Breeders' Cup to Lead Way
Updated: Tuesday, January 31, 2006 9:44 AM
By Fred A. Pope
Posted: Tuesday, January 31, 2006 9:44 AM
In the Final Turn of Jan. 7, D.G. Van Clief Jr. listed plans for the Breeders' Cup and the National Thoroughbred Racing Association, including a great opportunity for racing's future, a new racing series.
Every successful, modern sport has a vision for how it packages and presents itself to the public.
The vision for the Breeders' Cup is to package and present its championship races on one, single day.
The vision for how Thoroughbred racing can best be packaged and presented the rest of the year is needed now.
A number of us have tried to find a workable, national structure to package and present racing. Times change. Situations change. A situation analysis today reveals the Breeders' Cup is the right organization to execute a vision for racing's rebirth.
Big race days are popular. The ultimate, a full card of good races, happens only once a year on championship day. These days appeal to bettors and patrons alike by creating a critical mass of good races and racing personalities at the host track.
The problem with big race days is a serious one...they do not pay for themselves. The host track's revenues from handle are less than the purses offered on those days.
If a big race day has $20 million in off-track handle, after splitting simulcast revenue with the purse account, the host track would gross about $300,000. On the other hand, the simulcast outlets getting the host track's races might gross more than 10 times that amount, or $3.6 million.
It is a better business model for the simulcast outlets to join together and promote the host track's big race day than for the host track to promote its own races. This pricing model rules every racetrack, but not the Breeders' Cup.
If the Breeders' Cup's pricing model (half) was used, the $20 million in off-track handle would gross close to $2 million. If the Breeders' Cup brand name and expertise raised the handle to $30 or $40 million, the gross revenue would more than cover purses, expenses, and promotion.
The Breeders' Cup, operating within the NTRA, has unique strengths to expand from its current program:
First, the Breeders' Cup is not tied to a racetrack. It moves from major market to major market to the best advantage of the sport. Second, it simulcasts into every racing jurisdiction. Third, it has the industry's only simulcast pricing model capable of paying for big race days.
In short, the Breeders' Cup can do what no racetrack or existing organization can do. It can package and present big race days without losing money.
The Breeders' Cup could start with perhaps 10 new big days of racing to deliver our best new product into America's top markets. That's the vision all sports want and our sport has the facilities in place to deliver it soon. Like the PGA Tour, this new series can move around the country with a seasonal schedule.
The Breeders' Cup needs to work with the major racing corporations to the same mutual benefit they now enjoy on championship day. The corporations are vested in our major markets and a program to sell racing should focus on those media centers.
Championship day has taught us the value of a "full card" of good races. It allows the whole day to be covered under the simulcast price agreement. It allows the Breeders' Cup full authority in the packaging of the races and to arrange sponsorships, media agreements, and promotion on a national scale.
Big race days currently on the calendar do not always mean large handle. It seems the higher the grade of the stakes offered, the smaller the number of horses in the field, which makes the race less desirable for bettors. The Breeders' Cup can use incentives and leverage to increase participation in its races toward championship day.
One problem of the proposed Thoroughbred Owners and Breeders Association Tour was it tried to take established major races from the tracks. The Breeders' Cup should start fresh with new races. The Breeders' Cup could package eight races with a minimum of $100,000 purses, and if they have full fields, it qualifies as a big race day. As the program builds and handle increases, the purses can be raised.
Structure matters. The Breeders' Cup can provide both the structure and the vision to package and present our best Thoroughbred racing throughout the year.
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