Fred Pope | Horse Racing Free Tips

Letter to the Editor: First, Stop the Bleeding

T.D. Thornton's report on racetrack closures in California (TDN, 12/6/23) and Dan Ross's piece on Pat Cummings's research into Computer Assisted Wagering in California (TDN 2/13/24) are frightening for all tracks not supported by casinos/slots.

Santa Anita and Del Mar are high-profile tracks in trouble, but they are not alone. The problem? Host tracks are now receiving very little for their racing content.

Remember Napster, when a lot of people were stealing songs and nobody knew what to do about it?

I'm not Steve Jobs, who saved the music industry from Napster, but I'm going to tell you how to save Santa Anita and Del Mar and the rest of our tracks. When you understand how we came to this situation, you will see how easy it is to fix it.

I started working for the Thoroughbred Record in 1972. Then, the revenue from wagers was split 50/50 between the two “partners” in racing: half for the track and half for the racehorse owners' purse account. Each received about 8% of the on-track wager. It was a simple business isolated to the track location.

Off-track wagering across state lines was legalized with the Interstate Horseracing Act (IHA) in 1978. Although Congress has protected dairy farmers since 1946 with a “price floor” on milk, there was no price floor put into the IHA to protect the host tracks. A huge mistake!

After the IHA became law, Tommy Roberts, who pioneered simulcasting, negotiated a deal between Vegas sports books and some thirty tracks. Tommy told me Vegas said they could pay 10% of the wager to the host tracks. But, Vegas' actual offer was 2%. The tracks caved and accepted 2%, which meant the host track and purse account would only get 1% each and the bet takers in Vegas kept up to 15% of the wager. It was a very bad, upside-down deal.

The Vegas deal of 2% became the effective off-track distribution rate for every off-track bet taker, not just receiving tracks. As OTB's expanded off-track wagering locations, they cut into host track attendance, thus high-profit on-track wagering and concessions revenue dropped. Host track admissions and parking revenue vanished. Today off-track is more than 90% of all handle and host tracks and their purse accounts are suffering.

With the 2% rate in place, the major tracks were preyed upon by receiving tracks. NYRA, Keeneland and Hollywood Park all tried to increase the off-track rate for their races, but the hundred smaller tracks colluded to keep the rate as low as possible because they benefitted as bet takers on the major tracks' races. That was not the intent of the IHA.

The godsend of off-track wagering has now turned on racing and is devouring it. In the early days, most off-track bets were being made at receiving tracks and the money stayed in the sport. That ship sailed with computers and mobile phones. Today ADW's and robots are taking the most bets. What they pay the host tracks is so low they have enough margin to give up to 10% to whales. The money is bleeding out of host tracks and purses.

The first step for any business in trouble: Stop the bleeding.

Breeding, raising and racing Thoroughbreds is an agricultural business and sport. Over the years, Congress has responded with every possible advantage.

To stop the bleeding, Congress can establish a “price floor,” a minimum rate that off-track bet takers must pay host tracks. When Congress moved to save dairy farmers, lobbyists for the milk processors preying on them said the free market should set prices. But, the majority in Congress said “Sorry, we like milk and we are going to protect those who produce it.” There are many in Congress who like and care deeply about the Thoroughbred industry too.

Can we fix it? Yes, if Stuart Janney will commit to a “price floor” being put into the IHA, our tracks, purses and thousands of jobs in the industry will be saved. It is that simple.

Stuart Janney, chairman of The Jockey Club, personally committed to reduce the threat cheating has on the integrity of our sport. He worked with bi-partisan help from Andy Barr (R-KY) and Paul Tonko (D-NY) to pass the Horseracing Integrity and Safety Act (HISA). You need someone who has been successful with Congress to get back in harness and repeat the process.

Congress is the fastest way to save California tracks and all other racing states that do not have casino/slots support. As Mr. Janney related in working to pass HISA, you cannot do it state by state, or track by track. It has to be done at the federal level.

Today, the “partnership” between tracks and racehorse owners is far from simple and far from fair. Tracks have created subsidiaries outside the partnership with racehorse owners to take bets on other tracks' races and exploit the high profit margin. As a result, the percentage of off-track wagers going to purses drops every year. Purses fuel foal crops and ours have dropped from 50,000 to 17,000. Nobody wants track closures to return us to the days of Man o' War with a foal crop of 1,680.

The IHA puts people with feet of clay in position to approve multi-million dollar off-track bet taking deals. Dan Ross's piece told of death threats and extreme pressure on these individuals. To reduce the threats and the grip bet-takers have on the integrity of the wager, we need a “price floor” to protect the people giving IHA approval. The price floor will become the non-negotiable base rate for most approvals.

I don't expect tracks with wagering subsidiaries to support a price floor being put into the IHA any more than we expected all trainers and horsemen to support HISA. I don't expect those receiving rebates now to support a price floor anymore than those who got free music with Napster wanted to switch to iTunes. Most times, leaders have to step up and piss off some people to do what is right for the sport.

I believe a price floor on off-track wagers will allow host tracks to refocus on live racing that people want to see and they will be able to sell their product at a good price in the off-track market, something they cannot do today.

