Even ‘signature’ industries must support themselves

November 18, 2009

I’m worried about the financial state of journalism.

Digital technology has given news papers more readers than ever. Ironically, though, that technology means newspapers no longer are the dominant force in advertising, from where the money to support journalism has always come.

To make matters worse, most newspapers are owned by big corporations that went into debt to get bigger. They thought profits from advertising would make the debt affordable. They were wrong.

As a result, newspapers and newsrooms are dwindling in size. Radio and television newsrooms have been hit hard, too; they just don’t talk about it. But I worry most about newspapers, and not just because I work for one.

Newspapers have always done most of journalism’s heavy lifting, from investigations to public affairs reporting.

The Herald-Leader has gotten a lot of attention lately for exposing wasteful spending in some of Kentucky’s quasi- government agencies. But that kind of work is nothing new: Newspapers of all sizes have a long record of giving Kentucky’s powerful people and institutions some much-needed oversight.

Newspapers also play a big role in community-building. They do everything from covering neighborhood zoning disputes to printing wedding announcements.

You could call newspapers one of Kentucky’s “signature” industries. There’s at least one in each of Kentucky’s 120 counties, and almost all of them are struggling.

But I have an idea: What if newspapers could persuade the General Assembly to give them another way to replace the advertising revenue they used to have?

What if newspapers were allowed to put slot machines in some of that empty space where reporters and editors used to work? Big newspapers might even have room for full-blown casinos.

People who went to their local newspapers to gamble wouldn’t go out of state so much, so more of their money would stay in Kentucky.

Truthfully, though, much of that money would have stayed in Kentucky anyway. It just would have been spent on other things. So other than helping newspapers and the people associated with them, gambling revenue wouldn’t do a lot for Kentucky’s economy.

There would be other complications, too. For example, critics of slot machines and casinos say they attract crime and create other social costs.

There’s big money in addictive businesses like gambling, especially when they’re part of a government-sponsored monopoly.

Others would surely complain that it’s not fair for such a monopoly to benefit only one industry, like newspapers. At the least, TV and radio also would want a piece of the action. And it wouldn’t be long before politicians decided that government needed a bigger share of the take. After all, they created the monopoly, and they could just as easily take it away.

Even if newspapers could hang onto most of their new gambling revenue, I’m not sure it would be good for journalism in the long run.

Some media companies would use their cash infusion to invest in journalism — for a while. But corporate executives have a duty to maximize return for investors. If media companies could make big profits with slot machines and casinos, why would they want to subsidize journalism?

Even “signature” industries aren’t exempt from the laws of economics, no matter how special they think they are.

My guess is that journalism must find a way to adapt by attracting more loyal customers, doing a better job of marketing and selling its products, creating new business models and proving its value. It no longer can be totally dependent on something else, even advertising.

So maybe my newsroom gambling idea isn’t so good after all.

Besides, it’s not an original idea.

Another “signature” industry has tried this strategy in other states for years, with little evidence that slot machines and casinos are anything but a short-term fix for deeper economic issues.

Of course, that industry would have us think it’s a horse of a different color.

I wouldn’t bet on it.

Bicycle-racing friends have the Derby of a lifetime

May 4, 2009

Phil Needham didn’t make it to Churchill Downs to see the horse he bred and foaled pull a stunning upset in the Kentucky Derby.

He had his own race to win.

Mine That Bird became the second-biggest long shot ever to win the Derby, covering the 1¼ miles Saturday in a little more than two minutes and two seconds.

A few hours earlier, Needham, 67, rode his bicycle 123 miles in six hours to win his age group in the 18th annual Calvin’s Challenge road race, which drew 210 cyclists to Springfield, Ohio.

Had the Georgetown resident not wanted to be done in time to see the Derby on television, he would have entered the bicycle race’s main event, where he set the record for his age group two years ago by riding 225 miles in 12 hours.

