Ogden Mills Phipps: Our next speaker will be Dennis Robinson, who is going to give us a very enlightened speech about New Jersey and how successful it’s been.

Dennis Robinson: Thanks, Dinny. And thanks, Jim, for inviting me here today.

Before I get started with some comments, I thought we’d have a little fun and share a few Monmouth highlights with you.

[video]

As I am sure you are aware, we have had one heck of a summer at Monmouth Park. Our less is more strategy has worked and has shown great promise for the future, not only for Monmouth, but perhaps, for the entire industry. It kind of segues actually with what Jim talked about this morning. But before I share our results, I want to talk a little bit about how we got there...

It is no surprise to anyone in the racing industry that we are at collective crossroads, not only in New Jersey, but across the country. Our revenue and cost trend lines are no different than most, and we are in a position that we could only reduce our infrastructure and personnel costs so much — it is clear we’re not going to cut our way out of this predicament. Despite the success of our growing account wagering business, which has grown double digits the last few years, our off-track wagering business could only do so much to offset the losses on track in the short term — although I do believe the continued build-out of our OTW network is essential to the future of racing in New Jersey.

Our new distribution paradigm, while creating overall real growth in handle, has given our customers the ease of off-track wagering options and our neighboring states have all gone to expanding gaming, and in most cases on track gaming. As a result, due to our legislatively mandated inability to diversify our gaming options at this point, these factors combined with a severe recession, our two tracks have gone from profitability to a loss in the last decade. Obviously not a good picture, nor is it a sustainable one.

Some two and a half years ago, our Monmouth Park management team led by our VP & General Manager, Bob Kulina, and the Thoroughbred horsemen led by Dennis Drazin and John Forbes, agreed that the status quo was unacceptable. That was the first premise — we can’t go on this way. Second, we agreed that together we had to find a solution — and that word together is essential as well. As the saying goes: “the definition of insanity was doing the same thing over and over again and expecting a different result.” That kind of became our mantra, actually.

So we set some simple goals together:

• Improve the quality of the racing product (We felt strongly that that’s what the public wanted.)
• Create an event-driven marketing plan
• Create a summertime family entertainment product that offers the public a premium experience at a reasonable cost (In fact, over the last couple of years we’ve been incrementally increasing prices, believe it or not. Even with increasing prices, we’ve been able to increase attendance at the same time because it’s still a bargain at Monmouth Park.)
• Increase field size
• Increase average daily attendance by at least 10%
• Increase value for the wagering public
• Reduce operating expenses
• Increase profit margins on a per event basis

We simply had to develop a new business model that showed a future for Thoroughbred racing at Monmouth Park. We had to make sure Monmouth Park continues to be a summertime tradition.

So where and how do attendance, handle and transmissions thrive? The answer: where the racing is limited, the purses are high and the quality of racing is strong. In fact, we are a few blocks away from that longtime great example right here at Saratoga.

Of course, having a vision is one thing, but with limited financial resources and dealing often with disparate interests of numerous constituencies we knew that changing our business model was going to be no easy task. Given all the challenges of lining up the constituent stars, what did it take to get this done?

• First, it takes establishing communication and trust in your industry relationships. I cannot stress that enough. When you’re on the other side of the table, you have to have that level of trust and communication where you can lay it all out and talk about the pros and the cons.
• You need to have champions in each organization. If you don’t have a champion within the horsemen, the legislature, the governor’s office, your local town council, and the racing commission, you’re never going to get it done.
• There has to be a willingness to compromise on all sides. We had been talking about this plan for 2 ½ years...and finally came to the conclusion that we had to compromise.
• We also learned there has to be a willingness to share risk. It can’t be all one-sided.
• And a realization that if we did not implement the plan this year, we might not have a chance to try again in the future.

So from the horsemen, to regulators to legislators and governors, each have their own perspective and way of filtering information and making decisions. Through diligence, a certain level of relentlessness to say the least, we kept working with the horsemen and eventually this spring we were able to present the legislature and the regulators with a united plan to create the Monmouth Park Elite Meet presented by IZOD.

So what were the elements of our business plan?

