Panelists: Don't Blame Product for Racing's Woes

Chris Scherf looked around at the sparse crowd gathered for the 8 a.m. panel discussion and noted many industry executives weren’t in the room for presentations they probably should have heard. He then asked how the “corporate culture” in the pari-mutuel industry would change if no one is listening.

“I think it’s an important issue, and debate needs to be engaged,” Scherf, executive vice president of the Thoroughbred Racing Associations, said after “Internet and Disruptive Technology” panelists offered their views March 12 during the joint meeting of the TRA and Harness Tracks of America in Hallandale Beach, Fla.

Presentations by Dr. William Shanklin, a consultant, University of Akron professor, and contributor to The Blood-Horse, and consultant Eugene Christiansen of Christiansen Capital Advisers painted a picture of a “stodgy” racing industry too slow to embrace change and new ideas.

Shanklin called for more diversity and noted the typical corporate board is full of males over age 50.

“Do they know anything about industry change?” Shanklin said. “Do they know anything about getting young people to the racetrack?”

Shanklin said racing has a “two business-models approach”--slot machines and on-track wagering, and Internet wagering.

“The Internet and account wagering model has won,” Shanklin said. “But if you come to an industry convention, it sounds like you’re in two worlds.”

Christiansen noted the success of Apple Computer in the recorded music business even though industry-wide sales are in their seventh straight year of decline. He said the sale of online music is the only sector in a growth mode.

Christiansen said there are similarities between a slow-to-adapt music industry and the pari-mutuel industry.

“It’s a perfect example of what happens when you persist with an old business model when technology is changing around you,” he said. “I think the problem with racing is it’s married to an old business model. Most of the effort is still devoted to making pari-mutuel machines work and making new fans. Racing is product-centered.”

Christiansen said the product--horse racing--is fine; the problem is with the business model and demand for the product. He said slots won’t change the business model because they are a different product from racing, and he said questions are being raised in some states whether it’s good public policy to subsidize racing.

During a subsequent panel discussion, new Churchill Downs Inc. vice president Tom Aronson, who helped launch TVG in the late 1990s, also said he believes the product isn’t the issue. He suggested it would be more productive to develop new ways to present the product.

“I don’t know of any other industries or companies that agonize as much as we do about our product,” Aronson said.

The TRA/HTA joint meeting wrapped up March 12. Though panelists spoke in general about the pari-mutuel industry’s business model, there was no public discussion about the nagging internal issue of pricing structure and simulcast fees. The issue also wasn’t discussed during open sessions at the University of Arizona Symposium on Racing last December.