SBJ/October 31-November 6, 2011/In Depth

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  • Horse racing's dealmakers

    BOB EVANS
    Evans was promoted to chairman and CEO of Churchill Downs Inc. in June, after joining the company as president and CEO in 2006. He oversees one of the largest racetrack companies in the U.S. and has emphasized the entertainment and social experience of racing in order to attract new fans. In addition to its namesake track, home of the Kentucky Derby, Churchill Downs Inc. owns and/or operates several other major tracks including Calder Casino & Race Course, Arlington Park and Fair Grounds Race Course.

    FRANK STRONACH
    Auto parts magnate Stronach owns The Stronach Group, which operates Santa Anita Park, Gulfstream Park, Golden Gate Fields, Laurel Park and Pimlico Race Course, home of the Preakness Stakes. Stronach said he desires to reduce “government interference” in horse racing. “The tracks must have the flexibility to run the business like any other business for the best interests of shareholders, employees and the customers,” he wrote.

    CRAIG FRAVEL
    In June the Breeders’ Cup named Fravel, then Del Mar Thoroughbred Club president and general manager, to the position of president and CEO, replacing Greg Avioli, who left to become head of horse track operator The Stronach Group. In his new job, Fravel is charged with growing the Breeders’ Cup brand, as well as making it one of the premier sporting events in the U.S. and in the world.

    CHARLES HAYWARD
    Hayward is president and CEO of the New York Racing Association, which operates yearlong racing at Aqueduct, Saratoga and Belmont Park, home of the last leg of the Triple Crown, the Belmont Stakes. Hayward, a horse owner and horseplayer, was formerly president and CEO of the Daily Racing Form. He has worked to get more New York horse races on television and is in negotiations with the Breeders’ Cup about having New York host the two-day championship event in 2013.

    GREG AVIOLI
    Before Avioli left his position as president and CEO of the Breeders’ Cup to oversee The Stronach Group’s racing and entertainment operations in March, he held a number of positions, including deputy commissioner of the National Thoroughbred Racing Association and founding president of HORSEPAC, where he led the U.S. racing industry’s federal lobbying efforts.

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  • Host sites heat up sport’s East-West rivalry

    When the Breeders’ Cup announced in August that it would hold next year’s event at Santa Anita Park in the Los Angeles area, for the third time in five years, the decision caused an uproar among the New York horse racing community and fueled an old East Coast-West Coast rivalry in horse racing.

    Going back to the days of California-based Seabiscuit versus New York-based War Admiral in the late 1930s, that rivalry has continued to manifest itself. In the 1970s, it pitted fans of the East’s Alydar against fans of the West’s Affirmed. It raged again two years ago when the horse racing industry named New York filly Rachel Alexandra “Horse of the Year” over then undefeated Zenyatta, who was based at Hollywood Park in the Los Angeles area.

    GETTY IMAGES
    East Coast horse racing executives have criticized the decision to return the Breeders’ Cup to Santa Anita Park in 2012.
    Since the Breeders’ Cup was created in 1984, the tracks in the centers of racing — New York, California and Kentucky — have vied to host the prestigious event that is a showcase for not only the best horses in the U.S., but an event that has attracted some of the best horses in the world.

    Three years ago, the issue became hot when it became known that Breeders’ Cup officials were considering Santa Anita as the permanent home for the event, which is always held the last week of October or the first week of November.

    The stories were that “There was a strong desire on the part of the Breeders’ Cup to do a long-term deal at Santa Anita and, if that was true, I think it would have been unfair for the racing industry,” said Charles Hayward, CEO of the New York Racing Association. “Inherently, the West Coast trainers would have an advantage. It is unfair to the owners, the trainers, the jockeys and the fans.”

    Some of those who favor a permanent home for the Breeders’ Cup have said that having it at one iconic location, like Santa Anita, could help the event to grow, like other sports events held in the same place, such as golf’s Masters, held at Augusta.