There's nothing magic about taking bets. Lotteries pay gas stations a 5% fee for punching in the customers' numbers and taking their wager. A price floor in the IHA is the first step for host tracks to change off-track wagering from a “buyers' market” to a “sellers' market,” where those producing the racing content drive down the costs of bet taking.

Is it more important for us to save Santa Anita, Del Mar and other tracks, or to let the money from their racing content go to Fan Duel and Draft Kings?

What is the fair rate for a price floor?

I believe it is 10%, meaning 5% of the off-track wager goes to the host track and 5% to the racehorse owners' purse account. Blended with on-track handle and imported handle, the host track and purses could exceed 15% of the total wagered on their races.

With a flat rate of 10%, mandated by federal law taking precedence, the states will not be able to pass laws to get a competitive advantage in the off-track market. We've had enough of that. (NJ passed a law prohibiting their receiving tracks from paying more than 3% to a host track.) Each host track would still have the freedom to negotiate a higher rate than the price floor for their racing content.

That's how you stop the bleeding and allow Thoroughbred racing to be turned around.

I doubt most of you give much thought to track business and off-track wagering revenue. But, in the changing world of Thoroughbred racing, that's make or break for our sport. Take the time to learn how who gets what from racing impacts the breeding shed.

And right now, for Santa Anita, Del Mar and the life you love, contact Stuart Janney at The Jockey Club and voice your support for a price floor of 10% to host tracks on all off-track wagers be put into the IHA. Quickly.

The post Letter to the Editor: First, Stop the Bleeding appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Repole Announces Formation of National Thoroughbred Alliance, Hires Cummings as Executive Director

Owner Mike Repole's efforts to form a group that he hopes can help solve some of the sport's problems and create growth in an industry that has been in a downward spiral for decades took a step forward Thursday with Repole announcing that he has formed what he is calling the National Thoroughbred Alliance (NTA). Pat Cummings, who has headed the Thoroughbred Idea Foundation, has been hired as the alliance's executive director.

Repole said he picked the name because he thought using the term alliance sent a message that the organization would be inclusive and because he is an admirer of the original NTA, also known as the National Thoroughbred Association. That organization was founded in the early 90s by Fred Pope and Repole's NTA shares some of the same goals of its predecessor.

“I've reached out to Fred and had a couple of great conversations with him,” Repole said. “What Fred's vision was 30 years ago for the sport was amazing and is a lot of what we need today.”

Repole said he will fund the new organization himself and said he is prepared to spend “millions” to see it succeed.

Even though he is among the most successful owners in the sport and a major buyer each year at the sales, Repole has been open about his frustrations with the industry and his fears that it isn't that far removed from extinction.

“Yes, we have survived, but that still means we've gone from 35,000 mares to 18,000 mares and all these tracks have closed,” he said. “You can call that survival and we have survived over the last 30 years. But there's no way racing will exist in another 15-20 years if we don't make changes now. It's easy for me to say I'll be out of the game in five years because everybody's going to be out in 10 years because it probably won't exist in 10 years.”

Repole said much of racing's problems can be attributed to the fact that no one involved in the industry seems to have a vision or strategy about how to grow the sport as a whole. It is vital, he said, for groups to put aside their self interests and begin to make decisions that will benefit the entire industry.

“This is a sport that has gone from growth to stagnant to now a massive decline,” he said. “How do we now go from keeping the status quo to improvement and then growth? Every successful business has a vision. There isn't anybody that has a vision for this sport. On top of vision, there is also no strategy. You can survive with strategy and no vision. You can't survive with no vision and no strategy.”

Repole is aware that his organization will launch with a distinct disadvantage, in that it will have no power to make any changes on its own and will be trying to make fixes in a sport filled with individual fiefdoms that traditionally look out for nothing more than their own special interests. The key to making progress, Repole said, is getting the various stakeholders to realize the sport will be better off overall if people are aligned and united and that a thriving sport is good for all involved.

“This is about unity, this is about improvement, this is about trying a different take to get everybody to work together,” he said. “This isn't going to be the Mike Repole vision. It's going to be a shared vision. This is a vision of listening, of talking to others. Maybe when they share their vision, which might be selfish, and we then tell them why the other nine spokes on the wheel won't work, we're hoping they'll say 'Now I get it. This doesn't work for the industry.' Once there's an understanding of what's working and what's not working, then we can figure out what we need to do better.

“Over the next 12 months we're going to see who cares about the industry and who cares just about themselves. Getting this sport united and aligned with a vision of what we want this sport to be is going to be so important.”

Repole said the first step toward getting industry leaders unified is to get them all in the same room.

“We need to bring people to the table,” he said. “If you get people together they will help each other. 'How did you handle that problem?' 'Well, this is what we did.' 'What worked here?' 'How did you do this?' The formation of great ideas happens with brainstorming.”

Repole said he had never met Cummings before he began to go to work on forming the NTA, but added that he was immediately impressed by his knowledge and enthusiasm.

