Racing industry ... a reality check

Published: Sunday | April 22, 2012 Comments 0
Race fans watching the action at Caymanas Park on a recent public holiday.- Colin Hamilton/Freelance Photographer
Race fans watching the action at Caymanas Park on a recent public holiday.- Colin Hamilton/Freelance Photographer
Horses in action at Caymanas Park. - File
Horses in action at Caymanas Park. - File

Cliff Williams, Contributor

Since the news broke that the government-owned Caymanas Track Limited (CTL) is facing financial problems, I have been bombarded with questions from interested persons as to how this is possible against the background of the entity enjoying the monopoly of being the sole promoter of live horse racing in the country.

The short answer is the fact that the promoting company is not generating sufficient revenue to meet its operating expenses. Obviously, and it is understandable for the management of the entity to look for factors outside the operations for the explanation and for possible excuses. A number of reasons, including the following, have emerged:

1. Competition from the introduction of lotteries since 1994

2. The lack of development of the country's economy leading to a reduction in disposable income for entertainment purposes

3. The issuance of licences for the operation of casinos

4. Reduction of investment in the local breeding industry

5. Operating with a smaller horse population

6. Lack of capital to improve infrastructure and upgrade totalisator machinery

7. Increased competition from the bookmaking industry

8. Refusal by governments to reinvest some of the tax revenue garnered from the industry

A combination of the above factors would indeed account for part of the explanation, but the list does not include the deterioration in the quality of the racing product. This is due in no small measure to the introduction of a claiming/condition system at the expense of the straight handicapping of horses. I submit this is a major element in the factors having a negative impact on the performance of the promoting company.

The facts I have been presenting in this debate cannot be challenged successfully by any of the current supporters of the claiming/condition system. What gave rise to the idea of introducing claiming races was based on the false premise that the racing product lacked integrity. The betting public, based on the ever-growing support of the promoting company and the bookmaking industry, had no such perception.

In any event, it is not the remit of the promoting company to protect the integrity of the product. It is important also to recognise that the bookmakers have never had anything to fear from gamblers trying to manipulate results since it is just a matter of determining what bets they will or will not accept.

The myth that owners and trainers were always planning and executing betting coups by arranging results needs to be debunked. The overwhelming majority of the stakeholders are honest and love the sport too much to destroy its integrity. The attempts to arrange the results have mostly ended in dismal failure and disciplinary action taken against the few prepared to indulge in corrupt practices have at times even been described as draconian.

Under the 1973 Racing Rules, the Jamaica Racing Commission (JRC), equipped with the appropriate extraordinary powers, replaced the Jockey Club and assumed the task of policing the integrity of the industry. This body was empowered to take disciplinary measures against not only licensees operating in the industry but any member of the public deemed to be in breach of the racing rules or involved in corrupt practices relating to the conduct of horse racing.

Problem faced

For those who may not be aware, a claiming system was introduced in the United States approximately six decades ago. The problem faced by racetrack operators was that in the pre-computer age it was not easy to keep track of the form of horses, many of which raced at different tracks. This scenario certainly played havoc with the confidence of the punters. The idea then for owners to determine the value of a thoroughbred and compete where it is felt purses could be won and hopefully, in the promoters' view, would bring together horses of similar ability to drive betting.

Horse racing in the United States is a professional commercial operation with the breeding farms there yielding in excess of 40,000 foals annually. A seven-day a week operation, racetracks are in at least 35 of the 50 states and is organised for the trading of thoroughbred horseflesh as well as ensuring the massive breeding industry remains viable.

Jamaica's horseracing industry has very little similarity to what prevails in the USA therefore to impose a claiming system in this essentially amateur scenario was the worst business decision ever taken in any enterprise. The then board of directors clearly did not fully understand the implications of introducing this system.

They were unaware that it would have a negative impact on the quality of racing product and the subsequent cumulative effect the loss of billions of dollars through inadequate sales would have on the economic viability of the company.

No objective economic impact assessment was deemed necessary since there was no recognition this revolutionary change was being implemented for the wrong reason. What is of paramount importance is the economic viability of the promoting company and this is only possible if the racing product is properly and fairly structured through genuine handicapping for competitive betting. The current claiming/condition system cannot deliver competitive betting and racing consistently in a horse population this size, if at all.

Introduction of the claiming system presented the industry with certain insurmountable challenges. After a few years, a number of prominent owners and breeders withdrew their involvement. A significant number of the smaller trainers and many of the jockeys found themselves with less and less opportunity to survive with the reduction in field sizes and the inability to compete for purses with the larger stables.

Negative factor

When one looks at where many horses are declared to run, the most important negative factor emerging from this claiming/condition system, is the fact that a significant number of owners and trainers, especially among the smaller operators, either don't like it, don't understand it or have never really accepted it. In a meeting convened to discuss the proposal, the opposers to a handicap system were only concerned that when a horse becomes flawed it can be entered against inferior opposition in the hope it will be passed on to others to struggle with and further erode the confidence of the betting public when many of these formerly superior horses is lame and unable to complete the races.

