Establishing a Talent-Based Authority in Racing - Horse Racing News | Paulick Report

Establishing a Talent-Based Authority in Racing

(Editor's Note: For more than 20 years, Lexington advertising executive Fred Pope has advocated a business model for horse racing that collectively puts the owners of the best horses in a position of authority through the creation of a “major league” for the sport. The recent PETA allegations and complaints filed with federal, state and local agencies by the animal rights group have demonstrated how the absence of an authority figure or governing body has paralyzed the sport and rendered it unable to make meaningful change. Pope's proposal, modeled after sports like the PGA Tour, has been floated before, but in light of the void of ideas from existing industry organizations and their leaders, I think it's worth a renewed look. You can contact the author at [email protected] – Ray Paulick)

A former client in the Thoroughbred industry would often respond with a question of his own when someone asked him about a delicate issue.

He would say, “Do you want it with the bark on, or the bark off?” If they said they could take it with the “bark off,” he told the truth, as he knew it.

For more than forty years, I have worked for those getting started and those at the very top of this game. Here's my answer to the question of Authority in Racing, with the “bark off.”

This time of year thousands, and maybe millions, of basketball fans get fired up by the NCAA tournaments and go shoot some hoops, many at the local YMCA. Some are pretty good, most are not, but their families love them and want them to play.

They may need Advil, Red Bull, or newly legalized weed to prepare and then recover from those games and orthopedic surgeons will be seeing a few.

Some feel every participant, in every sport, deserves to be on television. That it is their right to appear in Madison Square Garden and the very best sporting facilities in America. But, that's not how sports marketing works is it?

Nobody will pay to see the YMCA level. No companies will sponsor them. No media will show them on television. It is a cruel world for the participants who cannot compete at the highest level.

The recent PETA video is about racing, a sport that puts YMCA level horses on television every day. We present them front and center at Belmont Park, Santa Anita and the best racing facilities in America. We break all the rules of sports marketing because government gave us the exclusive of legal gambling on sport.

Racing used to be a real sport. It was the biggest and most popular in America. Today it is the only sport where it doesn't matter if the participants are competitive. The New York Times broke the PETA story and has written about racing jurisdictions where owners get a check for putting horses into races despite them being much too slow and too infirm to compete.

Do those casino-fueled races qualify as sport? Do we realize the exclusive that racing has on gambling is at the whims of politicians (you know, the ones elected by the people who read the New York Times and share videos on Facebook)?

I'm a marketing guy, so I'm sensitive to the public image of racing and how fragile our position with the public is right now. Legal gambling on racing is not guaranteed in the Constitution. It's been taken away before and it can be lost again, state-by-state or banned nationwide, by a knee-jerk act of government.

We are so consumed with enabling YMCA races that medication has become the main issue of authority in racing.  Racing authorities, pressured by tracks and horsemen, tell casinos to race too many days, so medication is the answer.

If appearance-money races were suddenly drug-free by order of the federal government, would it make a difference and qualify them as sport?  Would you take your son or daughter to see them?

We manufactured this problem, which may prove fatal, for a market that does not exist in sports. The best facility in the world has no market for a bad product. You will never hear, “Let's go to Madison Square Garden to see some YMCA games.”

Why do we run the YMCA races? For money, of course, but if racehorse owners lose money keeping those horses running, then who benefits? That is a “bark off” question for racehorse owners.

Twenty-two years ago in The Blood-Horse, I bought advertising pages to ask the question, “Whose Game Is It?” The answer then is the answer now; it is the racehorse owners' game.  As the owners of the talent in the game, the racehorse owners should protect, control, and develop it like other sports.

Watching the PETA video, some in our industry are outraged at the trainer's assistant. But for outsiders – the public – the takeaway is the bad guy is not the foul-mouth grunt doing the work. It is the guy he is talking about, the racehorse owner, who pays them to do the despicable things.

Many owners in this industry are disillusioned and have stopped going to the races unless they have a horse running, or it is a big race day. Breaking the rules of sports marketing has consequences. We can alienate and lose our base.

A few days each year, racing meets the modern sports model of presenting only the highest level of racing.  On big race days people pay regular sports' admission prices and the atmosphere of major owners and their guests draws in a constituency of bloodstock agents, breeders and fans, similar to major sporting events. Good racing is good sport, for the public and our sons and daughters.

The problem is, the next day at the track is not good sport. As the PETA video showed, both good and not so good, horses are mixed together and treated the same in the current mess of too much racing and presenting all levels together.

