Tim Ritvo’s 10 percent solution

by | May 19, 2016 | Breaking, Business, Features, Maryland, MD Business, Top Stories

by Frank Vespe

If you want to see the Stronach Group’s vision for mid-Atlantic racing, Stronach Group Chief Operating Officer Tim Ritvo often says, you should take a look at Florida.

There, the company, which owns Gulfstream Park, expanded its racedays, worked out a deal with Churchill Downs, Inc. to operate Calder Race Course’s racing meet, and has more than doubled wagering handle.

“We emphasize field size,” Ritvo, a former trainer and, before that, jockey, said in an interview. “We emphasize positioning of races, try not to go off when anyone else runs. All the things that were successful in Florida, we’re trying to implement here” [in Maryland].

As the Maryland Jockey Club comes up to its premier annual event Saturday with the running of the Grade 1, $1.5 million Preakness Stakes, it’s fair to say that an era of good feelings prevails in the state – but the future of racing is very much a work in progress.

Still, for an understanding of how Ritvo envisions that future unfolding, it might make sense to look farther back, to his days as a trainer.

Ritvo, who stopped training horses in late 2010 to move to the racetrack operator side of the business, calls himself, in his training days, “a 10 percent guy.” That’s not exactly true – he actually won 11.6 percent of the time – but it’s close enough.

Wife Kathy, also a trainer, is another 10-percenter, having won 209 of 2,089 career starts.

As a trainer, Tim Ritvo won a single graded stake, the 1999 Grade 3 Tropical Park Derby with Valid Reprized. And Kathy had never won a graded stake prior to the conclusion of Tim’s training career.

Yet the very next year, her trainee Mucho Macho Man, won the first of his five graded stakes, the Grade 2 Risen Star at the Fair Grounds. His brightest career moment came two years later, when he won the Grade 1 Breeders’ Cup Classsic narrowly over Will Take Charge a year after suffering a similarly tough defeat in that event to Fort Larned.

It was a remarkable run for a training family of 10 percenters.

“When we decided to move to Florida, we moved there with four horses,” Ritvo, a native New Englander, said. “We’d just gotten married, we had no kids, and we went to a venue that was tough racing, they had great sales and a great two-year-old program, and we fought and fought and fought.”

It was, in a sense, a counterintuitive maneuver. Why would two unknown trainers with a tiny stable move to a top-class racing venue?  Why not work on becoming a big fish in a smaller pond?

That’s not how Ritvo sees it, however.

“I was a 10 percent guy,” Ritvo continued. “[But] we went to Saratoga almost every year, I went to Belmont, because I always wanted to raise the level. I think the result of me being a 10 percent guy, and Kathy, was we ended up with a Breeders’ Cup winner because we kept raising the bar. We tried to get the right horse, we ran into the right owner [Reeves Thoroughbred Racing], and we ended up getting lucky.”

That’s a phrase that comes up often with Ritvo, “raising the bar.” And it informs how he envisions the Maryland Jockey Club growing: work hard, raise the bar, and run into success. Call it the 10 percent solution.

Take the May 1 card at Laurel Park. It was a good card, with big fields, but it was fairly standard Laurel Park fare – three allowance races, a maiden special weight, and a half dozen claiming contests.  Yet it handled over $4 million, capping a nearly $10 million weekend: enormous numbers for the central Maryland track.

Why?

“We think we put a really good, balanced product out there,” Ritvo said.

But he also noted another key factor: since it was the weekend prior to the Kentucky Derby, there were no significant races elsewhere in the country to draw the betting public’s attention. “It’s amazing, when there’s a little bit of a void of product, the handle goes up,” he noted.

Work hard, raise the bar, run into opportunity.

Ritvo, Maryland Jockey Club president Sal Sinatra, and their team have been working hard, and the results are evident: improvements to Laurel Park, including two big new barns and plenty of work on the front side; handle that, if the company meets its projections, might be 30 percent higher this year than it was in 2014; and a political environment so favorable that the state legislature voted this year to give racing $500,000 annually for the next three years to revitalize the Maryland (nee Washington, DC) International.

