Horse running through field

The New Gilded Age

by Roger Lyons

Switched on the TV one night during BC week for The News Hour in time to catch the last segment of the Nightly Business Report, which was an upbeat piece on the bright outlook for luxury retail sales–$20,000 handbags, $85,000 watches, and the like. One Madison Avenue retailer explained that they’d made a mistake last year when they advertised on-sale prices. It had the unexpected consequence of cheapening those items. It turns out that the top priority when buying luxury items is to spend as lavishly as possible.

Obviously, the luxury retailers hadn’t read their Thorstein Veblen. Neither had the business press, otherwise they wouldn’t have been so upbeat. I thought I’d entered a time warp into the 1890s, which Mark Twain called “the gilded age.”

Even if Veblen had written his Theory of the Leisure Class in 1999 instead of a century before, he would still have put those $85,000 watches down to “conspicuous consumption,” but he would have to revise what he said about buying racehorses. Back then, owning a racehorse was a mark of social rank, which, as Theodore Dreiser shows in his novels of the time, was the prime fetish of the gilded age. What owning a racehorse has become would have to fall under Veblen’s less-known Theory of Business Enterprise, published in 1904. How far thoroughbred breeding and racing have been drawn into the business-industrial vortex is a particularly discrete measure of historical change, but it will do.

To commercial breeders–the primary producers–money spent on racing and breeding stock at the sales in Lexington recently goes down on the balance sheets as something like effective demand. That’s what those sales feel like when commercial breeders pay their bills. But, in fact, that investment only masquerades as effective demand. As I’ve previously pointed out, it’s actually a secondary supply function, which is why it’s called investment.

To find the racehorse production and investment industry’s demand side, you must cast your gaze across America’s widening socio-economic divide.

On BC Friday I made the one-hour drive down to Newkirk, Ok, where there’s a Kaw Nation casino with OTB, to buy three BC superfectas. It’s an incentive program for my company’s employees–that is to say, Jackie and me. I couldn’t do it locally because, although I love Kansas, I have to admit Thomas Frank is right about what’s wrong with it. The South Wind Casino in Newkirk was filled almost to capacity with retirees, people who have time on their hands and enough retirement income to enjoy some simple pleasures.

To me, that scene was the spitting image of racing’s tenuous relation to its effective demand. By contrast with American retirees, unemployed Americans of working age are no longer relevant to the thoroughbred industry because they have no purchasing power. People with work are working more than ever before–and for lower wages–just to make ends meet. They’re becoming increasingly irrelevant to the thoroughbred industry because they don’t have the time.

The first segment on The News Hour turned out to be a report on the conclusions of the President’s national deficit-reduction commission. It’s clear the deals that are about to be made will have the predictable effect of deepening the demand slump we’re now stuck in–oh, except for those $85,000 watches.

What does this have to do with the thoroughbred industry? Everything, because now we know for sure that the health of racing is not about Wall Street, conspicuous consumption, or the supply side. It’s about broadly shared economic prosperity. The thoroughbred production and investment industry is losing its effective demand as more and more ordinary people fall victim to our country’s pernicious supply-side economic policies.

Jackie and I did our part for the demand side on BC weekend, but it was supposed to be a lesson in how to deal with failure after investing the time and effort required to pick the best three supers out of a two-day BC card. That plan backfired when we hit both the Juvenile Fillies and the Classic. The good side is that I think Jackie is hooked, and racing needs all the new players it can find.

Sister Sarah Games the Fix

by Roger Lyons

My last post demonstrates the internal dynamics of the dam line index (DLI), with its seven-generation search limit and its survey of the last fifteen years of SWs (in the original analysis). Narrowing the survey parameter to SWs of the last 10 years confirmed the expectation that the number of SWs tracing to early-era dams would decrease substantially while their average generational distance would increase somewhat–a formula for declining DLIs of early-era dams relative to the late-era dams. Accordingly, the early-era dams moved down in rank as the late-era dams moved up, very dramatically in many cases.

But, as Greg Michalson comments, Sister Sarah (Abbots Trace-Sarita, by Swynford), an important dam born in 1930, proved non-compliant. She actually moved up in rank from eighth to sixth. The fix against her is strong statistical medicine, and, in order to game it, she would need to pick up a one- or two-generation advantage somewhere along the line over other older mares. Baby League, for example, born five years later than Sister Sarah, dropped from 14th to 18th.

Nothing proves a powerful rule like a notable exception, and Sister Sarah is–well–no exception. The numbers provide presumptive ground for suggesting that this family might be more capable than most other families of producing quality in old age. I can’t think of any other way Sister Sarah could beat the statistical fix I put her in.

Even her first generation suggests this. Her second-most substantial contributor to SWs since 2000–behind Sybil’s Sister (1943)–was her daughter, The Veil, born when Sister Sarah was 23 and the latest-born branch of the line. She’s represented within six generations (puts Sister Sarah in the seventh) by 26 SWs in the 10-year group, down from 36 in the 15-year group. The late coming of The Veil assured Sister Sarah a generational advantage over other mares of her era when the first decade of the 21st century rolled around.

Now, Sister Sarah’s daughter Lady Sybil was born in 1940 when the former was only ten years old. Even so, Lady Sybil retained a large proportion of SWs in the 10-year survey. Of the 22 that had Sister Sarah within seven generations of the 15-year group, 15 also qualified from the 10-year group. That’s the branch from which Workforce (2007) descends–his sixth dam Sister Sarah’s daughter, Lady Sybil.

Lady Sybil had a 1952 daughter named Esquire Girl, by My Babu, which produced Workforce’s fourth dam, Sounion (1961), by Vimy. At age 20, Sounion produced the 1981 filly Media Luna, by Star Appeal and the third dam of Workforce. By virtue of Sounion’s production of Media Luna in old age, Workforce and eight other winners of stakes run after 1999 descend from Sister Sarah within the seven-generation limit.

No doubt, such occurrences can be found along the branches descending from any great dam, but the numbers suggest that, more than is usual, descendents of Sister Sarah have been able to produce good producers late in their breeding careers.