The End of Horse Racing?

March 18, 2019

By Charles “Chuck” Simon

“This is the end, Beautiful friend This is the end, My only friend, the end”

Modern American horse racing surely wasn’t on Jim Morrison’s mind when he wrote the classic Doors song, The End. Racing was trending up the chart’s when the Doors released the hit on their iconic first album in 1967, a year that featured on track clashes between racing legends Damascus, Dr Fager and Buckpasser. Secretariat was going to be born soon, the Triple Crown drought was about to end in spectacular fashion, Seattle Slew, Affirmed and Alydar and Forgeo were all less than a decade away.

Yes in 1967 horse racing was getting ready to embark on its most prosperous and successful period, yet no one had a clue that this was on the horizon. Times were far simpler in racing in the late 60’s and early 70’s. New York racing was on top but California was not far behind. People poured into the grandstands and clubhouses throughout the country, wherever racing was being conducted. The Morning Telegraph, soon to be the Daily Racing Form, used to keep an attendance meter showing that thoroughbred horse racing was the most popular spectator sport in the United States based upon total number of bodies that went through the turnstiles. Simulcasting was a foreign concept and OTB’s were in their infancy, located only in New York. There wasn’t a super-trainer to be found, a trainer with 40 horses was as big it got. There were no two year old sales, most horses were bred to be raced not sold. Three weeks between races was considered a layoff. Racing was both very regional and very seasonal. There was very little winter racing in the North, there was very little summer racing in the south. Cable television, cell phones, personal computers, social media, PETA and TVG didn’t exist. Al Gore hadn’t invented the internet yet. There were no casinos outside of Las Vegas. Most states didn’t have lotteries. Frankly the powers that ruled racing in those days almost couldn’t screw it up.

As racing grew and grew into the 1980’s and 90’s, the sales and breeding business boomed and became a competitor of racing, siphoning bloodstock off of the racetracks and into the breeding sheds. Many owners became investors and speculators, trying to come up with the next hot stallion to cash out on the new trend of huge books of mares. The best and brightest horses of each generation had shorter racing shelf lives, they rarely campaigned past their four year old season. The influence of the bloodstock markets negatively affecting the racing game was never more apparent than saga surrounding last year’s Triple Crown winner. The whispers about Justify’s status began shortly before the Preakness, rumors that turned out to be prescient, that if he were to complete the Triple Crown with wins in the Preakness and Belmont, that his racing career would be ended. He did and it was.

The negative impact of a overvalued bloodstock market is mostly felt at the top of the racing game, the Saturday afternoon racing cards at the biggest tracks. The key factor that led well heeled investors on a search for a winning equine power-ball stallion ticket was the decision to stop limiting a stallion’s book to the 40 to 50 mare standard that had been in place for a hundred years. Why this practice took so long to challenge is a mystery but the end result was a positive one for those in the breeding, stallion and sales businesses. Despite their obvious ties to racing, they have been relatively insulated from racing’s ills. That is unlikely to continue to be true.

The past two decades have seen massive shifts in the racing paradigm. A handful of corporations and politicians have control over the tracks that produce the vast majority of handle in the United States. These racetrack companies have found alternate sources of funding through racino’s and in Churchill Downs case, major investment into non-racing entities. Competitors are found at every turn, casinos are everywhere racing is and now legal sports betting is spreading. Racing organizations have shown little regard for their wagering customers outside of a small group of big bettors called whales who are incentivized via cash rebates for betting volume. Horseman’s organizations have made short term purse increases their priority, ignoring trends and enemies that put their very existence in peril.

Last year was the first year in modern racing history that less than a billion dollars was bet on track. Twenty years ago, in 1999, there was more money bet off-track alone than total handle last year. When adjusting for inflation, the $11,365,000,000 bet off track in 1999 should be $17,129,826,895 in 2018 dollars, it was not even close. So racing isn’t just trending the wrong way, racing is massively underperforming when measured against itself. The foal crop has dipped below the 20000 foal mark after being at 32000 a decade ago. Foal crop shrinking equals number of owners shrinking. Losing 37% of your supply would jolt most businesses into action…but not horse racing.

Breaking it down to simplest terms, we are producing a lot less horses for a lot fewer owners and having a whole lot less bet on our races. The sunshine boys will tell you that the sales numbers are still strong, well they all say that the middle market is a tough sell, but that’s mostly because the middle market is out of business. It’s really worse when you start breaking down the numbers beyond the obvious but you lose people when the math gets too complicated so we will leave you with this final financial tidbit, the sales are currently fueled by tremendously advantageous IRS depreciation schedules that are set to expire in 2022.

