12 October 2013

Fort Erie Racetrack Gets Cold Shoulder From Carefully Worded OMAFRA Report

The OMAFRA panel members are not stupid, but they must think Ontario Premier Kathleen Wynne is stupid or completely apathetic at the very least.

Here is what the "final" report states about Fort Erie with my comments in bold:

Thoroughbreds

In the thoroughbred sector, Woodbine currently hosts all premier races while Woodbine and Fort Erie both offer signature races.

While thoroughbred racing attracts the highest wagering from horseplayers, it is the most expensive form of racing, largely due to the practice of on-track stabling. This cost is exacerbated with two tracks duplicating infrastructure.

Not really duplicating. What this report doesn't state is that the average horse costs $80+ a day to train at Woodbine versus around $50 a day at Fort Erie. Economically, for the horse owner of a cheaper caliber horse, the ability to stable at Fort Erie and race there, saves them from selling the horse for a G-note as a riding horse, or running them once in the States with the intent of getting rid of it after the race. An owner of cheaper horse who either is in inferior form or who can't handle polytrack might give the $80 a day option a try, but inevitably they will be priced out of the game, combined with losing the fun associated with owning a horse. Yes, fun is important, as most owners, even at Woodbine, lose money.

Another important factor is that small outfits are most likely to expose friends and family to the game. By chasing away many of these smaller outfits, it makes attracting new potential bettors even harder than it is right now.



The Fort Erie track has played an esteemed role in Ontario's racing heritage, but over the last decade meeting its financial needs has been a challenge. For years, additional provincial funding, over and above SARP, has kept this track open. Despite the best efforts of a dedicated Fort Erie racing consortium to boost fan attendance and wagering, maintaining a backstretch in Fort Erie places a difficult economic burden on the industry. Moreover, Fort Erie has struggled to attract an adequate horse supply to meet the demands of a 40 race-day calendar.

Fort Erie attracted half the horse it usually attracts the past year (using this year as a barometer is completely disingenuous by the panel), because they did not know they were going to be open for business this year until it was almost too late. It doesn't mean that if they had a five year commitment, that they wouldn't be able to attract much bigger fields and bettable races in the future. With new products and support from the OLG, Fort Erie has a bigger chance to be completely sustainable than the majority of harness tracks that this report has no problem supporting and not calling unsustainable. Fort Erie did need extra from the government even with slots, but they probably would be able to manage today if slots were reinstated and the schedule was reduced to this years levels.

Consolidating most, if not all, thoroughbred racing at one track, Woodbine, represents the best business case for the industry and the taxpayer. Reducing overheads and increasing the exposure to horseplayers in the larger Toronto market would provide more racing opportunities and higher purses than does the two-track alternative. Woodbine has the capacity to accommodate the horses currently racing in Fort Erie.

This is like saying that consolidating all harness tracks and racing at Woodbine would reduce overheads and yield the best business case for the taxpayer. I thought the intent here was to save and grow racing.

Fort Erie remains a beautiful and historic venue for racing. While track operating costs, including the redundant stabling facilities, are prohibitive on a full race-calendar basis, consideration should be given to hosting a ship-in festival meet at Fort Erie. Perhaps this could be done in conjunction with tourism initiatives in the region. One could easily imagine this festival culminating in the historic Prince of Wales Stakes.

This is not feasible. The track would likely be torn down if it was to only race a few days a year. The start up costs are too high according Jim Thibert.

The alternative to a festival meet would be continuation of a 40 race-day program at significantly reduced purses, with operating costs subsidized through a reduction in thoroughbred purses and races offered at Woodbine. The panel does not support this alternative.

The panel does not substantiate not supporting the alternative. Woodbine's purses are not affected negatively by Fort Erie running, and the $8 million a year Fort Erie is requesting will maintain Fort Erie purses at current levels. An increase in betting and new OLG products can reduce what Fort Erie needs and eventually increase their purse structure in the future. As Woodbine proved in the past years, a little new exposure coupled with larger field size can result in bigger pools size.

Fort Erie Proposal

The panel recently learned of a proposal by the Fort Erie Live Racing Consortium (FELRC) to host 40 race days per year. This proposal put the cost of producing these races at $7.9 million annually. In addition to the costs identified by the FELRC, the panel believes capital improvements of at least $1 million per year are required at the Fort Erie track. Beyond these sums, a fair comparison with providing all thoroughbred races at Woodbine must reflect the lost opportunity for higher wagering at Woodbine. The panel believes a reasonable estimate of the lost wagering revenue is $2.5 million annually.

This lost wagering revenue argument is complete hooey. It is like saying that if a decision to keep Grand River open versus running their races at Woodbine instead, a lost wagering revenue amount would exist. The reality is that most likely if Fort Erie were to close, wagering from the Niagara Region would drop significantly as many gamblers would bet less on horse racing. Exposure to the racetrack, even if it is a couple of times a year, keeps many Horseplayers interested, and wagering. Cutting race dates, and taking tracks away will cut total wagering totals in Ontario all things being equal.

