International Racing is Waiting on

Transcription

1 1 International Racing is Waiting on North America By Fred A. Pope Fred A. Pope 2010 A lot of people point to racing s failure in the 1950 s-60 s to embrace television as a major reason for the decline of Thoroughbred racing in America. The big question is, Who exactly was supposed to sign the contracts with the television networks? The Jockey Club could have signed TV contracts in 1950, but could not later that decade. With a potential anti-trust lawsuit hanging over their head, The Jockey Club decided to withdraw from racing and serve only as the breed registry. With that dramatic change, America became the only racing country lacking the central authority of a Jockey Club or government body. The most popular sport became rudderless and adrift, and it continues that way today. The lack of a central, national authority to decide how many races, how many track facilities are needed, and direction for the sport defaulted to the owners of individual racetrack facilities. The individual racetracks are not a business unit, meaning even if they had joined together to sign over the television rights, they didn t have a way to distribute the money from the networks among themselves. Plus, the tracks didn t own the basic commercial rights to the horses and jockeys. It s always complicated isn t it? I ve been involved in buying and selling television rights, both domestically and internationally, through my advertising business. It isn t complicated when the commercial rights you are buying are clean, or when the rights to the events you are selling are clean. Yes, American racing did mess up by not having a television strategy fifty years ago. But, those grainy images at the beginning of the television age were not nearly as important to our sport as what is needed today a digital age strategy. Television is a metaphor for all the opportunities missed in America because we lack a racing structure like the other countries. Are the awesome prospects of the digital age enough to change from the status quo? It is important to understand our situation in North America because of the global implications for owners and breeders around the world.

2 2 We are all tied together in this relatively small cottage industry. There are common interests among owners and breeders worldwide and if we formalize this bond, we can monetize it to grow and protect the sport. Until recently the technology was not ready to deliver international racing products that include high-definition video with a secure, state-of-the-art wagering and communications platform. Today, everything is ready and waiting. The question is, Who will make it a reality and who will benefit from the global, digital age of Thoroughbred racing? We have a leg up. The Plan to Harmonize International Racing Mr. Louis Romanet, and his father before him, has championed a plan for international harmonization of Thoroughbred racing. This will allow participants to move freely between countries in open races with standard rules for a more level playing field. Mr. Romanet is chairman of the International Federation of Horseracing Authorities (IFHA) and they now have 57 racing countries signed up, and all but one of the members are ready to go. The loose horse for the IFHA is North America. We will not comply with the rules on medication and performance enhancing drugs. For international success in any industry, North America has to be a strong participant. The world s number one economy is important and the IFHA members understand this and they are waiting. My interest in the IFHA goes beyond harmonization of rules. While the members of the IFHA are racing authorities, the individuals involved are more than regulators; they are the leaders of the Jockey Clubs and governmental bodies who have central authority over the sport in most of the other 56 countries. Unlike in North America, they own the clean, commercial rights needed to make worldwide distribution contracts. That means if we can find a way for North America to join them, by introducing a new racing structure that complies with the rules of the IFHA, then we have the basis for an international Thoroughbred-racing program. While the U.S. Jockey Club is a founding member of IFHA and provides valuable work for the organization, our Jockey Club is prohibited by U.S. laws from providing the one thing the IFHA needs: a corresponding racing structure in the United States. Mr. Romanet was the featured speaker at the 2007 Jockey Club Roundtable. He gave a candid assessment of international racing and then lamented what everyone in attendance knew. North America has no plan to comply with the IFHA s standards on drugs.

