Tuesday, July 27, 2010

Saratoga v. Monmouth: weekend 1

Well, Monmouth had Rachel Alexandra, and Saratoga had so much rain that it flooded out Danny Meyer's hot new Shake Shack restaurant. But, no surprise, guess which track had the better performance on July 23-25, Saratoga's opening weekend?

For the three days, Saratoga had paid attendance of 62,243, versus Monmouth's 28,365. Even on Saturday, with Rachel Alexandra at the shore, Monmouth drew only 12,859. The same day, with the highlight at saratoga the Coaching Club American Oaks, won by Devil May Care, Saratoga drew 20,352.

On-track handle for the three days at Monmouth was $1,975,627. At Saratoga, where there were 6 fewer races, on-track handle was more than four times as much, at $8,638,566. Similarly, all-sources handle for the weekend at Monmouth was $24,130,504, while at Saratoga it was $43,431,852. Monmouth did much better, comparatively, on its simulcast, OTB and ADW betting, but even with Rachel Alexandra running Saturday, it didn't equal Saratoga's handle on any of the three days.

For Monmouth, off-track betting accounts for about 92% of total handle, while for Saratoga, "only" 80% of the handle comes from off-track. That means that the blended takeout rate returned to the track is somewhat lower for Monmouth than at the NYRA track. To some degree, that imbalance may be made up by what Monmouth retains from its patrons' bets on other tracks' simulcasts, but, given the lowish attendance at Monmouth, I suspect the balance is still well in NYRA's favor.

Monmouth ran its usual 36 races over the weekend, with an average field size of 9.3, and an average purse, including the $400,000 extorted by Jess Jackson as an appearance fee for Rachel Alexandra, of $69,103. At Saratoga, over 30 races, the average field size was a very healthy 8.7 -- way up from Belmont's 7.0 despite a bunch of off-the-turf races -- and the average purse was $57,237, not all that much behind Monmouth.

The quality of racing was much higher, at least for this weekend, at Saratoga than it had been at Belmont. Only 6 of Saratoga's 30 races were claimers, including one maiden claimer and four "conditioned" races (N2L, N3L, etc.) At Monmouth, more than half the races -- 20 out of 36 -- were claimers, including seven maiden claiming events. That's part of the reason that Monmouth's per-race purse average was so (relatively) low. Yes, there are $80,000 allowances in the condition book, but for every one they ran at Monmouth, they carded three claiming races.

Actual claims made were 15 at Monmouth, or about 0.75 per claiming race, and 8 at Saratoga, or 1.33 per race (in both cases not counting the allowance/optional claimers, which I classified as allowances). That's a lot more active claim box at Saratoga than had been the case back at Belmont.

I'm not sure yet what this all means; I'll keep watching the two meets and see if we can draw any grand conclusions. For now, though, Saratoga seems to be, at a minimum, holding its own against the Monmouth challenge.

(If anyone wants the spreadsheet from which these figures were derived, just let me know, with your email address.)

Saturday, July 17, 2010

Monmouth vs. Belmont: the Numbers

Much has been made of this year's big increases in attendance, handle, field size and purses registered by Monmouth Park in its innovative three-day-a-week race meet. Halfway through the summer meet, attendance is up 13% over last year, at 10,500 a day; all-sources handle has more than doubled, from $3.5 million a day last year to $7.7 million; and on-track handle is up 43%, much more than the corresponding increase in on-track attendance. So, it seems, Monmouth's ballyhooed "million dollars a day" in purses for a shorter meet appears to be the wave of the future.

Meanwhile, the New York Racing Association's Belmont spring-summer meet seems to have been lost in the financial mess that is New York racing, with the performance of the horses and the track buried by news of the state government's continuing ineptitude over putting slot machines at Aqueduct, a mere nine years after they were authorized, and of the continuing failure of New York City Off-Track Betting Corp. to pay the race tracks and horse owners what it owes.

But a comparison of the data for the two meets, Monmouth and Belmont, reveals that there still may be some life in New York racing -- enough life so that, with a modicum of responsibility from Albany and a little innovation in trhe racing office and in marketing, NYRA might well have some hope for the future.

To compare the two race meetings, I looked at the data for the past four weekends, from June 18th through July 11th -- including the July 4th holiday -- for the two tracks. That's 13 racing days at each track. The comparison showed some interesting numbers:

Handle: Monmouth had total all-sources handle of $98.2 million for the 13 race days, an average of $7.6 million daily, or $629,000 for each of the 156 races run during the four weeks. Belmont, on the same 13 days, had a total handle of $112 million, or $8.6 million and $882,000 per race. Belmont ran a total of 127 races on the 13 days -- mostly 9- and 10-race cards, compared to the 12 races daily at Monmouth.

Field Size: The edge in handle for Belmont is even more impressive when one takes into account that Monmouth averaged 9.0 starters per race during the period, while Belmont barely managed 7.0 starters. Since handle generally increases in an almost linear relationship with field size, it's clear that Belmont would have done even better had it managed to come closer to its long-term target of eight starters per race.