Those who commit the bad deeds, from racing authorities to tracks to owners to trainers, could care less about PETA and whether or not racing is structured the right way. Those folks will not change by themselves.

To some the PGA Tour golf mantra, “We would rather lose than cheat,” is laughable. But it is as simple as refusing to tee it up with a guy who cheats. It doesn't matter how he cheats, you just don't play with him. That's what a major league can deliver to racehorse owners who want an alternative to the current mess.

Bad deeds make for good media stories. Bad deeds should respond to authority. But, on medication and cheating, we cannot agree on what is bad. Who is the arbiter? Who is responsible? Who sets the course and steers the ship for U.S. racing?

Dinny Phipps, chairman of The Jockey Club for more than 30 years, is the acknowledged leader of U.S. racing and breeding. He says he is just one individual and is powerless to make decisions on racing rules. Really?

Here's my opinion: If racing in America was a successful sport and we were having a dinner to honor the one individual responsible for the protection, growth and development of the sport, that person would have to be Dinny Phipps.

But over the past 30 years, with so many business advantages, racing is failing. It is a rudderless ship that is sinking in a sea of successful sports. His talk about eliminating medication has been going on for decades and failed.

In every sport the rules are the first step. But harmony on rules is a basic “one” on a scale of one to 10 in modern sports. Sports with a major league score a “10” by giving the public what they want, the highest level of sport. The major league commissioner holds the talent rights for media and sponsorship, with absolute authority over all participants.

Racing does not have a major league, but we have had two fake “commissioners.” They were installed to defraud this industry into thinking they could do what commissioners in other sports do for real.

As some of you know, I was responsible for both of them.

The first fake commissioner came from the Thoroughbred Racing Associations (TRA) in 1993. The position was announced the morning after I presented the plan for racehorse owners to form a major league called the National Thoroughbred Association (NTA).

The TRA Commissioner lacked both of the powers needed. He did not have the rights to make media and sponsorship contracts, and he did not have authority over participants. He was a fake commissioner and as that became evident, the office closed and the NTA came to the front in 1996.

The second Commissioner came into office in 1997, when the leaders of The Jockey Club started the NTRA.  This commissioner was also a fraud. His claim to the office was betraying the members of the NTA and killing the major league. Over the next several years, the NTRA would spend hundreds of millions of dollars taxing racehorse owners, breeders and bettors. He was popular with track owners for the scheme of giving them back the dues they paid to the NTRA.

The first fake commissioner was paid by the TRA, so that hoax to stop the racehorse owners' major league was on them. But the second one, the NTRA Commissioner, was much more sinister and punishing. In essence, this was the message to racehorse owners and breeders: “We're going to give this guy a million bucks each year of your money. He has no authority, is nothing more than a fraud in a stuffed suit, but we're going to let him spend hundreds of millions of your dollars and he will accomplish nothing. Do not ever test the power of the track owners again.”

There are a lot of things in racing that defy explanation. But in business, partners are more important that customers. If you follow the money, the business relationships provide an explanation.

The TRA is the business partner of The Jockey Club. All profits from their subsidiary businesses go to track owners and TJC. None of the money flows to racehorse owners' purses, even though racehorse owners' data is the basis for the business.

Conversely, every major league is a talent-based business structure where revenue flows to the talent and the owners of the rights to the talent. The facilities are paid a contracted fee. Images and data are valuable.

At the time the TRA named its fake “commissioner” in 1993, Mr. Phipps was an influential member of the board of trustees of NYRA, the largest racetrack group in the TRA. In my opinion, he had a large role in the fake commissioner debacle and it is appropriate to ask whether the leaders of The Jockey Club are more allied with the track owners than the racehorse owners in the sport?

In my opinion, The Jockey Club has had the influence to change the definition of horsemen in the Interstate Horseracing Act (IHA) to racehorse owners at any time. But their partners, the track owners, prefer to negotiate off-track wagering agreements with trainers instead of racehorse owners with business experience.

Structure matters.

When television burst on the scene in the early 1950's, the major leagues in other sports used their talent-based structure to sign national television contracts.

Racing did not have a major league. The individual tracks were not a business unit, so they had no way to join together for a national television strategy. And, they were not going to allow racehorse owners to change the structure of the sport and treat them as simple facilities like the other sports.

It is a sick, helpless feeling in business when technology brings a surprise you are not structured to handle.

Imagine what it was like at Motorola, the U.S. leader in cell phones, when Apple introduced the iPhone. Thousands of people lost their jobs because Motorola could not transition to a smartphone structure. But the iPhone created millions of new jobs to those providing rich content and services that never existed before. There is a lesson coming.

