Horse Racing Stretched Thin: Recession Takes Its Toll
There is only so much that you can get out of an industry before it starts to break down, and horse racing, it appears, has reached that limit. It didn’t come suddenly at all. There were indications when the recession first hit that horse racing was galloping towards troubling times. Still, no one had the foresight to do anything about it.
Profits kept sliding and racetracks looked to slots machines to save them from their financial woes. However, that was only a temporary fix. Horse racing is not making nearly as much as it used to and injecting cash through gambling isn’t fixing horse racing, just brushing the problem under the rug.
The problem with horse racing, it seems, is that there is too much of it. Demand and supply is the simplest and most well known of all economic principles. It’s intuitive. There is too much of racing and not enough demand and so it comes as no surprise that the industry has been struggling.
Granted that this is a simplistic view of the situation and there are deeper insights, but that is truly the crux of the problem. Horse racing doesn’t need casinos or subsidies or an endless supply of horses, it needs people to come watch the races.
The recession didn’t help the situation. The American people aren’t spending like they used to so everything took a hit. Horse racing was no exception. The recession came to collect its toll and that much was expected. What no one saw coming was the scale of the effect the recession would have. Since 2003, the amount that Americans have wagered on horse racing has fallen more than 12 percent. The number of people coming to racing events has continued to plummet, and there are no signs of things looking up.
Churchill Downs Inc’s chief executive, Robert Evans, was not optimistic either, but at least he was willing to place bets when so many others have taken the more conservative approach to gambling. “I'd probably bet the future is more likely down for the next few years than up,” Evans said. If even some of the biggest names of the sport are concerned, then the little guy has good reason to be worried. However, as this recession has seen, the victims of the crunch are all over the place.
Many a horse owner has gone out of business and many more are worried that they might too, but the fact that the largest names in the business have suffered is worrisome proof of the downwards trend. American thoroughbred racing company Magna Entertainment filed for bankruptcy in 2009. Magna Entertainment was the largest thoroughbred racing company with respect to revenue and holding in all of North America. Even they couldn’t face the aftershocks of recession.
Another well known name in thoroughbred racing, The New York Racing Association, is expected to be financially insolvent by next year. The NYRA has been criticized for not taking necessary measures to cut down costs to become financially viable. They instead placed their trust in casino revenues which they still haven’t seen yet. The NYRA’s aqueduct racing project has been stalled for many years, but finally some progress has been made. Even if the racino pulls through for NYRA, it still wouldn’t mean that their horse racing ventures can sustain themselves.
That is the fundamental problem. For all the tricks they pull out of their bag, the problem will persist unless horse racing itself starts to attract people and revenue. All other efforts just mask the problem.
Perhaps there is no saving horse racing in the traditional sense. Maybe the sport can only survive if it tags along with casinos and entertainment events. That has been the direction the sport has taken recently.
Del Mar’s executive vice president said that horses are no longer their primary attraction. He said that Del Mar has been marketing its fixtures as social events to attract crowds and so far it has been working. Although there has been a drop in attendance at Del Mar, it has been relatively insignificant.
Once the recession rolls over, the sport of kings can once again take its rightful place. Until then, it must do everything it can to survive. There would, of course, be casualties and New Jersey seems to be one of them. Monmouth Park and Meadowlands Racetracks have both effectively been scrapped. The tracks tried everything other than slot machines to survive. They cut down the number of races and boosted purses but in the end still continued to lose money. That battle is all but lost but the larger war rages on.
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