Some of the difference in field size was unquestionably accounted for by the high purses offered at Monmouth, as well as the guarantee of a $1,500 payout for every starter at Monmouth. When you can pick up a $1,500 check for finishing 8th in a $5,000 claimer, the Monmouth entry box looks pretty attractive.

Purses: Monmouth had been touting "a million a day" in purses, and it's true that the condition book did add up to $1 million each day -- but only if you considered not only the 12 races that were actually run, but also the races in the book that weren't used and the extras put up by the racing secretary. In fact, for the 13 days in question, actual purses awarded topped $1 million on only two days, and the average was $807,000 a day, or $67,300 per race. True, that was a lot more than was paid out at Belmont, where purses averaged $452,000 a day, or $46,300 per race. But with higher purses on offer by NYRA at the upcoming Saratoga meet, the per-race difference may not be as big as some New York-based owners and trainers feared.

Quality of Races: There were some striking differences between the two tracks in the type and quality of the races offered. In the 13 days, Monmouth offered 17 stakes races, compared to only 7 at Belmont. Monmouth had 36 allowances (23% of all races), of which 11 were for the limited pool of New Jersey-breds. Belmont, in the same period, ran 31 allowances (24% of the total), of which 12 were for its much larger pool of state-breds. Monmouth had 20 maiden special weights, nine of them for state-breds.a, while Belmont had 26, 15 of which were for NY-breds. Belmont had 20 maiden claimers (16% of its total), compared to only 18 at Monmouth (11.5%).

The big difference was in the nature and quality of the claiming races. Apart from the maiden claimers, Monmouth ran 63 claiming races (40% of its total), while Belmont ran 35 (28%). But Monmouth's races were almost entirely open claimers, spread reasonably equally over the price spectrum: 15 at claiming prices above $25,000, 22 at $10,000-$25,000, and 25 below $10,000. In New York, by contrast, racing secretary P J Campo continues his infatuation with conditioned claimers -- races for non-winners of two or three lifetime, for horses that haven't won in six months, etc. Of the 35 claiming races at Belmont, 27 -- nearly 80% -- were conditioned claimers. A few years ago, New York didn't run any of these races. Now it runs nothing but. I don't know whether P J could fill a racing card without resorting to the conditioned claimers, but the anemic 7.0 starters per race average over my study period suggests he might not have done any worse had he stuck to the traditional open claiming structure. And he would have had the added excitement of lots more claiming activity. At Monmouth, in the 13 racing days from June 18th through July 11th, 109 horses were claimed -- more than 8 per day. At Belmont, total claims for the same 13 racing days were 14, barely one per day. There just aren't the races at Belmont with attractive claim prospects, and the trainer making a claim doesn't have the options for future races that would be available with a more traditional claiming structure.

No wonder I've been having a hard time finding a suitable claim for my claiming partnership. If it weren't that we all want to race in New York, I'd be looking at Monmouth. And most people who want to make new claims are already there. I don't know if Charlie Hayward and P J Campo consciously set out to destroy the claiming game in New York, but, whether intentional or not, that's what they're doing.

As the figures above show, NYRA and the Belmont meet held up pretty well against Monmouth's challenge. But claiming is an important part of a race meeting, and by stifling claiming activity through a surfeit of conditioned claimers, NYRA is endangering the longer-term health of an important segment of the industry.

Tuesday, July 13, 2010

The NYRA Audit - No Good Deed Goes Unpunished

Earlier this year, displaying the political sense that has so often eluded it, the New York Racing Association (NYRA) agreed to turn over its financial records to State Comptroller Thomas DiNapoli so the latter could conduct an audit of NYRA's shaky finances. NYRA had previously unleashed its stable of pit-bull lawyers in an effort to block the Comptroller's request, a position that drew widespread criticism, and the turnaround in February seemed a smart move. Perhaps it even helped NYRA convince the otherwise clueless politicians in Albany that they had to make good on their contractual promises to advance NYRA the money it was losing as a result of the state's endless dithering on awarding a contract for slot machines at Aqueduct.

But yesterday, the other shoe dropped. Comptroller DiNapoli released his audit of NYRA, complete with a scare-laden press release. DiNapoli concluded that NYRA should somehow scale back the level of its operations to what would be sustainable without slots revenue and without the $20 million or so that's owed to it by the bankrupt New York City OTB Corp.:

"given NYRA’s spending patterns and its continued reliance on VLT revenue that failed to materialize, NYRA would have run out of cash (i.e., not have had sufficient cash to pay its operating expenses) sometime in early June 2010, if it had not secured external financing. Even with this State financial assistance, however, NYRA could again experience a cash shortfall in 2011 if the Aqueduct VLT facility does not become operational and its expenses are not further curtailed."

Not mentioned is the state's own role in causing the slots-revenue screw-up, a fact tacitly acknowledged by the Legislature earlier this year when it advanced NYRA some $25 million to get through the next 12 months -- a sum significantly below the amount that NYRA would have received had the Aqueduct racino been up and running, and considerably below what the State itself contractually promised to NYRA in the bankruptcy settlement in 2008.

