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[RC] The economics of horses (was: Barbaro) - k s swigart

Truman said:

The TB industry is an industry. It's economic model
pretty much dictates the flow. It takes looking at a
lot of horses to find one with potential to win a
major stakes race. The down side is there is a lot
of carnage along the way. But given the economics I
don't see it changing any time soon.

Actually, the standard micro-economic model doesn't work any better for the TB 
racing business than it does for any other aspect of the horse ownership 
business.  People who own TB racehorses are most definitely NOT in it for the 
money, and this whole thing with Barbaro is most definitely NOT about the money.

This is especially true of stakes horses.  People who own and/or breed stakes 
horses do something else for money.  Many of them are royalty (it isn't called 
the Sport of Kings for nothing) or come from long-standing well-heeled 
dynasties, and they are willing to pour millions of dollars into their race 
horse "business" (to use the term loosely) for generations (and not just horse 
generations, but also human generations), and lose it indefinitely. Winning a 
major stakes race isn't about the money, it is about the 
joy/prestige/gratification of winning.  It is about winning races, not about 
winning money.

So it is not the economic model that that dictates the flow of the "industry" 
unless you assign some "profit" value to winning the race while losing money at 
it.  That is the only way to make any kind of economic model work.  Most TB 
horses owners will keep a horse around forever as long as it shows promise or 
continues to win races (whether it earns its keep or not, especially since it 
probably won't earn its keep even if it does win).  The reason the TB industry 
goes through horses, and many of the horses become grist for the mill isn't 
because of the economics of it, but because there are so few horses that 
actually are winners, but there are lots of people willing to lose lots of 
money producing countless horses so that they can get just one that wins races.

There are actually some people who do make money owning TB race horses, but 
these are not the people with stakes horses.  There is a chance of making money 
by playing the game at the lower levels with claimers, and this game is played 
more by people who don't have (so much??) money that they can lose.

The reason people own race horses is so they can jump up and down in the 
owner's box and yell "Go, baby, go." And, if they get lucky one day, they get 
to stand in the winner's circle, point at the horse, and say, "That's my 
horse."  In the stakes racing TB industry, you have to be willing to shell out 
big bucks for this privilege, and never expect to make a dime at it.

There are, of course, exceptions to the rule (Seattle Slew comes to mind), but 
by and large, the stakes racing business is for people who lose money, and they 
lose it big time...and most of them know it going in, so they aren't applying 
any economic models to it either.

It isn't the economics of the TB industry that causes the "carnage along the 
way" it is the egos of the humans involved.  And this is not unique to the TB 
horse racing industry, it is rampant in all aspects of the competitive horse 
"business."  It is just that in TB racing, the prizes (and I am not talking 
about the money prizes) are bigger, so the egos are bigger too. (In fact, one 
of the reasons the money prizes are bigger, and the costs are more, is because 
the egos are bigger.)  We would do well to remember this in the endurance 
"industry" as well. I, personally, am of the opinion that we need to keep the 
prizes (and I am not talking about money prizes here) for endurance small, so 
as not to attract participants with big egos who are willing to run horses 
through the mill to satisfy their desire to "win."

Orange County, Calif.


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