3 3 In his speech Mr. Romanet mentioned the efforts of those on the North American Graded Stakes Committee, who want to tie drug policies to Graded Stakes status. No-Peeing Section in the Pool For North America to say our Graded Stakes are going to be clean is like saying we are going to have a no-peeing section in our swimming pool. The more than 54,000 races that are mixed with Graded Stakes on North American race cards are not clean and the public does not understand the difference. Even if the perception of our Graded Stakes improves, the commercial rights to those races are in the hands of individual racetracks in upwards of 30 different racing jurisdictions. Not one jurisdiction in our country complies with IFHA rules. Japan had a similar problem when they were mixing 17,000 good, and not-so-good, races together. Because Japan has a central authority over racing, someone realized they had a marketing problem with how they packaged and presented their product, so they introduced a new racing structure called JRA to solve it. Now Japan has 3,500 JRA-branded good races that run only on the weekends, and those races are totally separate from the 13,500 not-so-good races that run during the week. Most importantly, the Japanese public understands the good JRA-brand races are in a clean, separate swimming pool. Mr. Romanet understands all aspects of Thoroughbred racing and breeding. He has a lifetime of experience in conducting racing in France, while also working on the tedious details in the IFHA with other countries. He understands the value of integrity for race participants and for the public. I believe the work he has done in getting the IFHA to this stage, puts the Thoroughbred industry in position to become a real player in the international sports world. In his speech, Mr. Romanet said, I want to point out that one of the keys of the success of the racing and breeding industry around the world is leadership. That was his wakeup call to the members of the U.S. Jockey Club to find a way under U.S. laws to establish a new racing structure in North America and stop holding back the worldwide industry. Everyone in breeding has experience with international buyers and sellers in their business. These folks come from the most unlikely places with complete freedom of movement between countries. Is it possible to show how a simple change in North American racing, can combine with technology in the digital age, to carry one of the oldest sports out of its downward slide and move it up to the pinnacle of worldwide success?

4 4 Because if we can, there are only so many Thoroughbreds in the world and the supporting bloodstock value in every single country will skyrocket. That s worth everyone s time to work toward a strategic plan to advance international racing. What Goes Around Comes Around In the late 1970 s and early 1980 s stallion syndication in America fueled Kentucky stud farms acquisitions of European stallions. Nobody did it better than John Gaines. Gainesway Farm made successful bids for young leading sires and champions such as Lyphard, Riverman, Green Dancer, Irish River, and Blushing Groom. At that time, more than 35% of the Graded Stakes in North America were grass races. In addition, the commercial appetite for yearlings by European champions, classic and Group 1-winners, was sky high and brought worldwide buyers to Kentucky for public and private sales. I first met Mr. Louis Romanet in Chantilly, France at the 1985 Prix du Jockey Club (French Derby). Mr. Romanet was in charge of television rights to French racing and my advertising agency was buying the North American rights to the French Derby and the Prix de l Arc de Triomphe for our client, Gainesway. We also purchased the television rights to the Epsom Derby. Our strategy was to make these international races relevant and exciting for American mare owners, as well as for present and potential stallion syndicate members. I had already worked out agreements with the fledgling ESPN sports network and local Kentucky television stations to air half hour shows for the races. Gainesway, loaded with European sires, would be the sole sponsor. This was a delicate time in France. America was like the rich uncle providing the money. The realization for French breeders was a future without proven sires and it was a bitter pill for them. Mr. Romanet could easily have rejected my proposal and he would have had the support of many breeders in France. But he didn t. In fact, Mr. Romanet gave us a low price and production assistance to assure the highest-level French races would be seen in North America. The following year, I was in a studio in Los Angeles watching live coverage of Lyphard s brilliant son Dancing Brave winning the 1986 Arc de Triomphe. Within minutes we edited and packaged the half hour show with Gainesway commercials and fired it back on the satellite for distribution in North America. Breeders just home from church saw clear racing images from lush, beautiful Longchamp racecourse. Just two men, John Gaines and Louis Romanet, made it happen. Two leaders benefited the sport by delivering the highest level of Thoroughbred racing to North America. Gaines took the risk his stallion progeny might fail in the races and Romanet risked the ire of French breeders unhappy with losing their sires to Gainesway.

5 5 In the following months, the French beverage company Perrier called me to propose a promotion for two new flavored waters Lemon and Lime. The ads showed a painting of Lyphard, who symbolized original Perrier, then below were the new Lime flavor featuring European champion Dancing Brave and the new Lemon flavor with Lyphard s other 3-year-old from the same crop, North American champion Manilla. Those were heady times in the industry. Good things can and do happen for Thoroughbred racing when the sport has relevance with the public. With the new Breeders Cup, Arlington Million and significant international racing exposure on television, it looked like anything was possible for the sport. We were making international plans. At that time, the chemistry among owners, breeders and agents traveling to sales and racing events around the world was remarkable. The personal relationships that were being established then are still the currency for agreements across borders today. Train Wreck Then we had a train wreck in America that changed the worldwide industry. The impact of Ronald Reagan eliminating tax breaks cut the feet out from under investment. Our international marketing efforts stopped. A down market depressed the U.S. breeding industry for the next seven years. At the same time, the new racing structure in Japan started fueling their racing and breeding acquisitions worldwide. The lower commercial prices in America were also allowing European breeders to start reloading and recovering their bloodstock. Continuing purchases by the Maktoum family and Coolmore gave relief to Kentucky breeders, but it started to feel similar to what European breeders had to endure when American breeders were over there buying their best. Recently in Thoroughbred Daily News, Bill Oppenheim chronicled a shifting of bloodstock assets over the decades. I would recommend all breeders read his comments in the TDN archives. There is an international ebb and flow of bloodstock that is impacted by government programs, tax consequences and the up and down direction of the racing programs in our racing countries. To date, that ebb and flow has been a zero sum game for owners and breeders worldwide. One country s gain has come at the expense of other countries. Overcoming the Zero Sum Game So, what s the first problem the international community of owners and breeders must ally together and solve in order for the industry to stop playing the zero sum game and experience real, global growth? The mindset of most racing countries about international wagering is old-economy thinking, which is to protect and reward the country taking the bet, not the country putting

