24 October 2013

The Options For Fort Erie Race Track Right Now

I'm getting tired of reading John Snobelen's (nonsensical) ideas for a Fort Erie boutique world class meet.  Please John, that solves nothing. 

Fort Erie is needed in Ontario as a B meet for thoroughbred horses, and it needs to run at least 6 months a year to compliment the A racing that goes on at Woodbine.  Nothing wrong with adding a week or two of A racing at the Fort, but I don't see Woodbine giving up the A dates for that, but really, that is besides the point.

I thought the idea of the panel's report was to save horse racing in Ontario, and also set it up for growth in the future.  I fail to see how thoroughbred racing will grow under the new plan. 

What the plan does is keep the status quo at Woodbine.  They'll be able to keep purses up, but lets face it, they have had ample time with slots enriched purses to become an A track, but they are still not perceived in the same category as the California or New York A tracks.  A step below, but that step is a tough one.  Don't get me wrong, they have been doing many things right in attracting US handle of late, but there still seems to be a stigma when it comes to attracting the best trainers in the world to hang out for a while.  Woodbine is what it is, the top track in Canada.

What the plan doesn't do, is take into account the micro-factors that keep thoroughbred horse racing alive.  The panel did seem to grasp it on the harness side.  Of course, harness racing with more horses means more agricultural jobs, but how do you justify 6-9 B harness tracks, and no B thoroughbred tracks.

Lets look at exactly why a Fort Erie B meet is needed.  The answer is simple, it is why do horses race at Fort Erie in the first place?  The purses are much higher at Woodbine, why not just race there?  The fact is that most horses start off there, they either can't handle the competition at Woodbine (some are born without enough talent, while others just get slower with age and infirmities) and some can't handle the polytrack (Fort Erie has a dirt track which serves as an alternative).  There are also some horses that are bought in the US or Western Canada and shipped in to race at Fort Erie, usually by barns that are based at Fort Erie, so as to have a supply of horses that can provide a living.

The way this plan reads (and there are definitely many unanswered questions...final report, yeah sure), is that there will be 35 B thoroughbred dates.  So lets assume that these dates will be run at Woodbine on Thursdays, and at Ajax Downs (an undesirable bullring with no backstretch).  The cost to train these horses will still be $80+ a day.  Horses will have to be on the Woodbine backstretch if they have any hope of competing.  No way will they come off a farm to face horses dropping in class that are training at Woodbine.  The cost will be manageable for horses able to compete on the poly and win, but most horses don't win.  A good betting 10 horse race has 8 horses that won't break even for a month of training after a race is run.  And it is unlikely B horses will have as many options to race each month in order to have a few kicks at the can.

Owners of these cheaper horses will give up on them.  Now, a lot of owners are in the game to have fun.  Making money is nice, but the reality is that if an owner can be close to even, they are content.  The opportunity for them is that they may hit it real lucky with one horse or two, but that is part of the dream and why they own.  Many like watching their horses live as well.  The small owners with their partnerships is one of the best way to get new gamblers into the game as well.  But if an owner of an underperforming horse has to pay too much to train, they will have no choice but to sell the horse as a riding horse (if they can find a buyer) or go through the paperwork and race at a B track in the States.  The idea of doing this with a healthy, but slow horse, is beyond discouraging for most small owners.  They will leave the game.  And when you take out potential owners of horses, you kill demand.  Ultimately, it is the breeder who will suffer the most.  Thanks to the Liberal government's decision to end slots at racetracks, Ontario horses on average, have never been cheaper in a long time.  The report that just came out, does not change things, in fact, on the thoroughbred side, it makes it worse.

Horse owners and breeders in Ontario need an out, and that is where Fort Erie comes in.  Fort Erie has a backstretch where horses can train daily, and owners are rarely charged more than $50 a day by most trainers at the Fort. 

If it is the intent of the panel to kill Ontario thoroughbred breeding and just making it affordable for the very few, then excluding the idea of a B track is the right thing to do.

Look no further than the cancellation of the CTHS Winter Sale.  Breeders knew there is no demand for Ontario breds, and this happened after that "amazing" report came out.

