Thursday, December 18, 2014

Horse of Year Voting Hijacked By Team America World Police?

As corrupt Cuban politicians get richer, North Korea succeeds in scaring movie theaters and Justin Beiber is still somehow popular, the world got even more strange with today's Horse of the Year announcement in harness racing.

When Jenn Biongorno, accompanied by the lovely, tiny, Justin Horowitz, announced the winner, most didn't quite know what to think.

You see, harness racing is a sport with trotters and pacers. One move their legs slightly different than the other. That's really all you need to know about that. But there's only two. Trotter of the Year was announced, and it was a three year old filly named Shake It Cerry. A case could be made she deserves it, because although she did not win the Hambo Oaks, she was pretty good. Not long after, Sweet Lou was announced pacer of the year. Lou had quite the year, and he too deserved it.

All that was left was the announcement for Horse of the Year. Was it going to be Sweet Lou - the pacer of the year - or was it going to be Shake it Cerry - the trotter of the year.

Drum roll...........

The winner is: Another horse!

Joe over at the View blog can explain how this could happen, so I will leave it to him to add the details.

In effect, the voters who voted for Horse of the Year could choose either their choice for pacer of the year, or trotter of the year, for Horse of the Year. As it shook out, some people who chose Sweet Lou for POY, moved to Shake it Cerry for HOY. Most who chose JK She'salady for pacer of the year stuck with her. People who may have chosen California Chrome were in the wrong sport.

Anyhow, here is the ballot:

There are other strange things that happened too. Like as Brett Coffey pointed out, the switch from Father Patrick. Somehow Shake it Cerry got 59 votes for Trotter of the Year but ended up with 14 votes for Horse of the Year. Meanwhile Father Patrick, who was way back in the Trotter of the Year voting, actually beat her for Horse of the Year.

Got all that?

Anyway, I was disappointed because harness racing does not vote two year old fillies horse of the year, like ever. It was a fall back, or default position I know, but if JK She'salady was boxed in, or had a cough or got run into by someone and lost a race, she would not be considered for Horse of the Year. If that happened to a horse like Lou, he still would have been Horse of the Year. The vagaries of being undefeated should not make a filly the first ever horse of the year in harness racing. As someone pointed out on twitter:
He's right. Mission Brief was.

In a way, perhaps it makes perfect sense that North Korea hacked this vote. Maybe it makes perfect sense Bieber is popular; no, it really doesn't. But whatever the case, this was the strangest, most bizarre Dan Patch result in this sports' history.

Rake, Blah Blah Blah, Rake

Those business buzz-words like synergy or accretive make me think of classes way back when, when profs told us how business works. But, in reality, they are how business works.

I was reading this today regarding some of the deals being made by major sports leagues and DFS sites, like FanDuel:

"The appeal of daily fantasy sports to sports leagues isn't hard to understand. Nigel Eccles, CEO of FanDuel, told ESPN.com that his company's research showed that fans' weekly TV sports viewing jumped from 17.5 hours to 24 hours when they start playing DFS. Consider what that means for TV ratings, and TV ratings translate to more money for rights fees, cable subscription fees and advertising rates."

So that's like seven hours more a week. Many might say pfft, so what, no big deal.

Consider how much more a TV network can earn with an extra seven hours a week. 

Consider that the average Netflix watcher watches 10.5 hours a week of Netflix and it's worth $20 billion.

It is a big deal. It's a very big deal. By giving people an avenue to consume your product intensively, like daily fantasy sports is, it becomes "accretive" and "synergies" take hold.

Racing on the other hand, spends a whack of money and time to get you, the user, to watch it. 

There's giveaways, red carpets, people singing songs we don't know, a dude who was married to Heather Locklear playing the star spangled banner, America's Best Racing, Derby parties, Ils sont parties, Kegasus, Bo Derek, Richard Grunder, Go Baby Go, handicapping contests, the DRF, Mike Battaglia, Ray Paulick, urinal runs, TwinspiresTV, Ed DeRosa, Sid Fernando twitter feeds, the dude who looks like Ed Helms on TVG, @itsthejho, jockey fights, ABR buses, Horse Racing Now apps, Zenyatta, Churchill Downs stock options, Mike Maloney, Derby Wars, Man o' War, Seabiscuit movies, Secretariat movies, Richard Dreyfuss movies, and a 1980's rock band playing at Hollywood Park. OK, scratch that last one. 

In no way belittling that list (some are good ideas and my best peeps on the twitter and elsewhere), does that translate to 7 more hours a week, each week?

Horse racing is a gambling game, and what makes people play more horse racing, and invest in PP's, touts, open Twinspires accounts, search for rebates, read work reports, watch video, watch on TV, go to the track, and spend more than one hour a week to handicap one Grade I race, is winning money betting. When the game is priced in such a fashion where that is almost impossible, it becomes an albatross around the sports' neck. 

