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Guest Viewpoint: Industry Unity Not Likely Without Change In Structure

Best wishes go out to new National Thoroughbred Racing Association president Tom Rooney. And thanks to the Paulick Report for publishing his interesting statement.

Rooney has ambition, which is an essential ingredient in getting something important done. He wants to gain a sense of what's most important to racing and how he can most successfully advocate on behalf of the industry. Also, Rooney is not naïve. He cites opposition from people who can never be convinced that racing is doing what's right by the animals. For sure there is a segment of the population that holds this view regardless of sweeping safety reforms in racing. Unfortunately, continuously confronting this form of opposition seems far down the list of urgent priorities, particularly given the difficulty of changing some minds.

Speaking of the difficulty of changing minds, Rooney sets the lofty goal of building consensus in the industry so he can tell the positive story of the sport of racing in Washington, D.C. Rooney also says, “We need to constantly strive to do the best that we can do for the industry.” Amen to this assertion. However, while Rooney will no doubt do “his” best, the answer to the question of, “What is best for racing?” seems yet to be determined. Rooney is to be applauded for his aspirations regarding the need for consensus. Still, it is critical to recognize that like his predecessor, Alex Waldrop, Rooney is going to find that while he and many others may “want” the NTRA to speak for racing with a unified voice in Washington, the entities controlling the wide range of operating assets in racing are anything but unified as to what comes first.

For racing, agreement on sequencing priorities remains elusive.

Let's tackle Rooney's noble aspirations to see if we can better organize our thoughts in examining the complex task of problem-solving for racing. The “leading issues” facing racing cannot be agreed upon by the participants, simply because racing is not an entity. Racing is a loose collection of mostly unaffiliated participants struggling to benefit from stability. All efforts are conducted individually, while costs run out of control.

The root of the problem is racing suffers congenitally from foundational structures that have actually INHIBITED meaningful industrywide cooperation. This has gone on for decades. Racing is merely one niche competing in a massive modern eco-system we will refer to as the multi-billion-dollar sports entertainment market. Like so many entertainment markets where there is competition for fan dollars, thoroughbred racing's success requires genuine cooperation. Perceptions of the real incentives for cooperation must be imbedded in the foundation of racing.

In other words, changes necessary for racing to prosper must be STRUCTURAL.

Witness the structural revolution of college football in recent years. The Southeastern Conference (SEC) commissioner has gotten roughly a dozen schools to closely cooperate. So successful is the SEC in getting member schools to cooperate, they are now deep into the process of destroying the competitiveness of college football in all other conferences. Through cooperation, the SEC holds down input costs. And in an enormously profitable industry, the SEC dominates a sports marketing niche that generates billions of dollars in sales. SEC revenue streams are now growing and financing still greater advances in its competitive advantages.

The contrasts between the structures of thoroughbred racing and the NFL, NBA, MLB, NHL, and SEC are like night and day. These entities conduct themselves as well-organized niche monopolies in the sports entertainment market. Their commissioners succeed in tests of the perimeters of federal anti-trust statutes. These sports entertainment competitors negotiate as a single entity with suppliers of the raw materials that contribute to the creation of their products and services. They do the same with would-be distributors. They use a wide range of creative tools to control costs at all levels, and as a result, are able to distribute their products efficiently with pricing power. These leagues are prospering mightily while thoroughbred racing entities struggle while going it alone. Why?

Consider the astounding performance of Messier yesterday at Santa Anita. Messier is arguably the most promising 3-year-old colt in the nation on the Kentucky Derby trail. For now, he puts his talents on display at a major racing venue that produces many Eclipse Award winners. Yet Churchill Downs has banned his trainer for two years, while the industry tries to decide what to do about Medina Spirit's Derby win last year. At some point everyone at Churchill, Stronach Group, and the New York Racing Asssociation should consider a private summit to discuss this situation and what it tells everyone about racing, not to mention the difficulty of enhancing the value of individual franchises.

Racing participants continue to operate in a bifurcated and economically unvirtuous doom loop where even those with scale or mini-monopolies tread water. Most other racing participants flounder and many eventually fail. The better outcomes seen with the SEC and professional sports “leagues” is the result of STRUCTURE first, and sound execution second. And ironically, the benefits of real cooperation can be observed right under racing's nose in Lexington in the athletic department of the University of Kentucky, not in perceived power centers like New York City, Chicago or Los Angeles.

What are the barriers in thoroughbred racing that are preventing the sport from taking the same approach?

Many racing entities operate separately while wielding substantial power. Since we live in the midst of a digital revolution, let's start with data in the age of information. Consider that the Thoroughbred Racing Association and The Jockey Club control the vast and mission-critical databases associated with operating the racing industry. The implications of this present arrangement on mission critical data are part of a structural mosaic that inhibits cooperation.

