09/26/2013 2:27PM

Andrew Beyer: The stands may be empty, but people are betting

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ELMONT, N.Y – Walking through Belmont Park is an unsettling experience, especially for anyone who remembers America’s most imposing racetrack in its glory days. The grandstand that stretches nearly a quarter of a mile used to be packed with tens of thousands of fans, even on weekdays. Last Saturday’s attendance of 5,628 made the cavernous facility feel like a mausoleum, and on weekdays the crowds are half that size.

Near-empty grandstands are a familiar sight in the modern-day U.S. racing industry. But Christopher Kay, the chief executive officer of the New York Racing Association, doesn’t want to accept that as the new normal.

Kay took the helm of NYRA in July, just in time to spend the summer at Saratoga, the nation’s most successful track, packed with large, enthusiastic crowds six days a week. But when NYRA moved its operations downstate after Labor Day, Kay saw what the sport looks like most of the year.

Kay was hired after NYRA had been rocked by controversies and scandals and its CEO deposed. Governor Andrew Cuomo – no lover of horse racing – orchestrated a coup that gave New York State control of NYRA. Dealing with the state’s politics and bureaucracy would be a full-time job in itself, but Kay’s background won’t let him ignore the challenge of attracting and caring for customers.

He has been the CEO of Toys ‘R’ Us and an executive of Universal Parks and Resorts, two businesses in which taking care of customers is paramount. When Kay talks about racing, he uses language he probably employed in discussing visitors to Universal’s theme parks.

“What I want to do is provide an enhanced guest experience,” Kay said. “We’re stressing the importance of engagements with our guests.”

He believes that NYRA can do an even better job at Saratoga, and he believes that he can revitalize Belmont – by treating customers better, staging special events, offering better food and arranging the seating to eliminate the mausoleum feeling.

Kay will not succeed in transforming Belmont, but can be forgiven for being unrealistic, because he is a newcomer to the sport and even most industry veterans don’t understand the dynamics of on-track business vs. off-track business.

The sport underwent a profound change in the 1990s, when horseplayers got the chance to watch races on a computer or home TV and to bet by computer or phone. The vast majority of them saw that playing the races from home is a better experience than going to the track. They don’t have to take a slow-moving train to Belmont Park or crawl along the Capital Beltway to Laurel Park. They don’t have to pay for admissions, parking or overpriced food. With a computer on their desk, they have all necessary handicapping information at their fingertips. Nothing a racetrack can offer will trump these conveniences.

The few tracks that still offer a vital live product are all beneficiaries of special situations. Saratoga, Del Mar, and Oaklawn Park are resort/spa destinations with long histories and a special ambience that lures a broad spectrum of fans. Keeneland and Churchill Downs are in a state where horse racing is ingrained in the culture.

Almost everywhere else, technology has changed the business as fans opt for the ease of betting with a computer. Most other businesses eagerly embrace such technological advances. In an era when people can deposit a check by using a smartphone, executives at Bank of America don’t yearn for the good old days when people went to a

grandiose downtown bank and stood in line to make a transaction. Yet the racing industry seems distressed by change. Its leaders despair over empty seats more than they cheer the expanded reach of their business. The media reinforce this negativity. Newspapers regularly run photos of barren grandstands to demonstrate the decline of Thoroughbred racing

The empty seats represent a shift from on-track business to off-track business. In 1983, when the Belmont grandstand with bustling with activity, the average daily betting at the summer meeting was $3.46 million. Adjusting for inflation over three decades, that amount is the equivalent of $8.12 million today.

At the Belmont summer meeting of 2013, wagering averaged $10.1 million per day – exceeding the figures from the supposed good old days. NYRA vice president David O’Rourke says it is a conservative estimate that 25,000 individuals away from the track are betting on an average day.

Of course, on-track customers are more profitable; they pay admissions and buy food, and there is no middleman taking a cut for processing their wagers. Nevertheless, only 7.6 per cent of the money bet on the Belmont races this fall comes from people at the track. Does it make sense to obsess about taking proper care of on-track customers while taking for granted the other 92.4 per cent?

For decades, tracks have recycled tired gimmicks to promote live attendance (rock concerts, T-shirt giveaways, Family Fun Days, etc.), which never have any lasting impact on a track’s business. Perhaps clever marketing departments should reach out to gamblers at on-line poker and sports-betting sites and try to introduce them to the greatest of all gambling games.

