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Wednesday, February 15, 2012

Why Is Anyone Surprised?

With all the talk of cutting subsidies in Pennsylvania or even taking them away completely in Ontario, my question is why is anyone even surprised we have reached this point?  What made anyone think the good times were going to last forever?  More importantly, the question needs to be asked during this period of subsidies, what has the industry in your state/province or nationally really done to improve the sport to make it self-sufficient or at least less reliant on subsidies?

The answers to the questions are in order; Denial, The legislation said so; Nothing (in slot states).

It may have taken the perfect storm but welcome to reality.  With the severe economic decline, states are having problems meeting their obligations which they committed to before the economic downturn.  Medical expenses, at least in the United States continue to climb.  Labor contracts signed before the downturn need to be honored.  In many states/provinces they have borrowed money to pay for programs so the debt needs to be paid and you can't get more money out of what remains of the middle class and the lower class and there is a reluctance in some states (especially, Republican) to raise taxes on the higher wage earners.  Something has to give.

So Governors have to present their budget and they need to rob Peter to pay Paul and they make evaluations.  Eventually it comes to racing and the question is Teachers or racing subsidies?  Cuts to colleges or racing subsidies?  Cuts to providing health care to the most vulnerable or in Ontario the residents or racing subsidies?  You get the idea.

Yes, there are jobs behind racing, but you can't deny the fact teachers, college, and healthcare are necessities.  To most people, racing is an entertainment option.  If you are the Governor or a legislator with no connection to racing, which would you choose to cut?

Racing loses out and it is a lot easier to make that decision when handles continue to decline (though there seems to be some turnaround at some tracks this year thanks to guaranteed pools), and grandstands remain empty.  The decision gets easier when the government, such as was done in Quebec realizes racing was not going to change their business model and remain forever dependent on slots.  In Quebec, the decision was easily made; the heck with racing and they pulled the plug and subsidized breeders for a period of time to change over to another type of farming.  Now racing is coming back in a much smaller format.

In Pennsylvania, they are looking at cutting purses 30% if the budget proposal goes through.  In Ontario, the result to the racing industry is unknown if the casinos are pulled out; it will likely be some tracks not surviving and purses being cust massively at other tracks.

If these proposals come to fruition the horsemen are going to ask "How Could This Happen"?  I suggest they look at the first three questions above when answering these questions.  Yes state and provincial legislatures introduced slots to help the state and support the industry, but I am pretty sure the expectation was the industry was going to work to help their own situation at the same time.  Are legislators breaking their deals with racing?  Absolutely, but the question remains what has racing done to to help itself up to now; did they live up to their end of the deal?

I suspect the answer is no.

Remember these are tentative proposals and they may be beat back or modified.  Other states are still working on slots such as Kentucky and Ohio; Illinois may get some type of subsidy.  Those states are behind the curve and while they may not face cuts right away, down the road they may be coming to them as well.  The question is if these proposals get pushed back or modified, what is the racing industry going to do?  Will they go back into their slumber and come back to fight the next time the state comes for a little more of the subsidy?  If so, that is a plan for suicide because sooner or later you are going to get a Quebec-style response of "Racing is hopeless; it is time to pull the plug".

If you fight back the assault, you will likely be fighting the same battle for a few more years as it will be a long time until the government can go to its taxpayers to pony up to cover the debt.  It will be onslaught upon onslaught with cuts likely each year.

Racing needs to form a small committee to revamp how the business is run.  Ways to attract new people, ways to get people back to the tracks and how to get some of that ADW business back (at least the Red Mile set up their own ADW).  Don't look at the USTA to do this; with sixty two directors you are going to get sixty two different opinions, including opinions saying things are hopeless.  Let the USTA do what they do best.  Unfortunately, New York harness interests won't be getting involved because things have been going swimmingly for them, but you can't wait for them to sign on; sooner or later they will get hurt and when their lobbying machine doesn't work; they will come around.

We have reached a crisis situation and it is time for the leaders to rise up and get things changed and relatively fast.  Otherwise, you will be racing like they do in Quebec and no one wants that.

1 comment:

Anonymous said...

I could not agree more