Incidentally, Woodbine cut Thursdays because handle was barely a million a day.  If they were to add Thursdays for B horses, it is doubtful they could do the same numbers Fort Erie does on Tuesdays.  They would be very similar for sure.
 
Weighing all these elements, it is reasonable to assume that the total cost of producing 40 race days per year at Fort Erie, including capital improvements and provision for lost wagering, is about $11.4 million annually. All in all, the panel believes an investment of public funds of this magnitude in the Fort Erie track would not reflect good public policy.

Lets see, according to published reports, Fort Erie costs around $16-18,000,000 a year to operate. Lets ignore this lost wagering bs, what I see with my Economics 101 background is that probably $12 million (lets low ball) goes directly into the local economy. Money that is produced from purses and betting stimulates the local economy in a much bigger way than just the $12 million (there is a multiplier effect) and keeps businesses stay afloat that are even remotely dependent on horsemen and racetrack workers. Take it away, and the reverse happens. Employment goes into the crapper, businesses go under, etc. Fort Erie would be in a recession. As for bad public policy, what does one dollar of investment do for Ajax Downs which handles one tenth a race Fort Erie does?

Racing at Woodbine receives stronger support from horseplayers and creates more net investment and employment opportunities. While Fort Erie does create on-track jobs, the panel notes that the required funding of $11.4 million would support a payroll of only $3 million. It is the view of the panel that this does not meet the test for a positive return for Ontario taxpayers.

More disingenuous nonsense. Eliminate Fort Erie, and many of the horsemen in Fort Erie will go to the US, some workers will look for public support (welfare, etc.), those owners who bring in horses from the US, will not, there will be less horses, less employment, and the numbers will get even worse over time at Woodbine as owners will be getting out of the game. The $11.4 number again. They must really want Fort Erie to close!

In short, the panel can find no path to sustainability for a resident racing program at Fort Erie. Supporting a racing season at Fort Erie is not consistent with a sustainable horse racing industry. The panel believes the public and the industry are better served with one resident thoroughbred track, Woodbine.

Racing is not sustainable anywhere in Ontario right now without government help thanks to the destruction of SARP. Why is Fort Erie being singled out?

At the same time, the panel urges the government to work with the FELRC to develop an alternate and sustainable business plan based on the festival concept mentioned above.

Why? If racing isn't sustainable, why throw Fort Erie this bone that is not feasible to being with?


One more thing I noticed when reading the report. $100 million is going to be spent by the OLG on rent. Tracks got $160 million a year before the Liberals tried to inflict Ontarians with their failed pipe dream. Now it is a reality that slots are staying at the tracks. The OLG is probably having a heck of a time trying to convince private operators to get involved. Anyway, the report failed to say if the rent money is to be directed in any way. What I see is purses being made up of the $80 million a year Princess Wynne is putting up, plus $60 million (which seems to be in line with the 6.9% takeout reduction). What happens to the other monies wagered by Ontarians? I figure that number is around $150 million (but my math could be off a bit). I realize that the tracks need to pay for operations, but that still is a lot of money that is unaccounted for in the report. And what exactly does a track need to do to keep getting a handout? Does a harness track have to increase handle from $5,000 a race to $5,100?

3 comments:

Pacingguy said...

Not a big fan of harness racing huh? :-)

That being said, even I being a jughead fan, a track that increases wagering $100 a race isn't doing their job and deserves no funding.

As for Fort Erie Racetrack, the problem is having two t-bred tracks running at the same time. Why not race at Woodbine most of the year with the summer months at Fort Erie? With a period of exclusiveness, Fort Erie should be able to do a lot better.

Cangamble said...

I'm a thoroughbred guy. Harness needs to start penalizing the best horses with bad posts for me to get interested.
Ontario has a limited season. B horses can run at the same time as A horses, they just shouldn't run head to head like they do on Sundays. Fort Erie would maximize things if they ran Monday, or Wednesday or even Thursday afternoons along with Tuesdays.

Bobby MacKenzie said...

The market for horse racing is being dictated by the simulcast product.Flawed thinking,leads one to believe that eliminating Fort Erie will increase the handle at Woodbine.Check the handle for example last night at Mohawk,only one Standardbred track in Ontario racing but no increase in wagering at the trotting oval.Woodbine gallop,without Fort Erie, is one track in a daily simulcast market of 20 or 30 betting race tracks.Fort Erie really has no impact on wagers at Belmont,Santa Anita,Del Mar,Saratoga,Derby Day etc..However Woodbine has to cut into these markets,not Fort Erie, to increase their share of gambling dollars.Lack of Ontario product will not effect the simulcast schedule at all.To increase market share is to have product with the quality to shift the gamblers already playing larger tracks back to yours.Closing Standardbred tracks that never will be profitable makes sense.Lowering purses at the others will only drag us back in time,when good handles and low purses translated into shifty racing,hardly a way to improve market share. Fort Erie serves a valued agricultural/entertainment role in rural Ontario,eliminating this track benefits no one.