By Duncan Taylor
I am writing this letter in response to the article on the New York Times opinion piece, “In a Lengthy Guest Essay, the New York Times Advocates Ending Subsidies to Racing,” published in the March 1 edition of the TDN.
The Times article has caused me and our industry pain from the untruths that are spoken within it. But I’m going to take a slightly different view here–let’s see what is true in the article and what we need to do about it as an industry.
Light Up Racing is doing a good job as an organization doing something proactive to put the good word out there about horse racing, and I appreciate their efforts. This article in no way is criticizing anyone but instead is trying to rally the troops to do something that needs to be done. I have a question: do we want the health of our industry to rely on income from gaming products that have little to do with horse racing? If so, we are in pretty good shape as long as our current financial arrangements stay in place in each state. If those financial arrangements start to go away, what will happen?
The truth in the article is that our current customer is the horse bettor and our customer base is dying. What has led to this? Our industry does not have an entity that has authority or the incentive to be hyper-focused on serving our horse-betting customers and identifying and creating new ones.
There are four elements to marketing which all of you know: product, price, place, promotion. That order they are listed in is important. Where our industry has failed, because of the lack of entrepreneurial zeal and the lack of incentive, is we have not tried to grow our customer base as any entrepreneur should if they expect success. Compare us to Apple–the ultimate marketing company–and the way they constantly anticipate what their customers want, and meet their changing desires with new products.
An example of this follows. Our product offering to the gambling customer has a narrow focus. Racetracks and ADW’s currently offer only bets that are based on knowledge and intellect. There’s a different type of customer that we have not offered any products to. The other gaming entities have out-marketed us in developing products such as the slot machine, the lottery and other ways to bet for fun or to fulfill a desire–the hope that you can change your life with a single bet. Our industry has not looked at that segment of the market as a possibility to substantially grow our revenue. Therefore, we have developed none of those types of bets, which make up a large part of the revenue from gaming activities. This is problematic because we have used other nonintellectual bets from gaming entities that are not focused on the horse. What are the consequences of this approach? Less interest in horse racing? If you look at other major sports, most of the substantial revenue comes from eyeballs (TV and sponsorship revenue). We are losing our fan base (customer) and we are not focusing on what the sports fan and the gambler want.
Let’s look at our current situation. Who is developing our new product offerings? We have racetracks that have long been the customer-facing organizations, and the advance-deposit wager companies who are interfacing with customers. Oftentimes, these racetracks are looking at their real estate as a profit center, and the casino business sometimes is their main business. They are not looking to grow horse betting as their main source of revenue. I’m not being critical of the racetracks. If you’re a public company, you are responsible to your shareholders and you must do what’s best for them.
The answer must come from bright minds who own horses and who see an opportunity and want to make a difference. The people that own the most horses have the most to gain and the most to lose. One truth about these people is that most of them make their money from different industries. They are in this sport to enjoy it and not looking at it as a job to bring profits into their organization or their families.
Think of a young entrepreneur starting his own company and betting his livelihood on whether it makes it or doesn’t. That’s the kind of incentive we need to build within an organization that’s going to be customer-facing and thinks about nothing day and night but what the customer wants. They would develop products with the right pricing, in the right place and with the right promotion of our offerings. This is what I saw as being true about the Times article–we are a business without energy to give the customer what they want. Therefore, we are non-essential, Yes, we provide jobs and infrastructure and that is great but those too are diminishing and will continue to diminish if we don’t have customer focus. Who are our industry’s real customers? The people that watch our sport and the people that buy our gambling products.
We need to figure out the products our customers want. Then we need to price the product competitively, present the product at the right place and then start to promote a product we know through research that people like. In my opinion, we need an industry structure that will create exciting products to bring new customers, an entity structure full of innovation and full of zeal to do the best for the customer and create new revenue for purses and the members of this entity. This will take like-minded industry organizations (who want to put the thoroughbred at the center) to come together and select a great, qualified leader that can make a great deal of money based on performance. We have access to some great business minds–some of the world’s most successful people love and participate in Thoroughbred racing. Many of our problems will be solved if this happens. We have greatly improved our safety with HISA and we are doing much better in taking care of retired racehorses. We now must collaborate and work together to figure out how to build a customer-focused structure to make our sport profitable and bring it back to relevance.
I appreciate you reading and hopefully this will inspire collaboration and bring forth energy that can make our sport everything we know it can be!