More than 60 racetracks represent the core foundational structure of an anything but “monolithic” list of major participant hosts in the industry. Consider that the major racetrack venues are owned by separate corporate entities including: Churchill Downs (public market cap = $7.7 billion) Stronach Group (private), New York Racing Association (private – non-profit), Penn National Gaming (public market cap = $7.6 billion), and Caesars Entertainment (public market cap = $16.7 billion). Additionally, there are many other significant ownership entities with one or more tracks, including Del Mar, Keeneland and Woodbine Entertainment Group. There are also many stand-alone small racetrack owners.

Most of the major entities still squabble with one another over simulcast signals and television distribution arrangements like feudal lords a thousand years ago. The customer's interests are long lost, as are the long-term interests of most of the major host entities.

Why is it that both vast amounts of capital and the potential benefits of scale still fail to produce cooperation or unity? Again the explanation lies in basic structure. The invested constituent's default state is to gravitate towards the narrow focus of “survival.” Most industry observers are reasonably certain that the Kentucky Derby will always survive, as will the Preakness, and the Belmont Stakes. Accordingly, since Churchill Downs, the Stronach Group, and the New York Racing Association, each owns a slice of the rarest but still fragmented portion of the industry that figures to survive, genuine cooperation with perceived competitors cannot possibly drive the thought processes of their respective leaders.

Churchill Downs, in particular, is necessarily entrenched in enhancing/protecting its most unique franchise. To be fair rather than critical, leadership at large corporate entities like Churchill cannot be expected to forfeit their edge for a vague concept. They must be conservative when it comes to protecting shareholder investments. Something as valuable as the Kentucky Derby franchise should be protected.

However, given current perceptions, leaders at Churchill, Stronach and NYRA are highly unlikely to support a “cooperation plan” that has yet to be articulated, even if it will actually be the only path racing can take to produce a rising tide.

So … we see the alternative playing out instead. The much more narrow scarcity mentality that rightly recognizes the existing structural weaknesses in racing continues to prevail unabated.

What about the sport of racing itself? An end to the beauty of competition hardly defines the SEC, the NFL, the NBA, MLB or the NHL. Less competition need not define the essence of racing either. Tens of thousands of distinctly separate risk takers will continue to participate in racing. This impressive list of participants includes thousands of thoroughbred breeders and breeding entities, thousands of race horse owners and owner entities, thousands of independent contractors (trainers, jockeys and veterinarians), hundreds of stallion farms, and even several horse auction companies. Each can have a much better chance to prosper while still competing with one another if cooperation becomes the hallmark of the industry structure. While these various entities in racing will still compete, they could do so within an overall structure that redefines itself with an over-riding vision for prosperity instead of scarcity. Only constructive cooperation can make this happen.

What about thoroughbred racing's customers? They are frustrated while having a wide range of entertainment choices. Racing host entities continue to embrace far too many short-term paradigms that have nothing to do with serving the thoroughbred racing fan. If we can just get slot machine licenses, or better yet, more slot machine licenses, we can survive, even if our thoroughbred racing product continues to worsen. This is part of the survival mindset.

In the end, a handful of cooperative exceptions fall far short in racing, when compared to better-organized competitors. The “go it alone” mentality prevails in a brutal competitive landscape for fan dollars where real teamwork is essential. Though ownership syndicates and breeding syndicates collaborate and cooperate to produce the sport's stars, the lack of a growing fan base produces overall stagnation and decline. The end result is an overall horse population that is still in full retreat. Even with racing reduced to three days a week, five-horse fields are commonplace in the huge Southern California market that offers phenomenal weather.

Still, even with this disturbing trend in place, consensus for those that own the marquee physical venues in racing cannot agree on the priorities. Small fields in California and the closing of Arlington Park in the gigantic market of Chicago are the most visible symptoms of a huge overarching problem that goes unsolved. And since all of the previously mentioned venue-controlling entities are perceived in varying degrees by their leaders as adversaries, spontaneous combustion that produces “unity” on racing's priorities seems far-fetched. This reality will remain a fundamental truth no matter how hard any one person or group of people tries at the NTRA or anywhere else where hopes for unity remain.

Is it correct to describe as “herding cats” the job description of the commissioners of MLB, NFL, NBA, NHL and SEC? Thanks to a conducive industry structure, these commissioners convince a few decision-making members to cooperate and prosper. Given racing's current structure, imagine the correct way to describe the task Mr. Rooney is facing, considering the complexities and narrow perceptions of most of the interests participating in thoroughbred racing. Getting a bill through Congress is child's play when compared to securing real long-term cooperation in racing.

