Activities of The Jockey Club
Alan Marzelli Alan Marzelli - President & COO, The Jockey Club

Alan Marzelli: Thank you, Will. Good morning, ladies and gentlemen.

The tradition of the Round Table Conference calls for us to provide you with a summary of the activities of The Jockey Club during the previous 12 months. Today I am going to focus my remarks in three areas:

  • The Jockey Club’s corporate structure;
  • Our projections for the 2009 and 2010 foal crops; and
  • Significant initiatives undertaken regarding the health and welfare of Thoroughbreds after their racing careers are over.

Twenty years ago, The Jockey Club consisted of a breed registry, a sales catalog page production business, and a fledgling online service. It was a taxable corporation, as it had been for 50 years.

By spinning off the commercial business into a wholly owned, for-profit subsidiary, we were able to apply for, and receive, federal, state and local income tax exemptions for the non-profit activities of the breed registry.

Over the course of the past 20 years, we have relied on the same formula in creating several startup companies and making key strategic acquisitions. Each has been designed to serve the needs of specific segments within the industry while generating after-tax profits that could be used to help fund important industry initiatives.

Throughout the years, the facts are clear: each and every one of our commercial endeavors have consistently satisfied those two objectives.
The history of Equibase provides us with a good example.

Twenty years ago, the industry’s historical racing information was collected by a third-party publisher, as it had been for close to a century. Distribution of racing information was strictly limited and designed solely to protect the revenue streams from sales of the daily newspaper. Profits from those sales benefited the owners, and ultimately, the owners profited from the sale of the property itself.

Fast forward 20 years. The quality and timeliness of racing information that is collected has never been better. More than 125,000 people visit every day for instant access to entries, results and charts, all provided free of charge.

Let’s stop to consider what that means. We’re not talking about page views. We’re not talking about visits. We are talking about 125,000 visitors — the people in this room times 400 — coming to every day, 365 days a year.

They don’t come to us for editorial content. They go to our partners at the Daily Racing Form for that. They are not coming to us to wager. They go to our partners TVG and Twin Spires for that.

They come to us every day, 365 days a year, for free access to entries, results and historical charts.

That same information is available from Equibase on mobile devices. Over 100,000 people receive instant notifications via e-mails that horses they are interested in have worked out, entered to run, or have raced.

Full past performance programs and other value-added handicapping products are available in print and electronic formats at thousands of terrestrial and virtual locations.

And the Daily Racing Form — which is now Equibase’s biggest customer — continues to provide the same quality past performances and superior editorial coverage that have served this industry so well for the past 105 years.

Meanwhile, Equibase’s racetrack partners will receive $3.5 million in dividends and workout reimbursements this year.

It is not typical for technology companies to be owned by a tax exempt, non-profit parent.

And it is also not typical for technology companies to remain in the hands of the same owner, as opposed to being sold every three to five years or eventually going public.

But by operating these highly profitable companies for the long term and solely for the benefit of the industry rather than equity partners or shareholders, we are able to provide the capital — financial, technological and human — that is necessary to support many of the worthwhile initiatives that you will hear about throughout the rest of today’s program.

For detailed information about the activities of all of our companies, I would encourage you to visit our website.

For the first seven years of this decade, the number of Thoroughbred mares being bred each year fluctuated between 64,000 and 65,000, and except for the impacts of MRLS in 2002, foal crops remained relatively constant at 37,000 to 38,000.

But in 2007 the number of mares bred declined to about 62,000. Last year that number declined by an additional 5,000, resulting in a 2009 foal crop estimate of 34,000.
Similarly, based on Report of Mares Bred submissions to date, we are projecting a further decline in mares bred this year, yielding an early projection for the 2010 foal crop of 30,000.

These declines will have an obvious impact on the business in the years ahead, most notably at the racetrack, where on average 70 percent of registered foals make at least one career start.

So it is safe to say that we will have fewer 3-year-olds at the racetrack in 2012 than we do today, and racetracks will have to adjust accordingly.

We encourage all stallion owners to submit their 2009 Report of Mares Bred as soon as possible so that we can fully gauge the impact of these declines in 2009 breeding activity. As always, we will publish this information as soon as a representative number of reports are in hand.

In his remarks at last year’s conference, Stuart Janney indicated that, among other things, the Thoroughbred Safety Committee would address the treatment and use of racehorses when their racing careers have ended.

The committee did so shortly thereafter, and in November The Jockey Club, together with the Thoroughbred Charities of America and the Thoroughbred Retirement Foundation, announced the creation of a voluntary foal application checkoff program, the proceeds from which would be distributed to those two organizations to provide post-racing care for Thoroughbreds.

The Jockey Club is supplementing the checkoff program with its own contribution of $200,000 this year.

Our intent in forming this strategic partnership with these two fine organizations was not only to provide up to $400,000 in annual funding for their aftercare programs, but to bring more visibility to this issue in the hopes that other organizations in the industry would follow our lead.

In early April, The Jockey Club took another step in supporting aftercare programs when we launched Tattoo Identification Services, a free resource to help owners identify tattooed but unknown Thoroughbreds in their possession.

In making the announcement, Matt Iuliano, our vice president of registration services, said, “We hope that Tattoo Identification Services will be a valuable tool for individuals and organizations seeking to retire, re-train and find suitable homes for Thoroughbred racehorses when their racing careers are over.”

It’s safe to say that we were surprised, our hopes were met and they were far exceeded. In the first days after the service was introduced we were literally overwhelmed by the sheer volume of tattoo identification requests.

We were also the recipients of a number of e-mails that were overwhelmingly positive — that’s unique — thanking us for making this service available for free. As an aside, the old rocker in me on the occasion of the 40th anniversary of Woodstock can’t help but call your attention to one that ended this way: “YOU GUYS ROCK.”

The Jockey Club rocks. It just sort of rolls off the tongue. (Laughter)

I referred to Matt Iuliano a minute ago, and he is here today to provide further details about how our Tattoo Identification Service works.


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