Downturn at track

Preakness attendance, betting down, but industry experts aren't worried yet

May 20, 2008|By Childs Walker | Childs Walker,Sun reporter

Attendance and betting at the Preakness hit five-year-lows on Saturday, and fewer people watched on television than last year.

Does this signal a worrisome decline in business for Maryland's signature race or did a sluggish economy and the anticipated dominance of Big Brown lead to a one-year blip?

Magna Entertainment Corp. officials and industry analysts say that the numbers weren't down enough to raise long-term questions about the health of the Preakness. Magno owns Pimlico.

The crowd of 112,222 and the betting handle of $73,457,510 were both fifth best in the event's 133-year history. But the four totals that ranked higher were all registered between 2004 and 2007.

Last year's Preakness attracted a record crowd of 121,263 and a near-record gambling haul of $87,194,161.

"We expected the numbers to be down a little bit based on the economy," said Scott Borgemenke, executive vice president of racing for Magna. "We were probably a little surprised by how down they were."

All the makings for a big crowd were there: It was a picture-perfect day and a chance to see history in the making with Big Brown going for the second leg of the Triple Crown.

But industry experts say a sluggish economy, an overwhelming favorite and some people anxious over Eight Belles being euthanized after the Kentucky Derby could have kept people away.

"A prohibitive favorite like that is absolutely not enticing," said Doug Reed, program director for the Race Track Industry Program at the University of Arizona, also noting the economy and overall stagnation in horse betting as factors.

Other industry observers say one down year isn't reason to panic.

"I wouldn't be bothered by those numbers," said Tim Capps, a former executive at the Maryland Jockey Club who's now an equine industry expert at the University of Louisville. "It looks like just a blip in the radar after three or four years of tremendous growth. I think you only start worrying if in three years, you're looking at a steady downturn."

Capps cited many possible reasons for the lower numbers, from the sluggish national economy to the weakness of the Preakness field to the chance of showers in the weather forecast.

It's even possible, he added, that some fans stayed away because of the death of Eight Belles.

"That's a question you just can't answer," he said.

The declines are linked to short-term factors, added Jeffrey Hooke, a Bethesda-based investment consultant who analyzes gambling issues.

"I don't think it says anything about the event overall," he said

Hooke attributed the lower totals to a sluggish economy and an ongoing dispute between horsemen and tracks over revenue splits related to off-track betting signals (that dispute also depressed gambling totals at this year's Kentucky Derby).

Asked if the lower numbers raised deeper concerns for the owners of Pimlico Race Course and Laurel Park, Borgemenke said, "No, not at all. I don't find these numbers to be devastating."

Overnight television ratings were also down slightly, 6 percent for NBC's overall coverage and 3 percent for the hour including the race.

Preakness business always receives scrutiny, because the event is largely responsible for the racing industry's profitability in Maryland. Last year's record crowd, for example, increased Pimlico's overall revenue by 35 percent.

The lower numbers this year mean 2008 projects as a less profitable year for the track and Jockey Club.

How much less profitable remains unclear, Borgemenke said, with concession and parking revenues still to be tabulated.

"The Maryland Jockey Club will make money, people had a good time, and we have a lot more money for purses than we did at this time last week," he said. "So I'd say it was a very successful day."

The drop in gambling was tied almost entirely to the Preakness itself, with wagers on the big race falling almost $12 million short of the 2007 total.

That drop is understandable, given that last year's race featured a dramatic showdown between Kentucky Derby winner Street Sense and eventual Preakness champ Curlin.

Conversely, Derby winner Big Brown was an overwhelming favorite in this year's race, going off at 1-to-5 odds.

"Big Brown was regarded as such a clear favorite that I think that probably diminished the handle," Capps said. "It was just perceived by a lot of experienced horse wagerers as not a good betting race."

The drop in wagering was in line with overall industry trends. Wagering on U.S. races dropped 3.11 percent from the first quarter of 2007 to the first quarter of 2008, according to the National Thoroughbred Racing Association.

The NTRA cited the general economic downturn as a possible factor in that decline.

Crowds have also been down at many tracks, though attendance for the Preakness had increased steadily since the Jockey Club began adding seats to the grandstand early in the decade.

With tickets selling for $60 and up, the loss of 9,000 paying customers from 2007 is nothing to sneeze at.

"The attendance matters of course for the big days, because those events aren't entirely or even mostly about racing," Capps said.

Borgemenke said that based on ticket sales leading up to the race, the new policy prohibiting grandstand customers from bringing alcohol probably drove some to the infield.

But it's not clear whether it was a net win.

The infield filled to its 60,000 capacity earlier than usual, which should be good for concessions, he said, but those figures aren't available yet.

The economy might also have contributed to a 10 percent drop in corporate sponsorship for the Preakness. The number of corporate tents in the infield has also dropped steadily, from 45 in 2001 to about 30 this year.


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