Sunday, January 25, 2009

Last Train to Belmont?

In its infinite bureaucratic wisdom, the New York Metropolitan Transportation Authority has decided to eliminate race-day train service to Belmont Park. The service, provided by the Long Island Railroad, has for many years permitted racing fans from Manhattan and Brooklyn to use mass transit and arrive right at the entrance to the Belmont grandstand. In fact, my own initial exposure to racing was via this very train; as a high school student, I'd make the trip from Manhattan and hope the mutuel clerks would ignore the fact that I was only 16 (and looked 14) and let me get my $2 bets down.

It was on the train that I got my first lessons in handicapping, from grizzled veterans of the track who were only too happy to show off their expertise.  And the 45-minute trip provided time to explore the mysteries of past performances. It's pretty hard to focus on the Racing Form while you're driving to the track.

But, in an age of declining race track attendance generally, and of ever greater reliance on the automobile, I suppose that the train no longer carries the thousands of fans that I remember from racing's glory days in the 1950s. More likely, it's a few hundred fans a day, maybe even fewer on weekdays. The only day the train service is crowded is Belmont Stakes Day in June -- the one day a year that the MTA now proposes to run the train.

The MTA, admittedly, has a money problem.  By law, it's required to have a balanced budget, and its only significant source of revenue, apart from passenger fares and bridge and tunnel tolls, is the New York real estate transfer tax.  When the property market was booming, the MTA was flush.  Now that housing prices are falling, even in the New York area, and sales volume is diminishing to the vanishing point, that tax doesn't seem like such a friend of mass transit.  So, for the coming year, the MTA is proposing an average fare increase of 23% on the subways, buses and commuter trains, higher tolls on the bridges and tunnels connecting Manhattan with the rest of the world, and eliminating what its staff has determined to be "underutilized" services.

In a rational world, of course, this "solution" would be insane.  Raising fares by such a huge amount will inevitably reduce transit ridership. That will cause revenue to fall below the MTA's current projections, setting off yet another, self-destructive round of fare increases and service cutbacks. Mass transit, especially in a dense urban area like New York, should be subsidized.  It's not just the people who ride the trains and buses who benefit; it's also, and even more, the government agencies and businesses that need a way to get their employees to the workplace. And now that New York racing is, for all practical purposes, a creature of the state, it would make sense for the state to support one of the few services -- the train to Belmont -- that actually has the potential to expand the fan base.

State law requires the MTA to hold a hearing in each of the five New York City boroughs and in each of the suburban counties that it serves, an exercise in masochism on the part of the MTA Board members and executives who sit there being abused for hours. So, in the hope of sounding a note of rationality, and representing the New York Thoroughbred Horsemen's Association -- I've been on the NYTHA Board of Directors since 2002 -- I went to last Wednesday's public hearing, which was in Garden City, just ten minutes down the road from Belmont. Along with NYRA officials Joanne Adams and John Lee, not to mention at least half a dozen elected officials and civic association representatives from the Belmont area, I discovered that the Belmont train issue was far from the top of the agenda.

First, there was the outrageous, and, I trust, entirely cynical MTA proposal to raise Nassau County handicapped access fares by 100%. That brought out maybe 50 people in wheelchairs to register their opposition and, if I'm right about the MTA's reasons for the proposal, provide the MTA with ammunition to make a case in Albany for not abusing the handicapped.  Then there was the ticket-sellers union and their labor comrades, protesting plans to eliminate manned ticket booths from virtually all Long Island stations. And, of course, elected officials have to be heard before we citizens get our turn.

So, as 10 pm neared, Joanne, John and I finally each got our three minutes of quasi-fame (if, that is, being on a video on the MTA web site at some unspecified time in the future qualifies as fame). We all made the points that needed to be made, which John did a nice job of summarizing in a press release put out by NYRA yesterday:

  • at a time when we should be saving energy; it makes no sense to eliminate public transportation to sports events;
  • eliminating the train to Belmont eliminates the possibility that Manhattanites, few of whom have cars, will ever discover the joys of the race track; and
  • it's particularly crazy to shut down the train station at Belmont just as civic groups there are moving ahead with plans to develop the area right around the station
Despite the stony silence from the MTA Board members and executives -- who could blame them after four hours of being berated by people in wheelchairs, on respirators and with white canes? -- there is some room for hope.  An alternative plan is floating around Albany that would give the MTA revenue from a payroll tax on commuters and that would both avert the draconian service cuts and fare increases and allow the MTA to go ahead with some much-needed capital improvements.

But, as we saw last week with the fiasco over the appointment of a successor to New York Senator Hillary Clinton and with the long-expected indictment of former State Senate majority leader Joe Bruno -- for, among other things, failing to provide "honest services" to the citizens -- going to Albany with a sensible plan is no guarantee of success.  I fear that the relatively small matter of the train to Belmont will simply get lost in the furious horse-trading (sic) that passes for a legislative session in New York State's capital.