6 6 on the racing show. The fear is poaching of domestic gamblers, who might otherwise wager on domestic racing. The revenue model for this out-of-country wagering is similar to the off-track revenue model in North America, where the host event gets very little (3%) and the bet takers get the lion s share (17%) or more of the wager. The result of this upside-down, off-track revenue model is that we have very little international wagering, because there is no economic incentive for the host event to actively market its races out of the host country. But, just because the racing countries are not pursuing a new-economy strategy does not mean that bet-taking companies outside of racing are not planning to take advantage of new technology and fill the void in the digital age. French Racing is Going to Lead This year, France is trying to break the international revenue model by demanding 8%, versus the current standard 3% of handle on its races. France is going to stick a toe into the international wagering market and further fuel its high-quality racing program. Since the fixed costs of the racing facilities in France are already met, the new funds can dramatically increase purses, which will fuel French breeding revenue. Sounds like a good business plan. France will do this while the rest of the countries remain in the old-economy, clinging to an anti-poaching mindset that holds them and the international sport back. The problem for owners and breeders worldwide is while France will get 8% of each wager on its races; the rest of the takeout could be lost to international bet takers and bleed out of the industry. The time is now for racing countries to join together and establish their own international wagering platform, which would mean that most of the revenue from the wagers would stay within Thoroughbred racing and breeding. There is nothing wrong with the bet-taking companies that are providing a service to bettors (punters); the problem is the price they extract for their role in the distribution of the racing product is too high. We can license these companies at a fair price. The international wagering market is very small right now because of the old-economy protectionism, traditional problems with time zones and the lack of sharing pastperformance data, which is vital to improving familiarity with the racing subtleties in the various countries. Making Racing Relevant Again Money isn t everything, but economic success is the measuring rod for sports. If a sport wants to be relevant globally, it must show growth and be economically strong.

7 7 Total Thoroughbred wagering worldwide is estimated to be U.S. $85 billion, with only $3.8 billion going into purses. By starting the most basic management of international racing and protecting the digital distribution of images and wagering, it is reasonable to double the amount going into purses worldwide. Imagine the impact that would have on breeders. When China and other large developing countries come into the Thoroughbred industry, we need to have a modern, international wagering platform in place, so that the huge increases in global handle will benefit owners and breeders more than just selling horses. Each of the racing countries that choose to join together for international wagering can retain autonomy; however, we can develop a new, separate international tote system to handle only the international wagers. Such a secure, state-of-the-art platform could pay for itself quickly and provide the split of revenue back to the host event, as well as any splits of revenue and taxes deemed needed to the country where the bet originated. When that happens, Thoroughbred-racing purses will deliver to the talent in our sport the highest compensation of any sport in the world. That s how we will make racing relevant again. This new international program can also fund central R&D for Thoroughbred racing so that we can jointly benefit from advances in technology, such as 3-D imaged racing that will deliver more sensory appeal, especially to attract younger fans and bettors. The production of future racing content will become increasingly expensive for the host event. Technology will continue to evolve and deliver an experience into the home that will be second only to being at the event live. That s part of the reason we must work toward correcting the off-course revenue model to enable the host event to produce the type of racing presentation that will benefit the whole industry. Once international rules are standardized, bettors (punters) will easily draw upon past performance data and video of the horses as they learn to appreciate the nuances of racecourses, jockeys and trainers in various countries in order to win in the fast-growing international wagering pools. The more they do it, the more they will learn. And, the more familiar they become, the more they will want to do it. A bettor (punter) could place bets on quality races around the world and wake up the next morning with results and high-definition video of the races on their ipad or smart phone, before they even get out of bed. Their accounts in a secure, international Thoroughbred wagering system could immediately be accessible. Thus, owners and breeders will need to use their influence with their country s racing authorities to overcome old-economy thinking and assure their country participates in this new, coordinated international program. The most obvious change would be for the racing countries to equally share the takeout from international wagers, Then the host event will have the economic incentive needed to market their races internationally and the majority of revenue stays with owners and breeders in the industry.

