Houston, We Have a Problem....

Yesterday at Vernon Downs there was a great horse race.  Nine horses competing for $150,000 in the Zweig Memorial Filly Trot.  Not only did we have a full field, we had the star of harness racing, Check Me Out competing.  What more could we ask for?

Make that a great race to watch, a horrible race to wager on.  Nine horses with three wagering interests; win wagering only.  Four horses from Brittany Farms made up one entry with three of them trained by Jimmy Takter.  The other entry was three horses trained by Ray Schnittker and the fourth horse in the entry trained by someone else but as a result of common ownership, also coupled into the same entry.  New York State Racing and Wagering Board rules mandated the coupling of these horses. 

It wasn't just the Zweig Memorial Filly Trot.  The consolation of the Zweig Memorial for colts also had a four horse entry due to multiple owners having shares of various horses.  All year at the Meadowlands there were races with three or four horse entries in overnight series killing wagering on otherwise bettable races.  Bill Finley in HRU discusses the problem with coupled entries and its impact on wagering, and I agree all entries should be eliminated but this is addressing the symptoms of a much bigger problem; not the cause.

Harness racing has an ownership problem which is not only impacting wagering, it is hurting breeders as well.  Some people may call it gaming the system, others may call it good business sense.  I would argue it is a combination of both, but let me be clear, the way the rules are makes it perfectly legitimate but at the same time further sends harness racing reeling.  Why do we find ourselves in this situation?

First of all, there is the image problem harness racing has; wrongly or rightly the sport has a tarnished image and if you are someone looking for an investment, are you going to invest your money, especially in the upper echelons of the sport on a horse if you feel you are going to have to deal with possible integrity issues? Then we have the exposure issue. Thoroughbred racing has exposure in many more states than harness racing. If you want to attract owners, you need exposure to your potential market. Potential investors in states like Idaho, New Mexico, or Wyoming are familiar with thoroughbred racing but likely know little if anything about harness racing.

Then we have the problem of offering too much money in overnight races (racino states).  With so much money being available in overnight races, why would someone even think of investing in a yearling and training when you can get a ready to race horse?  This also reduces the pool of potential investors.

But let's say we get past these issues.  Harness racing can talk all they want about what a great investment a standardbred is when compared to thoroughbred racing; costing less and greater earning possibilities proportionally with regards to the number of races a horse can start, yet you don't see many newcomers entering the market; especially at the yearling sales.  Why is this the case?

Talking to breeders and owners you hear a common theme.  Instead of one person or a couple of people jointly bidding on yearlings, you see individuals taking smaller portions of multiple yearlings to reduce their risk.  In the stock market, it is called diversification.  While the specific horses and percentages on an individual horse may vary, you tend to see the same people involved in partnerships deals.

In addition, we have anecdotal stories of individual agreeing not to bid against each other with the promise of being able to buy a small piece of the yearling they agree not to bid on.  The result is two-fold; as a partnership they can bid more for a horse they really want as this risk is spread further out in the case of individuals agreeing not to bid on a horse, reduces to final price a successful bidder has to pay as serious competition in bidding has been reduced or eliminated.  For the breeder, it means receiving less money for their blue chip prospects who help cover the expenses of the yearling sold at a loss.  How do you expect to get new owners into the yearling market when the system is being legitimately gamed?

Ever wonder why certain trainers seems to have an embarrassment of  riches?  When these partnerships acquire horses, the lead person or group gets their say as to who trains the horses which means their trainer of choice gets the call which results in the large training outfits have an embarrassment of riches which means multiple horses are raced in the same races, resulting often in coupled entries and purse money earned concentrated with the usual cast of participants which means we find ourselves repeating the vicious cycle.

What can be done about this?  In some ways hands are tied as the actions of these groups is perfectly legitimate.  In the next entry, I will discuss some possible ideas to to address the larger issue.