NTRA’s Rooney: Debunking Some Commonly Held Myths About HISA

Change is never easy, especially change being brought about by the federal government imposing national uniform reforms in an industry long regulated at the state level. I served in the House of Representatives for 10 years, representing 750,000 people from South Florida. I heard day in and day out from my constituents on how we in the government could do things better. This feedback drove the work I did in Congress. Since I started at NTRA, I've been meeting with my new Thoroughbred racing constituency to hear about the major issues they face and how the NTRA can help. One of the most common concerns revolves around a bipartisan bill signed into law by President Trump in 2020 known as the Horseracing Integrity and Safety Act (HISA).

The fact of the matter is, Thoroughbred racing has needed change for quite some time. We all know that. The path we were going down was not sustainable, and after some challenging years we could not as an industry keep doing business as usual. Accordingly, since the passage and implementation of HISA, I'm optimistic that together we can work to preserve horse racing so that future generations can also enjoy it. The best way to do that is by creating fairness and safety across the nation for the people and horses that make up this sport we love.

HISA officials are doing all they can to educate and communicate with industry stakeholders covered by the law. I think it's important to separate facts from myths, so misinformation doesn't get in the way of the Authority's work. So let me try to set the record straight.

Myth: HISA has very broad powers of search and seizure under the law, which violates the Fourth Amendment.

Fact: HISA regulations are very similar to those long used by state horse racing authorities and courts usually affirm those powers.

State horse racing authorities have long exercised investigatory and enforcement powers over licensed entities that are similar to those provided in HISA. More broadly, courts have dismissed search-and-seizure objections critics have raised because participants in closely regulated industries have diminished expectations of privacy. While individuals have a Constitutional right to privacy, there is no Constitutional right to own, race, and train horses. Licensed individuals are only able to participate under the terms of their license and if rules are violated, that license can be revoked. However, HISA has made it clear their regulatory authority extends only to matters relating to racing. So any argument claiming HISA extends beyond matters relating to racing is wrong.

Myth: Many states don't currently have a voided claim rule, and now HISA is regulating all claims to the detriment of owners and trainers.

Fact: HISA provides a long needed, nationwide voided claim rule which will standardize the process for all claims, eliminate confusion and protect owners and trainers.

For years, voided claim programs have been confusing and challenging, even for regulators. In many states, voided claim rules don't exist at all. HISA aims to standardize this process. It will require a claim be voided in five specific circumstances (death, euthanasia, bleeding, being vanned off the track or testing positive for prohibited substances) making the rules clearer and leveling the playing field. Primarily this rule is intended to protect the welfare and safety of horses. Additionally, this rule is intended to protect people who sell horses through the claiming business but also ensure those purchasing horses are getting a fair purchase.

Myth: HISA's Committees are not representative of the Industry.

Fact: The Advisory Committees are made up of veterinarians, chemists, a jockey, former track owners and operators, breeders, former heads of equine sales companies, and a wide array of highly regarded independent directors with expertise both within and outside of horse racing.

HISA has worked with stakeholders from every facet of the industry to make the Advisory Committees as representative and inclusive as possible. HISA has also sought and received public comment on every proposed rule and regulation, so that any parties not directly represented on the Committee could share their input. While it is impossible for everyone to have a seat at the table, the Authority has made every effort to have representation and input be as wide-ranging as possible.

Myth: HISA is going to cost too much and small tracks and small owners will no longer be able to participate in the industry.

Fact: While not all state racetracks and regulators have finalized funding mechanisms for HISA fees, the best way to drive down the cost per covered individual is by every segment of the industry participating.

The concern over cost is a very valid one that I don't want to minimize. The cost assessment model is based on 50% starts and 50% purses, which is intended to help the smaller tracks. HISA will also be looking for supplemental funding models as they move forward. The best way to drive down cost is for all industry participants to pay their share, which will bring down the cost for each covered individual. In the end, if it leads to a safer sport with a higher degree of transparency and integrity, then it will be money well spent. That, after all, is what we all want and what people expect.