“Pat has the compassion and the inspiration to fix this but obviously not the resources,” Repole said. “He's not one of the top owners or someone who invests a lot of money in the sport, which makes it tougher. But he still has the energy and passion. We hit it off right away. He's the perfect guy to lead this initiative.”

Repole's one-hour conference call with racing reporters was part doom and gloom, with just enough optimism sprinkled in that it's clear Repole is very dedicated to this project and passionate about racing's future.

“It's time to turn racing from the Flintstones to the Jetsons,” he said.

But he was not able to offer a lot of specifics concerning the formation of the alliance and just how it could twist enough arms that the changes Repole says the sport desperately needs can come to fruition. He's confident he can figure that out.

“When you're building this new brand or entity, you don't really know what you need or who you need until after you get started,” he said, referring to his creating and then selling the brands VitaminWater and BodyArmour.

The post Repole Announces Formation of National Thoroughbred Alliance, Hires Cummings as Executive Director appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Letter to the Editor: Fred Pope

There are a lot of opinions about the Triple Crown. Most of them center on the Preakness and the spacing of the three races. In my opinion, the Preakness is the victim of the Kentucky Derby's success, or as T.D. Thornton said so well in his article June 12:

“Underscoring how the Derby itself is devolving into a be-all/end-all, one-shot endeavor at the expense of the Triple Crown race that follows it, for the first time in 75 years, Mage was the only horse out of the Derby to enter the Preakness.”

The Preakness is a very popular event in Baltimore, it just isn't popular on national television because it hasn't been a good, competitive, highest-level race. Here's why that needs to change and how it can be improved for next year.

The 20-horse field for the Kentucky Derby offers bettors and fans Roman chariot race excitement. The horses get banged-up cut-up, and many put on the shelf for a while. Any extra betting handle coming from the cavalry charge of 20 horses to the first turn is not worth the risk to riders, horses and the sport, especially right now. Many in the industry hold their breath for two minutes.

For safety reasons, Churchill Downs (CD) needs to limit the Derby to a maximum 14 starters, like the Breeders' Cup. If they do that, good things will happen. The immediate result is CD is seen as making a positive safety move, but the magic for the Preakness, is that potentially six horses move to the second Classic with fresh horses and perhaps a full field for bettors and fans. NBC gets to promote a much better product and the Triple Crown improves.

CD may not like it, but the rest of the industry should. If CD does not make this change on its own, then there are two strategies to make it happen. First, the TOBA Graded Stakes Committee rules the maximum starters in a Grade 1 race is 14, same as the Breeders' Cup, which is a very common sense move. Second, HISA rules the same for safety reasons.

This idea is one way the industry can help the Preakness, the Triple Crown and the sport without controversy. But it's an incremental strategy that does not get to the core reason we have the Triple Crown.

Around the Thoroughbred world, breeders and owners each year seek to “prove the breed” through a series of 3-year-old Classic races for colts and fillies. All the other racing countries start in a common sense way with a shorter race first, usually at one mile, then move to 1 1/2 miles, then the final leg is somewhere longer. Not us. We start at 1 1/4 miles, then backslide to 1 3/16, then jump to 1 1/2 miles. It doesn't make sense, thus it doesn't work in an increasingly competitive sports world.

1/ST Racing, owners of the Preakness S., should do something in their own best interest to improve the Triple Crown. They should move the shorter distance Preakness to become the first Classic, perhaps two to three weeks prior to the Kentucky Derby, which is locked into the first Saturday in May. They do not need Churchill Downs permission.

1/ST Racing also owns two of the major Classic prep races, the Florida Derby and the Santa Anita Derby, both at 1 1/8 miles, which they can adjust dates and leverage toward the Preakness. What about all the other Classic prep races? They will need to adjust, which they have done from time to time. Remember, the objective is three Classic races to “prove the breed.”

With the shorter Preakness moved out of the way, the Derby horses would then have five weeks to rest up and prepare for the Belmont, which is what many trainers are doing now by skipping the Preakness. This extra time for all horses will make the Belmont a much better competition.

Moving the date of the Preakness would require the Maryland Racing Commission, City of Baltimore and 1/ST Racing to continue to collaborate on how to make Maryland racing a more successful venture with a future. To that end, the uncertainty of Pimlico and Laurel should lead to some bold thinking about how Baltimore can have a true racing success story. It's going to cost a lot of money to find any facility solution, even a bad one, why not go big on a proven racing model?

Baltimore Harbor has been the focus of major urban renewal to bring tourism downtown. It's been a struggle to find a dynamic focal point. There is great opportunity to bring Baltimore harbor a Hong Kong-style, urban race track. A sports and residential complex on the harbor, right downtown. It can be a multi-purpose facility without training stalls, where horses are shipped in on race days/nights from the training centers at Laurel and Fair Hill. Happy Valley is a multi-purpose sports complex on less than 100 acres in Hong Kong. This could be the most stunning racing facility in America, a true tourism draw for Baltimore.

It's a lot easier to address the minor problems of three races in the Triple Crown than it is to tackle the structural problems of the sport in America. TDN does a good job of allowing readers to offer ideas, maybe some of them will click.

The post Letter to the Editor: Fred Pope appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post