The fact of the matter is that the training of horses is not an exact science and, therefore, has a huge built-in element of trial and error. Smaller trainers must once again have the opportunity to work with a string of horses to produce training feats. A United States claiming-system model is not designed to handicap races to drive betting or develop trainers but is biased towards the sale of horses. The idea of selling and passing flawed racehorses around the stables has become a non-productive and largely futile pastime as an outcome of this claiming system at Caymanas Park.

Superior horses are allowed to compete with inferior horses at vastly advantageous scales of weight thus yielding too many races lacking in competitiveness both in terms of betting and actual results. This scenario has seen a consistent inadequacy in sales turnover with an unsatisfactory number of viable betting options in too many races. Far too often, disastrous handicapping anomalies virtually make a gift of the purses to the favoured starter without the possibility of generating sales to pay purses.

Perception

Two of the most important factors driving wagering is the weights carried by the starters as well as the perception by the betting public that the runners are of similar ability. What must be recognised by the board of directors is that in a claiming/condition system it is virtually impossible to produce this effect consistently. No matter what conditions are devised and offered there is always the ever-present possibility that a superior eligible starter will emerge to destroy the profitability of any given race.

In any event, profitability cannot be guaranteed by the promoting company offering a system of racing seeking to race groups of horses for betting purposes that ignore ability, the class and the form of the horses brought together. From the anecdotal evidence I have gathered, the average punter finds the claiming system confusing as there are too many races involving horses of dissimilar abilities. I submit this is the primary reason for the inadequate sales.

For all I know, a claiming system may not even be serving the industry in the United States that well, and the ownership and operation of racetracks have become something of a revolving door. On the other hand, in Great Britain, with its genuine handicap system and weight-for-age allotment, racing is flourishing, especially since there is now a very enlightened tax regime as well as Sunday racing.

A straight handicap system in Jamaica would perform similarly in terms of yielding more racedays with the promoting company attracting much stronger sales per race.

When I checked at the start of 2012, 722 owners are registered with the JRC, 167 trainers, 80 jockeys and 421 grooms. In 2010, there were 86 racedays with 844 races run and last year, 828 from 82 days of racing. The top-10 trainers accounted for 329 races won in 2010 and 353 in 2011 and this certainly would include most of the larger purses. When I looked at a top-25 trainer list, it was 511 in each of those two years leaving over a 140 trainers to scrape for the remainder of the purses.

As far as the fortune of the 80 jockeys is concerned, the top 10 accounted for 526 wins in 2010 and 536 in 2011. When assessed as a top-25 list, it was 675 and 689 from the total 844 and 828 races in 2010 and 2011, respectively. Between January 2011 and March 2012, some 951 horses were able to race with less than half being able to make six or more appearances during the period.

Enjoyment of the sport

What these figures suggest is that a huge number of the licensed operatives is only pretending and wishing and hoping in vain to enjoy success. It has to be recognised that, although there are persons working in the industry as professionals in certain categories, the horse-racing industry in Jamaica still remains in the realm of a struggling commercial enterprise wedded to amateurism in reality.

I thought when the proposal of moving to a handicap system to equalise the chances of starters in a race there would have been a constructive debate. That has not materialised and I get a sense that not much is known generally about the principles of handicapping and how important this development would be to the promoting company in terms of enhancing its viability. I find it difficult to believe that so many trainers accept the huge handicapping anomalies. I often wonder what they tell the owners of the horses without a realistic chance of winning week in week out.

One member of the old Jockey Club said I cannot create a job for myself and another said he disagreed with the proposed change without giving a reason. On the subject of creating a job for myself, I have two sources of income neither of which is dependent on the viability of the racing industry. The fact of the matter is that I offered the training of handicappers and the classification of the horse population, which would be worth millions more in annual sales to the promoting company, at no charge, and stated the reasons for so doing, chief of which is the enjoyment of a sport I have been fascinated with nearly all my adult life and wish to see flourish again.

The position I am presenting in this debate cannot be challenged successfully by any of the supporters of the claiming/condition system when it is abundantly clear that a system of straight handicapping must be superior. Not only from the perspective of the economic viability of Caymanas Track Limited, but for those stakeholders who are heavily committed to the industry financially. Incidentally, the proposed change has been endorsed by four former chairmen of the board of directors and others who are great breeders and owners with a clear understanding of both sides of the business.

On the question of divestment, no one is sure what is being offered whether, it is the management of the operations or the 198 hectares of the plant as well. A racetrack operation is unique in that the product is not owned by the operators but by sundry investors on a personal level who in turn employ personnel in the requisite professional categories.

The two responses to the Request For Proposal floated five years ago failed to impress the Cabinet at the time. I am willing to wager heavily that no objective due-diligence exercise will find in favour of the acquisition and operating of this racetrack a viable investment option for any potential investor. Given the huge capital outlay required to modernise the facility and a claiming system guaranteed to deliver a very high number of unprofitable races divestment looks unlikely anytime soon.

For example, could private investors cope with a three-month stoppage as occurred in 1988 when Hurricane Gilbert hit or another four-month suspension when the stables were inflicted with equine influenza in 1996?

I think it would be most desirable if the public is allowed to invest in the ownership of the racetrack and its operation. This must be the best option for the development of the industry.

clifftrophy@hotmail.com

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