Originally Posted by dilanesp
Here's the problem. In economics there's something called a "natural monopoly". This happens when it doesn't make any economic sense given the conditions of the market for there to be a second supplier.
A classic example is an electrical utility. Many municipalities have public utilities. But even if the electricity system is set up and run by a private company, it makes no sense to have a competitor. You only want one set of power lines running everywhere, you want a single company to be held accountable and who can be called on to fix outages, etc. So instead of encouraging competition, you just accept there's going to be a monopoly and regulate it.
Horse racing, because it has declined and is no longer a sport that a lot of people care about, has become closer and closer to a natural monopoly. When it was a healthy sport bringing in tons of money, sure, nothing wrong with having several track owners competing with each other. When I was a kid, the management teams of Santa Anita and Hollywood Park hated each other and almost never cooperated on anything. But they were both very profitable tracks. That competition was healthy for racing and arguably brought out a lot of innovations such as swag giveaways, exotic wagers, etc.
But nowadays, the most likely result of separate ownership is to increase the probability that the remaining tracks fail. I am not convinced there's any economic viability in running horse races in Northern California year round at all, but if there is, Stronach-- a person who is actually committed to trying to get racing to work-- will find it. You are far less likely to find it with separate owners.
Understand, as well, that because the general public doesn't care about our sport very much anymore, and because of the economics of simulcasting, contraction is inevitable. Closing Pimlico, to choose sort of the obvious example, is probably necessary for the long-term health of the sport. Pimlico sits on very valuable land, makes money only two race days a year, has great difficulty competing with other east coast racetracks some of which get slot revenues, and would cost hundreds of millions of dollars to renovate. It's a lost cause. So if you like having racing in Maryland, consolidation at Laurel is a no-brainer. Stronach has a better chance of making it work if he only has to maintain and improve one track rather than two.
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