Sunday, December 7, 2008

Downturn Continues as Handle, Purses Drop

Unlike the 1930's, when racing was a relatively bright spot in an otherwise very dreary economy, thoroughbred racing in 2008 is not immune to the general economic malaise.

The latest figures from Equibase, reported yesterday in the San Diego Union-Tribune, show that nationwide handle was off 9.7% in November, compared to the same month last year, even though the total number of racing days at tracks across the country was up by more than 5%, from 440 in 2007 to 465 this year.

For the first 11 months of the year, through November 30th, total nationwide handle (on-track, at OTB's, and through ADW outlets) was down 6.17%, to $12.8 billion. purses were down 0.6% to $1.1 billion, and the number of race days was down 0.67%, to 5,764.

In some ways, these numbers are good news.  Most US industries are doing a lot worse than racing.  Auto sales, for example, are down 30-40% compared to last year, so perhaps we should be grateful that racing is down only in the single digits.  And for those of us who own and race horses, the tiny decline in purse money is even better news, at least in the short term.  Any business whose revenue is more or less flat this year shoulod probably consider itself verey lucky indeed.

Or at least that would be true but for some very worrisome facts.  First, it's true that purse money always lags behind handle, and if handle continues to decline, cuts in purses can't be that far behind.  Already, at Aqueduct this winter, we're racing for pretty much the same purse levels as last year; the big boosts in purses for the high-prestige Belmont and Saratoga meets have vanished, as the high-profile trainers and their horses head south.

Second, a significant section of the betting public consists of retirees with a few extra dollars to spend -- the guys, for example, who hang out in the Man O' War Room at Aqueduct, betting a few dollars and enjoying the camaraderie.  If these folks' retirement accounts are taking the same kind of hit from the stock market that mine is, I'd expect them to have a lot less to spend on the frivolity of racing.

At the same time, I don't see any decline in the cost of owning and racing thoroughbreds.  Trainers' day rates continue to close in on $100 in New York -- and that's if you're not using Pletcher, Mott, etc.  The recent declines in auction sale prices are a small sign that economic rationality may be returning to the bloodstock market, but we're still a long way from a situation in which one can buy a horse to race with a decent expectation of breaking even, much less earning a profit.

Slot machine revenue, comning soon to New York and Maryland, may help out in the short run.  In the longer term, we still need to figure out how to make our game accessible, relevant and popular.

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