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Friday, February 16, 2007

TVG Spinning Out of Control

- It's kinda funny that TVG Senior VP David Nathanson's column defending his network's exclusivity contracts appeared just a couple of days before we learn that their negotiations with Churchill Downs have broken down. Churchill is miffed over TVG's involvement in piping its races to the UK, in competition with a joint venture the company has with Magna, and it doesn't take a genius to see a future for the company's tracks on Magna-owned HRTV. TVG claims that it's strictly a business decision on their part:

“Nearing the end of a 10-year relationship with CDI, we were seeing continued growth in our television distribution and account wagering handle, as CDI continued to divest of racetrack properties, diminishing its importance to our business,” said David Nathanson...in a statement released by his company.

Over the past two years, CDI has sold, or announced pending transactions to sell Hollywood Park, Hoosier Park and Ellis Park. According to the TVG, the share of wagering by its subscribers on CDI’s owned tracks plunged from over 30% of TVG’s total wagering to less than 13%, including wagering on Kentucky Derby day. [Bloodhorse]
Oh c'mon man, don't feed us that fucking crap. TVG is already an endangered species during the winter without Gulfstream, Santa Anita or Oaklawn - so much so that the harness racing from the Meadowlands seems to have become the centerpiece of their broadcasts. What will they do without Fair Grounds and Calder? Sign an exclusive with Freehold and extend Drive Time into the afternoon? And without Churchill Downs itself, the only thing that's diminished is TVG itself. Talk about spin, this stuff is spinning so fast it makes the sulky wheels look stationary.

Nathanson writes in his re-edited Bloodhorse column (original column here via Google cache):
The purpose of exclusivity is not to gain an advantage over ADW competitors (as evidenced by TVG’s sub-licensing wagering rights to multiple ADW providers). The purpose of exclusivity is to secure for racing a viable and financially feasible long-term national television presence, and the resulting marketing benefits.
But of course it's to gain an advantage, specifically with respect to HRTV, with whom it competes for space on cable and satellite, as Nathanson himself acknowledges:
The ability of a programmer to provide exclusive content and high quality production values are prerequisites just to get in the door and absolutely necessary to broaden distribution.
And Nathanson is being just plain dishonest when he writes: TVG currently reaches more than 20 million U.S. homes in all 50 states via all the major cable and satellite providers. Tell that to those in the NYC area that have Time Warner Cable. (And isn't it strange that the purged version of the column contains a more accurate characterization, that it's carried by various cable and satellite providers!)

Of course, it's not TVG's fault that all of the providers don't carry both they and HRTV, and that, therefore, some viewers lose out depending on where they live and which service they subscribe to. We understand that this is business, and that they're not going to give their products away just to make us all happy. But don't talk to us as if we're as ignorant. Leave that for Racing 101.

9 Comments:

Steve D said...

I have so many opinions on this, I don't know where to start. I was offered a job with TVG in the summer of 1999, when it was just getting started. What I thought was a dream come true became a dream that I rejected when I heard the absurd philosophies of the chief producer, one of which included, "We're not going to talk about traditional handicapping that much. Our hosts will more likely say things like, 'This horse will probably run well on the grass because he has the word green in his name.'" I kid you not. I was stunned, rejected the position outright, and waited for TVG to fail.

It has failed spectacularly. It is built on a flawed model, which is to secure and deliver exclusive content in order to generate betting revenue. This is moronic, and the result is idiot hosts pushing Pick 4 & Pick 6 wagers (any clue which wagers have the highes takeout?) and true, cutting edge companies like Youbet and AmeriTAB being forced to pay absurd royalties for taking bets on TVG's exclusive tracks.

TVG has one worthwhile show...The Works, which come before the Kentucky Derby and the Breeders' Cup. That's it. Everything else is an embarassment to the industry and a stunning failure to provide players with desired content, which, in case TVG folks are reading is races, races and more races. For maidens and stakes, shots of the horses in the paddock and the post-parade. In extreme cases, a replay of a bad trip or a stunning stretch duel.

As an aside, how much time is taken up by idiot commentators and the posting of payoffs! I can get this information from the net or from my wagering account which is updated immediately. I don't need you to go over EVERY SINGLE PAYOFF or tell me what a wonderful training job Dominic Shettino did to win the $35,000 claimer at Aqueduct. The reality is that the horse was likely hand-walked for the entire week after his last race and standing in ice the rest of the time. Rides are wonderful or awful, training jobs are...well...typically something different that you think.

But this is not meant to be a screed against TVG. It's a disagreement with the basic philosophy of exclusivity. Racing needs to understand two things:

1. Their live product should be more scarce, mainly through seasonality and 4 and 5 day racing weeks. This would create more demand for the live experience.

2. Wagering, television and online coverage should be easily available to anyone who wants to partake. Easy to sign up, easy to bet any frickin race in the world and easy to view said races, over the internet or on TV. Obviously, with TV, there are bandwidth issues, so choices must be made. But hopefully in the future, there is enough bandwidth to have, say, two or three tracks per channel and stagger post times so that everyone can see every race!!!

The industry has done the exact opposite of these two principles. They put all their eggs in the TVG basket and we should be glad that they are removing those eggs now.

