Friday, May 14, 2004
The Kentucky Post
A horse race we cannot afford to lose
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By Thomas H. Meeker
Thank you, Smarty Jones.
Besides running away with the roses and the hearts of horse racing fans around the country during a soggy but spectacular performance at Churchill Downs on Saturday, May 1, Smarty Jones has given our industry a precious gift -- hope. Hope that another Kentucky Derby winner can go on to claim all three jewels of the Visa Triple Crown. Hope that a horse with a come-from-behind story and connections that average people connect with can go on to become a super horse, the superstar our industry longs for. Also, this Sports Illustrated cover boy has given us hope that the sport once associated with equine legends Seabiscuit, Secretariat and Seattle Slew has not lost its luster and can once again compete for a national fan base.
When Smarty Jones enters the starting gate this Saturday to run the 129th Preakness Stakes, he carries with him not only the hopes of a sport seeking a superstar, but the realities of an industry waiting for a good, clean break. Once the only legalized gaming product in town, horse racing now competes with state lotteries; riverboat, land-based and Native American casinos; and charitable gaming in almost every state where pari-mutuel wagering is offered. According to the Kentucky Horse Racing Authority, $546 million was wagered at Kentucky racetracks and off-track betting facilities last year. Compare that to the staggering $27 billion wagered across the border at Indiana's 10 riverboat casinos during the same period. Gaming patrons wagered 50 times more money at Indiana casinos than they did at Kentucky racetracks in 2003. A study prepared for the Kentucky government by PricewaterhouseCoopers showed that 12.3 percent of Kentuckians visit Indiana riverboat casinos on an annual basis. In the process, they leave behind millions of tax dollars, money that is spent building schools, improving roads and helping balance the books of a neighboring state with its own budget challenges.
While competition from other forms of gaming is considerable, an even greater threat to the overall health of Kentucky's horse racing industry comes from out-of-state racetracks with slot machines, an alternative form of gaming that has helped horse racing compete on more even terms. If we are not careful, Kentucky could quickly become the horse left behind in this race to level the gaming playing field.
Kentucky is one of several horse racing states that has considered, but has yet to pass, alternative gaming legislation. Legislation to allow slot machines at racetracks is being debated in Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Ohio, Kansas, Pennsylvania and Texas. There are also ballot initiatives on the same issue under way in the Thoroughbred breeding powerhouses of Florida and California. Alternative gaming legislation has already passed in Maine, New York and Oklahoma. It is only a matter of time before horse racing purses and breeding programs in those states will be fattened with revenues from alternative gaming.
The handful of states that legalized slots at racetracks nearly a decade ago -- including West Virginia, Louisiana, Iowa and Delaware -- have seen their purses and breeding programs improve dramatically. In fact, tracks once considered "second tier" to Kentucky's storied ovals are now competing with Churchill Downs, Turfway Park and Ellis Park for Kentucky-based horses.
Why should this matter to the average Kentuckian?
Smarty Jones can tell you why.
While the Derby winner's father, Elusive Quality, lives in Kentucky, Smarty Jones was foaled in Pennsylvania and is considered a Pennsylvania-bred racehorse. Funny Cide, last year's Derby winner, was conceived in Kentucky, but foaled in the Empire State to take advantage of the New York-bred purse incentives offered there. For two years in a row, the Kentucky Derby winner has not been a registered Kentucky-bred horse. The reason boils down to simple economics: The breeders of Smarty Jones and Funny Cide felt they would see a better return on their investment by foaling and racing their soon-to-be superstars out of state.
Losing a broodmare or a stallion to another state has been compared to losing a factory -- and with good reason. Kentucky's horse racing industry generates 53,000 jobs in the Commonwealth, with a large percentage of them connected directly to the care and maintenance of the stallions and broodmares stabled here. Without new sources of revenue to bolster purse programs and create breeders' incentives, Kentucky risks losing its prominent breeding stock to states that do have slots at racetracks. With that departing breeding stock will go the jobs connected to those horses and, quite possibly, Kentucky's recognition as "Horse Capital of the World."
This fact is not lost on Kentucky horse farmers. Last week, a group of breeders announced the creation of the Kentucky Equine Education Alliance (www.equinealliance.com) . The group's mission is to educate all Kentuckians on the economic importance of the horse industry to our Commonwealth. Did you know that the average Kentucky horse farmer owns or leases approximately 200 acres, stables 34 horses -- most of which belong to someone else -- employs four people and has a net annual income of only $50,000? Typical Kentucky horse farmers are not rich and famous. They are small business owners who create jobs, pay taxes and help the state's economy by purchasing feed, fencing, tack and supplies, veterinary services and a variety of other products from Kentucky businesses. Horse farms are located in 117 of Kentucky's 120 counties, and the horse industry has a $3.4 billion overall economic impact on the state. It is a vital economic engine for the Commonwealth.
