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Wednesday, June 15, 2011

Killing the Yearling Market; Racing Returns to the Delmarva Shore

A crisis in breeding is underway.  Turtle Express, a $2,500 yearling from the Morrisville sale was the fastest three year old out of the six divisions of the NYSS at Yonkers the other night.  What luck the owners had you may say?  Make it more likely the bargain price was due to the lack of serious yearling buyers.  While Morrisville is not Lexington or Harrisburg, NYSS-eligible horses typically go for a good price there.  The problem is there is a lack of serious purchasers buying yearlings these days and why should they?  At many of the racino tracks, claiming horses are racing for purses so high that a significant amount of a claimer's purchase price can be recovered by winning one race.  For example, at Chester Downs a $10,000 claimer races for a $9,000 purse; $15,000 claimers are racing for $11,000.  At Pocono Downs, $7,500 claimers are racing for $6,000 and the $15,000 claimers are racing for $12,500. 

Lucky Cadet, a $90,000 yearling purchase raced earlier this year at Pompano and his victory made all the publications for winning there.  What they didn't report was Lucky Cadet raced for a $4,000 purse.  On the same night, a $4,000 claimer raced at Pompano for a purse of $3,300.  You have to wonder who the fool is, the person who spends $90,000 on a yearling or a person who claims a $4,000 claimer?    

Horsemen and racetracks are not doing their part to stimulate the purchase of yearlings by offering such inflated purses for claimers.  Why take a chance buying a yearling when you can get a ready to race horse and win back your purchase price in two or three victories?  Standardbred purses are skewed towards claiming races when if anything, they should be skewed towards conditioned races for green horses to reward yearling purchasers who take on a lot more risk to get their horses to the track than the ready made horse does.  Thoroughbred racing realizes this which is why Maiden Special Weight races race for more money than many claiming race levels.

This past Sunday, a maiden special weight event for two year olds raced for a $45,000 purse at Monmouth Park.  An allowance race for non-winners of two races went for $50,000.  A $30,000 claimer raced for $34,000 (remember thoroughbred races traditionally have higher purses).  If you purchased a $90,000 thoroughbred yearling and raced it at Monmouth and won two straight races, you could earn $57,000 back making most of your money back.  There is an incentive to buy a yearling.  If we go back to our example at Pompano Park, why would someone spend $90,000 on a yearling when after two wins of a $4,000 claimer, you would have won $3,300 and that $90,000 yearling would have earned $4,750? 

The answer is plenty of potential owners won't buy a yearling.  75% of all yearlings sell for less than what was invested in bringing them to sale.  In New Jersey, a horse has to sell for $20,000 more than the breeding price of the stallion to break even.  When you hear about that six figure yearling, odds are they are helping cover the loss on several horses. 

Unless horsemen and racetracks alter purses so the purses for green horses are significantly hiked when compared to claiming races to stimulate the purchase of yearlings, what is going to happen is a lot of breeders are going to go out of business or cull their broodmare and stallion stock, resulting in less yearlings being produced.  With less yearlings produced, there will be an even greater shortage of race horses which will force tracks to race significantly less race dates due to the availability of horses.  I have often argued we need tracks to race shorter seasonal meets to meet the actual demand for our product.  Unless things change, I may get what I hoped for.

Poll Results
In a non-scientific poll and admittedly a small sample size of 26 respondents, the question was asked if tracks made meaningful cuts in the takeout rate for wagers made on-track, 72% said they would return to the track and either wager the same or money money and only 28% said they would continue racing through their ADWs and stay home.  Granted, not a large enough sample, but it is something to think about.

Ocean Downs Returns
Live racing returns to Ocean Downs this weekend, marking the return of parimutuel harness racing to Maryland for the first time in two years (last year Ocean Downs had four non-wagering days of racing).  There are a lot of complaints as there is no grandstand for the racing, no overhang in case of rain, and seating will be benches and picnic tables with the rest rooms being those delightful port-a-johns unless you want to walk to the casino (which if you have a child with you you can't go in).    Couple that with the fact the backstretch is closed this year, horsemen are not overly thrilled. 

However, all is not bad.  First of all, racing is back and purses are a lot better than they ever were at Ocean Downs.  It wasn't that long ago you had race purses under a $1,000 and the new minimum purse is $3,000 (for $4,000 claimers) and if the race is for Maryland bred and owned, they are racing for $4,500.  I suspect it will be a different product from years past.  It may take a little time before the simulcast world realizes the product has been upgraded significantly.

Then there is their website.  If you watch their home page you will see a message that says "Welcome to Ocean Downs Racetrack and Casino" and when you look at the tabs on the website, the first tab says Live Racing.  At least people looking at the website will know there is racing there.  How many other racinos bury the fact there is racing there on their website?  Racing will occur Saturday,Sunday, Wednesday, Thursday (closed July 4) with a first post of 7:00 pm through August 28.

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