When I first took this job, I met with a well-known trainer and asked him what he wants for racing. He said one word: fairness. With minimum standards of fairness across the country, Thoroughbred racing and betting will be more competitive and more fun. We must continue to work together as an industry to improve our sport, so the dream of future generations enjoying horse racing can become a reality.

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View From The Eighth Pole: The Price Of A Grade 1 Winner

So you want to go to a major yearling sale and buy a horse that your trainer can turn into a Grade 1 winner and boost its value (and your bank account) as a future stallion or broodmare prospect. How much cash should you stuff into your pockets on the way to the sale?

The question came up recently in a discussion with a veteran horse owner who has played both sides of the commercial market as buyer and seller. He watched Ireland's Coolmore associates try to dominate the top of the yearling market going back more than 20 years and has seen that same strategy carried out more recently by partnerships formed among individual entities who pool their significant resources.

The idea is to buy enough well-pedigreed yearlings to give yourself a chance to have one or two colts win Grade 1 races and pay for the whole lot through a stallion syndication deal or stand them at your own farm and reap the benefits of stud fees. Fillies that win Grade 1 races boost their broodmare prospect value significantly. For those playing the long game, adding a Grade 1-winning filly to a broodmare band can strengthen your racing stable or commercial breeding operation.

One group that was formed with this “critical mass” theory in mind is the 10-member partnership of SF Racing LLC, Starlight Racing, Madaket Stables LLC, Robert E. Masterson, Stonestreet Stables LLC, Jay A. Schoenfarber, Waves Edge Capital LLC, Catherine W. Donovan, Golconda Stable and Siena Farm LLC.

In 2020, according to records in Bloodhorse.com's auction database, SF Racing et al purchased 36 yearlings (all colts) for $14,540,000, an average price of $403,889 and a median of $400,000. Top price in the group was the $800,000 paid for an Into Mischief–Blind Copy colt named Coppola, who won his debut in a six-furlong maiden special weight race for 3-year-olds at Delaware Park July 13 for trainer Jonathan Thomas. Lowest price was the $100,000 paid for the Candy Ride–Proud Dame colt, Wahlberg, who currently is unraced.

Of the 36 yearlings, there are some successes, led by Grade 1 Del Mar Futurity winner Pinehurst, a $385,000 Keeneland September purchase who also won this year's Grade 3, $1.5 million Saudi Derby. Messier, Rockefeller and Newgrange are Grade 3 winners.

Newgrange was sold recently for $325,000 at the Fasig-Tipton Kentucky Horses of Racing Age Sale, one of four of the original 36 to be sold at public auction by the SF group. Another six were claimed from their stable in maiden claiming races.

Nineteen of the 36 yearling purchases have yet to win midway through their 3-year-old seasons, with seven of those 19 yet to start. The Triple Crown and most stallion-making races for 3-year-olds are in the rear-view mirror, but there are still some opportunities for one or more of these 2020 yearlings to become the proverbial home-run horse.

From a racetrack earnings standpoint, the group has won $3,624,064 to date from the original $14,540,000 investment. Keep in mind, however, it's stallion deals that will make or break this business model, not racetrack earnings.

Let's go back to the original question of this nerdy pursuit: What does it take to buy a Grade 1 winner?

Here is what I learned looking at 11 years of graded stakes results in the United States and Canada.