Apple is changing the world because the international legality of property rights protects them and allows them to cross borders and develop their business.

Racing is uniquely poised to benefit from technology and innovation, because the legality of racehorse owners' property rights can be harnessed into a major league that spans state and international borders for wagering, media and sponsorship.

In every racing state and every racing country, a major league in racing would work in concert with the racing authorities to do what they cannot do for themselves. As we expand into China and other countries, we need a central office to protect the breed and the sport. It can fund research and development that individual countries cannot afford individually.

Here's how a major league in racing could work.

The major league would hold the original rights to horses of like-minded racehorse owners who agree to abide by the rules of the major league. The trainers and jockeys for those horses would sign a contract with the major league to abide by the same rules. That's the absolute authority on rules, media rights and sponsorship that are missing today in the current, dead-end, track-based structure.

The major league would then partner with racetracks, media and sponsors to package and present a new brand of racing in the U.S. and perhaps Canada. Those tracks wanting the major league horses would participate and any choosing not to would continue as they are today.

The promise and difference in racing with the major league would be to present a full day of high quality races, perhaps the best race card in America each Saturday under the new brand name. All other racing would continue and perhaps a minor league would start as well.

Like the Breeders' Cup, the major league would look to partner with favorable racing authorities in those states. Not all of them may chose to participate, but it is reasonable to plan on a major league program in the major markets and across the country. There are more than 5,000 individual horses each year that win or place in stake races. We have the inventory of talent to operate a major league.

With the powerful rights to the best talent in racing, for the first time media and sponsors will have a major league central office to do business. It's all about property rights to the talent. Racehorse owners own them and have a responsibility to control them in order to protect and develop the sport.

When I created the major league NTA, it was not an idea new to sports marketing. From my experience in media rights and consulting with professionals in other sports, I adapted the major league structure to racing.

The NTA was the last major league to be created in major sports. All other sports had made the transition. Major League Soccer had just started and even though soccer was a minor sport in America, the major league structure was enough to make it successful.

One of the Major League Soccer owners was media giant and racehorse owner, John Kluge. When I presented the NTA to him and asked him to join, Kluge immediately understood how a major league would forever improve the fortunes of the sport. More than 100 of the leading owners in the world signed on with the NTA.

I looked founding members of the NTA in the eye and told them no major league formed by those owning the rights to the talent had ever failed. I wish there was something more I could have done to prevent the betrayal of those sporting men and women.

The fake NTRA Commissioner was a cruel, vindictive act to punish those men and women. It is hard to believe racehorse owners accepted what was done to them by the people they trusted as leaders.

Questioning the motives of our leaders is not part of the social fabric of this industry. Calling a spade a spade just isn't done. But when the last straw hits the camel's back, and the PETA video just might be that straw, people start to speak out about the bad taste.

There is talk about increasing big race days in the current track-based structure and while that will be an improvement, it will continue the mess we have today. The PETA video is about both good horses and lesser horses being cared for in this current mess.

We must be smarter. Racehorse owners must be tougher than to be bullied and duped by the paper tigers responsible for killing every idea for racing from the American Championship Racing Series to the major league NTA.

Since the racetracks are not a business unit, The Jockey Club has become the business unit for them. As partners, they generate revenue then distribute profits back to the track owners but none to racehorse owners.

Nobody is looking out for racehorse owners. The breeders, the tracks, the racing authorities, the trainers, the jockeys and The Jockey Club, all ride on the back of the racehorse owner to put on the show.

They have ridden him so hard, for so long, they have forgotten who he is. The lack of respect and contempt for the racehorse owner came through loud and profanely clear in the PETA video.

The golden rule — he who has the gold rules — needs to be rekindled in establishing authority in racing.

Authority in racing needs to come from a talent-based, major league. Please do not try to fake it with major league elements within the current track-based structure. A real major league must hold the original rights to the talent and have contracted authority over all participants, including the facility. If you cannot tell, ask me.

Can a new brand name in racing, a new public face for the sport, be as simple as like-minded racehorse owners forming a major league? Can it save and restore this wonderful sport in a new world of technology, innovation and opportunity?

The “bark on” answer is: “Of course, it has been put together before.”  The “bark off” answer is: “It will come when racing hits rock bottom.”

Will you move before then and save the track owners and their partners from themselves? I hope so. The future of the entire Thoroughbred family depends on it.

© Fred A. Pope 2014

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