Annual Report 2019
Total Page:16
File Type:pdf, Size:1020Kb
ANNUAL REPORT 2019 1 2 TABLE OF CONTENTS Message from the CEO. 2 Mission and Vision Statement. 4 2019 Accomplishments. 6 Championship.Racing. 6 Financial.Performance. 8 Nominations. 10 World-Class Racing Competition. 12 2019.Facts.&.Figures. 12 Relentless.Focus.on.Integrity.and.Safety. 14 Challenge.Win.and.You’re.In.Series. 16 Brand Enhancement & Experience. 18 A.Celebration.of.the.Sport . 18 Television.Exposure .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. 19 Elevated.Breeders’.Cup.Merchandise. 20 Building.Strength.Through.Corporate.Partnerships . 21 Providing.a.Customer.and.Participant.Experience.That.Matches.. 22. ..the.Quality.of.Our.Championship.Racing.Product Financial Performance . 24 A ..Selected.Financial.Data. 24 B ..Management’s.Discussion.and.Analysis.of.Operating.Results . 25 Appendix . 32 A ..Breeders’.Cup.Directors.&.Members. 32 B ..Breeders’.Cup.Staff. 33 C ..2019.Breeders’.Cup.Challenge.Series.Schedule. 35 D ..2019.Breeders’.Cup.Challenge.Series.Television.Schedule. 37 1 MESSAGE FROM THE CEO I.believe.it.is.fair.to.say.that.2019.had.its.share.of.challenges.leading.up.to.and. during.the.Breeders’.Cup.World.Championships ..Santa.Anita.Park.experienced.an. unusually.high.number.of.equine.fatalities.in.the.spring.which.directed.national. attention.to.horse.welfare.issues ..Breeders’.Cup.addressed.the.issues.at.Santa.Anita. Park.with.an.unprecedented.safety.and.integrity.approach.including.assembling. an.international.veterinary.panel.of.thirty.veterinarians.for.pre-screening,.extensive. out-of-competition. pre-. and. post-drug. testing,. and. new. safety. and. operations. standards.implemented.with.participation.from.Santa.Anita.Park ..Even.after.these. significant.measures.were.implemented,.the.final.race.of.the.event.was.not.without. injury.and.obviously.not.what.the.organization.intended.or.hoped.for ..As.a.result,. our.Board.of.Directors.engaged.Dr ..Larry.Bramlage.to.conduct.an.independent,. thorough.review.which.resulted.in.several.additional.reforms.being.adopted.by.Breeders’.Cup.to.help. make.our.event.even.safer.going.forward.and.our.company.continues.to.analyze.best.practices.for.future. races . In.addition.to.significant.safety.initiatives.at.the.World.Championships,.Breeders’.Cup.played.a.leading.role. in.forming.the.Thoroughbred.Safety.Coalition.(the.“Coalition”).along.with.Del.Mar.Thoroughbred.Club,. Churchill.Downs,.Inc .,.Keeneland,.New.York.Racing.Association.and.The.Stronach.Group ..The.Breeders’. Cup.worked.diligently.with.other.Coalition.members.for.many.months.to.unify.the.industry.and.advance. our.collective.safety.efforts,.implement.new.reforms,.and.create.a.unified.(and.well-funded).platform.to. simultaneously.communicate.our.positive.reform.efforts.to.the.public ..An.official.announcement.via.an. international.press.conference.was.made.on.November.19,.2019.to.announce.the.Coalition.formation .. Since.that.time,.Coalition.members.have.worked.together.to.announce.20.initial.reforms,.some.of.which. are.already.implemented.and.others.are.continuing.to.be.lobbied.for.regulatory.or.legislative.passage .. We.are.continuing.to.work.together.for.further.reforms.to.make.our.sport.safer .. Notwithstanding.the.many.challenges.we.faced.in.2019,.new.Breeders’.Cup.milestones.were.achieved .. The.event.had.the.highest.wagering.in.Breeders’.Cup.history.with.a.total.of.$177 .5.million.wagered.over. the.two.days ..Breeders’.Cup.broke.another.record.by.achieving.the.highest.sponsorship.and.licensing. revenue. since. the. NTRA/Breeders’. Cup. split. entities. at. $7 1. million .. Finally,. overall. consumption. of. Breeders’.Cup.content.increased.by.11%,.due.in.part.to.the.new.partnership.with.TVG.and.the.continued. expansion.of.our.digital.platforms . Looking.ahead,.2020.may.shape.up.to.be.one.of.the.biggest.challenges.in.our.organization’s.history ... COVID-19. has. significantly. impacted. all. major. sporting. events .. While. we. do. not. yet. know. the. size. or. scope.of.the.2020.World.Championships,.we.are.intent.on.conducting.the.World.Championships.with.the. health.and.safety.of.the.racing.community,.including.its.athletes,.fans.and.workers.being.the.top.priority .. As. we. collectively. navigate. this. uncharted. time,. I. want. to. assure. you. that. we. are. closely. monitoring. the. COVID-19. pandemic,. working. with. Keeneland,. relevant. government. authorities. and. public. health. experts.to.assess.its.potential.impact.on.the.2020.Breeders’.Cup.World.Championships,.and.creating. many.contingency.plans.to.address.the.multitude.of.potential.scenarios .. Breeders’. Cup. looks. forward. to. continuing. to. provide. positive. industry. leadership. which. impacts. the. future.of.our.sport ..Finally,.management.and.staff.would.like.to.thank.the.Board,.Members,.nominators. and.participants.for.their.continued.support ..Without.you,.none.of.this.would.be.possible . All.the.best, Drew.Fleming. President & Chief Executive Officer 2 3 MISSION STATEMENT TO CONDUCT THE BREEDERS’ CUP WORLD CHAMPIONSHIPS AT THE HIGHEST LEVELS OF QUALITY, SAFETY AND INTEGRITY AND TO PROMOTE THE GROWTH OF THOROUGHBRED BREEDING, RACING AND SALES THROUGH PROACTIVE LEADERSHIP, INNOVATION AND SERVICE. VISION STATEMENT TO BE THE MOST DISTINCTIVE AND RESPECTED BRAND IN THOROUGHBRED RACING AND SET AN EXAMPLE FOR AND LEAD A CELEBRATION OF THE SPORT AND LIFESTYLE OF RACING AND BREEDING. 