Fort Erie was purposely given the shaft by the panel.  Yes, $7.9 Million year is a lot (well, not really when compared to $1.1 Billion blown by the Liberal government to save two seats), but the reason Fort Erie needs that much is that they no longer get rent for slots.  And the reason they don't have slots is the Liberal government and OLG wanted to prop up Niagara Falls gaming numbers (and I doubt that worked out for them, as most of the Fort Erie slots players are playing in Buffalo or quit playing slots that much).  In fact, the whole idea of Modernizing Gaming by putting slots where the people are, has been an abysmal failure because the only acceptable place for slots in Ontario is at racetracks.   This is why the OLG is now giving out $100 million a year for rent to tracks across the province.  The tracks share used to be $160 million a year, so they did get a hair cut, but the tracks were probably getting too much in the first place. 

To add some intrigue on the Fort Erie situation.  NDP leader Andrea Horwath recently stated she will do all she can to keep the racetrack alive (and that means at least six months a year for the 600 or so whose income directly comes from a Fort Erie that has its lights on).  She even went as far as stating that she would reinstall SARP.  I don't know if that is possible, but if it is, it has to scare the heck out of any prospective casino operators who might be interested in running slots (again, that was part of the big plan that the OLG had and I'm not sure to what degree they are pursuing it now that a Toronto casino looks almost hopeless to be a reality any time soon).  PC leader Tim Hudak finally said something other than it is a shame what the Liberals have done,  when he stated that he would make sure Fort Erie had at least another 10 years of life if he is elected.

Another thing that is overlooked by some, is that the idea of the report and Racing Live is to make horse racing have the ability to come closer to be sustainable on its own two feet.  By getting rid of home markets and sharing betting revenues derived from internet wagering, as well as sharing in on new OLG products, possibly a lottery, sports wagering, etc., there is potential for growth, as long as a track is part of Ontario Racing Live.   However, not only does Fort Erie not have gaming zone status, they have been omitted from Thoroughbred Racing Live, which means that if the report goes through, Fort Erie will get no share of these revenues.  They can't grow or become sustainable, even if they wanted to. 

Sports betting would a great project in Fort Erie, which neighbours Buffalo.  Buffalo has a tremendous sports fan base, and sports fans like to bet on games.

There is also news that the auto track is now going ahead.  A 65,000 seat stadium, one mile from Fort Erie racetrack.  That alone is reason to bring back slots to Fort Erie.  Why chance it that the auto racing fans may go to Niagara.  Many who want some gambling entertainment will want to gamble somewhere closer, and if not at Fort Erie, they are likely to go to Buffalo instead.

Bottom line.  Fort Erie is being singled out, and denied the opportunity all other tracks have.  It isn't right.  The entire economy of Fort Erie will be in a recession for years without the money the track recycles to the local population.


First, Fort Erie should define itself as a B track only.  Race $4,000-$10,000 claiming races exclusively.  $5,000 starter allowance races and in house stake races are OK once in a while.

Race either Mondays and Tuesdays or Tuesdays and Thursdays so as not to compete with Ontario A racing at Woodbine.  Fort Erie needs to have handle and the bigger the handle, the more likely new bettors from all over will be attracted to their product.  Fort Erie should compete at times when the least amount of racetracks are offered in North America.

Any bigger purses should be geared towards Ontario bred claiming races.  I've stated this many times, in order to increase the value of all Ontario breds, the cheaper Ontario breds have to be more valuable to being with.  Doing this will key in potential owners to buy Ontario.

Fort Erie needs to be included in Thoroughbred Live.  If they need $7.9 million a year, they should get it, but it can include their share of the thoroughbred betting side as well as their share of the new products brought in by the OLG.

Of course, they need to have their gaming zone status given back to them.  Give them 200 or 300 slots and pay the track some rent (this will further reduce the $7.9 million they need).

If an additional showcase week happens, coincide it with the Friendship Festival, and have the Friendship Festival at the track.

Reduce takeout so as to attract more cost sensitive players and to keep their live customers in the game longer.

Give out larger purses for races that attract 9 or more betting interests.  Give less for those that attract 7 or less.  Horseplayers bet a lot more, the bigger the field size.

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:


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?