Horse farmers understand the stiff competition we are facing from other racing states and other forms of gaming. Horse farmers understand that Kentucky's signature industry is at a turning point: Do we move forward and build on the superior tradition of horse breeding and racing in Kentucky, or risk falling into mediocrity? Our farmers understand what is at stake, and their wise voices are a welcome addition to this dialogue.
Don't misunderstand. Kentucky's horse industry is not on life support. Kentucky Oaks and Derby weekend at Churchill Downs is proof of that. In spite of inclement weather, including pre-Derby rains that would have made Noah nervous, Kentuckians and race fans around the country turned out in near-record numbers to watch and wager on the "Greatest Two Minutes in Sports." For that, we owe everyone who made Derby 130 possible -- our employees, vendors, architects, building contractors, the trade unions, law enforcement and government agency partners, the media and our customers -- a tremendous "thank you." The Kentucky Derby always displays our Commonwealth and Kentucky horse racing at its finest. But we cannot allow the great memories and statistics that surround the first Saturday in May to eclipse the day-to-day challenges we face. And we, as Kentuckians, must decide what kind of future we want for our No. 1 agribusiness and the industry for which the Bluegrass State is known and revered worldwide.
Smarty Jones is oblivious to this dilemma. He is training well for his shot at equine immortality, while enjoying the pomp, circumstance and official pronouncements that come with being a hometown hero. Pennsylvanians have dubbed Smarty Jones horse racing's "Rocky Balboa," another Philly underdog that made good. The average-looking chestnut has ignited the imaginations of sports fans everywhere who never give up on the little guy -- or the belief that good things come to those who give their all.
Here's hoping Smarty Jones scores another knockout this Saturday at Pimlico. But no matter who crosses the finish line first, let's not forget the lesson this Pennsylvania-bred 3-year-old has already taught us: The race to remain at the front of the pack is on, and Kentucky cannot be left behind.
Thomas Meeker is president and chief executive officer of Churchill Downs Incorporated and president of Triple Crown Productions.
A horse race we cannot afford to lose
--------------------------------------------------------------------------------
By Thomas H. Meeker
Thank you, Smarty Jones.
Besides running away with the roses and the hearts of horse racing fans around the country during a soggy but spectacular performance at Churchill Downs on Saturday, May 1, Smarty Jones has given our industry a precious gift -- hope. Hope that another Kentucky Derby winner can go on to claim all three jewels of the Visa Triple Crown. Hope that a horse with a come-from-behind story and connections that average people connect with can go on to become a super horse, the superstar our industry longs for. Also, this Sports Illustrated cover boy has given us hope that the sport once associated with equine legends Seabiscuit, Secretariat and Seattle Slew has not lost its luster and can once again compete for a national fan base.
When Smarty Jones enters the starting gate this Saturday to run the 129th Preakness Stakes, he carries with him not only the hopes of a sport seeking a superstar, but the realities of an industry waiting for a good, clean break. Once the only legalized gaming product in town, horse racing now competes with state lotteries; riverboat, land-based and Native American casinos; and charitable gaming in almost every state where pari-mutuel wagering is offered. According to the Kentucky Horse Racing Authority, $546 million was wagered at Kentucky racetracks and off-track betting facilities last year. Compare that to the staggering $27 billion wagered across the border at Indiana's 10 riverboat casinos during the same period. Gaming patrons wagered 50 times more money at Indiana casinos than they did at Kentucky racetracks in 2003. A study prepared for the Kentucky government by PricewaterhouseCoopers showed that 12.3 percent of Kentuckians visit Indiana riverboat casinos on an annual basis. In the process, they leave behind millions of tax dollars, money that is spent building schools, improving roads and helping balance the books of a neighboring state with its own budget challenges.
While competition from other forms of gaming is considerable, an even greater threat to the overall health of Kentucky's horse racing industry comes from out-of-state racetracks with slot machines, an alternative form of gaming that has helped horse racing compete on more even terms. If we are not careful, Kentucky could quickly become the horse left behind in this race to level the gaming playing field.
