Stan Bergstein's Daily Racing Form columns

With permission of Daily Racing Form,  Stan Bergstein’s bi-weekly columns for that publication will appear here every other week. 

April 6, 2005

Racing at perilous crossroads

People learn by reading and listening, not by talking.

Some in racing have not learned this lesson, and some disparage racing conferences as social gatherings, belittling them because there is much talk and few immediately tangible or visible results.

It is a narrow view, and those who feel this way in the racing business can benefit by reading two things currently and easily available to them.

One is Thomas L. Friedman's new book, "The World is Flat: A Brief History of the 21st Century," which is not about racing, but about the world technological revolution that is changing the way of life on our planet, and our role in it. Racing will not be spared. It is a scary book, because Friedman makes a convincing case that the United States is losing the position of world pre-eminence and economic domination that we have always believed impregnable. He tells how an explosion of technology in India and China, and kids sitting at laptops in Romania, are threatening that dominance, and why.

The second text, available on both the Thoroughbred Racing Associations' and Harness Tracks of America's websites, www.tra-online.com and www.harnesstracks.com, is a racing marketing lecture by Bill Shanklin, delivered to the directors of the two organizations at their recent joint convention.

Shanklin is a college professor in Ohio who has taught marketing and written articles and books on it for 18 years. He also happens to hold a Ph.D. in racing, knowing the game inside-out. He is practical, not pedantic, and an entertaining teacher.

Shanklin told the track operators that all of the graduate business students worldwide could be taught by 200 professors using simulcasting and wireless technology. He reinforced Thomas Friedman's globalization point, noting that a university in Philadelphia broadcasts a class at 2 p.m. Eastern so that students in various countries around the world are able to "attend" during their normal waking hours. "How many racetracks would it take to supply the world's demand for simulcasting and account wagering?" Shanklin asks.

Shanklin called emerging technologies a two-edged sword for racing, echoing the view of Bob Rapp of Microsoft, who also spoke at the convention, that wireless technology offers racing an unprecedented opportunity to interact with customers at almost any time and any place.

Shanklin called it a largely uncharted communications frontier for tracks, and said the potential rewards are huge, as are the risks. He told how Michael Dell, as a 19-year-old college student, started the shock waves in marketing that allowed Dell Computer to become the largest personal computer maker in the world, and the fastest in history to make the Fortune 500 list. He cited Compaq as a victim of its own past successes, mired in a conventional business model that turned out to be an albatross under radically changing conditions, and he drew a parallel with low-cost offshore parimutuel operations luring away racetracks' best customers.

Shanklin said racetrack executives have to find a way to satisfy current mainstream customers and at the same time cater to technologically empowered high-rolling shoppers looking for the best deal.

This is the current business plan at Woodbine Entertainment in Toronto, the leader in that movement.

Shanklin said top executives in companies imperiled by developing technology know full well that the situation will only deteriorate if they fail to act, but often are paralyzed at the thought of putting their companies through wrenching changes. He indicated that wrenching changes are needed in racing.

Simply put, Shanklin said tracks sooner rather than later will have to form alliances and open their own offshore betting locations, and cannot let offshore competitors pick off their best customers. Otherwise, he said, the divergence between worldwide handle and purses will grow wider.

Friedman, in his new book, summarizes the threat.

"The long-term opportunities and challenges that the flattening of the world puts before the United States are profound. Our ability to get by doing things the way we've been doing them . . . will not suffice any more."

He was not talking about racing, but hopefully the track executives who read his book, and who listened to Bill Shanklin and Bob Rapp at their recent convention, heard and understand those truths more clearly now.