Monday, June 15, 2009

Sunday's Herald-Leader" "Horse industry has problems, but it's far from dying"

It was a bad day to be a slots advocate.

Sunday's Lexington Herald-Leader was a study in contrasts. While Larry Dale Keeling in the Opinion section and Tom Eblen in the City section were preaching that the end is near for the state's horse industry, John Cheves was on the front page dispelling all their gloomy prophecies and announcing that the horse industry, far from being dead, was still quite healthy, although with a few significant aches and pains.

Cheves also completely undermines the factual basis for the main argument for video slots.

In a story titled, "Nothing sticks like gloom," after recounting Gov. Steve Beshear's alarmist predictions for the horse industry, Cheves notes:
In truth, the state's iconic horse industry is not about to breathe its last breath.
In fact, the investigative piece is a demolition job on virtually every myth about the demise of the horse industry now being used to prop up the case for the Governor's video slots bill that he is pushing in the General Assembly session that starts today. Here is a rundown of some of the story's major findings:
  • Kentucky remains the dominant producer of Thoroughbred horses, with a 31 percent market share, up from 19 percent in the 1990s. "We're hanging in there OK," says Elliot Walden, Winstar's vice president and racing manager.
  • While Kentucky does not lead in horse racing (outside the Kentucky Derby), it leads in horse breeding, with 10,500 foals being produced in the state every year, dwarfing most other states, and Kentucky-bred horses winning both in Kentucky and elsewhere. "Despite the lack of slots," says Cheves, "Kentucky remains the master of Thoroughbreds."
  • The claim that 100,000 people work in the horse industry is false. "100,000 people work in Kentucky's horse industry," says Cheves. "Except they don't." Only 51,000 people work in the horse industry.
You have to wonder about the lines of communication over at the Herald-Leader. Surely Larry Dale Keeling couldn't have known the front page was running the same day he used arguments discredited in the same edition of the newspaper. Keeling says we have "no time to spare" to bail out the horse industry apparently has some time on his hands to spout incorrect figures, citing the now discredited 100,000 figure.


Where did the horse industry get the figure? According to KEEP it got it from the American Horse Council, which in turn got it from Deloitte, an accounting and consulting firm. Only that's not where they got it, since Deloitte reported 51,000, not 100,000. But Deloitte apparently told Cheves that if you added in basically everyone who a horse worker bought something from, then you could come up with a figure close to the one slots advocates are using.

Say whut?

That's right. "... if you included other jobs created by the spending on horse jobs," Deloitte told Cheves, "--for example, a horse breeder frequently dines out, which helps pay for a waiter at the local restaurant."

So the waiters at all the restaurants within the vicinity of horse farms and tracks are now to be considered "horse jobs"? And why not include all the workers at all the other retail outlets in those places as well. That is apparently how slots advocates are calculating their figures.

Now we know where all those refugee accountants from Enron landed.

So why all the dire predictions for the Kentucky's "signature" industry? The first reason is that there are some disturbing trends, although many of these trends affect all states, not just Kentucky. Horse racing has declined everywhere, not just Kentucky, since the 1940s and 50s. In addition, the Recession has affected industries everywhere. And, finally, there is the fact that other, richer states are offering bigger purses subsidized by slots.

But if purses are the real issue, which organizations like KEEP say they are, slots are not necessary to address it. Senate President David Williams' proposal takes care of that problem by subsidizing purses to the tune of $80 million. And if purses are the issue, then why is the lion's share of the money going to the hugely profitable Churchill Downs and other race tracks rather than directly to horse farmers?

And will allowing slots at tracks fix things? If so, then why hasn't it fixed the problem in Indiana and West Virginia? According to Cheves, the introduction of racinos in other states has not stopped Indiana tracks from having trouble paying their bills and West Virginia tracks from laying off employees.

One of the reasons Kentucky horses are racing in other states is not the fact that the purses are bigger, but because they can win easier. Why do they win? Because they're Kentucky-bred. Horse breeders can leave the state, but if they do, they won't be producing Kentucky-bred horses--the ones that are winning everywhere else.

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