The first priority for racing will never be lobbying efforts directed toward Washington. The solution to this problem we call the stagnant future prospects for thoroughbred racing rests with the perceptions of the participants who actually possess scale, and the dubious structures they cling to for seemingly sound reasons.

Discovering the abundant benefits of cooperation, in a world where there are well funded competitors everywhere, will have to replace the prevailing provincial mindset. That these perceptions must change is amply supported by evidence supplied by the success of the SEC. But sometimes, even when overwhelming evidence of the narrow path to prosperity is abundant, it does not matter to those firmly entrenched in a scarcity mentality. We are there, and structural changes are going to be required.

If these forces were easy to overcome they would have been re-directed a long time ago. Meaningful change can be accomplished, but only with great difficulty.

Jim Spence, chairman emeritus of Spence Asset Management, is a longtime fan and owner-breeder of Thoroughbreds.

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Cohen: Harness Racing Is Trying To Ignore Biggest Scandal (Yet) Of The Year

“If you see something, say something,” unless it's embarrassing and maybe criminal.

The biggest story in horse racing last week was the federal conviction of Dr. Seth Fishman after a horse-doping trial that ought to strike fear in the hearts of the racing communities across the world. Seemingly caught red-handed, with his lawyer lamely trying to portray him as a paragon of virtue, Fishman almost certainly is going to prison. It's even more certain that his customer database, in the hands of federal lawyers or investigators and now made public, threatens to turn a really bad scandal about the prevalence of doping into an existential crisis for both Thoroughbred and Standardbred racing.

The second biggest story of the week, at least as far as harness racing goes, was the industry's lack of alarm about Ross Cohen's testimony in Fishman's trial. Cohen was a harness trainer of little note until he pleaded guilty and then helped the feds incriminate Fishman. As part of his plea deal, Cohen told prosecutors and the jury that he fixed harness races at Yonkers Raceway, in New York, one of the most historic and important tracks in the country. Cohen made the allegations under oath and penalty of perjury and it's hard to imagine that federal prosecutors don't have a reasonable belief that he is telling the truth.

The third biggest story of the week, in harness racing, was the decision by Jeff Gural, owner and operator of the New Meadowlands Racetrack (and, full disclosure, a partner of mine in several horses) to allow trainer Adrienne Hall to race horses at the track despite her damning testimony against Fishman. Hall says she bought the illegal drugs Fishman was peddling and used them on a horse, who did so well doped up Hall felt compelled to thank Fishman for the juice. “He dominated. He was a completely different animal. I was so happy,” Hall reportedly told Fishman. Like Cohen, Hall copped a plea. Unlike Cohen, Hall is getting another chance.

And, finally, came publication of the Thoroughbred Daily News' interview with Scott Robinson, now serving time in a federal penitentiary in Florida for selling and distributing misbranded and adulterated drugs. “I sold to everybody,” Robinson now says. “More people should be indicted. Definitely.” But he adds that the feds (and presumably state racing commissions) have not pressed him to divulge the names on his customer list and he isn't inclined to do so. He told Bill Finley at TDN without an apparent shred of irony: “I know my career is over, but there are people out there who still work in racing and their livelihoods are at stake.”

These are stories about cheating and doping and bad medicine that are vitally important today and likely to be important for years to come. They raise questions and concerns of racing integrity at a time when the future of the Horseracing Integrity and Safety Act hangs in the balance. A federal judge is likely to rule soon on a request for an injunction against the federal legislation, a challenge brought by a few rogue horsemen's associations, including the United States Trotting Association, the increasingly-divisive trade group that wants to scuttle HISA even though harness racing is not covered by the limbo-ed new law.

There are, thankfully, still enough independent media voices within the world of Thoroughbred racing (including The Paulick Report, of course) to cover these stories and to shed light on the problems the industry faces. The same cannot be said of coverage of harness racing. There are only a few outlets that offer anything resembling independent news coverage and virtually none of that coverage is investigative. Some of this is a matter of practicality. There simply aren't enough legitimate journalists who are both interested in and capable of covering the sport. And some of it is a matter of policy. Few want to pay someone to ask tough questions.

So we get what we've gotten over the past few weeks. Belated pool coverage of Fishman's doping trial (coverage which, I should say, was good) and virtually no public mention of Ross Cohen's role in the case. “I paid drivers for somebody to hold their horses back in races,” Cohen reportedly testified. Which drivers? He was not asked and did not say. The New York track is owned by MGM Resorts and presided over, at least from the horseman's perspective, by Joe Faraldo, who is both the president of the Standardbred Owners Association of New York and chairman of the United States Trotting Association.