“We believe that, run properly, there’s great potential for growth,” he said. “But it’s still not a success story until you can grow the [industry-wide total wagering of] $10 billion, and everyone’s struggling how to do that.”

What’s the recipe?

Facilities improvements – including the Maryland Stadium Authority study into the future of Pimlico Race Course – are one piece of the puzzle. An improved racing product – the average field size in Maryland grew from 7.7 horses per race in 2014 to 8.5 in 2015 – is another.

Reduced takeout would be a third, though little progress in Maryland has been made on that front. Beyond reductions to the takeout on certain gimmick wagers – including the Pick 5 and Pick 6 – takeout in Maryland has remained the same in recent years. Ritvo acknowledges the issue.

“The blended [takeout] went down because we put the pick 5 in for 12 percent,” he said. “So we blended down a little bit, but we need to do more work on that.”

At the same time, though, he said that it’s not as simple a solution as merely reducing the rake.

“It’s a scary thing because you have to balance what you’re doing on track, how much your signal price is,” he said. “Looking at this from a big company perspective, we also affect our other facilities when we lower takeout.”

In other words, if Laurel’s rake goes down, it will hurt other Stronach Group facilities, which will retain less of each dollar wagered.

“It’s an evolving thing,” he added. “The right thing to do someday — the right number’s probably 10-12 percent across the board, and then no one gets a rebate. We positively have to do something.”

But to reach that goal, he said, would require “an industry look that everyone needs to do.”

Ritvo also believes that mid-Atlantic racing is hindered by too many tracks offering too much of essentially the same racing product. On Saturday in the mid-Atlantic, live racing will take place at Pimlico, Charles Town, Penn National, Parx Racing, Delaware Park, and Monmouth Park – a half-dozen tracks within a few hours’ drive, to say nothing of Belmont a bit farther north.

That puts enormous strain on a national horse population that’s been falling steadily for a decade. And it leaves the smaller and mid-sized mid-Atlantic tracks scrambling to profit in an industry increasingly dominated by a few major players.

The region’s current, fragmented status “is just not a sustainable model,” Ritvo said.

Ritvo and his team attempted to begin remedying that problem last year when they entered discussions with Delaware Park horsemen and management about joining forces, but those discussions ultimately foundered. More recently, they have approached Parx Racing management.

“We’re talking to different racetracks in the mid-Atlantic, saying, ‘Hey, what can we do together?” he said. “We’re saying to racetracks, ‘If you’re only racing because you like slots or because you need to to fulfill your slot agreement, look at the model of Florida, where we worked together with Churchill and were able to keep their slot parlor open and we ran the racing for them.’”

That approach may be more complicated in this region, though, with many more tracks and track operators, as well as horsemen’s groups. Some of the region’s tracks are represented by organizations under the Horsemen’s Benevolent and Protective Association (HBPA) banner, while others are allied with the Thoroughbred Horsemen’s Associations.

“Two things have to happen,” Ritvo said. “There has to be a consolidation, or there has to be a commitment of cooperative race schedule.”

Such an approach – for example, the Stronach Group operating both Maryland and Parx – would allow the company to maintain a year-round racing schedule. It would also allow it to manage its condition books in such a way that, for example, Laurel and Parx, if they have overlapping days, could minimize or avoid carding the same races.

It also, most likely, would lead to a reduction in the total number of days operated at both tracks. In 2016 the two Maryland Jockey Club facilities and Parx are expected to hold more than 310 days of live racing.

A cooperative race schedule would mean, Ritvo said, “You’re not running head-to-head on top of each other, and the product as it grew might be able to compete with Gulfstream, with NYRA, with Santa Anita as a group, but they could never compete by themselves.”

Whether the Parx deal, a similar arrangement elsewhere, or any such cooperation occurs remains to be seen, a story not yet complete.

But it’s certainly one in progress.

“The Stronach Group’s initiaitve was obviously not only to make money, but we were instructed to save an industry that was kind of broken, shattered, through subsidies, through slots and not running your business like a financially responsible company,” said Ritvo. “I think we’re getting there.”

If so, it’s through hard work, raising the bar, and running into opportunities: the 10 percent solution.