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Tuesday, March 20, 2012

Beyer Speaks; Time for Leadership Change

Blogger Note:  This article has been modified from the original one published as it comes to my attention some of the information used to publish the original entry may have been incorrect. Hence, the column has been updated accordingly.

At yesterday's USTA meeting, the theme presented by certain speakers is slot machine revenue is not a subsidy, it is a partnership between the state and horse racing to strengthen the individual state's racing industry by providing money to strengthen the breeding and racing industries by increasing purses.  If you note, there was no mention about the states expecting the racing industry to increase interest by the general public.  Now to be fair, there are people who realize racing needs to attempt to draw in new customers, that is one reason why the successful thoroughbred "Night School" program is coming to harness racing, but the industry's main emphasis is slot machines.  How can racing become more popular and stronger if the only goal is to fight to keep the money the states give away instead of improving the product?      

In yesterday's The Washington Post (registration required, free), the title of racing columnist Andrew Beyer's article says it all, "Money from slots has done nothing to improve horse racing."  As Beyer writes, there is something wrong when $5,000 claimers are running for purses of  $25,000.  Now harness racing is not this luck, but the fact is at some tracks slot machines have owners and horsemen downright giddy; especially when you consider pre-slot day purses such as the $800 purses at Dover Downs.

Despite the protests to the contrary, let's not kid ourselves; the only reason slots are in the racetracks of America is the state governments needed money and the quickest way to get revenue without increasing taxes on the taxpayers, which is political suicide, is by installing slot machines. It couldn't have cared where they put the machines, but to make it more palatable to the anti-gambling foes, they put it at existing racetracks under the guise of helping an industry survive.  It was a quick way to get the machines up and running fast and generating revenue for states.  Racing played its part in this scheme by repeating the mantra that bigger purses would attract better racing which would result in better attendance and increased handle.  Well, we have the bigger purses, a few tracks are showing this year an improvement but overall, interest in racing (attendance and handle) has declined.

But now as slots have become more acceptable and states realize slots are not racing's magic bullet with respect to customers, new states considering gambling are not looking to put slots at racetracks but are offering slot and casino licenses to the highest bidder.  As states are scrambling for more revenue, they have no problem changing the deal with racing, claiming the sport hasn't done little, if anything to improve demand for the sport.  Once again, let me repeat this, any law can be changed by the legislature if there is a desire to do.  One budget shortfall is all which is needed to change the tune of legislators.  It may not be all or none, it may be a slow bleeding of slot revenue.

Nothing was more distressing to me when comments by some at the USTA meeting basically insisted that racing must keep fighting for and to maintain slot machines.  Yes, if we are to keep purses high, slot revenue is essential, especially unless the sport is willing to make some drastic changes in the way it does business for slots do nothing to stimulate interest of the wagering and non-wagering public.  Unfortunately, at this point it appears the primary answer to racing's ills are slots, slots, slots.  This type of attitude must change and if members of the USTA leadership or Board of Directors feel slots is the answer to everything, then it is time for them to step aside and make room for someone who feels racing can make the changes necessary to make it relevant on its own.

Now, I realize there may have been years of frustration, road blocks, and failed initiatives which may have knocked the enthusiasm of some of the Board.  I also realize besides its official duties, the USTA is a defacto trade organization, looking out for the best interest of members, not the fans and horseplayers.  Making it even harder, the USTA is a membership based organization which survives primarily on dues.  Aggravate the membership and some of them are going to walk, leaving you with less revenue to work with.  Not an enviable position to be in for any leader at the district level or on the national level..

That being said, leaders of any organization need to be optimistic of what the organization is promoting.  Would you want to go into battle with leaders who feels the effort is futile or would you prefer leaders, who despite the odds stacked against them, believe they can still win even if the chance is small?  They need to motivate, be cheerleaders, and if necessary, keep fighting the same old battles if they truly believe the battle needs to be fought.  

Leaders must also be a realist.  The industry is in trouble, we are producing too much product (racing) for the demand (gambling dollars).  No, we probably can't save all the tracks, some horsemen are going to be out of work, some owners may walk away.  When a patient is seriously infected, you sometimes have to amputate a limb in order to save the patient. 

Being an optimist and a realist at the same time?  Is it possible?  Sure it is; it occurs in industry all the time.  Organizations hire turnaround experts to come in and make the tough decisions.  Now I realize the USTA is not a regular company but it is time to get individuals who believes in the product and willing to work their butt off for the sport in leadership roles if current members of the Board are unwilling.

The industry needs more revenue; it needs to recapture some of the money lost to the ADWs.  Form a non-profit ADW with thoroughbred and quarter horse interests which will run the ADW like any other and compete against them in pricing (rebates); the only difference being, after covering their expenses, the majority of the commission goes to the track and horsemen.  It may not be the same as a bet wagered on track, but it is a lot better than the 1.5% that goes to your purse account now (and to the track). 

Work towards instituting exchange wagering where possible to attract a new type of player who wants fast action and offer in-running wagering.  Tell the horsemen they must agree to regional coordination of scheduling.

Like the Gural plan for marketing but state laws restrict how slot revenue can be spent?  Make appearances in front of state legislatures, asking them to allow portions of the purse account to be used for the marketing of the sport.  Quite honestly the only people who would keep the legislators from doing this would be the horsemen and breeders who worked on crafting the original bill.  The state says no?  You don't put your hands up, you go back the next year if you believe it is what needs to be done.  After all, why should casinos have the freedom to do certain things while the states continue to shackle racing?

A problem with rules that are not uniform and fines and suspensions too weak?  Racing compacts are the answer.  Yes, it may be hard to accomplish it.  You don't give up.

The ideal leaders are individuals who challenge those who say "We can't" by asking "Why, not"?  If it is state law, work towards changing it.  It doesn't work the first time?  Change tact and try again.

The Board of Directors as constituted needs to go.  The number of directors is just too cumbersome.  How can any corporation change direction if you need the consensus of these many people?   There should be a smaller, more nimble board to make the decisions.  Any organization with a board so big will be strangled by the bureaucracy.  The right people need to be on the consolidated board.  What is needed is people who can say "Yes we can" instead of "No we can't".

Let this year be the year of "Yes we can".  If you don't believe in that, you need to step aside.

1 comment:

Harry Lare said...

I didn't watch the entire USTA meeting because quite frankly I couldn't stomach it. What I did watch, I can see why Harness Racing is circling the bowl.