Faraldo, you might recall, was linked as an owner at some point with one of the trainers later indicted by the feds. Was Faraldo on a witness list for the Fishman trial? Is he on a witness list for related trials? Has he been approached by federal investigators or defense attorneys to share what he knows about the operation of Yonkers as it relates to the conduct of Fishman and Cohen? We don't know. Is Yonkers or the New York racing commission or Faraldo's horseman's organization investigating the recent allegations? We don't know. Has the USTA ever looked into whether Faraldo's dual roles create conflicts of interest? We don't know.

Brad Maione, a spokesman for the New York State Gaming Commission, was particularly unhelpful. He told me recently: “We cannot confirm or deny whether an investigation is being conducted.” When I asked whether any New York racing licenses had been suspended or revoked as a result of the federal case he responded: “We cannot confirm or deny whether an investigation is being conducted.” When I asked if state regulators were cooperating or had cooperated with the feds during the course of the investigation, he responded: “The commission regularly collaborates with state, federal and local enforcement.”

We certainly can't go to the USTA's website for answers. The USTA is quite capable of promoting stories it wants to share with its readership. Its propaganda campaign against the HISA shows there is plenty of room on that main page for stories about racing integrity. But the Fishman trial? The USTA put up the pool piece after Fishman was convicted. Cohen's allegations against Yonkers drivers? I still have not seen a word of it on the USTA's site. Maybe that's because Faraldo, speaking on behalf of the USTA, keeps embarrassing himself in national publications when given the opportunity to denounce the Fishmans of the world.

The USTA's laughable pro-integrity campaign is based around the bumper-sticker line: “If you see something, say something.” Well, Ross Cohen saw something. And Ross Cohen said something. He said he was part of something illegal at Yonkers. He said it under oath. What's the USTA going to do about that, apart from ignoring that news on its website? Who is going to call for an independent investigation into racing at Yonkers Raceway? The USTA and Hanover Shoe Farms, the sport's largest breeding operation, established a $250,000 matching fund grant in 2020 to “support the work of restoring full integrity of that sport.” Is some of that money going to go into investigating Cohen's allegations? If not, why not?

I asked a USTA director some of these questions last week and the responses I got help explain the ways in which the organization is much closer to being part of the problem than being part of the solution. “In general the USTA does not do investigations,” I was told when I asked about the Cohen case. “We are not a news reporting organization in this manner,” I was told when I asked about reporting Cohen's allegations. Conflicts of interest? “If an issue would become too close to a Director he/she would likely remove themselves from the issue in question,” I was told, a fiduciary standard that I suspect doesn't cut it on Wall Street.

If I were an honest driver at Yonkers I would want my name cleared from the allegations Cohen leveled at the trial. If I were an honest trainer at Yonkers I would want to know more about what Cohen says he did and how he says he did it. As an owner of horses who race at Yonkers I want to know more about the race-fixing schemes. If I were a bettor, I wouldn't bet a dollar more there until I know the scheme that Cohen described ended when he was caught. None of this should be controversial. Either the USTA, New York regulators, and the SBOANY are as dedicated to protecting honest horsemen and horsewomen as they say or they are not. We all are better off knowing the answer to that question sooner rather than later.

Andrew Cohen is a Standardbred owner and breeder and a two-time winner of both the John Hervey Award and the O'Brien Award for commentary on horse racing.

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NTRA’s New CEO Rooney: I Was Hired To Be Thoroughbred Industry’s Unified Voice In Washington

The following statement was distributed by the National Thoroughbred Racing Association on behalf of its new president and CEO, Tom Rooney.

Horse racing has been in my family since long before I was born, and I've grown up with a passion for the sport. When I retired from Congress a few years ago, many people asked me what I would do next. I often responded that I wasn't too sure, I was going to coach my kids in football, and that my dream would be to own a horse that would run in the Kentucky Derby.

Fast forward to last year, when my predecessor Alex Waldrop announced he was retiring from the National Thoroughbred Racing Association. When I heard about this opportunity, I thought to myself how much I love horse racing, and how deeply I want to be a part of it for the rest of my life. Now, as the new president and CEO of this great organization, I am excited for the future of the industry and feel deeply honored to help play a small part in shaping what that future looks like.

It's not lost on me that the industry and racing as a whole have changed significantly in my lifetime, and will continue to evolve for future generations. While these changes may be inevitable, it is critical that we have a unified voice to advocate for what's best for the industry overall. I was hired for one reason and one reason only: to go to Washington, D.C. and be that unified voice on behalf of the thoroughbred breeding and racing industry.