8 8 The new international wagering system is a way to assure every member country, that every wager made from their country is providing them a share of the revenue. International management of digital racing content through this new platform is the answer to wagering integrity. Protocols can be established to adhere to the policies of the IFHA and allow member countries to decide if they want their tote systems to send wagers into the new international wagering platform or allow individuals to wager direct into the new system. With the fixed costs of racing already met in each country, this new digital platform, will deliver significant new money to purses worldwide. That s how Thoroughbred owners and breeders stop playing the zero sum game and grow an economically strong, international sport. The Situation in North America The last time I talked with Mr. Romanet was at a disappointing time in my professional life. He sat next to me at a luncheon in Saratoga where I was recognized for creating the National Thoroughbred Association (NTA). It was a day prior to the 1997 Jockey Club Roundtable, where Mr. Romanet was going to speak and a new NTRA alliance was going to be unveiled. The NTA was the product of my lived experiences in the sport. It was modeled after three organizations: The packaging and presentation of the NTA racing program was similar to Japan s branded JRA program of high-level weekend racing. The organizational structure was similar to the PGA Tour in golf, where members agree to abide by strict rules. The primary funding mechanism was an off-track pricing model similar to the Breeders Cup, which receives half of the takeout from wagers. Everything in the NTA racing structure was designed to establish in North American racing what The Jockey Club could not do in the United States. I was following the path of modern sports in order to not violate America s anti-trust laws and using the basic commercial rights of racehorse owners to sign contracts and monetize this advantage. The first time I pitched the NTA was in 1993 to the trustees of the national TOBA. It peaked interests; however, failed to get their support. I learned a lot from that failure and in 1996, a new program was presented to individual racehorse owners and it resonated with them strongly. We signed most of the top one hundred owners in North America and Europe. The NTA would have delivered to Mr. Romanet and the IFHA the missing link for harmonization of international Thoroughbred racing. North America would have had a structure in racing that met the international rules of the other countries. While the NTA was not created for power, it became about power. Because of that misunderstanding, thirteen years of development and fine-tuning a new racing structure in our country have been lost.

9 9 As Mr. Romanet has noted, North America s problem has become the problem of the international racing world. It isn t realistic to believe any effort in American racing can go forward without the tacit approval of the leadership of the U.S. Jockey Club. Now is the time for the U.S. Jockey Club members to respond to Louis s call for leadership and understand there is a way to have a new racing structure in North America that does not threaten their organization. As individuals, they can participate in this new structure, which will deliver on their highest shared goal of racing under drug rules in compliance with the IFHA. A New Racing Structure in North America How can North America establish a new racing structure that complies with the IFHA and unleashes the promise of international racing? Here s one way to do it quickly. Imagine a racing association like Oak Tree or Del Mar in California, where they conduct their racing programs by leasing track facilities. You do not have to own a racetrack to have a racing association in the United States. That s a freedom we have here. Now, think nationally and make it a multi-jurisdictional racing association. In this new racing association the members would be the owners of the racehorses competing in the races. This new association would contract with the jockeys riding their horses. That way, the new racing structure will have the clean, commercial rights to the talent, which are the cornerstone for all sports distribution contracts, both domestically and worldwide. With a business plan in hand, this new mobile, multi-jurisdictional racing association can sit down with tracks and racing commissions to put in place a national schedule of highlevel racing days. Each event could constitute a race meet in the jurisdiction. Would this new racing structure interfere with the Graded Stakes program? There is no reason the Graded Stakes Committee would change in any way. Once the new association has secured agreements with the tracks and racing commissions to conduct race days, then the committee would consider those races the same way it considers such races now from Del Mar and Oak Tree. The Graded Stakes Committee would have opportunity for a nationally coordinated program by having an IFHA-compliant racing association to work with on the races. In the first year this new IFHA-compliant racing structure in North America, could start off with say 30 racing days to contribute to an international racing program. If for example, France, Japan and Hong Kong would also contribute 30 of their established racing days in the first year, we would have an international racing program of 120 days of quality racing. That could be a good start to test the new system. If 120 days of international racing averaged $10 million in handle, the total would be $1.2 billion. With average after tax takeout of 16%, the new system would deliver $192

