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12 September 2008

Sale Of Stonerside;The Foreshadowing Of The Future Of American Racing

The sale of Stonerside Stable last week was a should be a wake up call for American racing. American racing lost one of the big owners. These were the people that campaigned stakes horses like Congeree, Too Much Bling and Halory Hunter. With Darley swallowing yet another American operation the horses, the properties and the future of Stonerside are all in foreign hands. This is not an isolated event, it is part of a larger trend where Americans are selling out of the racing business, usually to overseas interests. While this trend of Americans selling out their racing interest is not isolated to racing it is a trend that only figures to continue especially in a sick industry like racing. The trend will accelerate as racing loses its fans and the economy continues to tank.

While the game has lost it's luster outside forces are also at work here. The weak dollar, crashing real estate values and energy prices are driving American equine holdings overseas. Not only are most top stallions and broodmares are finding their way into foreign hands but so are the farms. This same thing happened in the first half of the 20th century but it was the Americans, flush with success purchasing European bloodstock for their American farms. Now the trend has reversed.

While the tracks are still North American owned they are hemorrhaging cash. With the track operators like Magna and NYRA on the ropes it would not be a surprise to see an overseas investor take over Magna and it's vast property holdings for pennies on the dollar. American tracks are sick and are on slot life support. Overseas the horse wagering market is entirely more sophisticated than the American parimutuel system. Overseas a horseplayer has choices, with player friendly betting exchanges like BETFAIR and on-line sports books giving the player low takeout and rebates. Here the horseplayer has few choices and the parimutuel system needs extensive government protection to operate outside of the fair market. This system almost assures that the horseplayer will lose his bankroll so fewer and fewer horseplayers play the game. Here in New York the tracks compete with government controlled OTB's and the government often purposely sabotages the tracks operations to preserve the the government controlled OTB's competitive edge. An overseas operator surely would do a better job. Can the industry wake up before it is too late?

For years racing has tried to reach out to younger fans but the attempts have hit a wall. Racing just can not find a way to make itself relevant to the youth. Instead of improving the vitality of racing the tracks have opted for artificial life support from a slot I.V. While purses may be up, the soul of the game is dying. The artificial life support is destroying the cardiovascular system of the game and the game is becoming dependent on slots to survive. The slot savior is creating a game that nobody cares about and a game that can not live without slots. Even the tracks without slots are affected as they find it hard to compete for horses with the tracks with slot money.

Outside of Keeneland, The Triple Crown, Del Mar and The Spa, few tracks have significant daily attendance. There are too many races, too few horses and rows and rows of empty stands. Thanks to slots the amount of races has increased to the point where we have a glut of endless races. Tracks like Philly Park or Presque Isle conduct racing as a sport without fans. These racinos are like a restaurant with no patrons or a nightclub with an empty dancefloor. Yet the racing restaurant continues to cook meals and the DJ continues tol spin records for the empty dance floor as slots float the entire operation. Some of these tracks with slot fueled purses have purses many times larger than amount of money bet on the race. Eventually will they wake up and realize that a gaming facility does not need horses to have profitable slots. In fact slots are much more profitable without horses.

The combination of lame fan support and a weak American economy led R McNair the owner of Stonerside Stable to say this “We don’t have enough sports fans in racing,” he said. “It’s frustrating because racetrack operators cling to the notion that they have to cater to the gambling audience. I think they are wrong and you can go to racetracks and see the empty seats. They have to increase their fan base and make sports fans develop an interest in racing.” With a boring sport that is not a thrill, why would multi-millionaire owners want to get into this game? For a few slot purses? The sporting aspect of the game seems to be withering.

As owners continue to sell out to overseas investors and top stock moves overseas, American racing will continue to see cheap stock racing for inflated purses in short fields. It is a nasty problem and it is a trend that will continue for the next decade or so until the game hits rock bottom. With no improvement in sight this is the sort of problem that needs to bottom out before it gets any better.

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