    But New York-based racehorse owner Mike Repole said he believes it is only fair that the Breeders’ Cup rotate from one racing center to another.

    “I don’t think 25 years ago when the Breeders’ Cup got started that they said, ‘We want this to be like the Masters. And it will be at Augusta or be like Wimbledon and be in London or be in England,’” Repole said.

    Repole called the decision to hold the 2012 event in Santa Anita a “travesty,” and suggested that NYRA host its own event to compete with the Breeders’ Cup.

    D.G. Van Clief, the executive director for the first Breeders’ Cup in 1984, said the idea at the beginning was to have the event rotate from one center of horse racing to another to grow racing at those venues and give fans in those areas a chance to see the best horses in the world.

    But, Van Clief said, three of the first four Breeders’ Cups were run at Hollywood Park and Santa Anita in the Los Angeles area, and the other one was held at New York’s Aqueduct. The reason for Southern California getting so many Breeders’ Cups when the event was in its infancy, according to Van Clief: “We needed the closest thing to a guarantee of good weather.”

    Frank Stronach, owner of The Stronach Group, which owns not only Santa Anita, but Gulfstream Park in the Miami
    area, noted in an email to SportsBusiness Journal that the Southern California weather is an advantage of holding the Breeders’ Cup at Santa Anita.

    “I believe the Breeders’ Cup is best when it is run in a warm weather climate,” Stronach wrote. “I know from many personal conversations that top owners and trainers around the world do not want to race their best horses in severe weather with very cold temperatures or too much rain.”

    Stronach said his group is excited about hosting the Breeders’ Cup at Santa Anita for the sixth time next year. “We would love to have the BC at Santa Anita on a regular basis after that,” he wrote. “Whether that is as a permanent home or in rotation with other tracks is up to the BC board.”

    The East Coast side of the debate may have something to cheer about soon. Breeders’ Cup officials were, as of press
    GETTY IMAGES
    Breeders’ Cup officials were in talks to hold the 2013 event at New York’s Belmont Park.
    time, in talks to hold the 2013 event at NYRA’s Belmont Park. Although there are no sure things in horse racing, a number of people in the industry were quietly betting that the event will end up in New York.

    “I am going to tell you what I have told other people,” said Craig Fravel, Breeders’ Cup president and CEO. “We are in the process of negotiating with New York for 2013 and we are hopeful that is where it will end up.”

    Hayward said that Belmont, which has not played host to the Breeders’ Cup since 2005, was disappointed when it bid for the 2012 Breeders’ Cup and it was awarded to Santa Anita. “We have had conversations with the Breeders’ Cup about 2013,” Hayward said. “We had a meeting last month at Belmont and we are hoping to move the dialogue along.”

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  • Stakes race

    The 28th Breeders’ Cup, horse racing’s annual championship event, officially kicks off Friday, but the real party will get started on Thursday night, when celebrity chef Bobby Flay hosts a gourmet food event for a select group of thoroughbred racehorse owners at a private jet hangar near Churchill Downs.

    “It’s a very hot ticket,” said Barry Weisbord, who, along with Flay, serves as co-chair of the new Breeders’ Cup enhanced experience committee, which was formed in January. “What our committee is charged with is creating a better customer experience, not just for the fans, but the owners, trainers and handicappers.”

    GETTY IMAGES
    The Breeders' Cup will involve 15 races with purses totaling $25.5 million.
    This year’s Breeders’ Cup will be held on Friday and Saturday, involving 15 races with purses totaling $25.5 million. The Breeders’ Cup started as a one-day, seven-race event held on a Saturday in the fall of 1984 at Hollywood Park, but over the years has grown not only in the number of days and races, but surrounding festivities. And it will continue to do so, said Craig Fravel, who was named Breeders’ Cup president and CEO in June.

    “In the next five years, one of our principal objectives is to make sure this is one of the major sporting events in the world,” Fravel said. “There is a big focus in the Breeders’ Cup to make sure the experience of the event is equal to the quality of the racing.”