As a former Member of Congress, I understand how Washington works. As a horse owner and fan myself, I understand many of the leading issues we face. But as your representative in Washington, I know that I don't have all the answers. I need to spend time with you, listening and understanding, to get a sense of what's most important and how I can most successfully advocate on your behalf. My goal is to build consensus in the industry and tell the positive story of the sport in Washington.

We're always going to face opposition, and there will be some people we can never convince that we're doing what's right by the animals we so deeply care about. We need to constantly strive to do the best that we can do for the industry. We need to hold people accountable for wrongdoing. We need to praise the good news and successes we have. And we need to work to maintain horse racing for generations to come.

I'm eager and excited to work with you and serve as the leader of NTRA. Together, we can continue to do great things.

Tom Rooney served the people of Florida in the U.S. House of Representatives from 2009 to 2019, focusing primarily on economic, agricultural, national security, and military issues. Prior to serving in Congress, Rooney served with the U.S. Army as a lawyer in the JAG Corps. During his tenure, he was Special Assistant U.S Attorney at Fort Hood, Texas, prosecuting all civilian crimes on post in the 1st Cavalry Division. After completing active duty with the rank of captain, Rooney taught constitutional and criminal law at the U.S. Military Academy at West Point, New York.

He received his J.D. from the University of Miami School of Law and became a member of the Florida Bar in 1999. He also has an M.A. in Political Science from the University of Florida. Rooney played football for Syracuse University and Washington & Jefferson College, where he earned a B.A. in English Literature.

Rooney resides in Palm Beach County, Florida, with his wife, Tara, and three sons, Tommy, Sean, and Seamus.

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Letter To The Editor: An Aussie Perspective On Being An American Racing Fan

I was saddened to read the heartfelt Letter to the Editor: Why I Am Leaving The Sport I Loved for 50 Years that appeared on the Paulick Report website on Jan. 20. As an Australian turf fanatic and now small-time owner who has been living in New York for a decade, I have a perspective on this.

Like the author, I relate deeply to that experience of the first time at the track and getting “hooked.” As a sports fanatic kid growing up in Melbourne in the 1980s and 1990s, I was ambiently aware of racing, but it wasn't until I experienced the roar of the crowd at the 1999 Caulfield Guineas and an epic battle between the champion colts Redoute's Choice and Testa Rossa that I was transformed forever. Or as the author puts it, “spiritually fed.”

Sadly, nothing about the author's recent experiences and decision to get out of the game entirely surprised me.

A few observations:

Racetrack Experience – American racetracks, even the bigger ones, are generally decrepit. While there may be little motivation to invest given the sport is played for TV and online wagering, it's a stark contrast to the magnificence of a Flemington or Royal Randwick on a clear day. Not to mention the hundreds of picturesque racecourses that make up Provincial/Country fixtures. Where my father lives in Kyneton, about an hour's drive from Melbourne hosts a brilliant “Country Cup” day each year with entertainment and great food options. In other words, a way to get people who aren't necessarily racing fans to enjoy a day out and perhaps also place a few wagers.

Wagering Experience/Bet Types – The user interfaces for American parimutuel betting are, in my view, very poor and don't reflect what younger generations would regard as a good user experience. While wagering types are mostly common between North America and Australia, the existence of “Flexi” betting options whereby a bettor can invest wagers of their choosing in return for a calculated % of the dividend are far more enticing than the rigid unit options available here. Additionally, many young people don't grasp parimutuel totalizator concepts. The option for “Fixed Odds” betting in Australia attracts a different type of player.

Integrity & National Regulations – I am not suggesting that Australia doesn't have its own issues with integrity, animal welfare, and scandals. To suggest otherwise would be untrue. But as recent examples show, public outrage against exposed corruption and animal cruelty has led to swift and decisive action by regulators. The bad guys do get disqualified for extended periods. While there may be minor state differences, on the whole, there are national rules of racing for medication and horse ratings/classification systems that promote certainty for participants and the wagering public.

Mainstream Interest / Media Platforms – Finally, while racing remains niche in Australia, engagement in some form is much more common there, particularly amongst younger generations. While only a handful of my friends follow racing daily, a large cohort will get together with their mates for the occasional “weekend quaddie” (a Pick 4 equivalent) as a social activity at pubs and sports venues across the country. A lot of this has to do with the prevalence of excellent media and digital platforms like Racing.com.

— David Salter
Owner, fan, and horseplayer

Want to sound off about something you've seen in the Paulick Report? Send us a letter at info at paulickreport.com. Please include your contact info so our editorial staff can reach you if they have questions.

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