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Tuesday, May 31, 2011

Out Sourcing Backstretches?

I have been having conversations with individuals who are unhappy with the fact the Meadowland will be closing their backstretch at the end of September in order to begin the construction of the new grandstand, subject to permits being granted.  While I personally despise the fact racetracks close their backstretches like Hazel Park did this year, at the Meadowlands it is necessary for construction purposes and with the number of training facilities in Central New Jersey which allow horsemen to travel to a multitude of tracks within the vicinity, the need for a backstretch is not critical.  It is not that Jeff Gural is against backstretches; there are backstretches at both Tioga and Vernon Downs.

The problem with maintaining backstretches is it's expensive.  From the insurance which needs to be paid on the backstretch, the employees to secure the backstretch maintaining stalls, taking care of manure removal and other things such a backstretch kitchen, there is a huge expense with maintaining the backstretch.

Still there is no need to close the backstretches.  The key is to outsource running the backstretch.  In any business there are profit centers and cost centers.  Profit centers are areas where revenue is generated and cost centers are areas needed to run a business but don't generate a profit to a company.  For example, a bank makes money from their customers so branches are considered profit centers.  An HR department which hires employees is a cost center, it generates no revenue; just expense.  This is why many companies outsource their HR function to other companies on their behalf because there are other companies with an expertise in that area who can make money and reduce costs in their area of expertise.

Make no mistake, the day of free stabling is over.  Racetracks can no longer afford to offer free backstretches as the cost of supporting them has become a large expense.  Still, some horsemen depend on the backstretch to stable at.  So the question need to be asked what can be done?  Why don't racetracks outsource their backstretch operations instead of closing them?

Let's think of the benefit of outsourcing a backstretch.  A firm can come in and update the backstretch so it is as good as any training center; perhaps adding a swimming pool for horses.  The company running the backstretch will be responsible for paying insurance, hiring employees to operate the backstretch.  They will be responsible for manure removal, maintaining track kitchens, and provide facilities for equine emergencies as well as dormitories.  If there is a training track, they will be responsible for maintaing it.  All the racetrack will be responsible for is running the ship in and race paddocks and making the racetrack available for training.  It can be a win-win situation.  The track loses a cost center; it may becomes a profit center as the outside company will pay a fee to the track for the right to manage the backstretch, yet charge rent and attempt to make the backstretch a better place to stable and train at.  While  horsemen will need to pay for stabling, they will have a first class training facility. 

So the next time a racetrack considers closing their backstretch, why not issue a RFP to see if someone else wants to run their backstretch?  Who knows, something which benefits everyone may happen. 

Yes, for certain tracks the elimination of the backstretch makes sense where there are multiple racetracks operating within the same area and there are sufficient training facilities available, but for other tracks, the need to maintain a backstretch is essential.

It is time to think out of the box when it comes to the backstretch.

5 comments:

Anonymous said...

I understand your argument for having some tracks outsource their backstretches but I believe there is a more serious problem. How can a track that has been around for 30 years or even longer in some cases not run a track backstretch efficiently? Who are they going to get to run the backstretch? Hopefully skilled people in the racing industry who have experience working with tracks themselves. The tracks need to hire the right people to get the job done. If tracks can't run their own backstretches they probably have no right being in the horse racing industry. Horses need the backstretch as much as tracks need the horses and when a track cant take care of their horses they can't take care of their product provided to the wagering public. They ought to be ashamed of themselves for not keeping up with the changing horse racing industry.

Pacingguy said...

Anon, an interested party may be someone who currently runs a training facility. The fact is tracks have never run backstretches as a profit center where as training facilities have. They have the experience racetracks don't have.

Anonymous said...

Profit at the expense of the owners through more incurred costs. Most of the owners in this game don't have the money to pay for these training facilities. The primary benefit of free backstretches is that horse stabled at the track will race there. When trainers ship their horses to race elsewhere the track loses out. The tracks should not profit at the expense of the owners.

Pacingguy said...

Anon, first of all a lot of tracks, not all do charge something for stabling on the backstretch. With electronic eligibility certificates it is harder to keep a horse at one track.

While I understand free stabling if you can still get it is good, the fact remains most tracks are eliminating it. If outsourcing the backstretch to someone who is looking to make a profit is the only option to keep a backstretch from closing, are you against it? Remember, in many states you can shop around for a training facility so if it is too expensive at the track, you can go to one of those farms.

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