Thursday, November 11, 2010

If Racing Was Pogo Sticks

A HANA member sent us along a note about a recent article on The article relayed how slots are helping horse racing. Helping how? Well, supply factors are up. Of course, sales and demand are down. Regardless, this clever member changed the word "racing" or "horse racing" in the article to another industry to see if he could become objective.

This reads like it is supposed to read. Putting all slots money into supply to "reinvigorate horse racing" by increasing purses (salaries) only, and ignoring demand (i.e. the long forgotten customer/takeout rewards etc) seems like a terrible business model for a subsidy, and it is.

Seriously, what business on earth would put ALL their subsidy into employee wages and supply, and zero to marketing and price lowering and expect to grow?

They are producing a whole lot of pogo sticks, but no one is buying. Gee, we wonder why.

Please keep in mind this is an actual horse racing article. There is one small edit, for continuity, in square brackets

Slots saving pogo sticks

Pogo stick sales are down 25 percent from 2006, according to the Pennsylvania Pogo Stick Board.

Gambling on slot machines in Pennsylvania provided $236 million in subsidies to the Pogo Stick industry in 2009, yet total sales of Pogo Sticks continued to fall, according to statistics released by the state.

The Pennsylvania Pogo Stick Makers Association said Wednesday that the statistics prove slot machines are a "lifeline," sustaining operations at Pogo Stick factories across the state.

"We would not have Pogo Sticks in Pennsylvania if not for the slot machines," said Michael Bounce, executive director of the Pogo Stick association. "The slot machines have saved our industry."

The organization remains hopeful Pogo Stick sales will improve with the economy.

Since 2006, when casinos in the state began operating, total sales of Pogo sticks have dropped 25 percent, according to the Pennsylvania Pogo Stick Board.

Jumping fans in Pennsylvania spent $734 million on Pogo sticks in 2009. That's down from $975 million in 2006.

Across the nation, Stick manufacturers have suffered. Pogo stick sales at all U.S. toy stores are down 16 percent from 2006, according to Pogobase, official supplier of Pogo stick statistics for ESPN.

The decline in sales in Pennsylvania comes despite a multi-pronged effort to invigorate the appeal of the Pogo.

A portion of all slots revenue goes to the Pennsylvania Pogo Stick Development Fund.

Of the $236 million generated for the Pogo fund last year, 80 percent must be spent on higher wages for factory workers [purses], and 16 percent must benefit the people who make the springs for the pogo sticks [breeders]. Another 4 percent helps pay for health care benefits and pension plans for Pogo employees.

Salaries paid to Pogo assembly line workers have doubled since slots were legalized, according to the state. Total salaries paid to Pogo producers were $134 million in 2009. Pogo producers received $62 million in 2006.

Pennsylvania Pogo manufactuers produced 11,539 Pogo sticks last year. That's up from 7,958 Pogo sticks in 2006.

In September, the Pogo factory unveiled renovations to its facility. The company said it hopes new Pogo themed sitting areas, entertainment centers and restaurants will draw more people to become Pogo enthusiasts.

A 24-table poker room, which opened inside toy stores on Nov. 3, should also spur more interest in the Pogo, Bounce said.

"We agreed to have table games in toy stores because we believe this will attract possible Pogo jumpers," Bounce added. "Unlike the slots, we believe that table games have a similar complexity to Pogo."


Anonymous said...

I like this analogy,It is too bad the racing managers and regulators do not see the big picture and favor certain segments of the game over others.


J-PA said...

So funny it's sad... just a matter of time before jurisdictions that rely on slots instead of customers will have the rug pulled out from under them...keep an eye on NJ to see how this proceeds...