super trainers

Yale Study of Racing Biz: Areas of “Surprising Strength” Amid Sharp Declines

Every summer, the New York Thoroughbred Horsemen's Association (NYTHA) takes in a small gaggle of college-age interns–what for many of them proves a baptism of the turf.

This year's batch–three Yale undergrads studying economics, electrical engineering and political science–were tasked with a data-driven analysis of the economics of the national horse racing biz over the past 20 years.

Harboring no previous relationship with the industry, the three undergrads came in free of prejudice and preconceptions.

The result is a 33-page paper weaving piercing and worrying insights into the state of racehorse ownership, racetrack management and training in the country alongside findings that give tentative cause for optimism.

It's also the sort of detailed analysis of horse racing's economic foundation stones that's done all too infrequently for an industry of this size and scope.

“We've been a sport that traditionally makes decisions either around general 'chat around the pub,' or just whatever the richest guy in the room thinks,” said Joe Appelbaum, NYTHA president and an advisor on the study.

“Neither is usually a good one to make good economic decisions from,” he added.

Among the areas the three researchers focused in on were owner, trainer and horse participation; purse and handle trends; the bloodstock market; along with a side-by-side economic analysis of horse racing and other national sports.

They break their key findings down the following way:

That the 2008 global financial meltdown significantly hastened the decline in trainer numbers, owner interest numbers and participating racehorses.

That two areas–bloodstock prices and per-capita purse distribution–showed surprising resilience during that time.

More pointedly, with fewer horses competing for increased purses per race, individual owner entities have generally been doing slightly better financially over the last 20 years.

Despite areas of improved economic value for owners, costs remain high while the entertainment value of the sport appears to be declining due in part to horses racing less and working more.

The economic divide between the bigger and smaller trainers remained unchanged over the past 20 years. That said, such a divide is a characteristic of other national professional sports.

A consolidation of quality horses among fewer and fewer of the nation's largest stables has also triggered growing inequality among the top trainers.

At the end of the day, the not-for-profit model of certain racetracks coupled with the “capitalist nature” of Kentucky's breeding market could serve as models for other areas of the industry.

The detailed analysis warrants a much closer look at some of the statistics woven through it, several of which mirror the TDN's own prior dives into similar topics.

PARTICIPATION

The past 20 years has seen a decrease of nearly 40% in total horses that raced, a decrease of nearly 55% in total trainers that had at least one horse make a start, and a decrease of just over 42% in the number of owners who owned at least one horse.

Interestingly, the sharp drop in trainer numbers has been reflected in the TDN's own examination of California's trainer colony. Between 2007 and 2020, California witnessed a 46.4% decrease in the number of individual trainers making at least one start: from 573 in 2007 to 307 in 2020.

Hastening the speed of these declines was the 2008 global financial meltdown.

As the researchers write, “it accelerated the declines among horses and owners, and although trainers were already leaving the industry at a significant rate prior to the recession, trainers were still impacted by the economic crisis as they rely on owners to give them their horses.”

Since the COVID-19 pandemic, however, there have been tentative signs of plateauing declines in the number of participating owner interests and competing horses.

In what will prove a surprise to no careful observer of the sport, the last 20 years has also witnessed a 37% drop in the number of races run nationally, and a 45% drop in the number of individual starts.

“The landscape of the horse racing industry has changed a lot over the past 20 years as it has lost close to half its existing participants and 37% of its total races,” the researchers write.

“As the number of races, owners, and trainers continues to decrease across the country,” they warn, “the survival of horse racing is threatened.”

PURSE DISTRIBUTION

An inflation-adjusted look at purse levels show that total purses declined by nearly 25% between 2003 and 2023.

However, declines in the number of overall races run nationally over that same period has led to a situation of improved per-race, per-start economics for owners and trainers.

Indeed, inflation-adjusted purse-per-race numbers increased nearly 18% during that time, while inflation-adjusted purse-per-start numbers increased nearly 30%.

In another similarly themed section, the researchers took a stab at quantifying the cost of owning a horse, using numbers shared by one of the nation's “leading racing operations,” which remained unnamed.

