imjingjing

Even as the world financial system came crashing down over the last few weeks, it appears that promises of returns that are too good to be true aren’t limited to Wall Street. For those who, luckily, aren’t in the stock market, here’s a quick definition.   A hedge is an unregulated, rich guys’ version of a mutual fund.   It collects money only from “qualified investors” (i.e., rich people) and invests in, well, anything, from credit default swaps with Lehman Brothers to thoroughbreds with blazing speed and bad feet. For the promoters of hedge funds, the big lure is the compensation.   The industry standard – don’t ask me how it got to be the standard, because it represents an unbelievable level of greed – is that the fund manager’s annual compensation is 2% of the value of the assets, plus 20% of the profits.   So, if you can attract enough money into the fund, you’re guaranteed to do well even if your returns are no better than what one would get putting the money into the S&P ...

Back in 1967, folk singer Pete Seeger wrote “Waist Deep in the Big Muddy,” a trenchant commentary on the stupidity of pressing ahead – in that case, with the Vietnam War – when everyone knew the cause was hopeless. ( Here’s a link to the song’s debut on national television in 1968, after CBS relented in its efforts to keep it off the air.) It seems to me that the song is once again appropriate, and not only to the current occupant of the White House.   Frank Stronach seems intent on leading Magna Entertainment, and with it the shareholders in other Magna companies, deeper and deeper into the swamp that he has created.   Only now people are beginning to speak out and call his bluff.   As Lyndon Johnson discovered in 1968, once that happens, the question is not if the end is coming, but when. As I noted some time ago , Magna Entertainment, which owns Gulfstream, Santa Anita, Laurel and Pimlico, Lone Star, Golden Gate Fields, Remington Park and other racing properties, is insolvent, ...

As a TBA colleague  has already already pointed out , NYRA has announced major purse cuts for the upcoming Aqueduct winter meet, which opens October 29 th . Apparently in response to the sharp drop-off in handle in recent months – Saratoga was down 10.6% from 2007, and the Belmont fall meet is down 10% so far – NYRA is cutting purses back to their January 2007 levels.   That means open-company maidens will drop from $48,000 to $43,000, and N1X allowances from $50,000 to $45,000.   New York-bred races in the same categories will pay $2,000 less than the open-company events. In addition, NYRA has announced that it will lay off 42 low-level employees when the Belmont meet ends.   The folks who will lose their jobs – none of whom is named Charlie Hayward – include 19 seating attendants (“whitecaps” in NYRA parlance), 16 parking attendants, five admission clerks and two program sellers.   OK, I understand that business is down, and I’m willing, as a horse owner, to take my share of...

Well, it took a while, but there are more and more signs that horse racing won’t be spared the ills that are affecting the rest of the economy. There are three ways of measuring how well racing is doing, depending on what your economic interest is.   If you’re a commercial breeder, what you care most about is the average, the median, and the buy-back rate at the sales.   If you own a racing stable, you care about purses, which are funded by handle and by slot machines. And if you’re a race track operator or the owner of an ADW or OTB operation, you care about handle, because that’s where your revenue comes from. Now, for the first time that I can remember, all those indicators are heading down at the same time. Sales prices are down, and buybacks are up.   According to a just-released NTRA/Equibase report , nationwide all-sources handle was down almost 10% in the just-completed third quarter, compared to the same period last year, and down 5.75% for the first nine months of the year....

I'm just back from Keeneland, where I spent too many days looking at way too many horses at the annual yearling sale. A couple of stories coming out of the sale sparked my lawyerly interest in those obscure terms called "Conditions of Sale" that govern the relationships among the auction houses, consignors, agents the people who actually buy and sell horses. The first story was the embarrassment of  Keeneland's selling a horse  for $1.1 million to someone who apparently didn't have the money to pay for it. The successful, if underfunded, bidder, Karen Sanderson, a dentist from London , outlasted Sheikh Mohammed's agent John Ferguson to get the Medaglia d'Oro filly out of Amizette (Hip No. 1084) on the first Saturday of the marathon sale. Then, after the auctioneer’s hammer fell, Keeneland discovered – surprise – that Dr. Sanderson didn’t exactly have approved credit.  Embarrassed Keeneland officials scrambled to clean up the mess.   First, after Ferguso...

OK, we finally had a weekend with good weather both days, good crowds at the track, great racing, especially on Saturday, and the usual Sunday giveaway mob scene. But a closer look at the numbers suggests that perhaps those giveaways -- by now a Saratoga tradition -- really don't contribute much of anything to NYRA and its horsemen. It's safe to assume that NYRA doesn't actually make any money on the giveaway items themselves. Even if made by near-slave labor in China, those long-sleeved t-shirts (today's giveaway item) probably cost NYRA a couple of dollars each. Add in the need to pay a few people to hand the shirts out to the oncoming hordes, and add in the over-ordering that's a necessary part of running the giveaway program, and it seems unreasonable that NYRA could realize a profit on the $3 general admission charge. I don't know how much of the giveaway items' cost is picked up by corporate sponsors (today's shirt was credited to the Adirondack...

This is a diversion from the usual fare, which deals with racing economics and the big players in the game. But we (Castle Village Farm) will be running our first-ever stakes race at Saratoga tomorrow, and I couldn't not mention it. Our four-year-old filly Just Zip It will run in Monday's $80,000-added Union Avenue Stakes, for NY-bred fillies and mares on the dirt at six furlongs. Just Zip It sailed through her NY-bred conditions earlier this year: lifetime she's 3-3-2 from eight races, and has never been worse than second at six furlongs. Her Beyer numbers aren't as flashy as some of the other entrants', but she has a great competitive spirit. Dick Dutrow has what will certainly be an odds-on favorite in By the Light, but we're hoping to be able to run with the rest of the field. Actually, we're happy just to be here, with a filly that legitimately deserves a shot at this level. Our horses have won stakes before (Maryland Million Distaff at Laurel and t...