    The owners of the more than 150 horses entered in Breeders’ Cup races will be invited to the Flay-hosted gourmet food event, featuring food from more than a dozen of the countries from which the horses or their owners hail. Flay essentially will be serving his peers in that he’s also a racehorse owner. Additionally, this year’s Breeders’ Cup will include a special hospitality suite for champagne toasts for the winning Breeders’ Cup racehorse owners and the large entourages they bring with them.

    The Breeders’ Cup hired an additional announcer to interview race winners and celebrities to capture what Weisbord calls the “feeling of frivolity” in Churchill’s historic Twin Spires building on television screens around Churchill Downs, instead of just the usual television shots of a horse’s betting odds and race replays.

    Media push

    The Breeders’ Cup began its expansion into more days, more races and other festivities about five years ago, and it has paid off. Since 2005, the event has seen steady increases in attendance, wagering dollars bet on the races, and ticket sales (see chart).

    Since 2006, television viewership has increased every year, with a spike coming last year, mainly as a result of
    GETTY IMAGES
    Zenyatta created tons of media buzz around last year's event.
    Zenyatta, a previously unbeaten female racehorse, narrowly losing the Breeders’ Cup Classic. Zenyatta gained national attention, including being featured in a “60 Minutes” segment prior to the race. Last year’s telecast drew 24.3 million viewers, up from 17.1 million viewers in 2010. This year, ESPN, ESPN2, ESPN3 and ABC will provide nine hours of coverage of the event.

    “The biggest challenge in the current year is living up to the hype without Zenyatta,” Fravel said, adding that this year’s event won’t feature a “singular attraction” like an undefeated racehorse that some have said was the best female racehorse ever.

    “Last year was probably the most coverage we had on our news and information show because of the story involving Zenyatta,” said Mike McQuade, ESPN coordinating producer of Breeders’ Cup coverage for the network.

    The Breeders’ Cup signed a seven-year deal with ESPN to televise its races, beginning in 2007. Part of the reason it switched from NBC to ESPN was a desire for the event to be covered on the same network that broadcasts more popular U.S. sports and “SportsCenter,” said Greg Avioli, former president and CEO of the Breeders’ Cup who left this year to run The Stronach Group, which owns several racetracks including Santa Anita Park and Gulfstream Park.

    “What we really loved were the live promotions during ‘College GameDay,’” Avioli said. “It brought our event more into the mainstream and integrated it with the major sports ESPN was covering.”

    Also on the media side, the Breeders’ Cup plans to launch a number of social media initiatives leading up to the event to get the attention of sports fans who are not core horse racing fans, said Peter Rotondo, Breeders’ Cup vice president of media and entertainment.

    The event is launching a 2011 Breeders' Cup app for iPad and iPhone.
    The plan is for Facebook users to play a new game in which they can raise a racehorse to run in the $5 million Breeders’ Cup Classic. On Twitter, Breeders’ Cup on-air broadcaster and handicapper Kenny Mayne plans to host a “Tweeters’ Cup” in which fans can tweet their picks for the Classic. An online Breeders’ Cup pick ’em contest will allow players to compete by trying to pick the winners of all 15 Breeders’ Cup races. Additionally, the Breeders’ Cup is launching a 2011 Breeders’ Cup app for iPad and iPhone.

    “You really don’t need to know much about horse racing to participate,” Rotondo said about all the new media initiatives. “Basically, you want to engage a new audience through the way we live now, social media.”

    Global presence

    Breeders’ Cup officials not only want to be a major U.S. sports event, but a major global horse racing event and compete with other international races, such as Royal Ascot, the Prix de l’Arc de Triomphe, the Melbourne Cup and the Dubai World Cup.

    Pleasing thoroughbred race owners with parties and champagne toasts in hospitality suites is not just for fun, it’s serious business as other international horse racing events pay to ship horses to the event, as well as cover travel costs for the horse’s human connections.

