Exclusivity is Right

(Editor's Note: The following is the correct version of a commentary written by TVG senior vice president and GM David Nathanson. The commentary that appeared in the Feb. 17 edition of The Blood-Horse and at Bloodhorse.com initially was an early draft that was published as a result of an editing and production error.)

By David Nathanson

There is an undeniable truth when it comes to sports and wagering: people bet more on what they can watch on television. That’s true of football, basketball, baseball, soccer—even hot dog eating contests.
The same holds true for horseracing, be it the Kentucky Derby (gr. I), the Breeders’ Cup, or the fourth race from Suffolk Downs on a Tuesday in September.

On average, TVG's wagering on races that we carry live on our network is 900% greater than races we stream only on the Internet. The majority of the two other largest Advanced Deposit Wagering (ADW) providers’ handle is on the 20-plus exclusive tracks that TVG airs most frequently—impressive when you consider their customers have more than 100 tracks to wager on.

The "television effect" is not isolated to TVG. Flat for years, New York City OTB’s ADW handle jumped by more than 500% in the five years after it began utilizing television in the mid-1990s.

Naysayers claim video streaming on the Internet is the future and will soon replace television. While broadband is clearly an opportunity for racing, Internet streaming is still light years behind TV in its ability to provide a high-quality live signal, target a broad audience and produce results that have a direct impact on the handle of a race.

The question is not whether horseracing needs television (it clearly does), but rather how we can improve our television coverage while distributing it to the widest possible audience to attract new fans and incremental wagering revenue.

The 11 new shows TVG launched in mid-2006 highlight our commitment to bring a fresh perspective to the sport. New series in development will explore programming formats never presented in the coverage of horseracing. Without distribution, however, none of this matters.

This is where TVG’s exclusive rights agreements have been vilified unfairly by some and misunderstood by many in the racing industry. The purpose of exclusivity is not to gain an advantage over ADW competitors (as evidenced by TVG’s sub-licensing wagering rights to multiple ADW providers). The purpose of exclusivity is to secure for racing a viable and financially feasible long-term national television presence, and the resulting marketing benefits.

Is there room for more than one network dedicated to horseracing? Absolutely—there is plenty of good racing to go around. What there isn’t room for, and what just doesn’t make sense, is multiple networks carrying the identical content.

Along with generating the best return for their shareholders, cable and satellite companies choose to carry the networks that make their programming lineups the most valuable to their subscribers. The ability of a programmer to provide exclusive content and high quality production values are prerequisites just to get in the door and absolutely necessary to broaden distribution.
TVG currently reaches more than 20 million U.S. homes in all 50 states via all the major cable and satellite providers. Our partnerships with Fox Sports Net and At The Races delivers our signal to an additional 35 million households in the U.S. and 11 million households internationally. I’m proud that we’ve become one of the most widely distributed sports networks on television (surpassing NBA TV, Tennis Channel, College Sports Television, Fox Soccer Channel and many others), and we’re not finished growing.

Our approach is obviously different from other ADW companies, but the results back our business model. In states where we don't accept wagers, others have been able to capitalize on our national television distribution. In the 12 states where TVG does accept wagers, TVG’s ADW handle is on average three times higher than our nearest competitor, proving again that televised sports with broad distribution can have a direct impact on wagering.

No other ADW providers invests more in its products and returns more back to the horseracing industry than TVG—an average of 14% of each dollar bet, resulting in payments of more than $220 million to racetracks, horsemen and the NTRA since our inception.

ADW supports our investment in television and television supports ADW's growth. Is television alone the answer to all the problems that face the industry? Far from it, but if used effectively it can certainly be part of the solution.

David Nathanson is senior vice president and GM of TVG.