A couple horse folks, who read yesterday's blog regarding owner economics, asked me to explain comparative analysis. I often forget that statistical givens may be as foreign to others as deep sea diving is to me, so here's a simple explanation.

Many organizations offer information in isolation. Unfortunately, I've found this to be true in Minnesota racing and breeding. For example, organizations offer Minnesota information on things like purses paid to state breds, state bred foals, auction results, revenue, breeding and racing rules, and many other key racing and breeding elements. 

When data is offered in isolation there is no context to determine the value of such data. It's like thinking a five footer is very tall in a tribe of pygmies, or a kid is a future major league ball player because he hit more home runs than anybody else on his high school team, or you are getting a good deal on a new car when the dealer knocks $1,000 off the list price, or a state thinking they are improving breeding by paying $5M in purses to state bred owners. Data is meaningless, and knowledge is rarely developed, unless it's turned into information through comparative analysis. 

Comparative analysis expands the study population so that results of similar people or groups can be compared. False improvement is easily claimed but systemic improvement is achieved by first creating context, thus reality, through comparative analysis. Such context then allows organizations to distinguish competitive options available in the improvement process. 

So the next time you see anything, from your financial adviser, your stock market analyst, your new home builder, your car dealer, your favorite race track tote, your employer, your favorite politician, or your racing and breeding organization, ask yourself if they created any context for you through comparative analysis. If not, find those who can, or do it yourself. Some people have built entire business models out comparative analysis like Angie's List, True Car, Yelp, Open Table, Hotels.com, Trip Advisor, Consumer Reports, and the list goes on and on. 

Comparative analysis may improve your life, and you may find some inner peace of knowing you understand greater truths, represent meaningful positions, take better actions and make better decisions, even if they are not the popular ones.

So, that's what comparative analysis is all about, and I hope this helps.

​Now that the summer racing season is over, a few folks asked about Minnesota and Iowa owner economics. Rather than simply provide propaganda on the subject, I went to Equibase for public owner information associated with the 2017 racing seasons at both Canterbury Park (MN) and Prairie Meadows (IA).

Owners with 20 or more starts were analyzed, and earnings per start (EPS) were calculated. I believe that the EPS indicator is the best proxy of economic results, and that’s one of the reasons you find stable EPS numbers on Equibase. Stables need to generate near $4,000 per start to breakeven on their “ongoing costs” economically. The $4,000 number is representative of fair market labor and costs, but “does not consider the original acquisition or breeding costs” related with acquiring a racehorse.

In Minnesota, 42 owner entities had 20 or more starts in 2017. Those 42 owners started 1458 horses, collected 188 wins, earned $4,305,088 in purses and averaged $2,953 per start. I estimate they collectively lost a little over $1,000 per start or 26.1% during the season, but 10 of the 42 owners earned over $4,000 per start which indicates that 23.8% were likely profitable. The 2017 numbers are in line with previous Minnesota racing seasons after the 2012 Mystic Lake subsidy came into being.

There were 34 owner entities in Iowa that had 20 or more starts in 2017. These owners generated 1627 starts 291 wins and $5,923,369 in earnings, with $3,641 in earnings per start. Collectively, I estimate these Iowa owners lost about $359 per start or 9.0% during the season. Of the 34 Iowa owners, 10 generated earnings per start greater than $4,000 so I estimate 29.4% of them were profitable on the season.

Though aggregate 2017 numbers were not available, Iowa and Minnesota generally have the same aggregate available purses totals. (Jockey Club 2016: $13.6M in MN & $13.8M in IA). Iowa has a higher volume of big race purses, graded stakes races, and higher state bred purses. The best comparative state bred purse example is the Iowa bred $41,000 Maiden Special Weight purse compared to the Minnesota bred $32,000 MSW purse, a 28.1% differential. Subsequently, it is no surprise that Iowa’s 20 or more start owners generated earnings per start that were 23.3% higher than Minnesota’s owners with 20 or more starts.

A deeper dive into the study distribution indicates that the bottom 50% of earnings per start owners in Minnesota generated $1,239 per start.  The bottom 50% of earnings per start owners in Iowa generated $2,015 in earnings per start. This means that Iowa earnings per start were 62.6% higher for the bottom half of owners in the study in Iowa than they were in Minnesota. In other words, adverse variation is more effectively accommodated by the Iowa system.

The 2017 results again demonstrated the ability of some owner stables to generate run rate profitability in both states (near 1 out of every 4), and a continuing difference in the Iowa and Minnesota purse distribution philosophies.

​Illustrating purses paid to state breds in isolation is irrelevant in that the percentage of overall available purse funds distributed to state breds historically range from 30% to 60% nationwide! A comparative analysis is required to understand the economics of this issue.

Congratulations to the top EPS owners.

The Canterbury racing season wraps up Saturday and we have a couple of our Minnesota Bred fillys running. PJ's Angel (Earner of $68,800, 3 wins, 4th in the Minnesota Oaks and winner just 2 weeks ago) and Blazing Angel (Earner of $75,976, Stakes Winner of the Minnesota Oaks), both run Saturday and will both be for sale immediately thereafter. In addition, Victory Ice, another filly who has won twice this year at Canterbury and earner of $38,480, is available.

All three of these horses can win races next year at Canterbury, so they would be a nice part of any Minnesota racing stable. They also have the personality, behavior, intelligence and athletic ability to do just about anything their new owners would ask.

As I have said here before, we are turning 65 and relocating our racing and breeding operations to other areas, thus reducing our footprint here in Minnesota. Subsequently, these sound Minnesota horses are available as racers for the next racing season, or as broodmares or even as solid prospects in other disciplines. 

Feel free to contact Gary Scherer, our trainer at Canterbury, while they are still at the track, or even watch PJ and Blazing race Saturday if you're interested. After this weekend they will be up at the Osborne Farm in Cambridge and you can contact Joyce Osborne 763-689-3661 about them up there.