LOUISVILLE, Ky. -- Thomas Meeker, the man who revived America's most famous racetrack, has seen the future of thoroughbred racing.
Smoke-free theme bars. Live bands. Guided tours of barns. Fewer horses and more wide-screen televisions. In short, a lean, fan-friendly, technology-driven entertainment business that is ready to shuck some tracks in order to survive.
"The time of long-term growth is over. The industry will survive. But it will be a different industry," says Mr. Meeker, who became president of Churchill Downs in 1984 and executed a remarkable turnaround.
Here, and at a handful of tracks across the country, racing executives are reinventing the sport, replacing dingy grandstands with colorful bistros and jazzing up the tired show with everything from petting zoos to driving ranges.
And they are earning riches selling telecasts of the races.
But even Mr. Meeker acknowledges that the strategy, which has given new hope to the sport, will go only so far toward aiding marginal racing operations. He is unapologetic about the trends: "The horse industry is in extremis -- no doubt that -- and it's a largely self-inflicted wound."
Among the potential casualties: Maryland, where organized American racing was born 250 years ago and which is the home of one of its premier events, tomorrow's Preakness Stakes. Its future as a major force in the sport is far from assured.
"We're going to move the way that makes economic sense. The tracks that figure out how to do it will succeed," says Richard Wilcke, executive vice president of the Maryland Horse Breeders Association.
"I think racing is on its way to becoming a secondary sport."
Interviews with track managers, trainers, economists and others in racing reveal a glimpse of where American racing is headed:
* Extensive television betting from home is considered a certainty before the century ends, with wagering conducted first by phone and later by interactive cable devices.
This would bring the sport to millions of new fans, and bring in millions of new dollars in betting.
* Some tracks are likely to go out of business altogether, and the survivors may be arrayed into a handful of "supertracks" producing most of the big races and a network of "minor-leaguers," testing young horses and running a few live races as a backdrop to telecast, or "simulcast," betting.
* The tracks of tomorrow are as likely to feature card games, live bands and water slides as they are a daily double.
Having lost their monopoly on legal gambling, tracks will have to find other ways to attract new customers and embrace casino gambling to keep the old ones.
What could it all mean for Maryland? Plenty. Organized racing meets began here before the Revolutionary War, when George Washington, among others, competed for tobacco and helped establish the sport of kings in the colonies.
Since then, it has grown into a $1 billion-a-year enterprise with two major thoroughbred tracks and a few minor ones, a pair of harness tracks and picturesque breeding farms spread across the state. By one estimate, 20,000 residents are employed at least part-time in the business, directly or indirectly.
Seedy image
Once one of the United States' most popular sports, racing has suffered in modern times from a seedy image and an inability to compete with newer alternatives, from VCRs to the National Football League. And its monopoly on legal gaming has been dashed by state lotteries, Indian casinos and riverboat gambling.
In 1992, legal betting in the country totaled $330 billion, the most recent figures available, according to Gaming & Wagering Business Magazine. That was up more than 250 percent from the levels recorded for 1982. Horse wagering grew only 35 percent during that period.
Almost everyone in the business agrees that there will be less racing at fewer tracks in the future; only the degree of retrenchment is in dispute. As for breeding, estimates range from a 20 percent drop in thoroughbred births over the next few years to optimistic forecasts that overseas demand will keep the farms at their current levels.
Churchill Downs, home of the Kentucky Derby, recently completed a long-range strategic study, and projects that the number of U.S. tracks will be cut by more than half by the turn of the century, to 45. The survivors will fall into a couple of castes, headed by a handful of powerhouses that will produce the top races and sell the telecasts, the internal study suggests.
Beneath those supertracks will be a network of "B-grade" tracks, which will offer mostly simulcasts augmented by short live meets to introduce the sport to newcomers. Among the "A" tracks will be Churchill Downs, Santa Anita and Hollywood Park in Southern California, Gulfstream in Florida and a track or two in New York, Mr. Meeker says.
Tom Aronson, a gaming consultant with Racing Resource Group of Alexandria, Va., predicts that Maryland, which he says "relied a little too long on existing fans and existing ways of doing business," is likely to end up in the second tier.
"Maryland is not unique in its troubles, but it is one of the larger racing states that has suddenly run into problems," Mr. Aronson says.
Robert Lawrence, an equine economist at the University of Louisville, says Maryland could survive with an improvement in facilities and strategies.
"You could have something in Maryland. I think they could be a player," Mr. Lawrence says. "I think, with the right facilities, Laurel or Pimlico could do it . . . with the location and the population and the history and the breeding. It may take a big capital infusion to do that."
