Thursday, September 2, 2010

The State of New York Racing

First NYRA, now the Jockey Club. I'm beginning to wonder what's getting intop these pillars of the establishment when they start doing things right.

In NYRA's case, it was the comments by Chairman Steve Duncker and CEO Charlie Hayward on the need to reduce takeout. Now, as announced at the Jockey Club Round table two weeks ago, the Jockey Club has released statistical fact books on each of the major racing jurisdictions. Breaking down the data state-by-state makes it a lot easier to zero in on trends in the business and to make some predictions about where we're going.

Take New York, for instance. The New York Fact Book for 2010 -- data through the end of 2009 -- shows in stark detail how the industry has shrunk, back to a level of perhaps two decades ago.

Take as a starting point the number of New York mares bred each year. From a high of 2,749 in 2003, that number dropped to 1,599 in 2009, the lowest in at least 20 years, and, based on anecdotal evidence, I'm sure that it will turn out to be even lower in 2010. With a breeding rate that';s barely half the peak level of only a few years ago, that means there are a lot of farms going out of business and a lot of jobs being lost, probably forever, as the racing industry is certainly going to downsize on a permanent basis.

Similarly, the number of stallions based in New York has declined by two-thirds, from 236 in 1991 to only 81 last year. While the average New York stallion's book size has doubled, from 9.1 in 1991 to 19.7 in 2009, that still doesan't compensate for the loss of stallions and mares.

New York's foal crop was 1,684 in 2008, down from a peak of 2,024 in 2004. New York also appears to be losing ground vis-a-vis other states; its foal crop in 2008 accounted for 4.7% of the national total, compared to 5.4% just six years ago. That's a significant reduction in market share.

Increasingly, New York-based mares are being sent to out-of-state stallions. For the 2004 New York foal crop, roughly 65% were sired by stallions standing in the state, while for the 2008 crop, just over 50% had New York-based sires. The big shift was to Kentucky, whose stallions accounted for about 25% of the New York foal crop in 2004 but for 40% just four years later, in 2008.

Moving from breeding to racing, the news is similarly discouraging. Purses in New York reached a peak (in non-inflation-adjusted dollars) in 2005, at $154 million. Last year, they totaled $133 million, about a 15% decline. And the average purse per race, despite big increases by NYRA at Saratoga last year, dropped from $41,229 in 2005 to just $34,832 last year. That's the lowest level since 2000, even before taking inflation into account. And horse owners' costs have certainly increased since them; trainers' day rates are generally 20% higher than a decade ago, not even counting the increasing number of extra charges that trainers tack onto their bills these days.

Meanwhile, as we all are aware, the average number of starts per horse per year continues to decline. From 9.3 starts per horse in 1991, when Lasix was still illegal in New York, the number has dropped to just 6.9 last year, a decline of 26%. More evidence, if such is needed, that the use of Lasix does nothing to extend horses' racing careers. Similarly, the average number of lifetime starts per horse has dropped from 28 for foals born in 1991 to 18 or so for those born in 2003, who would have been six years old last year. Again, the decline correlates very well with the introduction of Lasix in New York.

Auction prices for NY-bred yearlings peaked in 2007, at an average of $38,116. Last year, that average dropped by nearly 30%, to $26,931. With Keeneland and Timonium sales still to go, it's too early to estimate the 2010 number, but the average at last month's Saratoga Fasig-Tipton NY-bred sale, which usually catalogs the cream of the New York crop, was down a couple of percent from 2009, so it's unlikely there will be any overall increase when all the numbers are in this year.

So, the evidence is in. The decline in racing generally hasn't spared New York, even though NYRA presents the best racing product in North America. And the endless dithering in Albany, taking nine years to approve a slot machine operator for Aqueduct, coupled with the follies of the bankrupt New York City OTB Corp., have surely made things worse. Painful as it may be, perhaps it's time to contemplate a more orderly downsizing of the industry in the state -- fewer racing dates, coupled with a better distribution system for the simulcast signal. At least that might provide some stability for those left in the business and allow them to do a little planning for the smaller future that we all face.

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