The horse industry has always been a third wheel of sorts to the larger agricultural industry. In fact no figures were available to measure the impact on the national economy until 1996 when a report sponsored by the American Horse Council was released. The report stated the horse industry contributed about $112.1 billion. One of the most important sectors is the horseracing sector. Horseracing contributed 30.4% to the $112.1 billion total despite having fewer participants than other sectors of the horse industry. (Jockey Club Fact Book) Unfortunately horseracing has seen its impact shrink as losses have come from stronger gains from other gaming industries. Thoroughbred racing is the focal point of this report because it is the leader in the racing industry. In fact in the 1998 Gross Annual Wager report, Eugene Martin Christiansen noted "Thoroughbred racing is the only horse breed that posted a gain (in handle) in 1998. [... and is ] much better positioned to face the future than are other pari-mutual sports." (Mitchell, par. 5)
There once was a time in the early 1900s when 30,000 people came to Arlington Park in Chicago, presidents stopped their meetings to watch the races and racing pushed the Cubs off the front of the sports page. (McEvoy, par. 13, 21-23) With casino gambling restricted to Nevada and New Jersey and state lotteries just a twinkle in lawmakers eyes, horseracing had a monopoly in gambling through pari-mutual betting. Expansion of racing came from new exotic betting types, more races, more days and ultimately simulcasting. But the late 1990s was a different story, nearly every state has a lottery, and casino type gaming has gained a foothold in many forms including indian reservations, river boats and casinos in the inner cities. People were drawn to the familiar games of chance, free food and beer promotions. Horseracing was lacking a cohesive plan with infighting between the large, profitable tracks and the smaller tracks that saw their customers lured to "easier" gaming opportunities.
Marketing racing was made harder by years of being associated with race fixing and having no retort through national press or television coverage. The biggest marketing faux pas of the history of the sport was the refusal of racing coverage when television was in its infancy. By the time racing realized television would not draw away patrons and would instead keep the sport in people's conscious, it was too late. (McEvoy, par. 24) Baseball, football, basketball ruled the prime time slots and the ‘90s brought ice skating, NASCAR & Golf, cutting into the few hours racing was shown. ABC once had one hour broadcasts of Grade I competitions, but by 1996, telecasts were regulated to a few minutes between other sporting competitions. Racing had reached its lowest point and something had to be done as river boat and indian reservation casinos siphoned revenue and customers.
Hope brought about by desperation appeared in the form of the NTA (National Thoroughbred Association) formed by frustrated owners, which became the precursor to the current marketing arm of the industry, the NTRA (National Thoroughbred Racing Association).
In examining strategies on marketing thoroughbred racing, we will focus on the current leaders, Churchill Downs, Inc. and newcomer MI Ventures (Frank Stronach) who recently bought Santa Anita Race Track, Golden Gate Fields in California; Gulfstream Park in Florida; Thistledown Race Course in Ohio; and Remington Park in Okalahoma.
Churchill has been named one of Forbes best small companies in America 2 years in a row and became the envy of the racing world. But it wasn't always Derby roses. There once was a time when Churchill Downs was considered a second rate track with only one important race, the Kentucky Derby. Thomas Meeker hired in 1984, former president of the TRA (Thoroughbred Racing Association - another group that strived to organize racing), began the resurrection of the historic track by realizing simulcasting was one way to raise revenues which in turn would lead to higher purses, better horses and higher status among trainers. They started with building Hoosier Park in nearby Anderson, Indiana; Sports Spectrum, a simulcasting & training center in Louisville; buying out Ellis Park in western Kentucky; Kentucky Horse Center, a training center in Lexington; having a minority interest in Kentucky Downs in Southern Kentucky, and buying interests in handicapping companies. Churchill Downs had built up a strong circuit in the Kentucky area. With common ownership there was little battle for racing dates and a solid live and simulcasting schedules solidified the company's revenue base. Churchill has shown steady increases in attendance and handle over Meeker's term. Recently they have expanded outside the Midwest by buying Hollywood Park in Los Angeles, CA and Calder Race Course in Miami, FL. (LaMarra, "Spiraling Success")
Meeker has a more conservative approach, utilizing OTB (Off-Track Betting) facilities as a way to introduce fans to the sport. One of many complaints of younger fans is the time between races which can lasts around thirty minutes. With simulcasting, racing is occurring almost concurrently, leaving some bombarded by the number of betting opportunities. Meeker believes as the fan learns more about racing, he/she will want to see the sport in person and return to the live product.
Meeker‘s philosophy also involves working with neighboring tracks to improve the industry as a whole. Kentucky may be a special case as the state is very supportive of one of its biggest industries. With the purchase of Calder Race Course, Churchill Downs finds itself in a very complex racing calender. There are four major racetracks in the state; Tampa Bay Downs, Hialeah Park, Calder Race Course and Gulfstream Park, recently bought by Frank Stronach. In Florida, racing laws penalize racetracks who run over their allotted dates. Meeker prefers keeping the racing dates as they are, with little overlapping in the lucrative winter dates. (Harrell, par.30.)
