Sweep On by five lengths.  

Sir Barton won 13 races in 31 starts and bested such greats as Exterminator.   On October 18, 1920, at Kenilworth Park in Windsor, Canada, Sir Barton and Man o’ War hooked up in a match race with Sir Barton carrying 126 pounds and 3-year-old Man o’ War 120 pounds.   Man o’ War bolted to the lead from the start and won the 1 ¼ mile race by seven easy lengths.   The chart of the race simply stated that Man o’ War was “never extended” in the final race of his career.

Sir Barton was inducted into the National Museum of Racing and Hall of Fame and is number 49 on Blood-Horse magazine’s list of the top 100 racehorses of the 20th century.    He had a mediocre record at stud and lived to be 21 years old.  H. Guy Bedwell is also in the Hall of Fame.

A sidenote:   On a winter day in 1919, J. K. L. Ross was approached at New York City’s Racquet and Tennis Club by a man he had never met.   The stranger offered to bet Ross that Eternal would finish ahead of Ross’ Billy Kelly in the Kentucky Derby.   Ross thought the man might want to put up a friendly wager of perhaps $100.   To the contrary, he wanted to wager $50,000 (equivalent to about $623,000 today).   Ross agreed and the wagers were held in escrow by a third party.   The high roller who ultimately lost his bet with Ross was Arnold Rothstein, who became notorious for being the alleged, but never convicted, mastermind behind fixing the 1919 World Series in what lives on in infamy as the “Black Sox” scandal. 

Turning to the Belmont Stakes, 2009:  If Calvin Borel wins on Mine That Bird, he would be the first jockey to sweep the Triple Crown races, in the same year, with two different mounts.   However, in 1995, D. Wayne Lukas trained the winner of all three Triple Crown races–Thunder Gulch took the Kentucky Derby and Belmont and Timber Country won the Preakness.  Remarkably, Lukas won six Triple Crown races in a row from 1994-1996.  Beginning with the 1994 Preakness, Lukas-trained colts won seven of the next eight Triple Crown races.

How does Lukas’ amazing win streak compare with Woody Stephens training the winners of five straight Belmont Stakes in the 1980s?  This is the kind of debate that can never be resolved but one that makes horse racing so intriguing.

If Mine That Bird wins the Belmont, the familiar racetrack phrase “what if” will be heard here, there, and everywhere.  What if Rachel Alexandra’s owners had kept her running against the fillies?   Mine That Bird would likely be the first Triple Crown champion since 1978, but one can’t tell for sure how a race would turn out if the winning entry were not in the equation to set the race up a certain way.

My wagers in the Belmont will be an exacta box and a trifecta box comprised of Chocolate Candy, Dunkirk, and Mine That Bird.  A Superfecta box will contain Charitable Man, Chocolate Candy, Dunkirk, and Mine That Bird. 

Aidan O’Brien is training six of the thirteen entries in today’s Epsom Derby.  The odds dropped on Rip Van Winkle when O’Brien’s main jockey, Johnny Murtaugh, got the mount.   The 2000 Guineas winner Sea of Stars has a lot of support.  One of these two colts should be the favorite and they are likely to be the two top choices of bettors.   

Copyright © 2009 Horse Racing Business

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