The United States Thoroughbred industry is making efforts to expand into the global marketplace but must get past its domestic-centric mindset, Breeders’ Cup president Greg Avioli said April 26.
Avioli was one of several speakers that discussed the issue of globalization during the first day of the two-day Kentucky International Equine Summit hosted by the University of Louisville in downtown Lexington. Racing, breeding, and pari-mutuel wagering were part of the talks.
“Globalization is not the future for us,” Avioli said. “We already are one of the most globalized businesses in the world. You hear a lot of gloom and doom (in the U.S.), but if you look at racing on a global scale, it’s a very healthy business.
“In the U.S., we’ve focused so much on the domestic business but haven’t had the mindset to think internationally. We haven’t done a very good job reaching out to the rest of the world with the exception of some breeding farms.”
Avioli cited an estimate that about $100 billion is wagered through pari-mutuel systems each year around the world. Countries in the Pacific Rim account for about 50% of the total; the U.S. accounts for about 15%, he said.
Breeders’ Cup sees its niche as an international event, Avioli said, but running the World Championships overseas isn’t a viable option at this time. About 90% of Breeders’ Cup-nominated horses are foaled in the U.S., and having the Cup in England, for example, would greatly dent handle because the country relies heavily on bookmaking.
Avioli said Breeders’ Cup last year earned about $10 million in revenue from $150 million in total handle for the two-day event.
“We’ve looked long and hard at moving (the World Championships) overseas,” Avioli said. “If we were to have it at Ascot, the buzz would be tremendous, but the problem is the core metrics don’t work for us.”
Breeders’ Cup has yet to name a host site for 2011. Avioli said a decision on future host sites would be made soon; the Cup could stay at one location for a period of time.
Avioli said “everyone is pretty comfortable” with the model of having Breeders’ Cup rotate from site to site, but the question is whether there is a better model.
As far as U.S. racing goes, the Breeders’ Cup president said the fact fewer foals are being bred isn’t necessarily a negative. He said even with recent declines, 50,000 races is “way too much product.” He called the 50,000 or so non-graded races run in the country each year “essentially a commodity.”
Avioli said there is about $200 million in revenue from handle produced each month, and that if the money went to “the right number of tracks and races,” the industry would benefit.
“Instead of 20 well-run tracks we have close to 500 entities that suck off the mother (teat) of that money,” Avioli said. “We need to get rid of some of them.”
Fasig-Tipton executive vice president and chief operating officer Dan Pride said the auction company has been behind Keeneland in terms of exploring international markets but is moving in that direction.
Pride noted five of the seven of the mares sold for $1 million or more at the Fasig-Tipton November sale last year went to foreign buyers—three from Japan, one from Australia, and one from Canada. At the company’s recent 2-year-olds in training sale in Florida, 25% of the Thoroughbreds sold went to non-U.S. buyers.
“This is something we are focusing on,” Pride said. “You have to build relationships and find sponsorships. Fasig-Tipton and Keeneland have been active in sponsoring races around the world.”
Pride and Keeneland sales associate Chauncey Morris noted expanding into other markets requires a strong working relationship with government. In some countries, efforts to bring in breeding stock are subsidized.
“There is no coordinated effort here like in other parts of the world,” Pride said.