Better pricing will not solve all of horse racing's problems, but it truly is the biggest issue stopping people from consuming more of the horse racing product. When 98% of your customers lose every year, and have for generations, you can't dress it up and sell it to them. People know when they're up against it, and when they have a chance, and by their patronage, they've been telling the sport that for decades.


Tuesday, December 16, 2014

Commissioner Gural

People clamor for a racing commissioner and we're told over and over again how it can't happen.

Jeff Gural made news again today. Over the past couple of years, the practice of "kicking" or whatever apologists want to call it, has been in the headlines. Many of the alphabets, on air talent, or insiders were either frozen regarding what to do about it, defending it, or were just hoping it would go away.  After driver David Miller's interview with harnesslink.com, where he brazenly stuck his finger in the face of the rules by saying, "“I realize that people are really down on this idea of kicking” but it was worth every bit of the $750 fine", once again, Gural didn't run and hide from it.

It was announced today that Gural's three tracks have created a zero tolerance policy on kicking.
  • “We have a responsibility to our horses and to the public that we are putting forth the most integrity-driven and safest product possible,” said Meadowlands Chairman Jeff Gural. “Regardless of the debate that has been ongoing related to this issue, as far as we are concerned, perception is reality and it looks terrible, therefore we will not tolerate it. I hope our having to take action on this issue will not be required to demonstrate how serious we are about this subject.”
This change in policy will probably snowball, because that's what happens when leaders lead.
This is fresh on the heels of yet another announcement regarding more money for older pacers. Woodbine has backed a resurgence of the Confederation Cup, for four year olds, at $200,000 added.  This is in addition to the Prix d'ete at $200,000 at Three Rivers and Graduate Series at the Meadowlands.

That did not happen by accident. Several years ago the sport lamented the loss of the sports' stars at three, but threw up their hands because there was nothing they could do about it. Gural, through his stakes, along with the Hambletonian Society and Woodbine, backed the venture that three year olds can be retired yes, but their foals would not be eligible for a handful of big money stakes. The world changed.

The bottom line is clear: Jeff Gural is as close to a commissioner that harness racing has ever seen. Those who are against him - and there are many - can either fall into line behind him, or step up to plate and lead themselves. Thus far, those choosing the latter are few and far between.


ABR Lives In an Industry with No Clue Who It Is

A story on the Paulick Report about "America's Best Racing" popped up yesterday. The article, generally, focused on the ABR insiders and they tooted their horn a little (a couple of times with incredulous numbers). In the comments section (and in some places on the twitter) the project tended to get skewered.

I understand why people get up in arms about the whole ABR project (some are very good friends whom I respect). I get it. Where I diverge from that thought is based more on organizational behavior, not the nuts and bolts (i.e. the criticism of the job they are doing and tactics used).

Racing is odd, fractured, does not really have any idea who the customer is. It taxes based on slices not profits for revenue. Its best friend is a lobby group who wants slots. Racing is a gambling game so it has stalwarts like DRF.com in print and online. No, hold it, it's not a gambling game, so it has breeding heavy industry news at the Bloodhorse. But it is not only a breeding game, and it's much more than that, so it has the Paulick Report and Horse Racing Nation and a half dozen other outlets.

Racing is "The Best is Yet to Come"  sung by a lady most of us don't know.  It has Gene Simmons on a red carpet, while Gene from Brooklyn wonders what all the fuss is about.  It has a faction of people going crazy on social media because a jockey is pregnant, while others are just wondering who is going to replace her tomorrow on the seven in the fourth. It's Kegasus and the Kentucky Derby infield, intertwined with people who would rather eat bees than be anywhere near Kegasus and the Kentucky Derby infield .

Why is racing all those things? Because racing's revenue stream and mandate is so polluted and fractured, there is no way any one website, or organization can do anything in any macro type way. Its an industry that has no clue what it is, so it throws everything against a wall, hoping it sticks. 

One of my favorite organizations is Major League Soccer. They're new and they work very hard in a tough space. They've done some great work on social media and have an excellent flagship website. Through that site you can buy tickets, watch games through their platform, buy gear, play fantasy games and myriad other things. Customer enters funnel, customer can go through many funnels to get what they want. You've seen similar at other industry or sport portals, like MLB.com or NFL.com

For a 'racing.com', such a site cannot exist.

Sell tickets to the Derby? CDI owns that.

Show racing? Stronach says no (you can't even embed their videos on a blog), CDI says no (they won't even let some sites use their live odds feed).

Give free past performances? Ummm, no.

Fantasy games? If they tried to be Derby Wars there would likely be some sort of revolt by every horsemen group known to man.

API's, free stats, database searches? Not on your life.

Bet? Heavens no. There are like 50 ADW's, some don't have all the content, and aren't even available in your state. That's hands off.

So, go build a website about racing that can't do or say much about racing. Oh joy. 

What's left?

Well, pump grade I racing; Pump the experience. Pump the jocks. Pump the Queen's Plate. Pump Wise Dan. Pump hats and food trucks. Pump the on-track, live racing venue. Do so, and hope these people look into racing again, watch it on TV, or maybe make a bet a few times a year.

