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Triple Threat

Monday, June 2, 2008

Big Brown has a chance to win the Triple Crown. But even if he does, that won’t solve horse racing’s money problems.

The performances of Big Brown this spring have horse racing enthusiasts (like me) salivating over the prospect of a successful conclusion to the Triple Crown campaign in the Belmont Stakes this Saturday. But haven’t we gone down this road before? In six of the last eleven Triple Crown seasons, horses have won the Kentucky Derby and the Preakness, only to fail at Belmont: examples include Silver Charm, Real Quiet, War Emblem, Charismatic, Funny Cide, and Smarty Jones. More than one of these horses raised legitimate hopes that an end to the Triple Crown drought was imminent. People in the horse racing business watched in eager anticipation, confident that a Triple Crown winner would provide a boon to their ailing industry. 

Is Big Brown capable of delivering such a boon? Yes and no. The manner in which Big Brown has toyed with the opposition—he has won his five races by a total of 39 lengths and never faced a serious challenge in the stretch—suggests he can take care of business in the Belmont. But solving the financial woes of horse racing is another matter. The sport needs more than one shooting star, soon to disappear over the horizon. 

The credentials that the undefeated colt brings to Belmont are certainly impressive. Prior to Big Brown, no trainer in history had selected post position 20 in the Kentucky Derby; in other words, no trainer had been confident that his horse had the talent to circle the field and win (an ordinary Derby horse would lose too much ground by racing wide). Big Brown is not speed-crazy like War Emblem. He glides along the track while his opponents are huffing and puffing, accelerates on command, and can blow by the field in a moment’s flash. I have been watching horse races for more than 30 years. I’m with Bob Baffert, who trained the first three horses mentioned above: neither of us has ever witnessed anything like the string of performances from Big Brown this spring.

It is a measure of the sport’s latent potential that horses such as Secretariat, Seattle Slew, and Seabiscuit have a place in the public consciousness. But even if Big Brown shows the talent, heart, and durability of these predecessors (he’s got a long way to go after just five races), that won’t be enough to return horse racing to a position of prominence in the sports landscape.

Horses like Big Brown are more valuable in the breeding shed than on the racetrack. This robs the sport of the superstars capable of grabbing and keeping public attention.

Somehow, horse racing has failed to hitch a ride on the nation’s gambling wave, one of the dominant economic trends of the last 30 years. It is not difficult to see why racing’s response to the emergence of competitive alternatives has been ineffective: the sport has been burdened with high takeout rates relative to competitive forms of gambling, a fractured organizational structure, and state regulations that share the spoils while limiting innovation and entrepreneurship. The current disputes among Churchill Downs, horsemen, and wagering provider Television Games Network symbolize these problems. Purses have been reduced, and television broadcasts and wagering options eliminated, while the parties engage in a standoff over the distribution of gambling revenue. Cutting off a television signal from the leading satellite television provider (DirecTV) is not a great way to build a business. To a racing fan this is sad; but unfortunately it is all too common. 

But the biggest problem facing the sport is its backward economics, first made evident by Secretariat. Quite simply, both potential and actual stars are more valuable in the breeding shed than on the racetrack. A similar phenomenon affects human superstars such as Tiger Woods, who now earns more from commercials than he does from golf tournaments; but at least Woods shows up year after year for the majors, and that is ultimately what counts for the sport of golf. 

Early retirement robs horse racing of the superstars that are capable of grabbing public attention and keeping people interested in the sport. Big Brown is no exception: like Secretariat, he will head for stud duty at the end of his three-year-old season. Given the rules, this is the only rational decision. His owners pocket $50 million dollars by sending him to stud. Big Brown will generate upwards of $10 million in revenue in 2009, easily three times what he could expect to earn by racing. 

Addressing this problem requires fundamental changes in the organization of the sport. Here’s one proposal for reform: harvest the sperm of Big Brown this winter, enough to inseminate 12 to 15 years’ worth of a current stud book; store the sperm for future use; and geld Big Brown so that his best alternative is to race, rather than to breed, when he is four and five, the peak years of performance for a thoroughbred racehorse.

Sound radical? Of course it does. For one thing, it would require the Jockey Club to end the ban on artificial insemination. If that happened, entrepreneurs and innovators would soon figure out a way to keep the Big Browns of the sport racing in their prime years. The goal is simple: save the genes and keep the stars competing on the track. I have seen many a horse race, but a breeding shed has never drawn a crowd or a wager.

Raymond Sauer is a professor of economics at Clemson University and founder of The Sports Economist blog

Image by The Bergman Group/Darren Wamboldt.

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