    The Breeders’ Cup started a “Win and You’re In” program in 2007, giving horses that win certain major U.S. races an

    The races of the Breeders’ Cup

    DATE POST RACE PURSE
    Nov. 4 4:10 PM Breeders’ Juvenile Sprint $500,000
    Nov. 4 4:50 PM Breeders’ Cup Juvenile Fillies Turf $1,000,000
    Nov. 4 5:30 PM Sentient Jet Breeders’ Cup Filly and Mare Sprint $1,000,000
    Nov. 4 6:10 PM Grey Goose Breeders’ Cup Juvenile Fillies $2,000,000
    Nov. 4 6:50 PM Emirates Airline Breeders’ Cup Filly and Mare Turf $2,000,000
    Nov. 4 7:30 PM Breeders’ Cup Ladies’ Classic $2,000,000
    Nov. 5 1:20 PM Breeders’ Cup Marathon $500,000
    Nov. 5 2:02 PM Breeders’ Cup Juvenile Turf $1,000,000
    Nov. 5 2:37 PM Sentient Jet Breeders’ Cup Sprint $1,500,000
    Nov. 5 3:21 PM Breeders’ Cup Turf Sprint $1,000,000
    Nov. 5 4:01 PM Grey Goose Breeders’ Cup Juvenile $2,000,000
    Nov. 5 4:45 PM TVG Breeders’ Cup Mile $2,000,000
    Nov. 5 5:25 PM Breeders’ Cup Dirt Mile $1,000,000
    Nov. 5 6:07 PM Emirates Airline Breeders’ Cup Turf $3,000,000
    Nov. 5 7:00 PM Breeders’ Cup Classic $5,000,000


    Note: Starts are Eastern time
    Source: Breeders’ Cup

    automatic berth in a Breeders’ Cup race. Since then the Breeders’ Cup has increased the number of races in the program, also known as Breeders’ Cup Challenge, to more international races. This year, for the first time, the Breeders’ Cup is giving owners of horses who win those races money toward the expense of shipping their thoroughbreds to the Breeders’ Cup in Louisville, Ky. A U.S.-based Challenge winner receives a $10,000 shipping allowance; owners of non-U.S. Challenge winners receive a $20,000 shipping allowance.

    The efforts aimed at owners are only part of how the Breeders’ Cup is boosting the entertainment options for all of those who attend the event. Raising the stature of the event requires keeping up with the nonhorse racing entertainment rolled out for fans at other marquee international events.

    For example last year, Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum, who created the Dubai World Cup, the richest horse race in the world, engaged not one rock legend, but two — Elton John and Santana — to play after the day of races.

    “Sheikh Mohammed puts on a halftime show in Dubai that knocks your socks off,” Weisbord said.

    Turnkey Sports Poll

    The following are results of the Turnkey Sports Poll taken in September. The survey covered more than 1,100 senior-level sports industry executives spanning professional and college sports.


    How interested are you personally in the sport of horse racing? (U.S. base – 31%, ESPN Sports Poll in 2010)

    Very interested 7%
    Somewhat interested 14%
    A little bit interested 39%
    Not at all interested 40%


    In the past year, have you done any of the following (select all that apply)?

    Watched horse racing on TV 55%
    Attended a horse racing event 20%
    Wagered on horse racing 22%
    None of these 40%

    In your opinion, which of the following would most increase casual fan interest in horse racing?

    A Triple Crown winner 51%
    Consistent presence in mainstream media 25%
    More advertising by the industry 5%
    Promotions involving fan giveaways tied to winning horses 3%
    Larger purses 2%
    More focus on the horses’ backgrounds 1%
    More focus on the jockeys’ backgrounds 1%
    Not sure / No opinion 12%


    Source: Turnkey Sports & Entertainment in conjunction with SportsBusiness Journal. Turnkey Intelligence specializes in research, measurement and lead generation for brands and properties. Visit www.turnkeyse.com.