I suppose NYRA could cut back to a level supported only by on-track and simulcast wagering, without either the NYC OTB money or the slots revenue. If that happens, watch out for traffic jams of horse vans heading out of the Belmont stable area for Monmouth, Philadelphia, Delaware and, who knows, maybe even Ellis Park. It would be racing, but it wouldn't be the world-class racing that has made New York most prestigious place to race for more than a century.

The State authorized the Aqueduct racino in 2001. Nine years later, it's about to fail in yet another attempt to name the racino operator. This will be the fourth aborted attempt, and the smart money is on dumping the decision in the lap of the next Governor, who won't even take office until January. Back in 2008, the state promised NYRA $2 million-plus a month for each month after April, 2009 that the slots weren't operating. If the state keeps its promise and pays the money, there's no NYRA fiscal crisis. If the slots are running and the NYC OTB situation is solved, NYRA looks like a healthy, profitable enterprise. But DiNapoli, originally appointed by his buddies in Legislature back in 2007, over the opposition of ill-fated Governor Eliot Spitzer, has to run for re-election this year. And I guess he thinks he'll get some votes by projecting a tough-guy image and beating up on all those rich horse owners in NYRA.

DiNapoli's solutions to the problem are generally as wrong-headed as his analysis of the problems. And in fact, the proposed solutions would come nowhere near solving the revenue problem caused by the delay in slot-machine revenue and the continuing failure of NYC OTB to pay NYRA what it owes.
For example, DiNapoli says NYRA should end the free horse-van service that conveys horses stabled at one track to another NYRA track when they're entered in a race at the latter. He suggests either ending the service completely or charging horse owners for it. Either "solution" is absurd. NYRA is far from alone in providing free transportation between tracks. Churchill Downs Inc. does it between Churchill and Arlington, Churchill and Keeneland do it for each other, the Southern California tracks pay for buses to whichever track is running at the time, Gulfstream buses horses from the Palm Meadows training center, and the Maryland tracks provide buses between Pimlico, Laurel and the Bowie training center. In every case, the distances involved are far greater than the 10 miles between Aqueduct and Belmont.

Now, what about having the owners pay for the van. Let's see, we already pay $100 a day or more to send a groom with our horses to the ill-conceived security barn, and we pay upwards of 4% of the purse in various required charges taken out by NYRA before we get our money, not counting the jockey's fee and the trainer's 10% (now, sometimes, 12-13%) commission. So sure, let's add another $100 or so each way for the van. Just one more reason, if one were needed, to head on down the Jersey Turnpike to Monmouth. At least down there, every starter is guaranteed a minimum of $1,500. In New York, all the starters that finish worse than 5th collectively receive 2% of the purse. So, if you're in a $40,000 race with a field of 12, and you don't finish in the top five, the owner gets the princely sum of $114 -- and has to pay a jockey fee of $100, a variety of fees for Lasix, for the NY State Racing and Wagering Board, $100 or more to the trainer as a race-day fee to cover the cost of the groom, $23 for the pony to take the horse to the starting gate, etc. etc. Enough.

As it is, NYRA is averaging just about 7 horses per race at Belmont this spring, while Monmouth is averaging close to 10., Anything that further reduces field size at NYRA tracks is a really bad idea.

(The Comptroller's report does have a ray of light, though. It states that NYRA will be saving upwards of $1 million by eliminating the detention barn at Aqueduct. For those not familiar with the situation, one of the "reforms" introduced as NYRA emerged from criminal indictment and bankruptcy a while back was to required horses entered in races to be transferred to a holding barn six hours before their races, so the state could presumably monitor the giving of illegal drugs. A good public relations move, perhaps, to shore up NYRA's image and reassure bettors, but an unmitigated disaster for owners, trainers and horses. The detention barn, as noted, increases costs, and has an unpredictable effect on some horses. Many horses react badly to being taken out of their usual comfort zone, which encompasses their barn and the race track. And, in summer, the holding barn can be brutally hot, leading some horses to "wash out." Good to know it won't be coming back at Aqueduct, but how about getting rid of it at Saratoga and for the Belmont fall meet as well? New York already has the most comprehensive pre- and post-race drug testing in the country; the holding barn at this point is an expensive anachronism.))

Another of DiNapoli's recommendations was to reduct the compensation of the state-mandated "integrity monitor" for NYRA, the law firm of Getnick & Getnick. They receive $125,000 a month, or $1.5 million a year. DiNapoli says billing them at an hourly rate might save a few hundred thousand. As NYRA Trustee James Heffernan points out in his reply to the audit report, the Comptroller appears not to understand either (a) that the arrangement with G&G was previously approved by the state or (b) that it IS in fact based on billable hours, with unused hours carried forward. Now, personally, I think that the whole contract is probably a waste of time and effort, but, since the State required it, it's a bit odd for a state official to be criticizing it.

NYRA is running an operating deficit of some $30 million a year. Funny, that's just about what the slot machines would produce, if the state could ever get its act together and anoint an operator. All the rest is nickel-and-dime stuff. Tom DiNapoli's energy would be better spent investigating what his former colleagues in the Legislature were due to get for the thousands of "member items" stuffed into the state budget and, so far at least, vetoed by lame-duck Governor David Paterson. Don't hold your breath waiting for that audit, though.