Quote:
Originally Posted by ubercapper
Are you aware they put in $6 million a year for purses above the contract with horsemen (which I take to mean as not coming from handle) and that wasn't sustainable according to the initial story?
If you were aware of that subsidy (for lack of a better term) and reason for it, as well as, even with the added money, purses weren't competitive with some other tracks, what would YOU recommend to address the issue of having to add millions of dollars annually to be competitive with other tracks that run at the same time time of year?
I'm sure you will agree coming up with solutions is as important as raising issues. Honestly I don't have answers myself but I am hopeful you might have some ideas for solving the issue of purse inequity (which can lead to field size declines from one track to another) considering your intimate knowledge about how tracks operate.
Lastly, I don't understand how this can be labeled as corporate greed if the money is flowing back into purses, and therefore to trainers and their staff, jockeys and others that benefit from the trickle down effect of a vibrant racetrack economy.
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re: the bolded part of the above quote...
Call it corporate stupidity instead of corporate greed then.
Actually -- Utter stupidity might be a more accurate label.
"Raise takeout because we need bigger purses" is what this is being sold as.
But there's a huge problem with that.
You see "raise takeout because we need bigger purses" has been tried before.
In the entire (recent) history of takeout increases: "raise takeout because we need bigger purses" has never once produced the desired result.
It didn't work as promised in 2009 when Los Al had their takeout hike. In fact it had the opposite effect. During the first 6 months after the Los Al takeout hike ON TRACK handle fell approx 27%.
It didn't work as promised in 2011 when Santa Anita, now closed Hollywood Park, Del Mar, and Golden Gate had their takeout hike. Handle fell by a big pct immediately afterwards. The result was purse cuts not purse increases.
It didn't work as promised in 2014 when Churhill did the same thing. For non special event days (read that as days other than Oaks Fri and Derby Sat) handle fell by a big pct as well. The result once again was purse cuts not purse increases.
Outside of the above real world case histories that I'm citing --
The the topic has been studied by people with impeccable bios who are much smarter than myself.
Dr. Richard Thalheimer authored one such study in 1998.
In that study he identified and ranked the factors that drive betting handle in the following order of importance:
1. Special Event Days (Derby, Preakness, Belmont, Breeders Cup, etc.)
2. Takeout
3. Number of Races
4. Field Size
5. and lastly: Purse size
In his study, which was based on looking at real world numbers Thalheimer wrote the following on page 9:
Quote:
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This average purse elasticity is quite small and it suggests, for example that wagering would increase by only 6% if purse were doubled. This is a surprising finding considering the importance that is attached to the purse variable in all major policy decisions to increase the wagering in this industry.
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So riddle me this:
If this has been tried many times in the recent past?
And if it has produced purse cuts instead of purse increases every time it has been tried in the recent past?
And if dating back, well forever, the industry's own paid for published studies written by people with impeccable bios and letters like Phd and Dr after their names have been telling the industry why it won't work?
Why in the hell would anyone in their right mind think it will work this time?
No matter what reason Keeneland gives -- and no matter how Keeneland tries to sell this to its players -- I think the most likely outcome after Keeneland takes their turn with "raise takeout because we need bigger purses" will be:
a. Creation of some serious player badwill (much more than they anticipate.)
b. Purse cuts.
c. Or if they don't want publicly announced purse cuts because that would make them look bad: Having to step up the subsidizing of purses from sources other than betting handle on their own parimutuel pools. Re: Instead of throwing $6M of their own money at purses having to throw $8M or $9M at purses because handle on their own pools dropped that much.
-jp
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