Kentucky is one of several horse racing states that has considered, but has yet to pass, alternative gaming legislation. Legislation to allow slot machines at racetracks is being debated in Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, Ohio, Kansas, Pennsylvania and Texas. There are also ballot initiatives on the same issue under way in the Thoroughbred breeding powerhouses of Florida and California. Alternative gaming legislation has already passed in Maine, New York and Oklahoma. It is only a matter of time before horse racing purses and breeding programs in those states will be fattened with revenues from alternative gaming.
The handful of states that legalized slots at racetracks nearly a decade ago -- including West Virginia, Louisiana, Iowa and Delaware -- have seen their purses and breeding programs improve dramatically. In fact, tracks once considered "second tier" to Kentucky's storied ovals are now competing with Churchill Downs, Turfway Park and Ellis Park for Kentucky-based horses.
Why should this matter to the average Kentuckian?
Smarty Jones can tell you why.
While the Derby winner's father, Elusive Quality, lives in Kentucky, Smarty Jones was foaled in Pennsylvania and is considered a Pennsylvania-bred racehorse. Funny Cide, last year's Derby winner, was conceived in Kentucky, but foaled in the Empire State to take advantage of the New York-bred purse incentives offered there. For two years in a row, the Kentucky Derby winner has not been a registered Kentucky-bred horse. The reason boils down to simple economics: The breeders of Smarty Jones and Funny Cide felt they would see a better return on their investment by foaling and racing their soon-to-be superstars out of state.
Losing a broodmare or a stallion to another state has been compared to losing a factory -- and with good reason. Kentucky's horse racing industry generates 53,000 jobs in the Commonwealth, with a large percentage of them connected directly to the care and maintenance of the stallions and broodmares stabled here. Without new sources of revenue to bolster purse programs and create breeders' incentives, Kentucky risks losing its prominent breeding stock to states that do have slots at racetracks. With that departing breeding stock will go the jobs connected to those horses and, quite possibly, Kentucky's recognition as "Horse Capital of the World."
This fact is not lost on Kentucky horse farmers. Last week, a group of breeders announced the creation of the Kentucky Equine Education Alliance (www.equinealliance.com) . The group's mission is to educate all Kentuckians on the economic importance of the horse industry to our Commonwealth. Did you know that the average Kentucky horse farmer owns or leases approximately 200 acres, stables 34 horses -- most of which belong to someone else -- employs four people and has a net annual income of only $50,000? Typical Kentucky horse farmers are not rich and famous. They are small business owners who create jobs, pay taxes and help the state's economy by purchasing feed, fencing, tack and supplies, veterinary services and a variety of other products from Kentucky businesses. Horse farms are located in 117 of Kentucky's 120 counties, and the horse industry has a $3.4 billion overall economic impact on the state. It is a vital economic engine for the Commonwealth.
Horse farmers understand the stiff competition we are facing from other racing states and other forms of gaming. Horse farmers understand that Kentucky's signature industry is at a turning point: Do we move forward and build on the superior tradition of horse breeding and racing in Kentucky, or risk falling into mediocrity? Our farmers understand what is at stake, and their wise voices are a welcome addition to this dialogue.
Don't misunderstand. Kentucky's horse industry is not on life support. Kentucky Oaks and Derby weekend at Churchill Downs is proof of that. In spite of inclement weather, including pre-Derby rains that would have made Noah nervous, Kentuckians and race fans around the country turned out in near-record numbers to watch and wager on the "Greatest Two Minutes in Sports." For that, we owe everyone who made Derby 130 possible -- our employees, vendors, architects, building contractors, the trade unions, law enforcement and government agency partners, the media and our customers -- a tremendous "thank you." The Kentucky Derby always displays our Commonwealth and Kentucky horse racing at its finest. But we cannot allow the great memories and statistics that surround the first Saturday in May to eclipse the day-to-day challenges we face. And we, as Kentuckians, must decide what kind of future we want for our No. 1 agribusiness and the industry for which the Bluegrass State is known and revered worldwide.
Smarty Jones is oblivious to this dilemma. He is training well for his shot at equine immortality, while enjoying the pomp, circumstance and official pronouncements that come with being a hometown hero. Pennsylvanians have dubbed Smarty Jones horse racing's "Rocky Balboa," another Philly underdog that made good. The average-looking chestnut has ignited the imaginations of sports fans everywhere who never give up on the little guy -- or the belief that good things come to those who give their all.
Here's hoping Smarty Jones scores another knockout this Saturday at Pimlico. But no matter who crosses the finish line first, let's not forget the lesson this Pennsylvania-bred 3-year-old has already taught us: The race to remain at the front of the pack is on, and Kentucky cannot be left behind.
Thomas Meeker is president and chief executive officer of Churchill Downs Incorporated and president of Triple Crown Productions.