10 10 million, which could either go to the participating countries and/or toward the new tote system and online platform operations. If there were a way for Emirates Racing Authority to participate in this new wagering platform, the quality and interest in the international program would be elevated dramatically. The amazing commitment of the Maktoum family to premier racing in Dubai is testament to how individual leadership can impact the future of the sport. While the IFHA does not conduct races, it is reasonable the IFHA members would work toward the start of an international racing program. How can the new North American racing structure make enough domestic money to operate? It could price the off-track distribution of its races similar to the Breeders Cup, which is half of the takeout on its races. If these new 30 race days in the first year generated $10 million a day in domestic off-track wagers, the net to the new association would be about $800,000 per day. Depending upon the agreements with partner tracks, sponsorship and licensing, the new association should be viable, with great potential for growing international revenue. The Need for International Horses With the objective of an international racing program that will increase worldwide revenue to owners and breeders, we need leadership from owners around the world to help start this new racing structure in North America. We need help from owners such as those in South America, Australia, Europe, South Africa, and Japan to send older horses to North America to race in this new association of fellow racehorse owners. Those countries race without Lasix and other drugs. Their horses will have immediate credibility with bettors (punters) worldwide. The owners could either race the horses in their own colors, or lease them to owners they know in North America. At the start, if we have 30 race days in North America, with twelve starters in each of eight races each day, that s 96 starters a day, and 2,880 total starts the first year. With each starter projected to six starts that could mean less than 600 horses are needed. Is it really possible that an international racing program can finally be started with only 600 horses racing in North America? Yes, but it would be nice to have a cushion of a couple hundred more horses to fill specific races. A mix of domestic and internationally owned horses can deliver what is needed. How will bringing older horses from other countries make it even better for an international market? The international appeal of the older horses with established names coming from all the different countries will provide the following needed to boost international play and handle. Also, sending their older horses will not require owners to risk their 3-year-old classic dreams.

11 11 We do not need Group-level horses to get started, though they would certainly be welcomed. We just need good Listed stakes performers to get our new structure started. As it grows, the competition and status of the races will rise. This new racing structure of IFHA-compliant racing in North America may also appeal to international owners who want to start a competitive stable here and/or to prepare for the Breeders Cup races. It will also appeal to domestic owners who have chosen to race in other countries because of our permissive drug rules. The new association will decide the mix of dirt, grass and other surfaces for their races. Today, we have only the two full days of Breeders Cup races as a domestic product with international horses, and it must operate by co-mingling with domestic parimutuel pools. The North American tote systems are aged and have serious problems, which a new tote system that is exclusively for international wagers would overcome. This new racing structure in North America would deliver 28 more days of a new domestic racing program. It will also bring 90 quality race days into North America from other countries. The new structure will quickly expand as other countries come on board. This will be a boon to horseplayers and fans around the world. This new international racing program will create a new digital age product in sports. And, this would just be the beginning for international racing, which will grow and protect the sport for the benefit of Thoroughbred owners and breeders around the world. North American Racing s Problems When the U.S. Jockey Club was still in racing in 1950, there were 26,000 races in North America. Without a central authority to maintain the right size, the individual tracks allowed the number of races to explode. Instead of off-track wagering revenue going to elevate the host tracks and purses, the receiving tracks used the money to start thousands, upon thousands of new cheap claiming races. The proliferation of racing swelled to more than 86,000 races. The public s rejection of this oversupply has seen the number fall to about 54,000 races now. The other racing countries with central authority have kept the quantity and quality of racing under control. In France they maintain about 4,500 races and enjoy handle of U.S.$6 billion. That s means France gets half as much handle as the $12 billion wagered on 50,000 more races in North America. Less is more. In Japan and France, their parimutuel system flows all takeout to the benefit of racing, regardless of how or where the wager is made. Racehorses are used to advance the sport and benefit owners and breeders. This system is the gold standard for racing structure. In North America, England and Ireland, racehorses are perhaps used more for the benefit of track owners and bet takers, with little of the revenue from wagers flowing to owners and breeders.