Future unclear
Joseph A. De Francis, owner and operator of Laurel and Pimlico, the state's major thoroughbred tracks, agrees that Maryland's role in the future is unclear. "I believe that Maryland is one of those states that I would say is on the bubble," he says. "It could go either way."
Mr. De Francis says more tracks will go out of business in coming years, but he predicts that the survivors will align themselves into self-supporting regional circuits, opening and closing in sequence throughout the year.
Winning a license for Virginia would put Maryland into a healthy ++ circuit, he says. "That's the single most important thing we can do to move Maryland racing forward."
Some in the industry blame Mr. De Francis for failing to provide sufficient customer service and innovation. Since a peak in 1990, the first full year of Mr. De Francis' operation, attendance at the tracks has fallen 16 percent and betting 9 percent.
Nationally, betting rose about 1 percent during that period (no reliable attendance figures are kept).
Mr. De Francis defends his stewardship and the tracks, which lost a combined $7.2 million last year, but says he intends to do more for fans. He has focused in recent years on setting up a string of off-track betting parlors and on an increase in simulcasting, initiatives that should, if properly executed, make money.
"Clean and fun facilities are not the only thing,"he says.
Mr. Aronson, the consultant, says major surgery is needed to draw fans away from televisions, baseball and other amusements. "The sport has to be repopularized," he says.
For one thing, tracks probably will have to shift to night racing to accommodate fans who work, Mr. Aronson says. And the stale fare of win/place/show and exacta/daily double wagering will have to be updated with new and different types of bets, he says.
The mix of races also should be changed, offering fans a combination of sprints, match races and the traditional, massed-start runs run over turf, dirt and with thoroughbred and harness horses.
Geared towards family
"My belief is that racing has to be geared more towards the family," says Johan Fatemi, pari-mutuel wagering practice leader for Peat Marwick, a consulting and accounting firm. "The tracks have to be a more appealing place. . . . If you make a track a destination spot and get people to go, then you can survive as a business."
Churchill Downs, under Mr. Meeker, has spent $30 million upgrading the twin-spired raceway, which now has 1 million square feet of enclosed space.
There's the smoke-free Club Grille, with its green and mauve tiles, where patrons munch on pork chop sandwiches and egg rolls as they plot their betting strategies. In the exclusive Eclipse room, gentlemen must wear jackets, and the cuisine includes Mandarin chicken and eggs benedict.
On Saturdays, up to 1,000 fans turn out before the races for the "Dawn at the Downs" and its buffet breakfast, barn tours and presentations by star jockeys.
And Mr. Meeker requires each employee, including himself, to attend a refresher course every year on what one worker dubbed "Churchill cheerful."
Sonny Lease, a 32-year-old fan, says he grew up in the Louisville area and that racing was always something people were aware of. But polite company often was not found at the track on a workday -- until now, he says.
"Every year, we see some changes. I think 90 percent of it is atmosphere," he says. "It's an entertaining day. The clientele has changed. There used to be a lot of riffraff out here. It's more young people."
His companion on a recent day at the races, Jill Wells, 27, agrees. "A lot of my friends have started coming out. It's a social thing," she says.
The track last year posted a record profit of $5.9 million and opened a simulcast betting parlor across town that is open only when Churchill Downs is not. Mr. Meeker says he doesn't run much simulcasting during his live meets because they are less profitable.
"What racing forgot over the years is that the guys who make it work are the guys betting the money. We've got to get far more user-friendly," says R. D. Hubbard, who is credited with reversing the fortunes of Hollywood Park near Los Angeles.
Mr. Hubbard won control of the track in 1991 after a bitter stockholders fight and sunk $20 million in such things as improving the lighting, moving the paddock outdoors where fans could see it and reopening its trademark ornamental lakes and flower beds on the infield.
Other changes: Friday night racing and a single fee for parking, admission and a program. And there are simplified programs available for novices that rate the horses against one another and a common-sense explanation of the different wagers (a "win" bet, for example, is won "when your horse finishes first," the program says).
Mr. Hubbard also has rankled some traditionalists by adding a driving range and miniature golf course, part of his strategy of making Hollywood Park a total entertainment complex.
This year, he opened a $20 million card club, where patrons will pay a per-hand fee to bet against one another in poker and other card games, something that has investors snapping up Hollywood Park stock.
Last year, Hollywood Park posted a record profit of $5.2 million, and Mr. Hubbard is on the prowl to buy other tracks. Earlier this year, he nearly concluded a deal to buy Pimlico and Laurel from Mr. De Francis, and predicts he eventually may get the tracks.
