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Making the Numbers Work   

6/20/2016

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                Back in 1995 when the racing entertainment centre concept was introduced, it was hoped that the move to permit machine gaming at racetracks in support of live racing, would stabilize, and perhaps even grow, the financial stability of the horse racing industry in Alberta.  This spring has presented some difficult news for the business of racing.  Provincial wagering is down about 3% so far in 2016.  That means there had to be some adjustments in budgets for Horse Racing Alberta and for the provincial breed associations.  Added to that is the increased payment to the Province resulting from the 10-year Memorandum of Understanding, which was signed in late March.  That memorandum states that the industry’s share of provincial wagering drops from 51-50% this year, to 45% in 2017, and to 40% in 2018 and for the rest of the agreement.
 
                There are any number of reasons for the decline.  The reality for ASHA is that $210,000 have been removed from the Alberta breed improvement program and about $300,000 had to be stripped out of the overnight purses account.  This meant some tough decisions by ASHA’s directors had to be made.
 
                “We had to prioritize what is important for both the present and the future of the sport and the business in this province,” ASHA Vice-President, Bill Andrew, told me.  “The number 1 priority was to maintain a strong stakes program.  You want to encourage breeders to continue to invest in the upgrading of their stock.  You want owners to spend money on good racehorses and you want them to buy yearlings with the hope and expectation that they will be stakes winners.  Without that, there would be no racing and we would not be able to achieve the goals of growing the business as set out in the MOU with the Province.”
 
                “The number 2 priority was to maintain the bonus for Alberta broodmares in order to keep improving the stock and keep improving the product.  It’s true that to breed the best, you need both a good mare and a good stallion.  But the mare can only have one foal a year while the stallion can breed to a lot of mares.  You can bet that owners will be looking at this season’s stakes winners and checking to see if the mares of those winners have another family member coming to the yearling sale in September.”
 
                “When Stampede Park left the business and when revenues at Northlands Park began to slide, the mare bonus pool of about $800,000 was cut in half and the stallion bonus was eliminated.  The Alberta bonus, which is paid to owners of Alberta-breds, was cut from 15% when it started in the mid-1990’s to 12% as of February 15th of this year.  When it became clear that Horse Racing Alberta’s budget could not meet projected revenues, ASHA had no choice but to revise its own payouts for overnight purses and for the breed improvement program.”
 
                “The bonus for Alberta-breds was initially set up to help owners recover their investment in yearlings in a timely fashion,” said Andrew.  “What we have done to try and compensate for the loss of the bonus, is to have the racing secretary modify conditions for overnight races.  For example, an Alberta-bred entered into an overnight race listed as non-winners of 3 or $25,000, would be permitted an extra win and additional dollars (say $29,000 in earnings) to be able to race in that class.  The thought was it would give owners of Alberta-breds a chance to recover a little more of their investment before they had to move their horse up to the next level.”
 
                “We can’t do anything about the two breeders stakes because the rules have already been set and because owners have already made sustaining payments for those races.  Yes, we have had to cut some open stakes and cut some purses in those races over the past few years.  But we believe that protecting the Alberta-bred program must have complete and unconditional priority, which is why we have taken the steps we have taken.”
 
                It is hoped that the changes brought in this spring can be updated and improved.  But that means more revenue must be found.  That’s a story for another day.
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