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.
Dave Astar is a race horse owner, stallion owner, breeder, 40 year business executive, and 50 year handicapper.