    The Breeders’ Cup, which has had musical artists such as Toby Keith and Maroon 5 play at its VIP Thursday night party in recent years, is ready to step up its act.

    Next year, the Breeders’ Cup plans to hire a major music act to play before the Classic when it is held at Santa Anita Park in the Los Angeles area, Weisbord revealed. “We are talking about a big act,” he said, adding, “there have been informal talks with a number of talent representatives.”

    Looking forward, the Breeders’ Cup wants to keep expanding and is looking at models like the Super Bowl, where fans who don’t have a ticket to the game can participate in fan festivals in the week before the game, Weisbord said.

    “Unfortunately, our ticket isn’t as hard to get as their ticket,” Weisbord said. “But we want to continue to add value to our experience and make it one of the best sporting events that people know about.”

    Breeders’ Cup by the numbers

      Belmont (2005) Churchill Downs (2006) Monmouth Park (2007) Oak Tree at Santa Anita (2008) Oak Tree at Santa Anita (2009) Churchill Downs (2010)
    Attendance 54,289 75,132 69,584 86,588 96,496 114,353
    Wagering $124M $140M $147M $155.7M $178M $196M
    Ticket sales $3.4M $6.9M $7.1M $7.1M $6.5M $10.5M
    TV viewers NA 9.6M 12.2M 19.7M 17.1M 24.3M
    Total revenue $21M $28.5M $29.3M $28.7M $25.7M $33.6M


    NA: Not available Source: Breeders’ Cup World Championships

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  • New-breed horse owners make some noise

    Mike Repole may not be a household name to most sports fans, but investment bankers certainly have his number.
    The 42-year-old co-founder of Vitaminwater invested big and hit it big as a thoroughbred racehorse owner in the last few years. He will start not one, but two contenders in this Saturday’s Breeders’ Cup Classic.

    Over the past year, Repole has been on the receiving end of calls inquiring if he wants to buy all or a piece of several major league sports franchises. Investment bankers know Repole is flush with cash after selling Vitaminwater for $4.2 billion in 2007.

    EQUISPONSE
    Mike Repole stands with Uncle Mo, who won the Breeders’ Cup Juvenile last year.
    “Listen, when the [New York] Mets were looking for a partner, I was involved there,” Repole said. “I have talked to the New Jersey Nets about moving to Brooklyn. People call me about the [New York] Islanders. It’s not like it hasn’t hit my radar 400 different times. Do I get calls on the Philadelphia 76ers just before they sold? Do I get calls on the Charlotte Bobcats? Yeah.”

    Repole said that someone even called him about buying a 1 percent share in the New York Yankees in the last few months. That floored him, not only because he didn’t know you could buy 1 percent of the Yankees, but because the Queens native is a diehard Mets fan.

    Repole said there’s a “100 percent chance” that he will own a piece of an MLB, NHL, NFL or NBA franchise in the next several years, but he plans his entry into sports team ownership the same way he got into horse racing — slowly.

    In the meantime, he’s helping to bring much-needed exposure and investment to horse racing. Joined by the likes of Under Armour founder Kevin Plank and celebrity chef Bobby Flay, this new breed of horse owners brings new approaches to the business of horse racing and helps make the sport more relevant to casual sports fans.

    PLANK
    “Owners like Mike Repole, Kevin Plank and Bobby Flay are the future lifeblood of the sport,” said Greg Avioli, former Breeders’ Cup CEO and current CEO of The Stronach Group, which owns Santa Anita Park and Gulfstream Park. “There haven’t been too many of them come along in the last decade and we are lucky to have them.”

    Energetic voices

    Barry Weisbord, who co-chairs the Breeders’ Cup enhanced experience committee, said having owners like Repole, Plank and Flay is not only good for the Breeders’ Cup, but it’s great publicity for horse racing in general. He recalled a story The Associated Press ran about Flay winning a big race at Belmont Park this year.

    “What does that message say?” Weisbord said. “It says that Bobby Flay, who can spend his time anywhere, was at Belmont Park on Saturday. His horse won and that is where he chooses to spend his time.”

