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Yum betting on the Derby

Marketplace Staff May 4, 2006


MARK AUSTIN THOMAS: This Saturday is the 132nd running of the Kentucky Derby. David Carter is Executive Director of the USC Sports Business Institute. I asked him if the Derby is facing challenges similar to other major sports like baseball or basketball

DAVID CARTER: Well, horse racing really is fighting some of the same battles as other big-time sports. When you look at it, this day and age in sports only major events really seem to have broad appeal. They’re also seeing I think a real difference in the TV coverage of sports and how fans follow it and I think horse racing has been impacted by that. And finally, there’s this ongoing pressure to generate sponsorship revenue and have some events that are really credible, really have integrity meaning that there are no drugs involved and horse racing unfortunately has been battling that over the years too so many of the same issues that have impacting sports are right there at the doorstep of horse racing today.

MARK AUSTIN THOMAS: Let me ask you more about that because we know about the issue of steroids in other sports. What are the drug issues in horse racing?

DAVID CARTER: Well drug uses in horse racing have become a much more pressing concern because of the doping of the horses. If you don’t have fair competition, just like in Major League Baseball, if someone’s juiced, the outcome of the game is called into question. In horseracing when that happens and you have such a culture of betting obviously, whether that’s at the track or off-track betting, that can undermine the integrity of the entire sport.

MARK AUSTIN THOMAS: When we think of the Derby, we think of people dressed up sipping sophisticated drinks, mint juleps, very upper crust. How does this image square with the new sponsor this year, Yum Brands?

DAVID CARTER: Well I think it squares rather nicely if you really peel back the layers and figure out why this company might be getting involved. You have a 10-year old company whose individual brands — Kentucky Fried Chicken, Pizza Hut, Long John Silvers – are reasonably well known but the company itself is not all that well known. In fact some of the reports have it that about 80 percent of this company are owned by institutional investors and what they’re hoping to do with this sponsorship is get the horse racing fan which of course skews as you say a little bit upscale, maybe more affluent, higher educated, maybe with the propensity to invest, to acquaint those people with the fact that you can buy stock in this company.

MARK AUSTIN THOMAS: We’ve seen more and more that sports is joining entertainment programming in looking for nontraditional outlets like the Internet and mp3 players like iPods. Is the Kentucky Derby also looking to sort of step out of the box as a way of growing their fan base?

DAVID CARTER: Yeah I think they really have to. Fan interest throughout sports is a big concern because there are so many more ways to consume media these days, so many more ways to watch every conceivable part of an event and now as you move forward with horse racing having a little bit older of a demographic, some may not be as tuned in so to speak to new technologies the way fans of baseball are. You see Major League Baseball Advanced Media, a fantastic success. Look at their fan base: younger, perhaps hipper, more in touch with technology and you need to use technology to reach out to fans.

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