Calculating typical training costs, the average days a horse is in training, farm costs, predicted jockey fees, and stable fees, the researchers estimated that the average annual earnings by a horse required to break even for its owner in 2022 was around $66,500.

In 2003, a horse had to win more than $41,810 for the owner to profit, they found.

The findings suggest that the number of horses “breaking even” for their owners over the past 20 years grew from below 8% in 2003 to over 11% in 2022.

Unsurprisingly, there were precipitous drops in the numbers of “breaking even” horses during the 2008 economic collapse and during the worst impacts from COVID-19.

The reason for this overall increase, the researchers write, is twofold.

“There are fewer horses racing, which is an effect of the decrease in the supply of foal crop,” they wrote. “And there is a higher amount of money available due to the alternative revenue provided through the casinos at the tracks.”

FOAL CROP AND SALES

The sales rings provided the researchers with another area for optimism.

“As the economy in general and horse racing in particular emerged from the Great Recession,” they write, “one area of clear strength has been the increasing value of bloodstock at all levels.”

Indeed, the inflation-adjusted average price of weanlings, yearlings and 2-year-olds increased over the past 20 years by just over $14,500. The same goes for median prices.

Since a recession-led low back in 2009, the median sales price increased 48% to a level of $30,000 in 2022.

“This upward trend in the median price indicates that a wide range of bloodstock assets, not only just the high-end ones, have experienced value appreciation,” the researchers write.

Why is this? The researchers contend that simple supply and demand is at play as the national foal crop has declined nearly 50% over the past 20 years.

“As the supply of horses eligible to be auctioned decreased due to the lower foal crop, breeders and sellers found themselves with fewer horses. Notably, the demand for these horses remained relatively constant, or in some cases, may even have increased,” the researchers write.

The combination of reduced supply and stable demand has led to an “upward pressure on prices,” they add.

The researchers also tackle one of the bete-noirs of the industry–the issue of so-called “super trainers.”

Over the last 20 years, the industry has lost nearly 55% of its trainers. Most have been “micro-trainers” and “midsize” trainers–in other words, those with between 1-10 discreet horses, and between 11-40 discreet horses respectively.

Fewer races, horses, and owners invariably lead to fewer trainers, the researchers reasonably deduce. At the same time, existing stables have consolidated size.

The average horse-per-trainer ratio has grown from 8.2 horses per trainer in 2003 to 11.1 in 2022.

“With owners preferring trainers with more horses, the micro-trainers are losing out on potential clients and struggling to maintain a sustainable business,” the researchers warn. “Many of them may have decided to exit the industry altogether due to the diminishing demand for their services.”

At the opposite end of the scale are “super trainers” who operate stables with 80 or more horses.

The number of super trainers has stayed relatively constant in the midst of declining trainer numbers. In 2003 there were 123 super trainers, and in 2022 there were 114.

These findings mirror the TDN's own analysis of the training colony in California. While the number of active trainers in California almost halved between 2007 and 2020, the number of trainers with 100-plus horses making starts stayed fairly constant.

At the same time, the Yale researchers found that the nation's super trainers have significantly increased their percentage share of total available winnings over 20 years, from 27% in 2003 to 41% in 2022.

This means that last year, 114 “super trainers”–just 3% of the total number of active trainers–accrued 41% of the total available winnings.

Intriguingly, the researchers argue that this yawning disparity between racing's select few top-tier trainers and the rest is mirrored in other professional sports, like golf and football.

“Horse racing is a unique sport as it does not have many similarities to popular sports in the country, but so is golf, and despite being unique, they are both sports that have similar issues that must be overcome to participate,” the researchers write.

“Neither is easy to stay in, especially if you are not in the top percent,” they add. “It is hard to win, hard to profit, and hard to compete, but that is exactly what makes them both sports in the first place.”

WHAT TO DO?

The report has other intriguing findings, including how the income disparity seen among trainers is reflected between racetracks, with only a select few tracks thriving and offering competitive purses.