America's Best Racing is not the problem. Their problem is trying to exist and thrive in a eco-system that is fraught with problems. Looking at the slice they address, in the corner they're put into, they, in my opinion, aren't doing a poor job. They're probably doing about what many of us should expect.

Friday, December 12, 2014

Notes for a Friday

Hi everyone. It's pitch black here at like 4:15PM (I love December), it's kind of cold, but at least it's the weekend. Bachelor night again, with the dog and I probably playing the Meadowlands and watching sports of some sort. Right now the choice is heavily slanted to curling, but hey, it's Canada.

Anyhow....

Yesterday we spoke quite a bit about fantasy sports and racing's rather perplexing belief that somehow it can work for this sport. Scanning the twitter I see some asking if it can work in any way at all. I guess it could, but one has to realize that horse racing already has a fantasy league at the pari-mutuel windows. We bet a horse to win a race in the win pool, bet them to win in a set of races in a pick 4 pool, and bet them to win and run in a certain order. Daily fantasy games provide the casual fan a chance to wager on something that was previously not bettable. If someone wants to wager on racing, head to the track.

Mike Dorr had a look at what Fantasy Horse Racing might look like if done right in Horseplayer Monthly.

Kudos to Bill Finley for skewering Miller's (and the sport) reaction to the kicking fine he received for his actions on McWicked.  Harness racing truly feels beyond any hope. 

Handle at Turfway continues to be very good. Watch the bias there if you choose to play. It can sometimes result in some nice bombs.

Ryan Goldberg's lovely long form article on Japan racing is well worth a read. We have to be careful when we compare handles from Japan and here, however, because it's a trap. Japan has a regulated betting market and its a culture that bets on speed boat racing.

Lots of chatter about tying purses to field size. Something that should've been done long ago, I feel. California horsemen will explode if that happens. The culture there likes to race every seven weeks in five horse fields. They feel that's the weighted average that horse racing needs. Go figure.

Lenny had a few suggestions about how to improve racing in 2015. He predictably got skewered in the comments from insiders. 

I'm off to study the program for awhile. Whatever you choose to do this weekend, please have a good one.


Thursday, December 11, 2014

The Daily Fantasy and Racing Juggernaut

There was a panel this morning at the RTIP about Daily Fantasy Sports, its growth and possible benefits to racing (through crossover). You read that right, some are looking at an industry that no one heard of in 2010 (Fanduel had fewer than 1,000 players in 2010, according to the WSJ), that has had exponential growth rates, to somehow help racing.

I am sure Matt Hegarty will have a story on the panel later, so check his feed for that.

The DFS industry is in no way helping racing, and I doubt it ever will.Why? Because it's taking people who are betting racing, converting them to their platform, not the other way around.

This year there will be 800,000 to 1,000,000 DFS players, up from 1,000 in 2010. Like Ebay in 1995, which experienced 70% monthly growth rates, these firms attract investment money. For Fanduel, these investments are from organizations like NBC/Comcast and other heavy-hitters. Because of that, an eco-system is produced, which encourages growth. 

Like any startup, they have a high "burn rate", which simply is a new way of saying negative cash flow. Negative cash flow does not matter to these companies, just like they don't or didn't matter to Ebay, Facebook, Amazon or dozens of other companies you and I use daily. The negative cash flow occurs because they use the bulk of their revenues to attract new users, through advertising, lower rake, bonuses etc. Although advertising figures are not available (these companies are private and do not have, nor do they want to reveal what the ad budgets are), they are more than 100% of revenues. Conversely, racing spends (according to a study in Canada that I am too lazy to link), about 2% of revenues on advertising; bingo spends upwards of 20% for comparison.

These firms need critical mass and spend as much as they do, because each eyeball, or potential customer provides it with "Life Time Customer Value". Lifetime value for the restaurant down the street is meaningful, yes, but lifetime value for a gambling site (or Ebay, or poker site, or Etrade) is everything. These people repeat visit, and spend more than one visit that can yield revenue. Not to mention, it's no fun to play a DFS against three people (just like it's no fun to bet into a small racing pool).

When these companies reach some sort of critical mass the growth rate slows (this will likely peak, drop off, then slow) and they monetize more, becoming a regular business.

So let's recap:  Racing, with high prices, that does no advertising, that offers an inferior betting product, that has little synergy, has no burn rate and has been around with ostensibly the same pari-mutuel system since 1907, is somehow supposed to go get these DFS customers?

Are you kidding?


There are (according to the Fantasy Sports Trade Assn), 43 million Fantasy sports players in the US and Canada. According to the DFS sites (in the WSJ story), over 90% of them have never played a cash game. Be ready for more and more advertising, more and more chatter, more and more means to get to you - the guy or gal who plays an office pool or has a team that runs the season.

This is only the beginning. They're coming for you and they're coming for horseplayers.

Racing cannot gain, nor will they in the immediate future do nothing but lose some of their market to these sites. Those are the cold hard facts.