At Gulfstream Park outside of Miami, a once-struggling track has recast itself as a family entertainment center with pony rides, a giant slide, puppet shows and a petting zoo on Sundays. The track spends $50,000 a year on landscaping.
Betting and attendance have soared, allowing the track to offerrich purses, which, in turn, have attracted many of the nation's best horses and made the electronic export of Gulfstream races as simulcasts lucrative. It has emerged as the dominant track of the Southeast, siphoning off horses from Maryland during the winter months.
"If we get our signal out to mainstream America, whether it's at home or the shopping mall, we can educate more people, and they will eventually come to a track," says Robert Clay of Three Chimneys Farms in Lexington, Ky., a major breeding farm.
Other opportunities
But the big tracks also have another strategy. Hollywood Park and Churchill Downs aggressively have pursued other gambling opportunities.
Operators of both tracks say horse racing will remain a big part of their businesses, but they stand to lose too much money to casinos if they don't own them.
"That's a major crisis for us," says Bob Bork, general manager of Arlington International Racecourse outside of Chicago.
The track has done many of the things the successful tracks have done, such as investing heavily in customer service and facilities. Mr. Bork declined to say if the track is making money, but betting and attendance have been flat in recent years, which he attributes to the recent proliferation of riverboat casinos in Illinois.
Even if racetracks are successful in operating casinos, it may help their bottom lines but not necessarily live racing in the long run.
"I don't know where we are going to find all the gamblers," says Charlie Whittingham, the 81-year-old Hall of Fame trainer who tomorrow will saddle Numerous in the Preakness Stakes.
"I still think it's a good business," he says. "But I was in it in the best of times. It's not going to be as we've known it."
HANDLE RISES
Pari-mutuel handle declined only slightly in 1993 despite 5,100 fewer races being run, thanks to the proliferation of simulcasts and off-track betting parlors. Pari-mutuel handle has grown 33.4 percent since 1983.
Year, Handle, Percent change
1983, 7,134,124,200, -0.4
1984, 7,588,174,900, +6.4
1985, 7,720,786,000, +1.7
1986, 7,846,785,700, +1.6
1987, 8,330,367,800, +6.2
1988, 8,935,978,600, +7.3
1989, 9,285,509,800, +3.9
1990, 9,385,072,100, +1.1
1991, 9,393,460,600, +0.1
1992, 9,638,864,200, +2.6
1993, 9,600,545,400, -0.4 A projected registered foal crop of 1994 estimated at 32,200 in the United States will mark the eighth consecutive year the crop has declined since reaching an all-time high of 47,761 in 1986.
Year, Crop, Percent change
1986, 47,761, +1.8
1987, 47,507, -.5
1988, 45,859, -3.5
1989, 44,838, -2.2
1990, 40,907, -8.8
1991, 38,734, -5.3
1992, 35,800*, -7.6
1993, 34,170*, -4.6
1994, 32,200*, -5.8
* -- projected numbers Horse racing faces competition for the gambling dollar. There was $330 billion spent on commercial gambling in the United States in 1992, but only $14.1 billion went to horse racing. Figures are rounded off to the nearest tenth of a billion.
... ... ... ... ... Handle ... ... Pct.
Casinos ... ... ... 252.9 .. .. .. 76.6
Lotteries .. .. ... 24.4 ... .. .. 7.4
Indian reservations 15.2 ... .. .. 4.6
Horse racing .. ... 14.1 ... .. .. 4.3
Card rooms .. .. .. 8.4 ... ... .. 2.5
Charitable games .. 4.8 ... ... .. 1.5
Bingo ... ... .. .. 4.3 .. ... ... 1.3
Dog racing .. .. .. 3.3 .. ... ... 1
Bookmaking .. .. .. 2.1 .. ... ... .6
Jai alai ... ... .. .4 ... ... ... .01 The number of live races run in the United States in 1993 declined by 6.5 percent. The closures of Longacres and Canterbury Downs accounted for 40 percent of the total. The number of races run in the U.S. has grown 4.3 percent since 1983, but has dropped in number the past four years.
Year, Races, Percent change
1983, 63,930, -1.6
1984, 67,084, +4.9
1985, 68,367, +1.9
1986, 70,604, +3.3
1987, 73,250, +3.7
1988, 72,454, -1.1
1989, 75,781, +4.6
1990, 74,066, -2.3
1991, 72,439, -2.2
1992, 71,797, -0.9
1993, 66,995, -6.7