But, if you'd like to lend a hand in saving this public service, and if you live in New York, here's where you can find the names, numbers and addresses of your state legislators.  It can't hurt to let them know you care about this issue, and it might help save the train, and future generations of racing fans. I the meantime, if you're on Facebook, you can join a group that's working on ways to speak truth to those in power on this issue.

Saturday, January 17, 2009

On to the Two-Year-Old Sales

The last of the big mixed sales -- Keeneland January -- has just ended, with the expected horrific results.  Only 213 of the 407 horses catalogued for Saturday, the final day of the sale, managed to find a new home, even at bargain-basement prices. The rest were either scratched or failed to meet their much-reduced reserves.

It's pretty depressing, actually, to look through today's results from Keeneland. Many, many horses going for $1,000 or $1,500. For the day as a whole, the average price for those that sold was $8,431 and the median a depressing $4,000.  I'd be surprised if more than a handful of the horses offered today did as much as break even for their sellers, after taking into account stud fees, the cost of raising foals, and sales-related expenses.

For the six-day sale as a whole, the numbers were truly awful.  The gross sales dropped by more than 50% from last year, to a puny $32.8 million.  And despite a continuing shrinkage of the catalog -- two years ago the January sale listed 2,933 horses, compared to only 2,379 this year -- the sale's average and median price also plummeted.  Average price for the 1,338 horses that actually sold this year was $24,532, down 48% from last year, and the median -- more reflective of where the true middle of the market is -- was $9,500 this year, down 44% from last year's $17,000.

While last September's Keeneland yearling sale sent out some early-warning signals, declining by some 20-plus percent, the fall and winter mixed sales have revealed that thoroughbred breeding is by no means immune to the nationwide financial meltdown.  While only a couple of highly visible people in racing have been caught up in the Bernie Madoff Ponzi scheme, lots more have apparently been so shaken by the collapse of the securities and credut markets that they're just sitting on whatever money they have left, and certainly not spending it on luxury toys like thoroughbreds.

The fall and winter sales have sent a signal that the industry needs to slim down. It is probably already doing just that. Even with stud fees reduced and flexible deals and terms being offered by many Kentucky stallion farms, demand for 2009 stallion seasons is reportedly very slow.  When most yearlings won't even sell for the stud fee, there's not a lot of point in rushing ahead into breeding.  If the 2010 foal crop is substantially reduced, as breeders take thousands of marginal mares out of production, we'll probably have a lot healthier industry when/if the broader economy recovers.

Meanwhile, though, there are a lot of important players who must be getting very worried. The breeders of the 2009 foal crop, for example. It's hard to see many of them making money on this year's foals, and many will be squeezed by the banks that they depend on to give them the credit that carries them to the next sale.

And then there are the pinhookers in Ocala, getting ready for the start of this year's sales season.  While many of them were a bit more cautious last September than in prior years, they still, as a group, have a huge investment at stake in their horses, and a shortage of buyers at the sales in March, April and May could devastate their business model.

Pinhookers buy lots of yearlings, push them through a tough basic training in Ocala to get them ready for the breeze shows at the spring sales, and hope a few of the horses are the "home runs" that can pay for all the rest -- the $75,000 yearling that sells for $1 million because it runs an eighth of a mile in 10.0 seconds. (Or, even better, sells for $16 million if, like The Green Monkey, the horse runs that eighth in 9.8 seconds, no matter that he did it in a rotary gallop that tells one nothing about how he'd stand up to training for real race distances.)

The buyers at the two-year-old sales are mostly folks who actually plan to race their horses -- what a concept! With purses flattening out as handle declines and costs increase, the economics of racing certainly aren't getting any better. Couple that with the severe, continuing shortage of credit, and it's hard to see that there will be a lot of enthusiasm on the part of prospective buyers at the spring sales. Sure, John Ferguson of Godolphin and Demi O'Byrne of Coolmore will probably show up, and every Ocala pinhooker is hoping to have the horse that gets the two of them into the kind of bidding war that produced a $16 million Monkey.

But if you don't have that horse, it could be a pretty rough sales season. A lot of the Ocala pinhookers are excellent horsemen and women, and many are genuinely nice people as well.  It's going to be a rough adjustment for some; they're the people who are stuck with an expensive inventory just as the market is going in the wrong way.  That's not often a recipe for success.

Tuesday, January 6, 2009

The Future of Racing?

That's Sportsman's Park in Chicago, where demolition started yesterday, but it could be a number of other tracks in the not too distant future.  Racing needs to shrink, concentrate, and develop a focus. And that means that there won't be much of a justification for keeping a lot of tracks alive, as ever more betting shifts online.  This year's significant decline in handle, concentrated in the last few months of the year, will accelerate the process, inter alia by forcing Frank Stronach's Magna to sell of its tracks.  A year from now we may be looking at a very different industry.