    Kevin Flanery, president of Churchill Downs Racetrack, echoed that sentiment. “It is great to have people who are passionate about the sport, who are new faces to the sport, energetic voices that the public is familiar with.”

    Flanery added that Churchill Downs was fortunate that Plank, Repole and Flay not only all ran horses in last year’s Breeders’ Cup at the track, but won one of the races.

    Plank owns Shared Account, a filly that won the Filly and Mare Turf last year and is expected to defend her title in the
    GETTY IMAGES
    Celebrity chef Bobby Flay owns Super Espresso, a candidate for the Ladies' Classic.
    same race this year. Flay owns Super Espresso, a candidate for the Ladies’ Classic, and More Than Real, who won last year’s Juvenile Fillies Turf.

    One of Repole’s horses, Uncle Mo, won the Breeders’ Cup Juvenile impressively last year, which established him as the favorite for this year’s Kentucky Derby. Unfortunately, Mo was scratched due to illness, but his stablemate, Stay Thirsty, finished 12th in the Derby and went on to win the prestigious Travers Stakes at Saratoga this summer. Both Mo and Stay Thirsty will run in the $5 million Breeders’ Cup Classic. Additionally, Repole intends to run Stopspendingmaria, a horse he named after his wife, in the Breeders’ Cup Juvenile Fillies.

    Learning the business

    Repole started going to the races as a fan at Aqueduct in New York when he was 13, but started buying horses only seven years ago. And he started small, buying relatively inexpensive horses that ran in races where they could be claimed for a certain price. “I could have bought $200,000, $300,000, $400,000 horses, but I decided to start with $20,000 claimers.”

    Repole knew he loved horse racing as a fan, but wasn’t sure he would like it as an owner. He wanted to learn the business, including the jockeys, trainers and the other owners, the competition.

    Repole said he’s been shocked watching other wealthy people who get into horse racing by spending millions on horses and then taking a very hands-off approach.

    “If everyone ran their businesses the way they run their horse racing businesses, they would never have been successful and they probably would have been out of business,” Repole said. “I just think that some owners come in with a fistful of money and think they are just going to win graded races like it’s so easy, and it’s not.”

    It wasn’t until about three years ago that Repole felt he thoroughly understood and loved the business of being a horse owner enough to really dive in. He started spending hundreds of thousands on racehorses and hired the leading trainer in purse earnings in North America, Todd Pletcher, to train them. Pletcher, in an email, said that Repole’s hands-on personality, as well as his business plan for buying 1-year-old and 2-year-old horses, is different than most owners for whom he’s worked.

    “He sticks closely to his budget and doesn’t stray too much, and this has worked well for him,” Pletcher wrote.

    Repole’s plan is to buy 20 to 25 horses a year, every year, for the next few decades. “I can’t ever say never, but I never spent more than $500,000 on a horse,” Repole said. “I go to sales and I see horses that sell for $1 million, $1.5 million, $2 million. … There are a lot of owners who spend two times or five times or 10 times what I spend and aren’t having the same success.”

    Repole said he likes to spend between $200,000 and $500,000 on a horse. Uncle Mo cost $220,000 and Stay Thirsty cost $500,000.

    As of mid-October, Repole Stables led all thoroughbred horse owners in North America for graded stakes wins.
    While he’s enjoying his investment in horse racing, Repole said that buying at least a piece of a U.S. team sports franchise “is on my bucket list.” Although he’s a rabid Mets fan, Repole would not say which sport he might invest in.

    But when he does make that move, he will take the same approach he did to racehorse ownership: Start with a relatively small investment and learn the business inside and out. If he likes it, well, then he would be prepared to go all in.

    “You know how to get started in something?” Repole asked rhetorically. “Either start real slow or jump in like no one’s ever jumped in before. I mean, Mike Repole knows two speeds: 0 to 10 miles an hour, and then over 100 miles an hour.”

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