This is one of the variety ways where Thomas Meeker differs in strategy with relative newcomer Frank Stronach. Stronach, a Canadian auto-parts manufacturer and, and major horse owner/breeder, recently began a buying spree of racetracks. He formed a subsidy in his automotive company, Magna International Corporation, called MI Ventures and bought Santa Anita, Gulfstream Park, Thistledown, Remington Park and Golden Gate Fields within a year's time.
His buying spree has been seen as either a blessing or a possible curse. Stronach's ideas are to form the ultimate entertainment center, with activities for the whole family on the racetrack grounds. An idea wielded by casinos to garner record earnings at the expense of racing. Hollywood Park, Incorporated also attempted the same approach by adding a casino and proposing a football stadium for the new Los Angeles football team on the grounds of the track before they soldthe track to Churchill Downs Inc.
Stronach ideas have run into problems at Santa Anita, such as when he decided to scrap the track's unique 6 ½ furlong downhill turf course and put in large JumboTron in the infield. After much disapproval from trainers, owners and scathing editorials/letters in the Daily Racing Form, he redrew his plans. The sale of Golden Gate Fields however, is seen as a positive circumstance. It is currently owned by Ladbroke, Inc. The London-based bookmaker has been known as an opportunist owner - cashing in on the real estate where the racetracks once stood, such as Detroit Race Course & Canterbury Park in Minnesota instead of selling people intent on continuing racing. (LaMarra, "Goodnight, Detroit,") Golden Gate Fields stood on prime ground next to the Bay, with spectacular views of both bridges, easy access to freeways, public transportation & in the heart of the San Francisco area. Housing is sparse in the Bay Area and fears were Ladbroke would sell the track after their lease was up to build housing or a shopping center.
Besides forming an entertainment conglomerate, Stronach has a different philosophy regarding competition. Coming from a business background verses Meeker's military/legal background, he believes competition is best for the industry. He has said he welcomes the upcoming battle for racing dates in Florida, "Let Calder run as long as they want. [ . . .] Give them winter dates, give them everything, let everyone run. I think competition is good. You must compete in business. You can't excel unless you can compete. If you can run a great show, you will succeed, like anything else. If you don't run a great show, you won't succeed." (Harrell, par. 31)
However, one of the biggest differences between Frank Stronach and Thomas Meeker is their support for the NTRA. Meeker is one of the directors of the 2-year-old organization and believes it will help the industry as a whole. Stronach on the other hand, believes the structure of the NTRA is too much like the many associations that came before and failed miserably. Stronach has said he wants to pull the support his new acquisitions had made in the past. Gulfstream & Santa Anita Parks were two of the biggest donors in the startup of the NTRA.
One of my biggest problems with Stronach is his reluctance to support the NTRA. Although he has some good points about how the NTRA is organized, the dilemmas are horsemen are sceptical of people not in the racing business and the lack of growth prevents many potential executives from trying their hand in leading the NTRA. Tim Smith CEO, former Olympic Marketing head, has been blamed for the growing pains experienced by the organization because of his lack of racing background. The complexity of racing & tax laws only further complicate marketing the sport. The regionalism of racing is evident in licensing laws, where owners must obtain a racing license in every state they wish to compete in and tax laws unchanged since the early 1900s required racetracks to pay additional taxes because of fears of gambling whereas casinos are not required to do the same.
Unlike Frank Stronach, I believe the NTRA can help market horseracing and help it achieve the heights it enjoyed earlier this century in the new millennium. It is an amazing achievement after years of infighting and stubbornness, horsemen are willing to work together with the AQHA, the harness racing industry and with each other. They have embraced technology and trying to organize itself into a cohesive force to expand and achieve success in the new landscape of entertainment and sport. Of course there will always be conflicts regarding the direction of the industry, but racing has taken a big step in sustaining one part of the agriculture industry.
References
"Goodbye to Hollywood." The Bloodhorse. July 12, 1999.
http://www.bloodhorse.com/features/hubbard0712.html (26 Oct. 1999).
Harrell, John. "A Window in racing's future." Thoroughbred Times October 23, 1999. http://www.thoroughbredtimes.com/today/features.html (22 Oct. 1999).
LaMarra, Tom. "Goodnight Detroit"The Bloodhorse October 12, 1999. http://www.Bloodhorse.com/features/detroit1012.html (26 Oct. 1999).
--- "Spiraling Success." The Bloodhorse. November 2, 1998.
http://www.bloodhorse.com/features/chruchill1102.html (2 Sept. 1999)
"Magna Announces Board Approval of Ventures Spinoff." http://www.magna.ca/magna.nsf/pages/M2-PR-05259 (31 Nov. 1999).
McEvoy, John. "Chicago after the fall." The Bloodhorse. November 2, 1999. http://www.bloodhorse.com/features/chicago1102.html (26 Oct. 1999).
Mitchell, Ron. "Beneath the numbers." The Bloodhorse. August 23, 1999. http://www.bloodhorse.com/futures/gaming0823.html (2 Sept. 1999).
"National Economic Impact Study." The Jockey Club 1999 Fact Book. http://www.jockeyclub.com/factbook/impact.htm (2 Sept. 1999).
"Positive Reinforcement: An Interview with Thomas Meeker." The Bloodhorse. November 2, 1999. http://www.bloodhorse.com/features/meeker1102.html (4 Nov. 1999).