• We reduced our legislatively mandated 141 racing days to 71 — 50 days for the Elite Meet and 21 days in the fall.
• We eliminated the Meadowlands Racetrack Thoroughbred meet entirely, which saved us over a million dollars in track conversion and shipping costs.
• We created an event-driven schedule on weekends to drive attendance that included everything from giveaways to multiple concerts and food events, with an event planned almost every weekend.
• We also made a big push into social media and web 2.0. We upgraded our website and jumped into social media with both feet on Facebook, Twitter, and Youtube.
• We worked with our promotional partners — IZOD, TVG and the Daily Racing Form — that did one heck of a job for us promoting the Elite Meet.
• And, of course, the Elite Meet generated a tremendous amount of free media for Monmouth Park as the racing writers and bloggers embraced the experiment and the media response has been unprecedented. In fact, it even influenced the editorial pages of our major newspapers which, when you’re dealing with the legislature, I can’t tell you how important that is.

As a result, I’m really proud to present to you some of the results we have experienced thus far this summer. And this was as of a week ago, and yesterday we had another heck of a day so this doesn’t include those results. Overall our average daily attendance is up 11%; wagering on our live product is up 40%; field size is up 23%, or almost two horses per race; our transmissions are up 127%; and our total wagering is up 113%. Needless to say, our bottom line has improved substantially as well.

The meet has also caused a dramatic increase in the number of horses claimed and, in fact, a number of new owners have jumped into the game, which is a great sign. We are now averaging eight claims a day, driving some $350,000 in new sales taxes so far this year.

On the sponsorship side, the Elite Meet dovetailed with our recent sponsorship sales efforts.

We were able to leverage our working relationship with IZOD, an outstanding international brand who also has the naming rights to our arena, to not only title sponsor the Haskell but agreed to present the entire 50 day Elite Meet. Their sponsorship allowed us to broadcast the Haskell live on ABC, which was a huge branding opportunity for Monmouth Park, as we look to build our transmission business, which has actually been increasing over the years since the Breeders’ Cup, and for Thoroughbred racing in general, which currently lacks regular national television coverage that I believe is crucial to the future of this industry.

We needed to sell Monmouth as one of the top racing and sports facilities in North America, and post-Breeders’ Cup, we thought it was essential to continue to showcase our brand to the widest audience as great racing, entertainment, and a wonderful Jersey shore tourist destination.

IZOD’s involvement also opened the door to other sponsors getting involved and sets the table for the future. Based on IZOD’s experience at the Haskell, I don’t think they could have been more pleased with the results. As you saw in the film, we had Mario Andretti there, we had their racing team there and we had about a dozen IZOD models throughout the facility, which turned a lot of heads but gave it a nice young touch and branding. They are now convinced that Monmouth and the Haskell are great platforms to promote their lifestyle brand. We look forward to doing more with IZOD next year.

So what can others learn from us? What are the takeaways?

• That positive experiments like this are worth the risk and can be maintained.
• The idea that less is more need not be limited to Saratoga, Keeneland and Del Mar
• The public demands a quality entertainment experience
• Players want full fields that give them value at the window.
• Without trust and credibility you can not make significant change.
• That shared risk and sacrifice are necessary
• You must continue to invest in the live product: facility, entertainment, food service, customer service.

We know today that sports and entertainment are big event and star driven. I had the honor of working for David Stern of the NBA for eight years who surely got that right — that it’s a star business. Owners, trainers, jockeys and equine athletes are our stars, and where the stars go customers follow.

But the only way to create stars is not only to capture the public through social media but through traditional media as well, including national television. We need consistent delivery of our product on television, not just a few half decent ratings a year, but through regular exposure of our great sport from the Triple Crown right through the Breeders’ Cup.

So what does this say about the future?

• We must work together for the common good of our industry
• We must establish a level of trust throughout the industry
• It will take risk and shared sacrifice to make bold change
• We need to find leaders and champions within our various organizations to make those changes
• And lastly and most importantly, we must have a collective vision for the future.

Thank you very much.

Ogden Mills Phipps: Thank you, Dennis. It’s been a great experiment and we wish you well.

Steve ...