12 12 While bookmakers dominate wagering in England and Ireland, North America is dominated by parimutuel wagering like in Japan and France. Without a central authority to assure the parimutuel wagers flow to benefit racing, North American racing and breeding has fallen prey to bet takers. Last year, a push was made to correct the off-track revenue model in the United States to require a minimum 50% of the takeout goes to the host event. Many owners and breeders wanted the change, but the track owners rejected it out of hand. The tracks that are public companies were so confident that owners and breeders would not get involved they did not even mention the possibility in their SEC filings of forward looking risk factors. Owners and breeders provide a lot more jobs than track facilities. In fact, they pay for most of the jobs at the tracks. They can and must use their influence to have the offtrack revenue model corrected in the federal legislation. We need a real world, off-track revenue model to start a new racing structure in North America. Artificial Solutions Because we lack a central authority of a Jockey Club, the decision-making process in North American racing is completely artificial. We have trainers organizations in charge of complex, off-track distribution contracts in the digital age. We have 80+ individual track facilities owners with differing interests, sitting in charge of the national sport. We have casinos artificially funding purses, because bet takers are getting the off-track wagering money instead of supporting the host track and purses. We have breeders, with no commercial rights to racehorses, in charge of our biggest racing event. Artificial solutions and social influence can continue our slide for a long time, or we can establish some real world solutions, based upon legal rights that are the foundation for sports around the world. Let s set up this new racing structure in North America the right way. In North America, the people who own the commercial rights to the talent have the central authority for every major sport. There s a reason. Racehorse owners have clean, commercial rights to make domestic and international, distribution contracts for this new racing association. This new association can move around North America to the best seasonal facilities and deliver the best racing on those days. That is a powerful incentive for tracks and racing commissions to want to partner and benefit financially with this new association.

13 13 Why Not Expand the Breeders Cup To Do This? While this new structure in racing can be started with a small number of days, it will need to expand very quickly to serve the North American market, perhaps to more than 100 days of racing. The management of such an organization will be expansive. The Breeders Cup is similar to The Masters golf tournament, the only privately owned event sanctioned by the members of the PGA Tour. Like the Masters, The Breeders Cup has a valued place in racing s structure. It is the breeders gift to their customers, the racehorse owners. The Breeders Cup has avoided the divisive issue of medication by adopting the policies of the jurisdictions where the event is held. All jurisdictions allow a form of Lasix, which is totally banned by the IFHA. We could risk tearing apart this valuable event and organization, by trying to change such an emotional issue at this time. A new racing structure in North America, where like-minded members agree to race and be tested under IFHA s compliant rules, has the best opportunity to start clean for both short-term and long-term success, domestically and internationally. I would think the leading breeders in the Breeders Cup would want to quickly partner and help establish this new racing structure for mutual benefit. There is nothing artificial about this proposed new racing structure for North America. It is a real world solution, with worldwide promise. The only thing holding back international racing is North America. The only thing holding back North America is leadership. Summary All of us who participate in the worldwide Thoroughbred industry understand how connected we are in this small cottage industry. While the residents of each country want the best for their individual program, at the heart is a shared goal to protect and advance our international sport. There is an ebb and flow of bloodstock between countries, which is impacted by government programs, changing tax laws and direction of racing programs. To date, it has been a sum zero game ; meaning one country s gain is other countries loss. In the new economy both racing and breeding are making use of technology, however, we have not figured out a way to harness it and make our shared interests more than the sum of the individual parts.

