The Ontario Racing Commission (ORC) released the racing date applications by the various race tracks operators for the 2010 racing year. These were the second set of applications because after seeing the original applications and the uproar they caused by their request to cut racing dates, the ORC issued a moratorium on cutting race dates for this year with a promise to study the impact of potential racing date cuts in the province. As a result, the ORC required new applications which would have each track racing the same number of days in 2010 as they did in 2009.
Fortunately for us, the ORC releases to the public the applications so anyone who is interested can read the applications. Several of these applications speak volumes. Great Canadian Gaming Corporation (GCGC), owner of Flamboro Downs and Georgian Downs in their applications reiterates the reason for their original application and the consequences of not approving it. Why am I discussing the seemingly mundane issue of racing date applications in Canada? Change the names of the tracks and you can be looking at any race tracks in the United States.
Did Flamboro and Georgian Downs sit around and do nothing to stimulate the business since they were acquired by Great Canadian Gaming?
In the spring of 2006, GCGC issues a report outline its perspective on the Ontario standardbred racing industry/. Titled “Stop The Bleeding – Build The Business”, the report quantified the significant declines that the industry faced at the time and introduced a vision for the future operations of its racetracks.
Since that time, GCGC has followed through on many of its product development initiatives but continues to be mired in declining racing revenues and upward cost pressures.
The GCGCs application then indicates how they have been losing money every year; this despite having slot revenue.
In doing so, GCGC is forecasted to lose nearly $4-milllon on its Ontario operations – that on the heels of a $4.5 million loss in 2008. To be clear, both Flamboro and Georgian Downs lose money on each and every one of their racing days, despite the slot revenue that is earned as part of the province’s Slots at Racetracks Program.
So how long until a public corporation decides they can not expect their shareholders to absorb continuing losses of this magnitude and decide to shut both tracks down? Unless something happens to change the dynamics of Ontario racing, it won’t be long.
So the question needs to be asked, why has Flamboro and Georgian Downs run into problems?
Even at that time, it has long been apparent that Ontario was dramatically oversupplying a receding marketplace with harness racing product of a mediocre nature.
In the early days of simulcasting, Flamboro became a staple across Canada and the Northern United States, attracting tens of millions of dollars in export wagering. But, as simulcasting advanced and more attractive foreign products became available, the demand for the Flamboro signal eroded.
There is too much racing going on in a market that has less demand for it. By racing year round, the purse account is getting spread out over the whole year resulting in a mediocre product. When you have so many simulcast signals available for purchase, are you going to buy the signal of track with an inferior product when there is a signal of better quality racing available?
The solution according to GCGC? Develop a racing circuit between their two tracks of 160 days total with each track racing six months instead of their current model of each track spreading their meet out over ten to twelve months. Realizing this will be a big change for the horsemen, they propose reducing the number of days over a period of three years; 233 days in 2010, 208 days in 2011, 160 days in 2012. What would this mean to the two tracks with respect to marketing and simulcasting?
While the above circuit model will help to address GCGC’s financial concerns, it will also usher in a new era for Ontario harness racing. A Flamboro/Georgian circuit would offer saleable, high-quality, year-round racing to the Ontario and simulcast marketplace, while allowing both tracks a season format that satisfies market demand and provides exciting promotional opportunities.
The track promises $120,000 in purses every day the first year, and to mitigate the impact on horsemen offered to add races each day to get horses raced and develop a stakes program for overnight horses, including claimers. According to GCGC, developing a second tier circuit, similar to Woodbine and Mohawk will allow their two tracks to offer similar purse structures, higher than they are now, to attract better horses now racing at other Ontario tracks; the end result offering a product that gamblers will have interest in.
Of course, OHHA is opposed to GCGC’s plan. They like the status quo, sending their lesser stock to race at Flamboro and Georgian Downs while they send their better horses to WEG or other B tracks in the province. Even though the horsemen were offered a stronger circuit to race on for more money, they rather continue as business as usual. No doubt they are fearful as to where they will race their cheaper horses. If GCGC’s plan was successful, many of the horses competing at these two tracks may no longer fit in. However, this would not be in 2010. The track operator has offered the horsemen a plan where the number of racing dates will be cut back each year with the average purses increasing each year to correspond with the cut back in dates. As a result, the horsemen will have time to upgrade the quality of their racing stock.