  • There were 260 individual Grade 1 winners from 2011-2021 who either were sold or bought back by consignors at major summer yearling sales in Kentucky and New York. This number does not include yearlings purchased for pinhooking purposes and reoffered for sale as 2-year-olds.
  • The average sale price of those 260 yearlings who subsequently became Grade 1 winners in the U.S. or Canada was $272,555. The median yearling price of the future Grade 1 winners was $200,000.
  • Five yearlings that sold for $1 million or more as yearlings won Grade 1 stakes from 2011-2021, led by Mendelssohn, who brought $3 million at the 2016 Keeneland September Yearling Sale. The others were Cambier Parc ($1,250,000), Tapwrit ($1,200,000), Malathaat ($1,050,000), Flightline ($1,000,000), and Good Magic ($1,000,000).
    For some perspective, at the Keeneland September Yearling Sale alone from 2008-2019, there were 151 million-dollar yearlings sold.
    Thirty-one of the 260 future Grade 1 winners sold for $500,000-$999,999.
  • At the other end of spectrum, there were 68 future Grade 1 winners that sold for less than $100,000. Of course the pool of horses selling for less than $100,000 is much larger than those selling for a half-million dollars or more.

The bargain of the decade was the Congaree filly Don't Tell Sophia, winner of the Grade 1 Spinster Stakes at Keeneland in 2014 and second to Untapable in that year's Breeders' Cup Distaff. Bred by Stonerside Stable and offered by Taylor Made Sales Agency at the 2009 Keeneland September Yearling Sale, Don't Tell Sophia was purchased by trainer Philip A. Sims for $1,000. She earned $1,382,479 on the racetrack, then was sold by consignor Spring Trace Farm to leading Japanese breeder Katsumi Yoshida for $1,200,000 in foal to Medaglia d'Oro at the 2015 Keeneland November Breeding Stock Sale.

Only someone with the wildest of imaginations could write up a business plan with a result like that.

That's my view from the eighth pole.


Note: Below is a listing of the SF Racing et al yearling purchases in 2020. Auction data from Bloodhorse.com and Equibase.com. Racing information from Equibase.com.

 

 

 

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The Friday Show Presented By Monmouth Park: Finding Winners In Saratoga With Andrew Champagne

The elite Saratoga Race Course meet offers some of the most appealing wagering opportunities on the calendar, and few in recent history have been able to find winners at the upstate New York track like Andrew Champagne.

Champagne, a content manager at Catena Media and formerly of the Daily Racing Form and TVG, is a five-time leading handicapper in The Saratogian's Pink Sheet, and he's a two-time all-media public handicapping champion for the Saratoga meet.

In 2021, he selected an impressive 142 winners in The Pink Sheet over the course of the season to lead all public media handicappers.

On this week's episode of The Friday Show, Champagne joins bloodstock editor Joe Nevills in the midst of opening weekend in Saratoga to share some tips on how to find winners at one of the sport's showcase meetings.

Champagne shares what makes a horse stands out in the past performances, what makes a runner an automatic toss, unsung trainers and jockeys who traditionally step their games up for Saratoga, and more.

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‘Slippery Slope’: Approval Of Lexington Soccer Complex Threatens Local Equine, Agricultural Operations

The following is an open letter penned by the Fayette Alliance, a non-profit of citizens dedicated to achieving equitable, sustainable growth in Lexington-Fayette County through land-use advocacy, education, and research. The letter is in response to the approval for a soccer complex in an agriculture-rural zone which had been home to the Ashwood Training Center on Russell Cave Road just outside of Lexington, Ky.

The site plan has the soccer fields located where the training track sits and near the southeast border of Fasig-Tipton Kentucky's sale grounds. The fields are adjacent to trainer Ken McPeek's Magdalena Farm. The site plan also calls for 750 parking spaces. 

There have been questions about the relationship between the proposed recreational fields and an “anticipated” commercial stadium for a USL League One professional soccer franchise that is coming to Lexington in 2023. Plans for a downtown soccer stadium have fallen through and no new plans have been announced. The site plan does not include a stadium, though the Division of Planning staff said “separation between the uses” (recreational soccer fields and pro stadium) should be more “clearly delineated.” William J. Shively, owner of Dixiana Farm in Lexington, brought the franchise to Lexington. Vince Gabbert, a former vice president at Keeneland, is the franchise president.