14 14 Mr. Louis Romanet, chairman of the International Federation of Horseracing Authorities (IFHA), has brought together 57 racing countries in an agreement to harmonize racing rules to help participants cross borders and have a more level playing field. I see the potential of the IFHA going beyond harmonization of rules. While the members of the IFHA are racing authorities, the individuals involved are more than regulators; they are the leaders of the Jockey Clubs and governmental bodies who have central authority over the sport in most of the other 56 countries. Most of them own the clean, commercial rights needed to make worldwide distribution contracts. But, the problem is North America. We do not have a racing structure that complies with the IFHA s rules on drugs. If we can find a way for North America to join the other countries, by introducing a new racing structure that complies with the rules of the IFHA, then we have the basis for an international Thoroughbred-racing program. When federal laws resulted in the U.S. Jockey Club withdrawing from racing in the mid s, North America lost a governing body to decide how many races, how many track facilities were needed, a coordinated schedule and standard rules of racing. The things needed to protect and advance a national sport were suddenly missing. Instead of finding a way to legally restructure similar to other national sports, racing in North America broke into more than 30 separate, island jurisdictions. Decisions for the sport defaulted to individual racetrack owners, whose vested interests stopped at the border of their facility. Technology, with opportunities beyond the track facility border started to appear. One of the first was television. Since there was no central authority to decide if the sport should use the medium to grow new customers, the decision fell to the individual track facilities owners. They let it pass. Technology next delivered off-track wagering. In 1978, a federal law was passed allowing off-track wagers on the host track s races across state lines. With no central authority to assure the host tracks received the majority of revenue from off-track wagering, the receiving tracks created a buyers market and kept the money. They used the purse account money to add thousands, upon thousands of cheap claiming races and by 1989, the total number of races exploded to 86,000. Thoroughbred racing was going hell-bent in the opposite direction of every modern sport, by increasing quantity over quality. The public started to withdraw and reject Thoroughbred racing as a relevant sport. Attendance and television ratings were falling dramatically. In 1996, a new structure for racing was introduced, which would package and present only the highest level of the sport and change the distribution pricing through central authority on its races. It was called the National Thoroughbred Association (NTA).

15 15 The NTA racing structure was designed to deliver to North American racing what The Jockey Club could not do in the United States. It following the path of modern sports in order to not violate America s anti-trust laws and used the basic commercial rights of racehorse owners to sign contracts and monetize their advantage. Misunderstandings about the NTA stopped it at the gate. The structure of racing in North America has remained unchanged. While the U.S. Jockey Club is a founding member of IFHA, it cannot deliver what the IFHA needs a corresponding racing structure in the United States. We can start a new multi-jurisdictional racing association, whose members would be the owners of the racehorses competing in the races. The members would agree to abide by the rules of the IFHA. This new racing structure in North America could start and contribute enough racing days to go forward with an IFHA-complaint international racing program, complete with a new wagering platform. Technology waits for no one. Although the racing countries are not pursuing a neweconomy strategy does not mean that bet-taking companies outside of racing are not planning to take advantage of new technology and fill the void in the digital age. The answer to the digital age for Thoroughbred owners and breeders is to assure the commercial rights to the images and data are used to benefit the sport. In the digital age, these rights have tremendous global value. We need owners and breeders worldwide to ally together and then talk with the racing authorities in their countries about growth for the sport by changing the revenue model to share the takeout from international wagers. While the IFHA is an organization of racing authorities and does not conduct racing, the individuals involved can work toward establishing an international racing program. We can develop a plan that shows the incredible benefits of management of the international racing product. Like Japan, North America can segment the clean race days in this new racing structure away from all other races. This move to establish a new brand name of racing does not mean all other racing is discontinued. Our industry cannot allow the many thousands of horses that race in more than 35,000 claiming races to suddenly be forced into retirement. There must be a long-term transition and the simple introduction of a small, new racing program is the responsible way to proceed. North America needs this separate, branded racing structure and it is going to require forward-thinking owners and breeders around the world to support it and to encourage their fellow owners and breeders in North America to make it happen. Mr. Louis Romanet has shown great courage to not compromise on the problem of drugs and medication in North American racing. Perhaps his fellow members in the IFHA have also held firm on their principals. We should commend them all.

16 16 The digital age, with all of its business and social opportunities for racing, can be used effectively to protect and advance our sport. My professional perspective is in marketing. The elements we work with in marketing are: the product, pricing, distribution and communications. Over the past 35 years in our industry, I have watched the lack of central authority in North America turn all of those elements upside down, because of artificial authority. We need the clarity of structure enjoyed by the other countries. Where like-minded owners race on a level field and we package and present racing like other major sports. With a distribution revenue model, where it doesn t matter where the wager is made, or how the wager is made, the revenue flows to benefit racing. After we have those things in place, then we promote this new public face of Thoroughbred racing. The same laws that prohibit central authority over all racing, are the same ones that give us the freedom to establish a new racing structure within the sport and deliver this clarity to North America. Timing can be everything. I believe the time is right for owners and breeders around the world to ally together and use their common bond to make our sport relevant in the digital age. I have some ideas and others will have ideas. I would be happy to hear from owners, breeders and racing authorities around the world about their interest in moving North American racing forward with a new racing structure to bring about an international racing program. Fred A. Pope fpope859@gmail.com Fred A. Pope 2010