SWOT on "Churchill Downs Race Track Beating the Odds"

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[EXCERPT] . . . .

Churchill Downs Race Track

Beating the Odds: Churchill Downs- Fighting for Position

Churchill Downs: SWOT

Beating the Odds: Churchill Downs- Fighting for Position

Churchill Downs: SWOT

"And they're off!" Although thoroughbred racing is a worldwide industry, perhaps no race is more famous than the Kentucky Derby. The Kentucky Derby is held at Churchill Downs, a name which is also synonymous with American racing. "Churchill Downs racetrack remains the flagship operation of Churchill Downs Incorporated, and recently underwent the most significant series of ambitious and comprehensive renovations in the history of the track" (History of Churchill Downs, 2001, Churchill Downs). However, despite Churchill Down's recent makeover, its future and solvency remains in doubt, as does the financial and cultural future of the American horseracing industry as a whole.

The gaming industry has been transformed by the Internet. Online wagering makes betting on a variety of sports venues easier than ever before. There are also options to play online poker, blackjack, slots, and other games of skill and chance. Unlike horseracing, to maintain such sites requires virtually no overhead and operational costs. Horses are very expensive to keep: there is a reason that the sport is often called the 'Sport of Kings.' Feeding and training a horse is costly, as is employing a talented jockey. And even then, the racehorse's fragile health could break down, instantaneously ruining a potential investment. Of course, racing's entertainment value is a substantial draw for many spectators. Unlike other forms of wagering, racing is also entertainment.

But the next generation of betters has been turning away from wagering on the track. A lack of a Triple Crown winner this year, combined the global recession has exacerbated the downturn in "an industry clearly in decline for the past decade," since the explosion of the Internet onto the racing scene (Grassi 2010). Consumers are simply less willing to part with discretionary income to bet and horse racing enthusiasts are aging (and older individual's pension funds were particularly hard-hit hard by the recession). In the U.S., to keep a younger generation interested in racing, many states are subsidizing "their tracks and racing bonuses with slot machines, video lottery terminals or video poker machines at track racinos [race tracks with built-in casinos]" (Grassi 2010).

Strengths: Churchill Downs

Horse racing has always been a major industry in Kentucky, even before the establishment of America as an independent nation. Churchill Downs is more than a hundred years old. While traveling in England and France in 1872-1873, 26-year-old Kentuckian Cornel M. Lewis Clark marveled at the elite European racetracks and decided to create a similar venue in the United States for the finest members of Kentucky aristocracy and their horses. He "devised the idea of a Louisville Jockey Club for conducting race meets" (History of Churchill Downs, 2001, Churchill Downs). However, despite its elegance, financial problems dogged the track, even early on. "At the turn of the century, financial problems plagued the racetrack…the track finally showed its first profit in 1903, 28 years after its founding." (History of Churchill Downs, 2001, Churchill Downs).

Over the course of the 20th century, the track began to show a quite considerable profit, with the advent of luxury seating and computerized betting and televised races. Movie stars flocked to the race track and even people with little interest in horseracing followed -- and bet -- on the Derby (History of Churchill Downs, 2001, Churchill Downs). The Kentucky Derby is thus a 'brand name' in horse racing, and is inexorably linked with Churchill Downs. It is a coveted prize by owners and trainers. In a comparison of stud fees, all other aspects of the horse's record and pedigree being equal, the fee of a Kentucky Derby winner would exceed that of a non-winner by $8,843.31 (Stowe 2010).

Weakness: Churchill Downs

The Kentucky Horse Racing Commission recently "approved new proposed regulations that would allow wagering on historical horse races, called 'Instant Racing,' at licensed Kentucky horse racing tracks" as this would allow betters to wager for races regardless of the location of the track at venues such as Churchill Downs and encourage more betting (Grassi 2010). However, despite its attempt to expand and democratize its own atmosphere, Churchill Downs has always capitalized upon its image of exclusivity, not simply its ability to generate revenue from bets.