In 1958, Lexington became the first community in the U.S. to institute an Urban Service Boundary to protect the farmland that is our identity. Last week, the Lexington-Fayette Urban County Government Board of Adjustment approved a 12-field soccer complex and 750 parking spaces in the Agricultural-Rural zone. This decision threatens the historic precedent set by those who had the foresight and determination to safeguard this community's most important resource with potential consequences that would negatively impact generations to come. The land in question is immediately adjacent to equine and agricultural operations that are the pillars of both our local economy and Lexington's proud identity as the Horse Capital of the World. In approving the proposal, the Board of Adjustment also took the highly unusual step of removing the most critical of the 19 conditions recommended by the City of Lexington's professional planning staff to preserve the integrity of the Agricultural-Rural zone should the project move forward.

This decision was just the first step in Lexington Sporting Club's multi-faceted plan that would disrupt Lexington's Bluegrass farmland as we know it. The next two steps are proposals to amend existing zoning ordinances to permit lights, concessions, and retail sales at that same complex in the rural area – an area that has been protected from this exact type of development for decades – in addition to a 10,000-person stadium and thousands of surface parking spaces in the nearby Economic Development zone.

Fayette Alliance supports bringing professional and youth soccer and the corresponding infrastructure to Lexington. However, we must do so in a responsible manner that protects our trademark industries and the productive farmland that makes Lexington unique. We already find ourselves on a slippery slope: together, these proposals would allow intense commercial uses in the rural area. They represent a major change from Lexington's nearly 70 years of thoughtful growth policies and the consequences, if approved, will long outlive us all.

At the Board of Adjustment hearings, dozens of community members voiced their opposition to the development, highlighting the adverse impacts it would have on their livelihoods, the agricultural and equine industries, and the surrounding environment. The approval of the soccer fields and parking lot was a disappointing dismissal of the valid concerns of the citizens of Lexington and its city planners. The result, including the Board of Adjustment's unprecedented move to gut the most important of the planning staff's recommendations, all but ignores this community's longstanding support for the balance between urban and rural uses of the land that we have worked tirelessly to maintain.

This decision, and those that will come before the Planning Commission later this month, could set a dangerous precedent for our community. They put our rural area at risk by opening it up to similar intense development throughout Lexington-Fayette County. Where will we draw the line if the physical Agricultural-Rural zone boundaries and conditions outlined by our own city planning staff are so readily ignored from the start?

Fayette Alliance isn't waiting around to find out; our founding mission is to advocate to protect the finite resource that is our Bluegrass farmland for generations to come. To this end, we are appealing the Board of Adjustment's decision and filing an Open Records request to understand how last Tuesday's vote resulted in not only the approval of a proposal that saw near-universal opposition throughout the meeting, but also the inexplicable decision to eliminate the most protective of the 19 recommendations made by planning staff.

On Thursday, July 28, the Planning Commission will hold a public hearing on the next phases of the project, which threaten both our rural area and the job creation for which our economic development land is explicitly designated. Aside from the obvious concerns voiced by the community about these proposals – from light and noise pollution to storm water runoff and safety issues – the farmland that is under threat features finite, prime soil for agricultural uses that can never be replaced. The economic development land is zoned as such because it is critical to our community's economic success; acres upon acres of parking lots certainly are not. If these proposals are approved, there is no going back. No do-over.

The decisions we make about land-use today have a far greater impact on our children's futures than a worthy soccer program located on the prime soils that form the foundation of our unique community and its signature industry. While soccer can be played at other existing facilities, our farmland is irreplaceable. If you share our fundamental belief in the need to protect our hallowed Bluegrass land, please join us in attending the Planning Commission meeting on July 28 at 1:30pm at City Hall and make your voice heard in opposition to these proposals. We must stay engaged and demand transparency from Lexington Sporting Club around this project; our community has too much at stake to let this pass.

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