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Friday, September 26, 2008

Racing is What's Wrong With Racing

About 15-20% of HANA's membership are harness players. Harness racing has the same essential systemic problems as the thoroughbreds do. This post from a harness racing blog explains that point, and HANA members might find it interesting. A commissioner, lower takeouts, better delivery, listening to customers? All the same folks.

"When he took over in 1960, as a little known fallback choice of the league's owners after 23 rounds of voting, professional football was chickenfeed - an uninspiring hotchpotch cluster of local teams, local markets and purely local enthusiasms. By the time he retired, the NFL had outstripped major league baseball to become a national institution, the country's richest, best run and most widely followed sport."

That is from the official obit for NFL commissioner Pete Rozelle.

Does the fractured NFL/AFL of the 1960's sound a lot like us?

We have spoken a couple of times about what the NFL has done to grow. I won't go into another central organization or commissioner tirade, which I am sure you are happy to read, but it is interesting to look at that history. I was watching the NFL Network last evening and they had a decent show called "Top Ten" on. This shows topic was "Top Ten Innovations of the NFL". There was a common thread in these innovations, but primarily they were borne by a response to the customer (i.e. viewer).

One interesting one was rule changes. We are seeing how we handle rule changes in our sport now with whipping. It does not seem to go very smooth when you have upwards of 30 commissions and so forth. In contrast, the NFL adopted rule changes in 1978. Defense was ruling the game and fans were turned off with defensive football. What did the NFL do? Simple, they responded to fans and changed the rules. The result? Growth.

How about the AFL? When they were started there was suddenly a competitor to the NFL football monopoly. What did they do? Took the best ideas and teams from the NFL/AFL and changed their league. Oh, and of course, just for good measure this new-found partnership resulted in a little game called the Super Bowl.

The NFL embraced another thing, and that was television. They were one of the first sports to recognize this medium. There were some that wanted to ban televising games because they thought that people would not come to games if they could watch them on television and that would hurt the sport (sound familiar folks, who constantly comment on 'live racing'?). Luckily leadership ruled and the NFL took over television sports, like no sport ever has before. Now 2% of people who watch football attend games to do so. $5 billion dollar TV deals are the norm.

What did they do with the money? As we all know Rozelle (and anyone else with a clue) knew that each team had to share in the revenue to build the league.

In contrast we have not done as well listening to customer complaints, competition, technology or revenue sharing, have we?

What do we do when fans have complained about high takeout? We have raised takeout even higher.

What do we do when fans try and go offshore to get better prices and/or mediums because of a new entrant to the horse betting monopoly? We try and shut them down and do not recognize we have a problem on what we are delivering, not what others are.

What does racing do with new technology and high value added low marginal cost mediums like the Internet? Not much. A buddy of mine called from work wanting to watch the Little Brown Jug last week. Sorry pal, in the vernacular you are 'SOL'. In fact, there are rumblings that if there was not offtrack betting or TV betting that people would go to the track instead and all will be wine and roses. Oh my head. The NFL learned that was nonsense 48 years ago.

How about sharing that revenue? I would guess that there will be about $4B distributed to racing in some way, shape or form from slots in the next year or so. Did we do anything with it to grow handles? Let's see, it would cost no more than $50,000 to start up a harness racing website with all free video of all tracks a la TwinspiresTV. Is there one? No. I read a bit about starting up an ADW like Day at the Track or Premier Turf Club. We could have started an All Harness ADW with all kinds of bells and whistles. It's a revenue driver for sure. Cost? Let's say $1.5M. Do we have one? No.

For something as simple as a harness racing website with free programs and free video ($50,000 to create) it works out to 0.0013% of our slots revenue. To equate that to a lawyer making $200,000 (after taxes) that would be about $6.50, or a Big Mac meal.

When someone emails me and asks me what I think is wrong with racing I know how to answer it: We are what is wrong with racing.

1 comment:

Michael said...

I liked reading this article. The comparisons with pro football of yesteryear and modern horse racing are eye openers. That's why I joined HANA. Because not only does this organization address the issues on behalf of fans everywhere, the men that started it are "doers" and not just talkers. For the first time in years, I see a ray of hope and I feel a tiny sense of optimism.