JC / Railbird

Pegasus World Cup

Pop this Balloon, BC Board

If Thoroughbred racing has a silly season, it’s the weeks between the winter holidays and the Eclipse Awards. And things don’t get much sillier than floating the idea to create a Breeders’ Cup Derby, restricted to 3-year-old horses, and move the Breeders’ Cup Classic to December. Ray Paulick reports the idea may get a hearing at an upcoming Breeders’ Cup board meeting:

Should the Breeders’ Cup expand again?

That’s a question the organization’s board of directors is expected to ponder at an upcoming meeting, when a proposal to add a “Breeders’ Cup Derby” for 3-year-olds and push the Breeders’ Cup Classic to a separate date in December will be discussed. Craig Fravel, Breeders’ Cup president and CEO, declined to comment on what he called “matters that may or may not be considered by the board of the Breeders’ Cup.”

(Disclosure: I’ve worked with the Breeders’ Cup on digital media initiatives as a contractor. My work doesn’t put me in contact with the board or BC decision-making, and I haven’t talked to anyone at BC about the Derby/Classic idea or other BC planning. All opinions my own, etc.)

Paulick runs down the major objections to such a scheme: Reduced field quality for such races as the Dirt Mile and less attractive betting. (I can’t imagine any excitement for a new race restricted to the 3-year-old glamour division.) It would also have the bizarre effect of holding a championship weekend without featuring the marquee division. What even is the Breeders’ Cup if the horses at the top of the American racing hierarchy aren’t the thrilling culmination of the event, as they have been since its inception?

In that sense, the proposal poses an existential question for the Breeders’ Cup — is it a competitive event, or is it an exhibition? Is it for horseplayers and fans, or is it for owners and breeders? That’s the tension at the heart of the BC and a Derby and standalone Classic would snap it in favor of one constituency.

For that reason, I have trouble believing the idea is coming from within the Breeders’ Cup. Paulick refers to “some industry stakeholders” pushing the proposal, possibly out of “Triple Crown envy,” and those stakeholders obviously have the clout to compel the BC board to consider the idea. But the idea feels so anti-fan and enough of a threat to dilute the BC brand that it seems unlikely to have strong organizational support.

Re: the Triple Crown, and whether interest in the Triple Crown season among the general public could be replicated later in the year, I’m skeptical. Non-racing fans watch the Kentucky Derby because it’s a cultural event, not because they have an interest in the sophomore division.

One likely effect of trying to emulate Triple Crown season, though, would be the creation of a new three-race series that would link together the Breeders’ Cup Derby (November), Classic (December), and Pegasus World Cup (January). I have no idea if this is part of the intention behind the proposal! It would just be a very tidy series, especially for television, and for trainers, owners, and breeders — who would then have a series worth up to $25 million to aim for with a conclusion snug against the start of the breeding season.

But what would that do to races such as the Travers or Jockey Club Gold Cup and other 3-year-old male and open-company graded stakes scheduled from July to October? A big part of summer and fall racing (and betting) would be shaken up, potentially affecting tracks from New York to New Jersey to California. Maybe money and attention would flow to other divisions during those months, particularly turf, or new, exciting campaign arcs for older horses would emerge, but does anyone really want to find out?

2:00 PM Update: More details on the proposal from Matt Hegarty, including that board member Bobby Flay is supporting the Derby idea and Classic move:

The Flay proposal is based on the belief among some board members that public interest in 3-year-old horses during the Triple Crown races would carry through to the Breeders’ Cup Derby and make for a popular showdown between those horses and older horses if the Breeders’ Cup Classic were held a month later in December. Critics of that proposal, who did not want to be identified because of Flay’s popularity, contend that it misreads the public’s attention span beyond the Triple Crown.

I don’t know, if public interest in Triple Crown contenders carried over past the season, wouldn’t that interest already register? As usual, @o_crunk has a sharp read on the handle implications of a new race and Classic rescheduling.

Why Not?

Steven Crist on extending the Pegasus World Cup concept:

The central idea of the Pegasus is to raise purse money from owners rather than through an extraction from the parimutuel handle. Horseplayers have been told for generations that they must pay an exorbitant 20 percent takeout on their wagers because of the need to pay purses as well as to staff and maintain a racetrack. Now, however, we have a rare case where the purse has already been funded.

So, why not eliminate the takeout on the race entirely, or at least slash it to a low, player-friendly rate such as 10 percent? That would make this a revolutionary race for the customers as well as the owners.

(I think I hear someone muttering, “to hell with the bettors.”)

The other Steve of the turf trade press proposes a Pegasus reality show.

Stars Aligning

The Pegasus World Cup is coming to Gulfstream on January 28, 2017, and to get a spot in the 12-horse starting gate, owners will have to buy an entry for $1 million, which will go into the purse, making the $12 million Pegasus the world’s richest Thoroughbred race. (Somewhere, Sheikh Mohammed’s gritting his teeth at this trumping.) The money doesn’t only guarantee entry, though:

All entrants will not only be competing for the world’s largest purse, but they will also share equally in 100% of the net income from pari-mutuel handle, media rights, and sponsorships from the Pegasus World Cup, according to The Stronach Group announcement.

Aspects of the Pegasus plan, which allows owners buying an entry to also lease a starter or sell their place in their gate, immediately reminded me of Fred Pope’s star vision from 2011. You might remember this idea:

Maybe, just maybe, the system we have been using for compensating our talent in racing has become a problem, a big problem. This year, if things go well, Uncle Mo’s races could have total wagering handle of more than $200 million. With average takeout of twenty percent, the wagering revenue generated by Uncle Mo’s races, $40 million, will go somewhere else.

Of that $40 million, about $10 million (5% of the $200 million wagered) will go to the host tracks where the races are held and be split between track operators and future purses. The remaining $30 million (15% of the total wagered) will go to those simply taking bets on Uncle Mo’s races. Why?

Why can’t the top finishers in Uncle Mo’s races receive the $20 million in purses due from wagering on their races? Our stars need to be compensated for the revenue they generate. That’s how the real world works.

Racing’s welfare system is not working for those putting on the show, thus it is not working for Uncle Mo, and the other brands in the sport. Racing needs the same distribution model as the Apple brand, where Apple sells customers direct, through bricks and mortar outlets and through on-line vendors.

The Pegasus World Cup is selling direct. Even if it doesn’t upend the current economic structure of racing, it’s a step in that direction.

5/19/16 Addendum: I missed this Tom LaMarra story in January, which quotes Frank Stronach addressing the business model experiment angle:

“The basic idea is how can racing compete with other great sports?” Stronach said. “We’ve got to make things exciting, things the press will write about. We want to tell people that love horse racing that we say, ‘Look. We want to establish a new business.’ We would lease Gulfstream for one day and call it a new business.”

He was cagier about it when asked by T.D. Thornton last week:

TDN: If the profit-sharing concept works with a race of this magnitude, could the concept be scalable? By that I mean could you see profit-sharing trickling down as a way of funding other types of races or even entire racing programs or race meets?

FS: That’s possible. But smaller races are less interesting, right?