Trickle Down Economics

Trickle Down Economics
Photo:
Ray Paulick
Editor-in-Chief
In a 24-hour period recently, Woodbine Entertainment hosted an 11-race Thoroughbred program with purses of $1.9 million and a 12-race Standardbred program worth $2.6 million. While the stated amounts are in Canadian dollars, the total when converted to U.S. currency is still nearly $3.2 million. That's serious money.

The two racing cards were not typical weekend fare for the Toronto, Ontario, track. The nighttime harness program included the $1.5 million (Canadian) North America Cup, which attracted the continent's best 3-year-old pacers. The $1-million (Canadian) Queen's Plate for Canadian-bred 3-year-olds was the main attraction during the afternoon Thoroughbred card.

The principal reason Woodbine Entertainment (formerly the Ontario Jockey Club) can offer such purses is the roomful of slot machines that have been in operation at the track for more than two years. The slots have fueled massive purse increases for both breeds--its U.S.$350,000 in daily average purses puts Woodbine near the top 10 among North American race meetings. Slots also have provided the economic foundation for much-needed capital improvements and allowed Woodbine to develop a state-of-the-art racing channel and account wagering network.

In many respects, Woodbine has developed the model for the rest of the pari-mutuel industry to follow. Working in lockstep with other groups, Woodbine chairman and chief executive officer David Willmot helped persuade government officials to level the playing field for the horse industry. The pari-mutuel tax was decreased and tracks were given permission to install slot machines to compete with nearby casinos.

The racing public has been re-energized by the many improvements at Woodbine, and horse owners have a much better chance at turning a profit than ever before. The number of Thoroughbred foals born in Canada has been on the rise since hitting a low point of 2,284 in 1997, but it still remains below the levels of the late 1980s and early 1990s.

Like some American tracks that have increased purses from slots revenue, Woodbine has put a great deal of that money into claiming races. That may entice more people into horse ownership and certainly increases activity at the claiming box. It does little, however, to improve the breed or increase the demand for horses sold at public auction.

Currently, someone who claims a $16,000 horse at Woodbine can "get out" in just one race, since the winner's share of a purse at that level is about $16,000. Similarly, first-place money of $30,500 for $28,000-$32,000 claimers essentially pays for that investment in one race. Even low-level maiden claimers racing for an $18,000-$20,000 price tag receive $16,000 for a win. Pre-slots purses in 1998 paid less than half the amount currently available. For example, $28,000-$32,000 claimers were running for first-place money of $14,700.

Woodbine's current claiming race purse levels give action-oriented owners the sustenance to keep going. Slots money has helped maiden special weight and allowance races as well, but not enough. Maiden winners at Woodbine earn in the vicinity of $36,000--twice what it was four years ago--but considering the initial investment and training costs needed to bring a young horse to the races, most owners will remain in the red until well after that first win.

Increasing maiden and allowance purses to the highest level possible, in theory at least, should encourage owners racing at Woodbine to buy or breed better horses. That, in turn, should create greater demand at yearling and breeding stock sales both in Canada and the United States.

The turnaround for Thoroughbred and Standardbred racing in Ontario is nothing short of a miracle. But it won't be complete until there are trickle-down economic benefits to breeders.

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