02/01/1991

Loss of Horse Racing May Cost Alabama Millions

AUBURN, Ala.—The curtailment of horse racing at the Birmingham Race Course may cost Alabama over $100 million over the next five years, according to a recent Auburn University study. The impact on thoroughbred horse production and subsequent effects on agriculture and tourism constitute the bulk of the loss, according to Alabama Agricultural Experiment Station (AAES) researchers.

During the last year the Birmingham track featured live racing, 3,300 thoroughbreds resided in Alabama, according to Joseph Molnar, an alumni professor of rural sociology, who headed the Auburn study. About 900 of these were racing thoroughbreds. The state was also home to 53 stallions registered in the Lexington, Kentucky-based Jockey Club, with the majority found in Shelby and Tuscaloosa counties.

Maintaining a thoroughbred in training costs over $22,000 per year. Based on these costs, the 900 horses that raced in Alabama in 1989 generated about $16 million. "If the additional 2,400 non-racing thoroughbreds participated in at least one horse show or other out-of-town event during the year, they generated over a million dollars in direct income to the state's tourism industry in 1989," Molnar noted. Both of these figures are considered to be conservative by the Auburn research team.

Total direct income to the state by the thoroughbred industry, which includes racing horses, is estimated at nearly $80 million per year. Using a multiplier factor developed by Texas and other states with established thoroughbred industries, total economic impact on Alabama's economy is about $230 million annually. "If successful racing seasons were held in each year until 1995, and the breeding industry expanded to supply the horses, total economic impact could reach one-half billion dollars," Molnar contends. If the track fails to reimplement horse racing and other uses of the track, total impact could diminish by half the current value of $230 million, he concludes.

The potential economic impact is evident from dollar figures in 1989, when the Birmingham Race Course had a significant impact on the contribution by the thoroughbred horse industry to the state economy. Over $46 million came directly to the track from the handle (amount wagered), concessions, admission and parking. Of this total, the state received about $1.5 million in taxes and the track paid nearly $3.5 million in wages.

Constructed in 1985, the Birmingham Race Course, formerly known as Birmingham Turf Club, at first discouraged patrons with modest incomes from attending by requiring high admission and parking fees. The facility, now under supervision by a Federal bankruptcy judge, holds the key to revitalization of the thoroughbred horse production industry in Alabama, according to the AAES study.

The loss of the racing segment of the thoroughbred industry had a profound impact on the state's agricultural economy. Farmers raising various grain and hay crops have had to reduce production or find new markets for the portion of their crop lost due to movement of thoroughbred racing horses from Alabama to states with horse racing. The state's rural economy was further hurt by the closing of horse operations or their conversion to less income-generating endeavors.

Though currently limited to handling parimutuel betting on televised horse races, the opportunity to reinstate live horse racing at the facility remains a viable option, according to the Auburn study. The abundance of in-state feeds, a favorable climate, proximity to two state-of-the-art veterinary facilities and availability of non-racing thoroughbreds for other type horse shows all favor return of live events to the Birmingham track.

On the negative side of the ledger, Molnar said, guidelines for determining an "Alabama Thoroughbred" need to be modified, so that more horses can qualify for the Breeding Fund. This fund allows payment to owners for Alabama horses participating in some races and provides bonuses if they win. Currently, both stallion and mare must be in Alabama at conception and their foal must be raised in state for the offspring to be classified as an Alabama Thoroughbred. A more definitive system of providing purses for out-of-state horses was also suggested by the study.

"We concluded from the study that the thoroughbred industry has a small, but measurably significant role in the state's economy. The loss or reduction of the industry would represent significant opportunity costs in terms of the employment, income and tax revenue that would otherwise have been generated by breeding, racing and horse ownership. A reversal of the development of the industry also would represent waste of substantial taxpayer and private funds associated with the construction of the racetrack and related public improvements such as roads and utilities," Molnar concluded.

In addition to Molnar, Cindy McCall, an extension animal scientist, and Robert Pendergrass, a research associate in rural sociology at Auburn, participated in the AAES study. It was supported by the Alabama Thoroughbred Owners and Breeders Association and the Birmingham Racing Commission.

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By:
Roy Roberson