Ultimately, said Appelbaum, the report could and perhaps should trigger a couple of key industry responses.

One would be to decrease the regulatory burden “as much as possible,” especially when it comes to the Horseracing Integrity and Safety Act and to sports wagering.

“The current regulatory regime both in New York and around the country is really a bit redundant and not in step with the current sports wagering environment,” he said.

The other would be to regionalize circuits of racing to provide for “better planning of races between tracks and jurisdictions,” he said.

At the end of the day, the report should also spur more of these in-depth analyses into the economic building blocks of the sport.

“Why is it three college-age interns are doing this?” Appelbaum added. “Why aren't we doing more of this ourselves?”

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Asmussen, Baffert, Brown, Cox Dominating Grade 1 Competition

Four trainers – Steve Asmussen, Bob Baffert, Chad Brown and Brad Cox – have combined to win 41% of the 83 Grade 1 races run in North America so far this year, a marked increase in the success rate for racing's elite “super trainers” from just a decade ago.

Asmussen and Cox have won nine G1 races each this year, with Baffert and Brown just one behind. Throw in Todd Pletcher's six G1 wins and fully 40 of 83 (48%) of the sport's most important races have been won this year by horses from one of five stables.

Going back a decade to 2011, the dominance was not as severe. When that racing year ended, Bob Baffert led all trainers with 11 G1 wins, but the trainer with the next highest number was Dale Romans, with six, followed by Todd Pletcher, H. Graham Motion and William Mott, with five apiece.

The combined 32 G1 races won by those five trainers accounted for 28% of the 116 G1 stakes run by the end of 2011.

Looking at all graded stakes run so far this year, Pletcher leads the way with 29, followed by Cox at 28, Brown at 27, Baffert at 26, and Asmussen at 20. The combined 130 graded race wins by those five trainers accounts for 33% of all the graded stakes run so far this year.

In 2011, the top five trainers, led by Pletcher's 43 graded wins, combined to win 125 of the 486 graded races by year's end, or 26%.

Anecdotally, it seems as though a handful of trainers are dominating North America's best races – the Grade 1 events – like never before. These numbers, though they only represent a one-season comparison from 10 years ago, would tend to back that up.

The charts below include all trainers with 10 or more graded stakes wins by year's end in 2011 and through Oct. 10 in 2021.

The post Asmussen, Baffert, Brown, Cox Dominating Grade 1 Competition appeared first on Horse Racing News | Paulick Report.

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Super Trainers in California: The Story in Numbers

Over the years, the rise of the so-called super trainer has prompted many a clutched pearl by virtue of a perceived monopoly on the sport.

Anecdotally, it can certainly appear as though the same few names wield an outsized impact. But what does the data say?

The TDN has crunched the numbers in California from 2007 onward. This is far from a comprehensive overview of the situation, and what emerges is a picture that can be viewed from multiple angles.

On the one hand, the numbers suggest that the biggest stables in the state have indeed consolidated their positions at the top during a long period of market contraction. Yet at the same time, other indicators afford tentative encouragement for the smaller players.

One statistic that should make industry leaders sit up and take notice, however, is how in just 14 years, the number of trainers making at least one start in California has nearly halved. As a market shrinks, the impact from any dominant force is going to be more keenly felt.

Super trainers

One common narrative in California is that the 80/20 rule–the notion that 80% of prize money funnels into the pockets of 20% of the trainers–has long been a defining feature of the industry.

How accurate is this?

The 80/20 rule has fluctuated a little over the last 14 years, with the top 20% of trainers in the state typically winning more then 80% of available purses. Indeed, back in 2007, they won more than 85% of all available prize money.

Between 2007 and 2018, the closest California came to the 80/20 benchmark was 2015, when the top 20% trainers won 80.7% of all prize money. But the last two years have seen a very slight shift in that trend.

In 2019, the top 20% of trainers won 80.8% of prize money. Last year, it fell to 79.2%–the first time it dipped below 80% in at least 14 years.

