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Investors would share in revenue of $12 million race
The individuals who purchase a share in a $12 million race that was proposed by racetrack owner and owner-breeder Frank Stronach earlier this week would share in the revenues generated by the race but not in the revenues generated by any other races on the card, a senior official for Stronach’s racing company said on Thursday.
Mike Rogers, a senior vice president with the Stronach Group, said in an emailed response to questions about the race that many of the details in the proposal have yet to be nailed down.
However, he said “it is anticipated” that the shareholders, who would each be required to invest $1 million, would be limited to the revenue derived from the single $12 million race, although that revenue would also include the horsemen’s share of the handle, plus all media rights and sponsorships connected to the race.
As proposed by Stronach, each share would entitle an investor to one starting berth in the race, with the field limited to 12. That right could be assigned or leased to another owner, the Stronach Group and Rogers said.
As designed, the 1/14-mile Pegasus World Championship, as the race is being called, would be the richest race in the world, and the winner would likely take home approximately $7 million before taxes. Currently, the richest race in the world is the $10 million Dubai World Cup, which is underwritten by the ruling family of Dubai.
“The shareholder agreement would need to be struck well in advance of the race,” Rogers wrote in the email, in response to a question regarding the timing of the shareholder agreement and the difficulty in predicting a horse’s schedule or fitness for a race months in advance. “That shareholder will then own a slot in the Pegasus World Championship, and if they don’t own a horse that they want to enter in that race then they can make arrangements with another owner to lease or share the purse or make a business arrangement to put another horse in the spot.”
Rogers wrote that the Stronach Group is “hopeful that the race handle could reach as high as $50 million.”
This year, the Kentucky Derby drew bets in excess of $120 million, while the Belmont Stakes had handle of $82 million and the Preakness Stakes had handle of $52 million. The richest race in the U.S., the $5 million Breeders’ Cup Classic, had handle of approximately $29 million this year. All four races this year featured eventual Triple Crown winner American Pharoah, now retired.
The release from the Stronach Group about the proposal said the investors would be entitled to 70 percent of the revenue associated with the race, with the Stronach Group retaining the other 30 percent. If the investors were able to retain the racetrack’s share and the horsemen’s share, the take from handle would hover around 8 to 10 percent of the total amount bet. If that were the case, the best-case scenario for generating enough handle for the investors to cover the purse of the race would be $170 million.
Rogers said that the Stronach Group has not yet decided whether investors would share in any of the ontrack revenues such as admissions or food-and-beverage sales. “TSG is still working out details as to whether they would be entitled to any of the ancillary revenues,” he wrote.
Under the proposal, the shareholders would be required to lease either Santa Anita Park in Southern California or Gulfstream Park in Florida to stage the race, which would be scheduled for January, “thereby avoiding a conflict with either the Breeders’ Cup or Dubai World Cup” in late March, according to the Stronach Group release. The Stronach Group owns Santa Anita and Gulfstream.
Once again the rich folks who run this industry have come up with a scheme to entertain themselves that does nothing long term for horse racing. It's incredible that all their ideas exclude the real solutions that racing needs. One of these days these geniuses will have a eureka moment and realize that for racing to continue as a self sustainable year round business it can not live off big day Ponzi schemes. Or revenue from external competing businesses like casinos .why in the world would they believe that casinos would subsidize them long term ?. The casinos used racing to gain access to markets and now see racing as a burden and want to rescind the deal.goverments are only too happy to to side with the more profitable side.and rightly so. The failure of the horse racing leadership to understand the basic economic truth that a business needs to be self sustained has doomed the sport. If all the effort that is put into these short term non solutions were used to actually make their product more marketable racing might have had a chance. In the end even this scheme depends on the bettor to generate enough revenue to cover the investment.so why not look at the bettor "the goose that lays the golden eggs' and create an environment where he will grow and help make the whole thing auto sustainable. People are not abandoning racing because it's easier to bet at a casino or pbecause it's an old mans game and all the other nonsense you hear regurgitated over and over.its because there is no integrity in the sport. The general perception is that you don't get a fair chance .then there is the issue of abuse to the athletes 'horses' who wants to see their favorite horse being doped and then regress until he ends up a broken $5 000 claimer. Address the real issues .insist on honesty .be transparent have track vets administer any on track medication. Have all melds available at the track come in through a track pharmacy .trainers can order online but it gets delivered to the track pharmacy and opened and picked up there.put in privacy protocols if necessary.but nothing comes into the track that is prohibited and when caught expell the culprits immediately.have surveillance 24 hours in the backstretch and don't allow undesirables in. Have a panel analyze video of all the races immediately after the race and have software that analyzes betting patterns and throws up red flags for unusual betting. Then investigate and make findings public. Right now the perception is that horse racing is a wild Wild West were anything goes and the boldest rule. While the public runs for cover.
Another irrelevant idea.
this game needs all the gimmicks it can find because if it doesn't, it will flatline like AC casinos did.
Hopefully not one owner participates in this Ponzi scheme. Stronach is getting even more weird as he ages...
It's actually a great idea because it will keep good horses from going to Dubai and basically knocking them out for 3-6 months & it might prevent horses from retiring after the Breeders Cup...personally I would like to see horse racing wake up and add a series like golf and nascar has done to create excitement to the sport but that would make sense so it will never happen.
$1 Million sounds like a lot of loot....but these folks are so rich they often spend $1 Million on unraced 2 year olds.
Awesome. No matter the final result, ( and I think it'll be a success), the fact that new ideas are being well thought out is great. Let free enterprise work. This allows for not only a great race, but more folks actively involved in the investing of horse racing, which benefits all. Great idea.