06/02/2016 3:36PM

Crist: Pegasus needs tweaks before it takes flight


Racing is so bereft of innovation that new ideas are especially welcome even if they are flawed. Exhibit A is The Stronach Group’s new Pegasus World Cup, scheduled for Jan. 28 with a $12 million purse that would make it the world’s richest – and weirdest – race.

Its central idea is not truly new, having been borrowed from the futurities of yore, where nomination fees accounted for the entire purse of a race. This is not your grandfather’s futurity, however. Instead of soliciting hundreds of nominations, the Pegasus has already sold the 12 spots in its starting gate for $1 million apiece. The buyers, an odd assortment of established horse owners and financial speculators who don’t own any horses, can then use their purchased spot to race, lease or share a horse, or sell the berth to the highest bidder. The 12 spots sold out within a week.

The owners of California Chrome and Nyquist are among the purchasers; everyone else is looking for a horse or a buyer between now and January. This creates some intriguing arbitrage situations and hypotheticals. When’s the best time to sell your slot? At what point does it start losing value? If the five favorites have secured berths and any additional starters are going to be 20-1 and up, who’s going to pay $1 million to get only 6-1 on winning the race?

At different times, it will be either a buyers’ or a sellers’ market. It will be fascinating to see how it plays out – if the public is in fact allowed to see. The complex mechanics of berth ownership demands transparency for the wagering public, with all transactions registered and announced. Otherwise, the race will go off under a cloud of hidden ownership interests and suspicions of collusion.

(One small matter to reconsider is the current plan to pay $250,000 to each of the fourth- through 12th-place finishers rather than the usual practice of paying more to the fourth- and fifth-place finishers than the trailers. It would increase the chances of someone buying a slot if the prize for finishing fourth were the customary 6 percent, which would be $720,000, rather than incentivizing someone to run a claimer around the track to salvage $250,000 for running last.)

It all amounts to a whole new model, fantasy racing with a side order of arbitrage. The question is how fair and significant the world’s richest race will be under these conditions.

Gulfstream Park, where the race will be held just outside the shadow of its 120-foot statue of the mythical Pegasus stomping a dragon, plans to secure Grade 1 status for the race by swapping it in for the Grade 1 Donn, which would be discontinued. This is the same maneuver that Belmont Park used to get instant Grade 1 status for its new Belmont Derby and Oaks two years ago, substituting them for existing Grade 1 races (the Jamaica and Garden City).

The problem is that strictly speaking, the Pegasus should not be a graded race at all, for the simple reason that it is open only to owners who have bought starting berths. It is less like the Donn than like the rich 2-year-old races here and abroad that are restricted to graduates of a certain yearling auction or 2-year-old sale. Those races are properly denied any graded status despite their gaudy purses.

Supposedly, owners are racing for even more than the $7 million winner’s share of the purse, as they allegedly will receive a share of the media and sponsorship rights and the betting handle. The first two seem fanciful sources of revenue – any cash will be flowing outward to put the race on network TV – and there might be a more productive use of the takeout from the betting handle.

The central idea of the Pegasus is to raise purse money from owners rather than through an extraction from the parimutuel handle. Horseplayers have been told for generations that they must pay an exorbitant 20 percent takeout on their wagers because of the need to pay purses as well as to staff and maintain a racetrack. Now, however, we have a rare case where the purse has already been funded.

So, why not eliminate the takeout on the race entirely, or at least slash it to a low, player-friendly rate such as 10 percent? That would make this a revolutionary race for the customers as well as the owners.

Anonymous More than 1 year ago
The owner is paying everything  @Gulfstream, so I would prefer to go to Dubai where the transportation, hotel, food, seats etc is free for a week. and the purse is pretty good, $10,000,000
charles More than 1 year ago
How about a future's wager to benefit retired horses, rescue horses, and injured jockey fund. One could wager on a post position before even knowing what horse was going. Similar to a lottery but with a small takeout to pay for administration costs and small percent to the wagering platform. It could be run continuously until the post position draw.
realgooddogtoo More than 1 year ago
Steve Crist, you hit it right on the head, couldn't say it more specific .
Walter More than 1 year ago
Takeout should be ZERO for this race since it is already funded.  That will attract a lot of betting interest no matter who runs in the race.  
Bruce Epstein More than 1 year ago
It's Frank's "bat and ball" in winter racing, so he can do as he wishes.  
Chas More than 1 year ago
Steve Crist....
Thank you for a true perspective on this very flawed race...this is not about getting the best horses to run in the world's richest race...this is about owners playing a 'high stake game' for $$$$...
No one knows what the $$$ from all other revenue is going to be under this 'sharing'...and worst is the people who have brought 'slots' in the starting gate for this race without even having a horse or a horse worthy of running for this kind of money...plus these people retain 'rights to' their starting gate slot as long as they come up with $1 million every time they run this race...
Flawed, flawed, seriously flawed and it is the brainchild of Frank Stronach...it will go the way of the Sunshine Millions - racing between Florida and California bred - existing only in name....
Anonymous More than 1 year ago
The Florida state lottery should surely get on board either by selling parimutuel tickets through their terminals or  running a scratchie game tied to the saddlecloths. I'm not sure how they would deal with less than 12 runners or a horse being scratched but there are smarter people than me working for state lotteries. This would increase handle on the race substantially and a 20% take out is actually a bargain for people who pump money into lottery games. 
Cemi Farkell More than 1 year ago
Thank you Anonymous for a great comment. The state lottery is a good option to get more people involved in the gambling aspect of racing, If it could be made to work.  it would give everyone an easier way to participate in pari-mutuel activity. If the average person - 1. Never goes to the track, 2. Does not go to the local OTB,  3. Does not have access to TVG etc. , and worst of all 4. Could care less, how are they supposed to bet? On the other hand, the state and national lotteries are extremely popular on a daily basis - evidence that is much easier to blindly play numbers as opposed to spending 3 hours on the DRF.
Joel Firsching More than 1 year ago
Why would rhe fan ever get treated kindly ?  When the new casino money was introduced.  The takeout was never lowered.
Ron Rios More than 1 year ago
Does any racetrack ever do anything for the horse players?
Andrew More than 1 year ago
Yeahm, takeout should be 5-10%. But it should still be Grade 1 because it is still open company. The Kentucky Derby, Preakness, and Belmont are restricted to horses that are Triple Crown nominated by their owners
Mike Oliveto More than 1 year ago
Not true. Owners can supplement to Triple Crown races.