08/15/2011 4:42PM

Racetrack executives encouraged by Jockey Club's $10 million marketing commitment

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SARATOGA SPRINGS, N.Y. – The Jockey Club’s commitment to underwrite a television series in 2012 and pay for the launch of a social-networking game and mock-wagering Internet site was welcomed by racetrack executives on Monday, one day after the organization announced the projects at the Round Table Conference on Matters Pertaining to Racing.

The Jockey Club will commit approximately $10 million over five years to the projects, including the costs of a report prepared by McKinsey & Company that was released at the Round Table. The projects are being funded in an attempt to reverse an erosion of racing’s fan base, officials said, largely on the recommendation of the McKinsey report, which said that racing needs a greater presence on national television and should introduce more people to the game in simple, low-cost ways.

Jack Liebau, the president of Hollywood Park in Inglewood, Calif., said that the recommendations in the report would provide guidance to California racing officials as they consider how to spend the state’s annual $5 million allocation toward the marketing of California racing. Some of that money, Liebau said, should go to television broadcasts of races from the state’s tracks and other portions should go toward promoting the Jockey Club’s free-to-play site after it is launched.

“One of the big problems that racing has always had is the intimidation factor,” Liebau said. “[Free-to-play sites] have been very successful for poker, in helping people learn the game, learn how to play it right. I think that’s the sort of thing that’s got to work.”

Chris Scherf, the executive vice president of Thoroughbred Racing Associations, a racetrack trade group, said that the TRA would work with bet-processing suppliers to simplify betting interfaces and would add several topics to the TRA’s annual simulcasting conference relating to the recommendations. He characterized the recommendations as “practical steps” that would be unlikely to create significant reversals in racing’s popularity, but he said that the industry would be remiss if it failed to embrace the measures.

“Anybody who believes that we can maintain the status quo right now is delusional,” Scherf said. “None of these recommendations are a magic bullet, but they certainly give us a way to take incremental steps to building the fan base.”

The Jockey Club hired McKinsey after precipitous declines the past three years in the sport’s core economic indicators, including handle, bloodstock prices, and the size of the foal crop. The report’s recommendations were largely focused on small measures that could help stall the slides, in an acknowledgment that the “capital constraints” facing the industry’s beleaguered racetracks precluded far more expensive undertakings such as large-scale improvements to racing facilities and national marketing campaigns aimed at combating negative perceptions of racing shared by large segments of the public.

The report included several sobering statistics, including the result of a survey of 1,800 racing fans in which only 46 percent of the respondents said they would recommend racing to other people, compared with 82 percent of baseball fans and 81 percent of football fans. However, the self-loathing of horseplayers seemed to be a trait shared by other gamblers – the same survey indicated that only 55 percent of poker players would recommend that other people follow the game.

The survey indicated that more than 65 percent of all fans were introduced to the sport by going to a live racetrack, by far the largest reason cited – the next highest was “other,” at 13 percent, followed by “family has always been involved in racing,” at 8 percent. But the report did not offer any recommendations for improving the ontrack racing experience, aside from citing a litany of complaints offered by survey respondents about their negative experiences at the track, with the top three complaints being dirty bathrooms, poorly maintained facilities, and low-quality food and food service.

The report’s authors, Dan Singer and Mike Lamb, contended that racing’s low visibility among the general public was related in part to the sport’s television coverage, citing a decline in the number of national television broadcast hours from 175 in 2003 to 43 in 2010. The statistic, however, excluded the thousands of hours in annual horse racing broadcasting on Television Games Network and HRTV, two competing channels that are available on satellite and cable systems. The authors said that the TVG and HRTV broadcasts did not appeal to people who are not already core racing fans and that a renewed presence on national television was important to draw more fans into the sport.

Because of the recommendation, the Jockey Club said it was exploring a number of ideas for a television series in 2012, ranging from a reality-type show to a series of televised races. Following the Round Table, James Gagliano, the Jockey Club’s president and chief operating officer, said that the Jockey Club was already in discussions with major television networks to broadcast the series, but he said that planners had yet to decide on what format the show would take.

Closer to home, the report recommended that racetracks more closely examine how races are scheduled to avoid overlaps, especially for graded stakes, which draw the highest amount of handle relative to other classes of races. The Jockey Club already has a tool in the suite of software it has developed for racing offices that alerts racing secretaries to overlapping races, but Jockey Club officials said during the Round Table that they planned to improve the scheduling tool to illustrate handle gains that might be possible if races were re-scheduled farther afield of competing races.

Charles Hayward, the chief executive of the New York Racing Association, said that he found the recommendation about avoiding overlaps to be an important aspect of the McKinsey report, citing an analysis that NYRA’s staff had conducted. And it was particularly germane for NYRA: the day before the Round Table, the Grade 1 Sword Dancer Stakes at NYRA’s Saratoga Race Course went off only moments after the horses in the Grade 1 Beverly D. Stakes crossed the wire at Arlington Park, in large part because of unforeseen delays earlier on the Arlington Park card.

“If our track and Del Mar have a race that goes off within five minutes of each other, we probably both lose about 10 percent in handle,” Hayward said. “That’s definitely something we can improve on.”

Gagliano said after the Round Table that the Jockey Club was committed to funding the projects for the next five years, after which the organization would evaluate the results of its efforts.

“We’re confident that after the five years we’re going to see some growth in the numbers,” Gagliano said.