Betters are turning away to the Internet and to casinos as was of making a profit. It is unclear if horseracing as a whole can survive the opportunity for 24-betting provided by the Internet, particularly at venues that promote the 'experience' of racing as well as the opportunity for wagering like Churchill Downs. For individuals who are focused upon betting for betting's sake, many more lucrative options exist beyond that of racing.

Allegations of illegal drug tampering with horses' performance have also soured many betters on the racing industry. Wrote the Rail columnist for the New York Times: "The horse racing industry is dying because people like me are its biggest fans…the problem for the racing industry is that I am now 65 and have become a $2 bettor. It can't make money on people like me, and it can't sell my demographic to advertisers. My unsteady march to 65 was more or less inevitable. My transition to becoming a $2 bettor was not inevitable. 'If you bet on horse races, I would call you an idiot'… Which of us studying the Daily Racing Form is privy to the magic piece of unpublished betting information? That would be: which horse got the cobra venom/milkshake/thing-with-no-name this morning" (Meagher 2010). While 'fixing' sports events is hardly confined to racing, the difficulty of predicting a horse's performance due to unfair tampering has diverted wagers to more predictable gambling venues and hurt the profits of a sporting industry that is uniquely dependent upon betting.

Opportunities: Churchill Downs

The brand name of Churchill Downs still has considerable cache, as is the revenue that can be generated by the Derby. "According to Dean Keppler, author of Betting the Kentucky Derby, over $80 million is wagered on the Derby alone (the day's entire bill, which consists of several races, can approach up to $123 million" (a brief history of the Kentucky Derby, 2010, Time). Horse racing still continues to hold the public imagination. The recent careers of the fillies Rachel Alexander and Zenyatta captivated audiences, given their unexpectedly strong records, even when racing against 'the boys' (colts). Racing has an undeniable mystique as a spectacle other types of gambling lack. Other human interest stories connected have been compelling in the media, spanning from the tragic tale of Barbaro to the recent resurgence of interest in racehorses from the past like Seabiscuit and Secretariat, and the popular Animal Planet reality TV series Jockeys.

Combined with the fact that Kentucky has allowed tracks to supplement horse betting with other venues for gambling, such as slot machines (which many see as the salvation of the industry) many believe that Kentucky's future in horse racing looks far more promising than other nearby states, such as New Jersey and Maryland (Grassi 2010).

Threats: Churchill Downs

"Even though Kentucky outpaces horse breeding by a wide margin over any other state, it too believes that expanding gaming is its only answer to keep racing in Kentucky. But the question remains. In a global recession, with bankruptcies continuing in every industry in the U.S., while many of its states, including the once great racing state of California headed towards its own bankruptcy, will slot machines save the day?" (Grassi 2010).

Some industry insiders believe that the reasons for the lack of interest in horse racing are deeper, and particular to the state of contemporary American culture. "A century ago, horses were the primary mode of transportation...The horse was part of our shared culture, and a bond existed between fans and the sport -- a bond that has slowly eroded with the rise of the suburbs and the dominance of the internal combustion engine as our primary means of transportation. The reasons that NASCAR has become one of the top spectator sports in the United States are the same reasons horse racing is slowly losing its fan base. Young men of today aspire to go fast in their cars, not on their horses" (Trageser 2010)

The industry is also dogged by allegations of human and animal cruelty. Regarding the extremely low weights jockeys are forced to maintain, "the recently screened Jockey [documentary] estimated that 90% of all jockeys reduce their weight daily to ride. In a 1995 study by the Chicago Rehabilitation Institute, 69% of riders said they skipped meals; 34% used diuretics; 67% sweated off pounds in the sauna; 30% "flipped," the term for self-induced vomiting, and 14% took laxatives" (Schmidt 2010). The dangers of the sport, combined with the fact that jockeys are often underinsured as independent contractors make for an innately dangerous lifestyle that holds little promise of compensation after a short career.

Doping of horses that should be resting rather than racing with tranquilizers… READ MORE

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