For photos from the Meadowlands contact Lisaphoto@playmeadowlands.com

Thursday, March 17, 2011

The Leading Indicators Are Poor; Traitors Getting Out of Dodge

News Item: Meadowlands owners and trainers get out of Dodge early.  With just two weekends left to the standardbred meet at the Meadowlands, the annual exodus of horses entering the box at the Meadowlands has begun.  For this Saturday's card, fifty less horses were in the entry box.  What a disgrace.  With the Meadowlands fighting for their survival, you would think horsemen would have supported the entry box there for two more weeks before heading to Chester.  Forget about putting on a strong card to encourage Jeff Gural to keep working on financing.  Worrying about themselves is why the entire industry is in trouble.  The funny thing is if the Meadowlands doesn't reopen, these very same horsemen will be bitching about having nowhere to race in the early part of the year.

Some people claim with the highest purses ever seen in ages; times have never been better to get involved in harness racing.  Well, do you remember the dot com bubble?  Well, harness racing is in a bubble and it is just a matter of when the bubble bursts.  What fueled the bubble?  There is no secret that slot revenue has fueled the market for ownership at the highest levels.  But at the lower levels, the market is starting to show signs of getting ready to burst.

What do I base this on?  Let's take a look at the leading indicators for harness racing; breeding.  In an article from harnessracing.com, they talk about Peter Koch having problems filling the races for the final two weeks of the Meadowlands winter meet with Chester Downs opening this weekend (Friday to be exact.).  The specific clue we are in a bubble is in the end of the article.  Specifically: Fewer horses are being bred and registered every year. The U.S. Trotting Association’s numbers show just 7,256 foals registered in 2009, down from 8,627 in 2008, with that figure down from 9,767 in 2006.

The breeding industry is a leading indicator for harness racing and despite the purses being offered at many harness tracks thanks to racinos, many breeders are being killed at the yearling sales.  Sure you have your $200,000 yearlings being sold, but how many yearlings are being sold at a loss or barely breaking even?  Each year, we see breeders falling off the map, and fewer yearlings being bred and registered.  If the racing industry was so strong, why are some breeders going broke?  Some would argue these breeders have stallions that are out of demand right now, but most commercial brokers have stopped breeding the backyard yearlings.  For sure, if you have a yearling that does not have perfect conformation or is from a state where the racing situation is not that great, that will hurt prices, but with less yearlings foaled each year, the demand for raceway stock should be increasing given the availability of racinos, resulting in a stabilization of prices for the second tier horses; something which has not happened. 

The same stakes caliber yearling buyers continue buying but despite the reduction in the number of yearlings, the raceway market is getting soft.  The question is when does the bubble burst?  It may be as soon as April 1 if Jeff Gural is unable to consumate a lease for the Meadowlands, it may be later when slot revenue and purses decline.  All we know is the market strength is at the highest tiers with the foundation starting to quiver.

So remember, if you want to know how harness racing will do in the long run, just look at the leading indicators.