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Here is the complete text of the email I received Sunday from Ivan Axelrod, Chairman of the Board of Directors of the United States Trotting Association. I asked Ivan to comment upon the procedures used in formulating the membership of the new USTA Marketing Commitee. Here is the text of the email from Ivan:

"Andrew:

You asked for a paragraph or two to address the questions raised in your Saturday email. I have provided more than two paragraphs as I believe you need to have some additional background on the overall process and intent of this marketing committee. As you may not have the appropriate space to include all of the below information, I would just ask that if you need to reduce the information contained in this email, you do not change the intent of my description of the process used to arrive at our final committee makeup. If you have any questions related to my response please let me know.

"During the USTA District 3 meeting last December the concept of a USTA supported marketing committee was born. From those early discussions, I invited a group of executives and marketing personnel from our Slot tracks to attend a meeting during the February annual USTA meeting. Several agenda items were developed for this meeting. We discussed their current marketing efforts primarily in the areas of new fan development and expanded horse ownership. I believed that we could use this initial forum to find out what these tracks were doing in the way of marketing our sport to their new customer base (Slot players), the success or lack of success they were having and the obstacles they encountered in achieving success. I also wanted to brainstorm with these individuals on ideas they had to expand our business through various marketing programs.

"At the conclusion of this meeting the participants agreed that an expanded committee should be assembled. We also agreed that the primary focus of our work would be on new fan and owner development and would initially include the following:

- Current programs that are working and how they could be duplicated at other race tracks

- Development of new programs

- Marketing dreams that they have now and how do we turn them into reality

"During the meeting I was very much interested to learn where the tracks marketing dollars came from and I was educated from each of the tracks as to the legal requirements associated with the Slot income and how that money could be used. In some cases the tracks could only use Slot proceeds to market their casino business and in others Slot income was available to market the racing aspect of their business. Getting the horsemen to share some of their proceeds would also have to be discussed. The USTA would provide support for any future programs developed by this committee; however, all of the marketing dollars required for any future programs would have to come from the tracks. I would need their full support for any new concepts or marketing programs coming from the Committee. Since the funding of future marketing programs would come directly from the tracks and would require their support for implementation, it was my decision to include many of our current Racino operators as members of the Committee.

"Ellen Harvey, Director of Harness Racing Communications assisted me in developing an advertisement looking for volunteers for our committee, the structure we would use for our meetings and the number of members that would be included in our primary committee. We concluded that we would have as many as 13 individuals on our committee in addition to me and Ellen. Once our request for volunteers went out, we began to receive many inquiries and requests to be part of this project. At that time I decided to expand our structure in that we would have a primary committee and various subcommittees. Once specific projects were approved by the committee, we would ask some of the individuals that were not able to be included on our primary committee, with the appropriate marketing background or interest, to work with us on subcommittee projects.

"I requested our Slot tracks to provide us with representatives for the Committee and received positive support from six tracks. In addition, I asked the Meadowlands, our premier race track, to provide a representative, as well as one additional race track executive.

"The remaining five positions were left to be filled from the individuals submitting their resumes and interest in being a part of this Committee. We had many requests and had difficulty in reducing the number to five. As with any search for qualified candidates for a position, you begin with a review of the information provided by the candidate and based on that information determine the individuals for direct follow up. We did not interview every individual that responded to our advertisement. However, we did review the information submitted by each individual as well as going to their websites, if applicable, to better understand their background.

"Some individuals limited their response to a sentence or two indicating that they would like to help if we needed them, to other responses that provided detailed information about their background in harness racing, their passion for the success of our industry and how they could assist in this process. I will repeat that we reviewed the information submitted by EVERY interested individual and with only five spots available; many qualified individuals were not able to be added to our primary committee. I did state, in my Friday email, to those interested parties that we will need help in carrying out our goals and we will be contacting some of these individuals as we move forward.

"You asked me in your email why no industry 'outsiders' were selected for the Committee. In our advertisement seeking candidates for the marketing advisory board, I was clear that we were looking for a group that would include current professional racing marketers as well as owners, breeders, horsemen and fans who work in marketing as their profession. I believe the final makeup or our primary committee meets our goal. In addition to our race track marketing professionals and executives, several of our committee members have strong ties to our racing industry but are not directly associated with our race tracks; I consider these individuals to be 'outsiders'."

Comments

Bob Marks said...

With all due respect to this learned assembly, it remains difficult to discern any connection to the legions of lost fans and attendees and how this relates to the underlying causes for the erosion of the once fertile fan base.

posted at 11:01 AM on May 27th 2008

Dean said...

