Thursday, October 23, 2008

Halsey Minor: No Slots

From a HANA members blog, an interesting post on Halsey Minor.

Halsey Minor, the former CNET founder and Internet entrepreneur who wants to buy tracks, might be a guy that can turn this business around. He says "slots do not belong in racing," and that if they are approved for a track he owns he would not implement them.

Minor, with the comptroller by his side, also told reporters that he wants to revive Maryland horse racing without slot machines.

"These things, they're cancer," Minor said at a news conference in the comptroller's reception room.

Minor also said he would consider building a new facility in Baltimore at Pimlico, which is home of the Preakness Stakes, the second leg of the Triple Crown. Minor said his plans to revive horse racing involve focusing on improving the track experience for fans.

"Slots do not belong in thoroughbred racing," Minor said

Slots are our drug. Like most subsidies that are given without benchmarks or penalties, they make us lazy and allow us to be second rate, ordinary, unremarkable. They have allowed us to completely ignore handles, and the horseplayer for a long, long time. I think Mr. Minor has a point, and it is amazing to see someone with the cajones to stand up and say it.

Over the last dozen years we as a business have received billions of dollars of slot money. Almost all of this money has gone into supply. It has been said by many that the slots boom has been a good one for drivers/jockeys and veterinarians and not many others. I do not disagree.

What is the result? Handles have gone down and fewer people watch racing today than ever before. What business do you know gets a $3,000,000,000 or $4,000,000,000 subsidy (enough money to pay for the purse for the Breeders Cup Classic for the next 800 years) and has their industry’s only measurable metric go down? None that I know of. Racing will be spoken about in MBA textbooks someday as a "what not to do" case study.

I don’t begrudge the slots boom and the business taking all the money. After all, I am a horse owner and get to race for inflated purses, in front of almost no fans, but it really does me no good. My training bills are small compared to many others out there, yet they are 150%-200% higher than the bills from my family stable in the 1980's - how’s that for inflation. A vet bill then might be $1000 a year. Now for some stables, it can be $1000 a week. It has done us very little good as owners in microeconomic terms. We have just shuffled money from one hand to the other.

As for the players, they have been annihilated. Takeouts pre-slots were in the 17% range. Now they are about 21.8%. The business got billions and the players have received a giant kick in the ass. I don't blame them one bit for leaving our sport and feeling cheated.

The sad part is that many will disagree with Mr. Minor and will probably be angry with him. Each time we hear something from the business it usually has something to do with marching on a state house for more slots, or sports betting, or some kind of hand out that does nothing but hurt racing handles. It has become a cottage industry, like trial lawyer or oil company lobbying in Washington. We know it is bad, we know it will not help us in the long run, but we can not help ourselves from bowing to the elixir of free money. It’s crack cocaine and we are its users.

When I first heard of Mr. Minor, I wrote a post about it.

In a recent interview on the Paulick Report, I found out that I really like Halsey Minor. Minor is a founder of CNET, a very successful internet firm which sold for almost $2.0B and he wants to buy and restore Hialeah in Florida. Why does a guy who worked in the Internet where tomorrow happens today want a piece of the racing business where tomorrow happens a decade from now? I don't know, but he appears to like racing. And he handles things like many I know in the Internet business - with common sense and no nonsense.

That opinion has not changed. I sincerely hope he succeeds and helps our core business thrive with a much needed change of business model.

We need a leader. We might have found him.


Newman said...

While I applaud Mr. Minor's enthusiasm, I am not sure how realistic he is. With the cost structure of racing facilities, how exactly does he expect to not lose money.

I remember hearing the same type of talk from Mr. Stronach years ago. Granted, I think that Stronach executed his plan poorly, but he faced profitability issues that he was never able to beat. That was not only due to his poor judgement.

The racing business is not really a good business to get into. Only dreamers do.

Anonymous said...

Slots more than anything else has ruined horse racing. I doubt the guy would turn down slot revenue, let's be honest here, he's a business man first.