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Thursday Thoughts: Yearling Prices Increase while Betting Declines

by Al Cimaglia

November 16, 2017

As the trees become bare and yearling sales wrap up, standardbred breeders should be happy. Big money buyers came out again and spent a tidy sum. The results from two of the largest yearling sales at Lexington and Harrisburg were generally good. The Harrisburg sale from earlier this month was up 1.5%, but on fewer horse than last year. The Lexington auction beat its 2016 sales total by close to 4%.

There are reasons to believe harness racing ownership can be enjoyable and profitable. If the dots line-up for an owner money can be made and it's great entertainment. That's my hope as I have purchased a small percentage in a few yearlings and still own an interest in a couple of three-year-old pacers. If ongoing expenses are controlled, with some good luck a profit can be made, or hopefully at the very least losses can be limited. But there is an enormous difference in the game plan of those who spend very large sums of money compared to someone like me.

Overall there is a shortage of horses and those who jump in with both feet, go in very big. In theory the more horses owned the better chance of hitting homeruns. But it's a balancing act because as the amount invested rises so does the risk. In following years, if the supply increases purses will need to grow so the spending to the hilt formula can continue to work for the largest owners.

Those who spent the most money this year at the Harrisburg sale are some of the same familiar trainer-owner combos.

Burke Racing Stable led all buyers with a whopping total of $1,541,000 (23 horses). Burke Racing came in first place by a mile as they spent over two times the amount of the second-place finisher. Stroy Inc. was runner-up with a total of $746,000 (10 horses). Stroy Inc. are the owners of this year's Hambletonian favorite Devious Man. Rounding out the top six were Ake Svanstedt $730,000 (7 horses), Casie Coleman $675,000 (10 horses), Determination $610,00 (6 horses) and Crawford Farms $579,000 (6 horses).

The average daily handle at the recently concluded Mohawk meet was up 8% from 2016. The surge was largely bolstered by an increase in betting from south of the border. A point of concern is the total harness racing handle in the United States is currently down 5.2% this year. Maybe some of the decline was due to the increase in Canada. At some point, for the continued spending rate at yearling sales to continue if would appear an increase in the betting handle should occur.

For now, Ron Burke seems to be getting a decent return overall for his owners. For 2017, Burke is the leading standardbred trainer in wins (805) and in earnings of ($19,233,802) according to the USTA website. Burke's operation involves more than racing younger horses and his stable spends to make. Between this year's Lexington and Harrisburg sales, Burke has spent $2,466,000 and they have participated in other auctions as well.

The U.S. economy is growing, the stock market is near all-time highs, the employment rate has improved yet the total handle for harness racing is down from last year. Sales up and betting down, interesting times.

Check me out on Twitter, @AlCimaglia.