There has been much talk in the harness racing blogosphere about the USTA's marketing initiative set up in part by Mr. Axelrod, Chairman of the USTA. Andrew Cohen at harnessracing.com's blog has been chatting about this and offering some insights and opinions.

The definition of the word specious from dictionary.com is: Apparently good or right though lacking real merit; superficially pleasing or plausible. I hope that this committee does not fall into the trap of many before them, who hope to do well, but make the wrong assumption for their focus.

Racing has two types of fans, or potential fans. We have seen this for generations, and racing has been told who they are, and what they are for years. But I rarely hear the business speak of them in those terms. Hambletonian Day brings out 30,000 people. The on track bet is under $2M for those 30,000. Offtrack, the bigger bettors, playing online and in simulcast bet upwards of 250% more. At the Little Brown Jug the handles were around $1M on Jug Day, with over 50,000 people in the stands. That number is now much more than that with simulcasting and web betting. Harness racing, and to some extent thoroughbred racing caters to most of these fans like they are the same thing. I sincerely hope that this committee, right from the start, decides who they are speaking to. Are they there to get on track attendance up? Or are they there to speak to the bettor? Lord help us if they try to do both.

Bettors have been speaking loud and clear on what they want: Lower prices, free information, easy to use internet sites, ability to bet all tracks in one account, rewards programs, perks, decent racing and a larger pool size. This has very little - some would say nothing - to do with marketing. Conversely, the casual fan, or perhaps new fan, or even the slots player across the way mindlessly placing money in a negative expectation game are completely different. They want the Kelly Spencer Grand River experiment. Give them contests, give them a free T shirt, give them a free $2 bet, give them a juggler. But go into this with a solid pre-conceived notion and goal: you will not raise your handles with this, you will try to raise attendance and possibly brand the live harness racing experience as 'fun'.

Mercedes knows that the elasticity of demand for their product is "x", while KIA knows it is "y". Their marketing speaks to this very point and it is the life-blood of their existence. In Japan in the late 1980's Honda was planning to make cars. The Japanese market did not want their cars because to them Honda meant 'motorcycle'. They had to move their marketing to the US, where North American buyers did not have that entrenched notion. The examples from marketing are endless. If they went into a marketing meeting with a goal of "let's market to everyone" it would have never succeeded. It never can succeed frankly.

The bottom line is this: The elasticity of demand for casual players is zero. Price does not matter, the experience they have at an entertainment venue does. The only cost they see is opportunity cost. The elasticity of demand for an every day player is anywhere from -2.5 to 4 or perhaps 5 - meaning that if you drop their price a percent handle will go up by a factor of 2.5 or more. I highly doubt there is another business out there which has this wide a range of customer. Try it with online stock trading. The casual guy trading at home is there because Etrade offers $9 trades. Raise it to $100 a trade he leaves. Same with the larger trader. Charge him more he leaves. You can make similar arguments with virtually every good.

So, I sincerely hope that this committee is not specious. I hope they are tackling one thing and one thing only - growing the sport through new customers and making the on track experience a focus. If they try to speak to both ends of our customer spectrum, in my opinion, it is a waste of time and effort as is doomed to fail before it starts.

posted at 10:15 AM on May 27th 2008

Trotter Bob said...

"I requested our Slot tracks to provide us with representatives for the Committee and received positive support from six tracks."

Are we to take from Mr. Axelrod that only six racinos care about helping the racing side of their businesses?

posted at 12:24 AM on May 27th 2008

Paul Siegel said...

If the call for volunteers had asked applicants for a resume, I would have attached one. Here's the announcement from Ellen Harvey :

"Freehold, NJ --- The U.S. Trotting Association is seeking to build a marketing advisory board from racing stakeholders who have a professional or academic background in marketing.

Responsibilities of advisors will entail participation in regular phone conferences to identify and plan marketing goals and strategies for the benefit of the sport.

The board will include current professional racing marketers, as well as those who are owners, breeders, horsemen or fans who work in marketing as their profession.

To volunteer for this board or to seek more information, contact Ellen Harvey at HRCNews@ustrotting.com or by phone at (732) 780-3700."

Since Ellen and I have known each other for probably the better part of 15 or 20 years, all I did was send her the briefest of e-mails, assuming that she would ask me to elaborate if necessary. My mistake, I guess.

posted at 11:24 AM on May 26th 2008

Axelrod Exclusive on Marketing Committee M.O.

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