Tracks should focus on improving their websites and their own betting sites. (Kay understands this, and developing the NYRA Rewards wagering platform is one of his top priorities, though the project has been bogged down in typical New York red tape.) Tracks should look for ways to communicate important information – such as late changes and scratches – to customers who are in no position to hear announcements on the public-address system. (E-mail and text alerts, perhaps?)

Racing executives should understand the changes in customers’ betting habits and explain them to the media and the public, in order to dispel the notion that diminished live attendance means that the sport is dying. When Chris Kay walks through a barren Belmont grandstand, he should be thinking, “We’ve got a great crowd today; they’re just not in our seats.”

chad mc rory More than 1 year ago
I hope Beyer saw the attendance figures from Keeneland... Go bottle some of that magic and spread it around.
Joseph Batyko More than 1 year ago
Mr Beyer i really believe the only way to reenergize the sport is to lower the take out to make it competitive with football and other sports wagering. wagering on most sports is a 5% take out on average, racing is 18%_ to 20% . if the supply siders have it right the lower rates will produce more revenue and more profit for the tracks and state. if people can leave the track a winner more often racing will come back
Courtland More than 1 year ago
I think this company's news report says it all... "CARLSBAD, CA. Project Metamorphosis—a new horse racing research study conducted by solution consultancy Creatorans™ reveals de- centralization and mismanagement from a national or “big picture” perspective are top problems faced by the US industry. Shortfalls in innovation, marketing, consumer understanding and modernization also placed high..." creatorans.com/pr_sept_27-13.htm
saratogajunkie More than 1 year ago
Just a thought....when tracks offer anything free people flock to the track only to leave, as some readers mention below. How bout a 5$ win voucher +- for the feature race but hand it out prior to the first race!
Mark More than 1 year ago
If east coast tracks want to increase their attendance all they have to do is visit the tracks in Southern California. Both Santa Anita and Del Mar are beautiful, well-maintained tracks that offer clean facilities, plenty of betting windows (both electronic and manned) and pleasant amenities including food and beverage and even child care and betting and handicapping clinics. I visit Del Mar for a week each year and there are more people at the track on a Wednesday with a nothing-special card than are at Laurel on Maryland Million day. I can't speak to whether this is because of special rules that apply only to California racing or just good track management but Belmont, Aqueduct, Laurel and Pimlico sure could take a lesson!
M More than 1 year ago
I hope the Texas Racing Commision reads this article.........
Alexander Danzig More than 1 year ago
Spot on Andy. Not saying racetracks should not resolve to improve customer service - but so should many sports venues. At least west coast tracks do not employ stop-and-frisk of every fan like the baseball and football stadiums do. That said, while other sports developed for reasons other than gambling, and hence in the gambling era do not see much of a change in attendance, racing was always centrally about gambling. Now that it can be bet in your underwear at home, your typical track bum just isn't going to tax himself to get bohonkus to the track. 90% of racing's marketing dollars should be spent developing the online part of the game that provides 90% of racing's profit.
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B LG More than 1 year ago
it
Sal Carcia More than 1 year ago
Neilnap, I thought Andy was advocating doing more for the remote fan. Nevertheless, I think your point is a very good one. I hear it often that racing lost it fans to other forms of gambling. The truth is horseracing had a pent up demand of fans ready to abandon the game after years of poor treatment. It other words, racing drove its fans away. If I was Chris Kay, I would track you down, bring you to the track, buy you lunch and pick your brain about what is wrong and how to make it better. Making fans feel wanted does not cost that much.
NeilNap More than 1 year ago
Thanks Sal, appreciate the comment. I have very strong opinions on things that could/should be done to improve the fan experience, because I don't like seeing empty stands on a beautiful weekend. I think the right product is there (good racing), but pretty much nothing else... I have been going to the races for 25+ years, big days and regular days, and not once did I ever feel the track was doing something to strengthen my loyalty (or for that matter, appeal to new fans). I would absolutely welcome the opportunity to spend a day or two with Mr. Kay and share my thoughts.
Frank More than 1 year ago
it's 2013 and we're just now figuring this out?