Tag: The Biz

When the projected foal crop figure is released each year, analysts are quick to look at how it's trending compared to years past. For a very long time now, that number has been going down. The annual foal crop declined 53% from 1990 to 2019, and depending on who you ask, everyone has a different theory as to why that's happening.

Dr. Lauren Stiroh, managing director at NERA Economic Consulting, was brought in by The Jockey Club to analyze the issue from an outsider's perspective. Stiroh presented her findings at the 2022 Jockey Club Round Table conference in Saratoga Springs, N.Y., on Aug. 14.

Stiroh focused on the period from 1990 to 2020, although acknowledged many of the factors she looked at registered atypical results during the first year of the pandemic in 2020. While the foal crop declined 53% from 1990 to 2019, Stiroh found the number of individual breeders went down 56% although the number of foals registered per breeder only rose by 5%.

There were also changes in the location of those breeders. In 1990, Kentucky, California, Florida, Texas and Oklahoma combined to account for just over half the annual foal crop. Now, Kentucky accounts for about 43% of the total on its own.

Stiroh tested several different factors to see which was most strongly correlated with changes in foal crop. Auction prices for weanlings, yearlings, and 2-year-olds have remained largely steady through this time period. With the decrease in the crop, there has been a slight increase in the average earnings per runner. As the foal crop shrunk, advertised stud fees came down, but then they rose again as the shrinkage leveled off and didn't experience the same severity of drop as the foal crop. Average stud revenue followed a similar trend. Stiroh concluded there wasn't a clear cause on the revenue side of the equation.

She then looked at the costs side of the equation, presenting data from the producer price index of hay and hay seeds. A graph of hay prices showed them increasing significantly from the mid-2000s forward, but not necessarily in step with declines in the foal crop.

Predictably, the biggest dips in foal registration immediately followed national economic recessions, reiterating what the industry already knows — the horse industry is not immune to larger economic forces off the farm.

The number of races held each year has decreased as the foal crop has decreased, and the average field size has also shrunk (though not as drastically as the foal crop has); still, those did not seem to be strong predictors of the foal crop. When Stiroh got to parimutuel handle however, she found a really good predictor of foal crop changes. Parimutuel handle figures followed nearly exactly the same trends as foal crop, in terms of timing and severity. Using regression analysis, she found that data from parimutuel handle, number of races, gross domestic product, and average stud fee combined to create a very accurate prediction of foal crop changes.

So where does that leave us?

Stiroh pointed out many of the same issues already identified by the McKinsey and Company study commissioned by The Jockey Club in 2011 — if foal crop is directly correlated to changes in parimutuel handle, it would seem the way to grow the Thoroughbred industry is to increase handle. Racing faces far more legal competition for the gambling dollar in 2022 than it once did, and its popularity as a spectator sport has slipped considerably from its height in the 1950s or 1960s. An aging fan base has also limited racing's ability to compete with other sports or other gambling options.

Stiroh's takeaway: Racing needs to appeal to a younger audience and pursue revenue streams outside parimutuel handle — a suggestion the sport has heard several times before.

The post Round Table: Economist Sheds Light On The Forces Behind The Declining Foal Crop appeared first on Horse Racing News | Paulick Report.

Source of original post

As the American horse racing industry looks ahead to the upcoming new rules for medication control via the Horseracing Integrity and Safety Authority, Authority CEO Lisa Lazarus says there are other changes coming, too.

Lazarus reflected on the first weeks of the Authority's regulation of Thoroughbred racing as part of the keynote address at this year's Jockey Club Round Table. Although she admitted the Authority was still a ways from being perfect, she said she was proud of the progress the group has made so far in its efforts to comply with the tight implementation deadline given by the authors of the Horseracing Integrity and Safety Act (HISA).

The Authority implemented track safety rules starting July 1, and is prepared to submit draft regulations for medication and anti-doping to the Federal Trade Commission next week for approval. The group's work so far has received mixed reviews, depending upon your perspective; its critics have raised concerns about its transparency and about its willingness to collaborate with industry participants. Besides the medication rules, Lazarus says the racing industry can look forward to a new and improved permanent website for the Authority, which will include “more content around committee work, budgets, staff responsibilities and contact information, organizational charts, as well as HISA's strategic goals and objectives.” Additionally, the Authority plans to hire a medical director to oversee the use of uniform health and safety procedures for jockeys across the country.