It’s into this black cloud of negative trends that 2019 arrived. Consider some of the racing news since the ball dropped in Times Square a little more than ten weeks ago, it has gone from surprising to unfortunate to outrageous to sad. NYRA head honcho Chris Kay getting fired, a soggy Pegasus, racing roulette, Santa Anita. The few bright spots like purse increases at Oaklawn and the Kentucky circuit can barely be attributed to racing, it’s all alternate source revenues. Handle is down nationwide, even before the southern California debacle is taken into consideration. Horse racing twitter and Facebook rage daily about the latest violation or outrageous statement or baffling action which at the very least keeps racing in the public’s eye in some manner even if it’s about 90% negative. With almost no racing coverage in newspapers these days and the few racing media outlets either wildly biased or now muted, it’s no wonder that the racing public appears to be as misinformed as ever which also probably says a lot about how we are perceived in the mainstream media.

I’m afraid that most still don’t realize that another body blow was likely just signed Saturday night. The agreement between the Stronach Group and the TOC was clearly signed under duress, the track ducking for cover from the firestorm of dead horses, duplicitous animal rights activists and politicians looking to score brownie points by acting like they give a damn; the horsemen in panic mode wondering how best to get back to racing and cease hemorrhaging cash like they are currently doing. Banning lasix in any form is a tax on owners, no matter how you look at it, regardless of your opinion, no matter how ill-informed you are on the topic. Losing lasix doesn’t mean internal bleeding will cease, to the contrary it will be more prevalent. To think that horsemen won’t respond in some manner, won’t try to do something to reduce their horses risk of bleeding is naive and misguided. Therapy of many varieties, herbal supplements, wives tales and hare-brained schemes are the new normal for horsemen dealing with EIPH and sadly all these poor substitutes will cost more than a simple dose of lasix. A part of the fallout from this decision is that it widens the gulf between the “haves” and the “have-nots” on the backside, one of the biggest problems racing has that no one seems comfortable talking about. The bigger, richer outfits have more funding and latitude to treat their horses and have a larger supply to choose from, allowing them to be able to take a more patient approach, giving the smaller owners and trainers an even greater hill to climb.

Remember that we are smack dab in the middle of a crisis where the supply is dwindling, the suppliers are more and more scarce and the customers are cutting back on their spending. Surely other jurisdictions will be browbeaten into following similar rules which seem to be the polar opposite of what would be needed to reverse the trends. More of the common man owners will leave, the more we lose owners, the smaller the horse population, the smaller the horse population, the worse the on-track wagering product will be. The racetracks have taken their suppliers and customers for granted for years, even more so since they stopped being “just” racetracks. That of course seems to be a contradictory stance considering that in recent years tracks desire to run more races, often jamming 6 hour long cards with 12 and 13 races, squeezing the juice out of the lemons. The horseman have gone along with the program because the more races, the more winners and the tracks claim they make more money therefore more money for purses. The jockeys and breeders are complicit because they also benefit in the short term as well. The commissions are generally mute on everything. However if we are now in theory, a ‘kinder and gentler’ sport, appeasing those who don’t really benefit the bottom line, how long till the bottom line is blamed for further downward trends in the business that almost assuredly will have been created?

The vast majority of people in the sport regardless of their role are in favor of reasonable regulations that protect our equine partners. The devil is always in the details and when a side effect of regulation also serves as a strain on the cash supply…I suppose we will find out how strong the front-sides resolve to take care of the horses truly is.

I don’t know where we go from here as an industry because the barriers to our success are growing exponentially and we are shooting wildly from the hip as usual. Keeneland will be here with big fields and huge purses and an absurd number of bros wearing bow ties and the last few weeks of discord will fade into the background noise.

The lesson of 2019 is that thoroughbred horse racing in North America seems to be living on borrowed time, the end seems closer than ever and yet so many racing insiders are still firmly entrenched in a foxhole of denial.

For close to forty years racing has been my world and my life and my feelings are best summed up by the 19th century German philosopher Arthur Schopenhauer in his seminal book, The World as Will and Representation:

What give all that is tragic, whatever its form, the characteristics of the sublime, is the first inkling of the knowledge that the world and life can give no satisfaction, and are not worth our investment in them. The tragic spirit consists in this. Accordingly it leads to resignation.”

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