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Wednesday, July 21, 2010

The Shafting of the NJ Horsemen

Note: This article has been updated as a result of additional details becoming known.

Well, the SBOANJ got their wish when they supported financially the campaign of Chris Christie; they got rid of Governor Corzine who was viewed as an enemy of harness racing. They won the election. They may have lost the war.

Harness racing has gotten the proverbial shaft in New Jersey thanks to the Hanson Report. The few standardbred breeders who remain in New Jersey are probably looking as you read this to move the stallions and broodmares they still have to other states as soon as possible and are calling real estate developers to gauge their interest in building shopping malls and housing.

The Hanson Report has been submitted and according to news reports, the Governor is to formally discuss the report’s recommendation which would send harness racing back to 1975, if not to extinction. It is expected that the SBOANJ will be offered the opportunity to lease the Meadowlands for $1 a year and if the offer is not accepted, the grandstand would be razed and the paddock would be converted to an OTW facility. Failing the SBOANJ taking over the Meadowlands, the report calls for harness racing to occur at another New Jersey racetrack such as Monmouth Park or for private investors to convert an existing training facility to a pari-mutuel facility by building a 5,000 seat grandstand. Whichever route is taken, self-sustaining is the word. No VLTs, no subsidies. Casino industry CEOs must be pinching themselves in the face to make sure they are awake; even they could not have realistically imagined a decision like this.

Of course, all this depends on what parts of the report Christie and the legislature accepts as well as what can be done by executive order and what must be done legislatively. There are sure to be battles in the legislature but in light of New Jersey’s current political atmosphere some things appear sure; no subsidies, no VLTs, and the demise of the NJSEA. Freehold, a private entity, will like end up closing as well.

The thoroughbred industry in New Jersey faces similar issues. The state is getting out of that segment of the horse racing industry as well, as they are looking to lease or sell the track, instead of lease or closing it. Of course, with the purses next year lacking a subsidy, how well their Elite Meet will be received next year and how long they can survive is up to speculation.

Let’s assume the SBOANJ decides to lease the Meadowlands. There are two choices the horsemen have. Race either a very short fifty day meet with purses somewhere in the $5,000-$20,000 range, or race a longer meet with purses probably somewhere between $2,500-$12,000; a Freehold North. Stakes program? Goodbye Grand Circuit. So long Hambletonian. A few stakes races will survive, but nothing like it is now. Of course, how long the horsemen will be able to run their own meet depends on how long the bettors will support the racing product. While the mile track remains, the driving colony will be heading to New York, Pennsylvania, and Canada as quick as they can and how intriguing $4,000 claimers will be to the heavy hitters is questionable. Not known as of now is what happens to the future of the OTWs and ADW business of the NJAW; does it get kept by the state, jointly operated by harness and thoroughbred interests, or does it get sold off to a private ADW such as TVG?

If the SBOANJ doesn’t lease the Meadowlands things get even more precarious. If harness racing moves to Monmouth or another track, the purses will still be small when compared to the current purses. Also, if Monmouth were to be sold to a private concern, what assurances would there be to ensure they continue to hold a harness meet after it has been privatized and how willing would the thoroughbred horsemen be to share the facility? It is possible the standardbreds could race at Atlantic City Race Course but it would require a major capital investment to make the facility habitable for any meet over a few days as the grandstand would need to be renovated and lights would need to be installed for evening races which may not be feasible; especially with the lack of subsidies. The horsemen can convert a training center to a pari-mutuel track, but who is going to lend the horsemen the money to build a grandstand? No matter how you look at it, the existence of harness racing in New Jersey is being threatened by this report. The purses would not be any bigger than they would be at the Meadowlands, perhaps even smaller as it is unknown how harness racing at these facilities would be received by gamblers.

What would this mean to standardbred racing nationally? While the loss of the Meadowlands would be a severe body blow, reports of the death of harness racing is premature. Make no mistake, there will be some seismic changes coming to harness racing. Granted, in the United States there may no longer be the “one” flagship track but I believe Yonkers Raceway will become the leading track once again. I know some people will say how can a half mile track become a leading track? First of all, horsemen will follow the money. Removing the Meadowlands from the equation, it leaves Chester Downs, Pocono Downs, and Yonkers as the three highest purse tracks. Horsemen will have no choice but to race at Yonkers.

In addition, as long as there is a Rooney involved in the running of Yonkers, I believe management of the track will be willing to host more stakes races. The horsemen’s group at Yonkers likely will be willing to divert purse account money to host additional stakes races as they realize the necessity of having stakes racing opportunities for the industry to survive; especially if it makes their track more prominent which leads to increased wagering. There is even a slight possibility if the Meadowlands ceases to exist, they would be willing to convert the track to a five-eighths oval if handle increases significantly.

As I previously alluded to, management at Pocono Downs is friendlier to racing than some people give it credit for. In the same way Pocono management came to bat to host the Breeders Crown this year, they will likely be willing to take on some more stakes races providing wagering on their track increases. What about the 35% takeout on Superfectas and Trifectas? Remember, Pocono Downs is launching a trial where the takeout is reduced to 25%. If it is well received, they will keep the takeout at 25% for next year, making Pocono more playable than it is now.

The big question is where is the gambling dollars going to go if the Meadowlands disappears? For sure, some of the gambling dollars will disappear, but the fact remains there are certain people who only play harness racing. That money would need to go elsewhere and it will probably be spread between the remaining tracks which offer the best racing. Who knows, maybe the handles at these tracks may increase to the point they cover the operating expenses of the racing operation?

I am not trying to trivialize what appears to be happening in New Jersey; the changes will be seismic. Some owners will leave; breeding farms will close; breeding fees will drop; syndications will occur less often and for less money. On the flip side, more of our racing stars will likely keep racing instead of heading off to the breeding shed; the owners who remain will have more opportunities to earn checks. What appears to be happening in New Jersey may force the changes the industry has needed to undertake but refused to deal with. The point is harness racing may look different, but it is not going away.

5 comments:

The_Knight_Sky said...

Q: Is this Hanson Report the one can the same report that was supposed to be revealed on August 1, 2010?

Or are we to expect another report (or an announcement) on the day of The Haskell Invitational?

Pacingguy said...

This is the Hanson Report which was due on August 1. August 1 was the deadline.

Phil J. said...

I have pictures of myself in the winners circles at both Garden State and the Meadowlands from years ago. It seems they are both going to suffer similiar fates.

Luckily, I have been able to attend Breeders Crowns, Meadowlands Pace Elims and Pace Nights. Guess I better get to the Hambo this year, or I may never get to see it at the Big M in person.

The_Knight_Sky said...

Ah. Okay thanks Pacingguy.

I must say the timing of the announcement is questionable. We have the Horse of the Year Rachel racing on Saturday, then The Haskell the following week, then The Hambo on tap.

Hoping none of this puts a damper on the current wave of excitement.

Anonymous said...

The Hanson Report is now available at (corrected link) -- http://www.nj.gov/governor/news/reports/pdf/20100721_state_document_final2.pdf