The organization will also soon create a series of new committees, including a horsemen's committee, to provide feedback on proposed rules and rule changes to better understand the needs and concerns of the sport's participants. Lazarus emphasized that the Authority is governed by an interest in collaborating with — not fighting — horsemen and others, which she says is illustrated by its willingness to change its rules on toe grabs on hind feet after industry pushback.

“Let's have vigorous debates about what the rules should be,” she said.  “But let's never forget the real adversaries are the bad actors who tarnish our sport, anyone who is cavalier about horse welfare, and those who want to shut down horse racing for good.”

Lazarus also underscored the need for racing to have a unified voice in the public space, pointing out that the Authority can serve in that role, even if racing industry participants agree to disagree internally about the rules.

Six weeks into the Authority's regulation, she presented the following statistics:

• There are 34,000 horses and 28,000 people registered with the Authority
• Of the horses, trainers, and jockeys who compete in the States, 90% are registered; if you take Louisiana out of the equation (Louisiana is one of the states suing the Authority in an effort to have a judge declare it unconstitutional), the proportion goes to 95%
• Of 21 states governed by Authority regulations, 17 have voluntary agreements with the Authority
• Concussion baseline testing for jockeys has taken place at 10 different racetracks to date.
• Of 1,748 claims put in since the July 1 start date, 36 have been voided in accordance with Authority rules
• $1.8 million has been spent so far defending the Authority from the four federal lawsuits questioning its legality

The last point was a particular area of emphasis for Lazarus and also for Jockey Club chairman Stuart Janney III. Lazarus pointed out that the legal costs for the Authority are ultimately inherited by the jurisdictions it governs, so that when the Authority prevails in court, those expenses could be shouldered in part by the very groups who have brought suit.

Janney indicated particular disappointment in The Jockeys' Guild, which joined the suit brought by Texas and Louisiana, pointing out that HISA includes numerous safety provisions aimed at improving the lives of riders.

“It's outrageous,” said Janney in his closing remarks. “The jockeys are wasting their time and hurting our sport. I hope they come to realize that.”

Read a complete version of Lazarus' keynote address here.

The post Round Table: Lazarus Announces More Transparency, Input From Horsemen Coming To HISA appeared first on Horse Racing News | Paulick Report.

Source of original post

An alliance of 14 affiliates of the Horsemen's Benevolent and Protective Association and four racetracks are seeking protection from the alleged harms of the Horseracing Integrity and Safety Act Authority (HISA). They are asking a federal judge to allow them to participate in an existing lawsuit that claims HISA and the Federal Trade Commission (FTC) violated the Fourth and Seventh Amendments to the U.S. Constitution as well as the process by which federal agencies develop and issue regulations, T. D. Thornton of Thoroughbred Daily News reports.

The HBPA affiliates and the tracks on Friday filed a “motion to intervene” in United States District Court (Western District of Louisiana). If accepted by the judge, it would grant the petitioners status in the case alongside the lead plaintiffs from the states of Louisiana and West Virginia.

The HBPA affiliates seeking to join the lawsuit are Arizona, Arkansas, Illinois, Iowa, Indiana, Kentucky, Minnesota, Nebraska, Ohio, Oklahoma, Pennsylvania, Washington, Charles Town, and Tampa Bay Downs. The Colorado Horse Racing Association, the state's statutorily recognized horsemen's group, also wants to be an intervenor.

The racetracks seeking to join the lawsuit are Fonner Park, Horsemen's Park, and the recently approved racino Legacy Downs, all in Nebraska. The fourth is Turf Paradise in Arizona.

“[Our] interests will be seriously impaired if Defendants prevail in their effort to enforce the enjoined HISA Rules beyond Louisiana and West Virginia,” the movants wrote in their Aug. 12 court filing. “Intervenors are not adequately represented by the parties to this action. Intervenors therefore respectfully request that this Court grant their motion to intervene as plaintiffs to protect their and their members' interests.”

“Specifically, Intervenors seek to ensure that HISA does not kneecap the horseracing industry as a whole or themselves with the implementation and enforcement of defective HISA Rules,” the filing continued.

Click here to read the complete story at thoroughbreddailynews.com.

The post 14 HBPA Affiliates, Four Tracks Seek To Join HISA Lawsuit appeared first on Horse Racing News | Paulick Report.

Source of original post