It is time for horsemen to realize the old business model does not work. There are too many tracks racing too long. The demand is not there. Rather than agree to a cut in overall racing dates at these two tracks and build a better product, they rather keep the status quo. My question is where are these horsemen going to race once Flamboro and Georgian Downs are shuttered? GCGC is not running a charity; it is a business. Once they realize they can’t make a profit, these two tracks will be shut down quicker than you can imagine.
While Flamboro and Georgian Downs may be sounding the alarm the loudest, other tracks have noted things are not wonderful in Ontario. Western Fair complains that they are racing too long. As per their filing:
By the time June rolls around, live fans have been watching races from Western Fair all winter and spring and they are ready to change it up by going to Clinton, Grand River, Woodstock, Dresden, Hiawatha or Hanover.
Fans want seasons. They get bored with the endless string of racing day in day out. They want a meet to start and a meet to end; keep the product fresh. Instead, the tendency is to race long monotonous meets.
Overall, how is Western Fair scheduling their calendar?
In summary, we have selected our 130 dates with a focus on maximizing the commissions earned…
Again, another track recognizing the key to financial success is scheduling your meet to maximize the export of their signal. It is all about off-track wagering. The question needs to be asked, how many simulcast signals do we really need at any one time? Wouldn’t the tracks, and in turn, the horsemen do better if their signal was one of a few available at a given time than one of many?
The situation at Windsor is not much better. For several years they have attempted to cut their racing dates due to the excessive number of days they race. They acknowledge their product is perhaps the cheapest in the province.
It is well known throughout the industry that Windsor Raceway Purse levels have been the lowest in Ontario for several years and they are now the lowest due to the unjustified level of racing the ORC has required to be conducted.
Due to the lower purse structure, they are unable to draw full fields and their simulcast product becomes less desirable with bettors bypassing their racing product accordingly. It becomes a vicious circle. Couple this with the current economic downturn and…
WRI is implementing a further reorganization of its financial affairs in 2009/2010 to survive during these difficult economic times…. The 2010 calendar at Exhibit “A” of 111 race days imposed by the ORC moratorium will compromise this financial reorganization and cloud the future of WRI.
The applications by these tracks is worth reading. You may access the applications by Flamboro and Georgian Downs as well as Western Fair and Windsor Raceway here.
Does any of this sound familiar? While in different states, you have Chester Downs, Pocono Downs, Dover Downs/Harrington Raceway, and Freehold Raceway racing at the same time. In New York, you have Monticello, Tioga Downs, Vernon Downs, Saratoga, Buffalo Raceway, and Batavia racing during the year. The Meadowlands and Yonkers Raceway are less than fifteen miles away from each other. Ohio has Scioto Downs, Northfield Park, Raceway Park and Lebanon Raceway.
Tracks realize they are part of a shrinking national (North American) market and they need to find their place in the new market. Horsemen, who are seeing the best purses they have ever seen seem to think everything is grand, even if they are racing in front of a handful of people. State racing commissions assign race dates in a vacuum; heaven forbid there was a coordination of dates with tracks just across the border in another state.
I am not one for advocating the closure of any race track. If done intelligently, circuits can be set up where tracks run shorter race meets and the rest of the year they will offer simulcasting. The set up of these circuits will allow us to keep the number of simulcast signals to a reasonable level thus allowing each track to get their signal distributed when they race to maximize the potential of their signals as they wouldn’t get lost in the clutter. More importantly, some people may actually go to the track as they would be racing for a shorter period of time; the meets will become boutique events.
Yes, I know we won’t need as many trainers or drivers as we have now; those who are not successful may need to seek employment elsewhere. We will not need to breed as many horses and will not need as many horses to race. However, this can be done intelligently. No one says we need to get to the end point in a year or two. Reduce dates over a period of three or four years so the industry can have a soft landing as it downsizes. The choice is clear. We can have a soft landing and gradually reduce the number of race dates to meet the market’s demands or we can see a wholesale closure of tracks which would be more devastating on the industry on the whole. It is time that people face reality; welcome to 2009.
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