I am a dedicated fan and bettor. Do you know how frustrating it is for me to figure out which tracks I can bet via internet, which I have to bet via phone, what I can see on TVG, what I can see on the internet, and what I can see on HRTV (which I don't have so I don't know why I bother with it anyway)? It's enough to drive me crazy and has resulted in me scheduling my "intense" gambling time around periods of the least complexity. Early year racing (Santa Anita and Gulf) stand out because its easy on Xpressbet, as does Saratoga, since I'm only interested in one track and it's on TVG but I can bet Xpressbet via phone.

If this is what I have to go through, what about a new fan? I don't even want to think about it.

The death of TVG, which seems inevitable, will be lamented by many in the industry. However, we should see this as a good thing. A move away from exclusivity, and a change for the better (and the bettor). Racing should get together and change the economics of simulcasting to benefit the host track more. After that, it should lobby the states as vigorously as it has lobbied the federal government in order to lift restrictions on wagering. During that process, it should set its sights on making all racing content, as well as internet and phone wagering, easily available to anyone that wants it.

Sorry for the rant. That's my view.

Handride said...

steve d, just posting about this over at my blog, maybe you're the guy i'm looking to answer my question. Where does all this money go? How does it get there?

Anonymous said...

Steve D...you should get educated about the racing industry. You don't have clue.

Anonymous said...

from Steve D:
"...It has failed spectacularly."

Right. It has failed spectacularly for over seven years.

Tote Board Brad said...

Glad to see Tony Allevato stopping by!

Steve D said...

Alan,

Thanks for highlighting a necessary debate. And I am more than willing to engage in a debate here, if we want to do that, but the anonymous posters are apparently not interested in that.

On Patrick's blog, he mentioned that TV was "giving free rides to a lot of other services out there." I commented on his blog but also wanted to make this clear on yours: Since TVG has exclusive agreements with many tracks (which they claim are required for them to be an effective content provider), other ADWs must pay TVG royalties to take bets, which are around 5%, I believe. In just one example, Youbet has paid TVG the following amounts over the last three years in royalties on bets taken for TVG exclusive tracks in the Churchill family, the NYRA family and others: $10.8 million in 2003, $14.4 million in 2004 and $19.5 million in 2005. It'll be somewhere in the neighborhood of $24 million in 2006!

Any wonder why so strongly trying to sway public opinion FOR exclusivity? When I say that it has failed spectacularly, it is on two fronts: 1. Content. Can we not all agree that TVGs content does not serve its viewers particularly well, from a standpoint of the talking heads and the incredible lack of actual racing?

2. Finanically. If TVG doesn't get its millions of dollars in licensing fees for exclusive content, is it any longer viable as a business? I guess we'll see, but I won't be crying if it goes away. I'd rather start over the right way than create band-aid solutions for a company that has never lived up to its initial promise.

Matt said...

Interesting discussion and I agree with most of you on these issues.

As a fairly hardcore horseplayer it is becoming increasingly frustrating to see how messed up this industry is in delivering content to its base customers. The winter months, because I don't get HRTV in my area, are almost worthless unless I want to play Aquaduct inner and Turfway every day. Now that TVG is going to lose Fair Grounds...well, there's not much left.

I have no doubt that "exclusivity" benefits TVG but it absolutely screws the people that matter the most - the bettors. By limiting my choices I am limited in my betting. I think TVG believes that we'll bet on anything when the exact opposite is true.

Lenny said...

When I switched cable providers a few years ago and was able to watch racing from home I was so happy. At first TVG seemed like a great product, but I soon realized that it was nothing more than a "show." There is more talking then handicapping and what little handicapping is presented is weak and mostly useless to experienced fans. There is always at least one person (the "host") who knows nothing about racing. I will not metion names but everyone knows who I am referring to. I do not need pretty faces or charismatic characters to watch racing. I would rather watch races with no analysis then the garbage that is put on on a regular basis. The only insightful product in my opinion is "The Quarters." I have learned more about Los Al and their different types of races/breeds then I will ever learn from the other shows that are televised on TVG.

HRTV is just as bad as TVG. In the course of an hour on HRTV (which I no longer get b/c I moved) all you hear about is Santa Anita, Santa Anita, Santa Anita. There are other races going on and they get tape delayed so I can listen to analysis of a $32k maiden claimer full of mules that will never win. What racing needs is a channel that has handicappers, not actors and shows as many races as possible. I watch TVG because I have to in order to see certain tracks, but I usually end up watching races on my computer. I hope that in the near future someone gets a clue and either fixes the current garbage or creates a better product from scratch.

Lenny

Anonymous said...

Why should TVG spend more time on air handicapping? Thats for the horseplayer to do. I like TVG as its entertaining and I get to watch the races I bet on television vs video stream on the computer. Also, the hosts and guest handicappers are cool and horse fans and bettors. I don't understand why people are hating on this board. They are great for the sport and provide a great opportunity for advertisers also as TVG's audience all has money and are spending it. For people like me who live in state that doesnt have paramutual wagering and have to bet offshore, its perfect for me as I only use it to watch races. Dave