4 5 2019 ACCOMPLISHMENTS CHAMPIONSHIP RACING The.2019.Breeders’.Cup.World.Championships.were.held.for.a.record.tenth.time.at.beautiful.Santa. Anita.Park.located.at.the.foothills.of.the.San.Gabriel.Mountains ..Vino.Rosso’s.victory.in.the.Longines. Breeders’.Cup.Classic.over.fellow.Grade.I.winners.McKinzie.and.Higher.Power.later.had.him.crowned. Champion.Older.Dirt.Male ..The.Classic.was.preceded.by.a.similarly.spectacular.performance.in.the. Longines.Breeders’.Cup.Turf.by.2019.Horse.of.the.Year,.Bricks.and.Mortar,.who.capped.off.his.year.with. four.Grade.I.victories .. A.record.$177 .5.million.was.wagered.in.common.and.separate.pool.wagering.on.the.history.making. performances .. Two. returning. Champions. and. 44. of. the. 296. individual. horses. ranked. on. the. 2019. Longines.World’s.Best.Racehorse.Rankings.from.around.the.globe.competed.in.front.of.109,054.fans. over.the.two-day.period .. An.all-star.cast.of.188.of.the.world’s.best.Thoroughbreds,.including.47.from.overseas,.were.pre-entered. for.the.2019.Breeders’.Cup.World.Championships ..At.pre-entry,.six.of.the.14.races.had.full.fields.or. were.oversubscribed ..There.was.a.total.of.153.starters.in.the.14.Championship.races.which.represented. a.decrease.from.a.record.number.in.2018 ..The.decrease.was.due.in.part.to.scratches.Breeders’.Cup. week,.an.overall.reduction.of.good.quality.horses.running.in.the.fall.and.misgivings.about.the.surface. at.Santa.Anita .. For. the. second. year,. “Future. Stars. Friday”. featured. all. five. two-year-old. races. on. the. opening. day. of. the. Championships .. Early. Horse. of. Racing. Age. nomination,. Storm. the. Court,. won. the. TVG. Breeders’.Cup.Juvenile .. Total. purses. and. awards. in. 2019. exceeded. $31 .0. million. and. average. field. size. was. 10 .9. starters ... Among.the.153.starters.there.were.34.internationally.campaigned.runners.and.64.Grade.I.or.Group.1. winners . 6 Champion.Older.Dirt.Male.Vino.Rosso.wins.the.$6.million.Longines.Breeders’.Cup.Classic Horse.of.the.Year.Bricks.and.Mortar.wins.the.$4.million.Longines.Breeders’.Cup.Turf Champion.Male.Sprinter.Mitole.wins.the.$2.million.Breeders’.Cup.Sprint 7 FINANCIAL PERFORMANCE Despite. the. many. obstacles. in. California,. Breeders’. Cup. had. a. net. operating. loss. of. $1 .6. million. as. compared. to. a. budgeted. net. operating. loss. of. $1 .8. million .. This. positive. variance. was. mainly. attributable. to. strong. wagering. despite. low. field. size .. Total. two-day. all-source. handle. for. the. Championships.was.$177 .5.million,.an.increase.of.$14 .9.million.from.the.previous.year .. Due.to.a.strong.economy.in.2019,.Breeders’.Cup.total.net.income.for.the.year.was.$7 .6.million,.a.$2 1. million.increase.from.2018 ..Investment.income.was.$9 .2.million,.which.is.a.positive.variance.of.$6 7. million.from.2018 . 200 TOTAL HANDLE 150 100 $155.5 $169.4 $170.8 $162.7 $177.5 Millions 50 *$11.9 *$12.6 *$12.6 *$13.9 *$14.4 0 2015 2016 2017 2018 2019 Keeneland Santa Anita Del Mar Churchill Downs Santa Anita *Simulcast Revenue 16 NET INCOME 12 $11.8 8 $7.6 Millions 4 $5.5 $3.3 $0.8 0 2015 2016 2017 2018 2019 Keeneland Santa Anita Del Mar Churchill Downs Santa Anita 8 9 NOMINATIONS The. foundation. of. the. Breeders’. Cup. program. begins. with. the. nomination. of. foals. and. stallions .. From. its. establishment. in. 1982. to. the. current. year,. the. nomination. programs. provide. a. valuable. source.of.funding.for.the.Breeders’.Cup,.showcased.by.the.Breeders’.Cup.World.Championships .. The. nomination. programs. have. evolved. just. as. the. racing. programs. have. and. Breeders’. Cup. is. committed.to.providing.excellent.racing.and.benefits.for.our.breeders.and.nominators . North American Stallion Nomination Program There.were.490.nominated.stallions.in.North.America.that.generated.nomination.fees.of.approximately. $9 .0.million.in.2019 . North.American.stallion.nominations.are.made.annually.by.a.payment.equal.to.the.stallion’s.advertised. stud.fee ..Stallions.that.are.expected.to.have.more.than.50.live.foals.are.assessed.an.additional.fee. equal.to.50%.of.the.stud.fees ..Stallions.that.are.expected.to.have.100.or.more.live.foals.are.assessed.