By John Piassek
Tuesday, April 26, 2016
“ARE PURSES IN RACING ECONOMICALLY VIABLE, OR WORTH THE COST?”
There were three major stories in racing over the last month or so that involved purse money:
- On March 23, Oaklawn Park announced increases in purse money for the third time in the meet. Maiden special weight races, which were worth $68,000 at the start of the meet, are now worth $76,000. That, you may note, is worth more than some stakes purses at other tracks. Allowance purses are now upwards of $80,000, while no race is worth less than $23,500.
- On March 22, Monmouth Park announced a $1.1 million cut from its stakes schedule, including the reduction of the United Nations purse to $300,000, and the elimination of the Monmouth Stakes. Curiously, however, the Haskell Invitational purse remained at $1,000,000.
- On April 11, the connections of California Chrome gave an ultimatum to Del Mar: in order to get them to guarantee a run in their signature race, the Pacific Classic, the purse must be doubled, from $1,000,000 to $2,000,000. “The Pacific Classic is on our agenda, but we hope they raise the purse. That would get us there” trainer Art Sherman said, ominously adding: “There are a lot of tracks out there that want us”.
All of these stories seem only vaguely connected, but they all tie back into one theme: the amount of purse money going around racing nowadays has reached ludicrous levels. Furthermore, the purses don’t seem to be in line with the amount of handle being brought in.
Consider some recent headlines: handle on racing in March 2016, despite a decrease in the number of races, increased by 0.9% from March 2015. Yet, purses increased by 4.9%. That hardly seems to make sense. If a track’s purse fund is boosted by casino revenue, it has the resources to give out as much purse money as it wants. However, that doesn’t mean that it necessarily should. Why? Because bigger purses does not necessarily equal more handle, or more horses.
Consider Oaklawn. All meet long, Oaklawn has offered fantastic racing, with big fields and great betting opportunities. On the last week of January 2016, the track offered $1,582,700 in purses, and drew 394 horses to the entry box over 36 races, for a wildly impressive 10.7 entries per race. On the first week of April 2016, Oaklawn gave out $1,653,500 in purses – not a huge increase, until you see the weekend figures (where the high-purse races are usually clustered). From January 30-31, Oaklawn gave away $818,700 over 18 races. On April 2-3, $937,000 was available over 19 races. That’s a big step up.
Anyway, over the races during that first week in March, 397 horses were entered over 37 races: 10.4 entries per race. It’s about even. But when you raise purses THAT much, shouldn’t you expect field size to go up, not decline? It’s an especially notable issue at Oaklawn, whose tote system cannot handle more than twelve betting interests. When you’re already drawing maximum-sized fields in more than half your races already, what’s the point of throwing even more money at the owners? Why not put the money back into something beneficial for the bettors, such as seeding pools, or lowering the takeout?
And, in many cases, the purse of a race barely affects the handle. Consider the aforementioned Haskell. In 2014, with a $1,000,000 purse, the race handled $3,936,195 in the WPS exacta, trifecta, and superfecta pools, for a total handle per dollar in purses (or HPDIP) figure of $3.94. Meanwhile, the day before at Saratoga, the Jim Dandy Stakes was run with a $600,000 purse. That race had $2,645,522 bet on it in the one-race pools, making the HPDIP figure $4.41. In other words, despite having a smaller purse, the Jim Dandy generated more handle for its purse than the Haskell did.
As for last year’s Haskell, featuring American Pharoah: it did handle $6,399,033, but Monmouth had to boost the purse to $1,750,000 to get him to run there. That race’s HPDIP figure was just $3.66.
That’s something that Del Mar should keep in mind as team California Chrome asks for an extra million in the Pacific Classic. Giving away this much money to horses who will not strongly increase the handle seems silly.
Purely from a sporting aspect, doing such things sets a bad example. The Pacific Classic is already worth $600,000 to the winner. California Chrome has banked more money than any American-bred horse in history. Do you really need an extra million added to the purse that badly? Of course you don’t. Unfortunately, it reflects greed, pure and simple.
Del Mar, meanwhile, should know better than to give them more money. California Chrome’s presence in the race, without any serious competition, will almost certainly make it a more unappetizing betting affair, and as such depress handle. Consider last year’s Pacific Classic; it was a wide-open, competitive field of ten, where favored Beholder was only 2/1, the race handled $2,501,051, for a HPDIP of $2.50. With a $2 million purse, the Classic will have to double their handle from last year, with (presumably) a smaller field and a bigger favorite, to match that HPDIP.
In summary, raising purses to insanely high levels has in many cases shown to be financially irresponsible. If Monmouth cut the Haskell purse to $750,000 or so, or if the Pacific Classic purse was only $1,000,000, or if maiden races at Oaklawn weren’t worth $68,000, would handle drop that much? Probably not. On the other hand, if that money was used to improve the overall fan and betting experience, that would be worth something.
John Piassek is a student at Loyola University in Maryland. He prides himself as a supporter of racing in New Jersey and Maryland. John is an aspiring race track announcer, marketer and writer. His “Mid-Atlantic Musings” column on DanonymousRacing.com focuses mostly on NJ and MD racing, ways to market them, how the states can improve their racing, and how racing should start focusing on bettor-centric marketing.
You can follow John on Twitter @Theyreoff.