Some Thoughts About Horse Racing Ecocnomics

日期:2012/06/23

One visited Belmont Park as a guest of noted handicapper, writer and spec Keven Depew's family on a beautiful Saturday afternoon with great gratitude. The place reminded me of a mausoleum. Right out of Rosebud. More empty betting booths than customers existed. Hundreds of unused betting booths with lettering from the 1960s that hadn't been used in decades stood unattended. About 1000 were at the track which sits on at least 100 acres and houses thousands of employees.

The average handle per race was about 150,000 including all exotics and simulcasting. And that's 25000 per race to the associating. The average purse was 60,000 of which about 80% is paid by the track. The losses on the Belmont Park must be of the order of 50 million a year, and taking the opportunity cost of the land on the park which is worth billions, it's a billion dollar a year loser. Naturally the state just agreed to take it over, so the losses will escalate and the ordinary citizen will pay for the entertainment of a dying breed of 90 year old betters, and the status of the owners and horsemen.



Throughout the industry, there is devastation, degeneration and loss. The breeders are desperately trying to sell their farms, and the attendance and handles are decreasing. Not much attention is paid to the losses except that an indirect affect is that twice as many horses are dying each year from the races. We only saw one death on Saturday in the 8th race, and it was properly handled with a black screen, and an ambulance truck. Apparently it's the norm because the pursees are getting bigger as an offset to on track occasions and the trainers have more of an inducement to get their horses into the races with greater frequency.

In the good old days, on a nice Saturday with a 300,000 high stakes race like the mother good handicap, we would have seen 60-75,000 in attendancy. No touts letters were available and the usher who had been there for 45 years said he hadn't seen the Lawton brother's the famous clockers, or any replacements there in 25 years.

The mother goose handicap was won by the beaten favorite at 5 to 1, and he had been 2 to 1 against the same field the previous two races. A good lesson to learn for speculators. Laurel got the exact on the mother goose with the help of Lila Depew who knows horse racing so well, and makes one wish that one had half the knowledge in his own field as she does in hers where she runs online racing for the racing form. The average race horse costs 35,000 a year to keep in a barn and race. With 85,000 foals born each year from the breeders, that's 3 billion a year in costs. The average horse at Belmont wins about 40,000 a year, of which the owners take is say 30,000. Let's say 10,000 of them race each year, making their prize money about 300 million.

Whatever the economics of breeding are and some horses produce 600 foals at 20,000 a foal, there is a tremendous loss to the horse racers. It has to be done for prestige and enjoyment. The race tracks themselves must lose another billion or two a year considering the opportunity costs. No wonder the NY government is taking over the racing association, as the owners can't afford it any more. In new jersey however, with attendance at the meadowlands down from an averave 0f 25000 10 years ago to 1000 these days, all the barns are being torn down, and a grandstand 1/5 the size is being built at a cost of 85 million in the futile hope that a reduced size will make the place look less like the mausoleum that all the non-casino racing tracks looks like.

The main reason for the decline in racing handle is that the average better is 90 years old. Young people these days don't wish to spend a whole day at the track for action when they could be playing video games or watching porn. The off track take of 20% if much higher than they can get at the casinos, and they are not comped and romanced at the races. The price of admission to Meadowlands I believe last time I was there was 0.50 but to its credit Belmont maintains a 2 buck admissions charge, although there is a rebate of 1 buck for most circumstances.

I liked the nice touch that when you come into the horseman's area, it's a jacket and tie policy only. There were about 25 in the only restaurant on premises, and the restaurant looked like it had a capacity of about 600 from the good old days. I was reminded of how uncle Howie walked through the Loews Hotel with a yamulka on to go to is wedding in one of the private rooms there, and the general manager walked up to Howie and told him to remove the yamulka as it might offend the guests. Howie has always rued that day to the present. He was so revved up for the wedding that he completely overlooked knocking the block off the general manager, cursing him out, creating an uproar in the hotel and canceling the wedding. As I saw the forlorn handful of betters straggling at the finish line, I though of what many commodity brokers have told me. "It's so sad to see smith trading now. He used to trade 1000 lots. Now he's reduced to trading one lot, and we're on his back every moment to see that he doesn't stiff us if the loss goes above the margin.

There but for the grace of the good one be I and all other gamblers. Laurel is a big gambler and bets much more heavily than I do, and one couldn't but be thankful that …