There doesn't appear any one clear explanation. These past two years in California have been far from typical, with 2019's welfare issues followed by a global pandemic. It's unclear, however, exactly why those events should begin to iron out prize money distribution disparities.

Another factor to take into consideration is purse distribution between stakes and overnight races. Then there's the shrinking opportunities out West–has that led to the bigger barns stabling more horses elsewhere?

Arguably more consequential was the expulsion in June of 2019 of trainer Jerry Hollendorfer from The Stronach Group's California facilities (Santa Anita and Golden Gate Fields).

Prior to that, Hollendorfer had been the dominant numerical force in California racing for many years. In 2018, for example, his runners made up 3.6% of all starts in the state. As recently as 2015, they had made up 4.1% of all starts in the state.

Nevertheless, without a clear understanding of where Hollendorfer's horses went, it's difficult to accurately diagnose. And as we shall see farther down, when the data is restricted to stables with 100+ horses making a start per year, their dominance appears as strong as ever.

Trainer data

Between 2007 and 2020, California has witnessed a 46.4% decrease in the number of individual trainers making at least one start: from 573 in 2007 to 307 in 2020.

At the same time, the number of trainers making up the 20% highest earners has decreased by nearly 47%–from 115 in 2007 to 61 last year–putting it in line with the overall drop in trainers.

The top 20% of trainers have consistently had an outsized impact when it comes to the apportioning of horses.

For the past 14 years, these top 20% trainers have started between 58.6% and nearly 65% of horses that have made at least one start in the state.

There are other indicators illustrating how, while the industry has shrunk, the big players have consolidated their position at the top.

One hundred-plus horses

Back in 2007, the number of trainers with 100 or more horses making at least one start per year was 14–the highest over the last 14 years.

Since then, however, the number of trainers with 100 or more horses making at least one start has fluctuated between eight and 12.

This means that while the number of active trainers in California has almost halved, the number of trainers with 100+ horses making starts has stayed fairly constant.

Not surprisingly, these large stables have long wielded tremendous sway in terms of prize money won and number of starts made.

In 2007, the 14 stables with 100 or more horses making at least one start annexed roughly 27% of all prize money and 21.6% of all starts. These 14 stables represent 2.4% of all trainers with at least one start in the state.

In 2020, the eight stables with 100 or more horses making at least one start (Isidro, Glatt, Sadler, Wong, O'Neill, Baltas, Miller and Baffert) represented 2.6% of all trainers with at least one start in the state. All in all, they annexed nearly 31% of all prize money and roughly 18% of all starts.

Lower end

There are, however, some angles to the data which appear to show glimmers of encouragement for the smaller stables barely scratching out a living.

As the number of active trainers in California has shrunk, the average earnings per trainer have trended upward.

Comparing 2007 to 2020, the average earnings per trainer for the bottom 80% had increased nearly 53% (from roughly $52,000 in 2007 to roughly $80,000 last year).

In comparison, the average earnings per trainer for the top 20% had increased only 0.6% during that same period (from roughly $1.212 million in 2007 to roughly $1.220 million last year).

Comparing 2007 figures to last year's, the bottom 80% of trainers have also significantly outpaced their top 20% cousins in terms of growth in both earnings per horse and earnings per starter.

Nevertheless, when the data is adjusted for the relative purchasing power of the dollar, the picture looks less rosy. When overall earnings per trainer are adjusted for inflation, for example, we see a more than 13% decrease from 2007 to last year.

To reinforce just how important the smaller stables are to the racing ecosystem, over 70% of trainers start fewer than 20 individual horses a year, but last year their horses accounted for about one-quarter of the entire horse inventory (1,392 of 5,389) and about one-quarter of all starts (4,321 of 17,973).

If the health of a racing product is defined in good part by fielding races with a varied breadth of competitor, therefore, this certainly leaves much food for thought, especially when the broken business model widely used throughout the industry disproportionately impacts the smaller trainer struggling to stay afloat.

And if the smaller stables find themselves unable to survive in an increasingly lopsided marketplace, what kind of product can the bettor expect?

Note: The data is derived from Daily Racing Form chart text files.

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