Needham’s racing partner was Bena Halecky, 50, of Lexington, whose 123-mile performance won her age group. She was named the best overall female racer.

“I went up to Louisville last Monday to see the horse work and meet the new owners and trainer, and I was very pleased with what I saw,” Needham said. “But the chances, you know, were very remote, 50-1. So because we had trained and planned for this race, we went to Ohio.”

It wasn’t the first time Needham has been wrong about Mine That Bird.

The Birdstone colt was athletic and strong. Needham’s wife, Judy, thought the yearling was promising. But Needham and his business partners decided to sell him.

“When the partners agreed to sell, we had the right to buy, but we let him go,” Needham said. “He brought $9,500, which was next to nothing. People spend millions trying to create a Derby horse.”

Needham had better instincts about Mine That Bird’s mother.

When Needham and Bill Betz ended their thoroughbred partnership last year, they decided to sell the mare Mining My Own at auction. But when the bids started coming in, Needham thought they were too low. He jumped in and ended up buying her for $8,000.

Needham and Halecky had been friends for years. Halecky, a Procter & Gamble executive, had urged him to buy P&G stock. “He said, ‘If I’m going to invest in your business, you need to invest in mine,” Halecky said. So she kicked in $4,000 for half interest in the mare.

As Needham and Halecky raced Saturday, the Derby was on their minds. They considered it an omen that their race was called Calvin’s Challenge and Mine That Bird was being ridden by jockey Calvin Borel.

“And then we kept seeing birds in front of us on the road and I kept yelling to Bena, ‘Mine That Bird!'” Needham said.

After their race, Needham and Halecky headed back to Lexington, stopping at a sports bar near Cincinnati to eat dinner and watch the Derby. The place was noisy, and the big-screen TV was hard to see. So it took them a few moments to realize that the impossible had happened.

“Finally, Phil looked at me and said, ‘We just won the Kentucky Derby!'” Halecky said. Soon their cell phones were ringing as friends called the congratulate them.

Several of their Bluegrass Cycling Club friends, who gathered to watch the Derby at Keeneland, bet and won big on the horse. But Halecky had put only a $2 bet on him. Needham didn’t bet anything, although his wife, who had always known better, put down $100 to win.

“It was one of the best Saturdays that anyone could ever have,” Needham said. “It’s just unbelievable.”

Since ending his partnership with Betz, Needham has formed Needham Thoroughbreds, with interest in about 15 horses, including Mining My Own.

Needham had planned to focus more on his cycling.

He took up the sport a decade ago and has been riding competitively for seven years. He was sixth in his age group in the 24-mile time trial at the 2007 masters nationals. A first-place finish in last year’s Bluegrass State Games made him eligible to compete this August at the Senior Games in San Francisco, where he plans to enter the time trial and the road race.

“My goal is to be number one in my age group in the country,” he said.

But his 40-year career in thoroughbreds seems to have gotten a second wind.

The $8,000 mare he and Halecky own could now be worth millions if they sell her — or even sell part ownership in her — and perhaps even more in the long run if they keep her and breed her well.

Mine That Bird was the mare’s first foal. She also has a 2-year-old in training and a foal by her side, and she is pregnant with another. At age 8, Mining My Own could have 15 more years of productive life ahead, Needham said.

“Bena wants to continue to own her and have the fun; my wife wants to continue to own her and have the fun,” he said. “My best business sense tells me to keep at least 25 percent. I have to review that with my partner. I have to let the dust settle a little.”

As the dust was beginning to settle Monday afternoon, and it was beginning to rain, Halecky and Needham met near Georgetown for a bike ride through the countryside. They said they planned to ride 20-something miles, maybe more. After all, they had a lot to talk about.

From winner to weather, an unpredictable Derby

May 2, 2009

It was a Kentucky Derby as hard to predict as the weather, with a field of long-shots, two high-profile scratches and a sloppy track.

So it seemed only fitting that Calvin Borel would charge to victory on 50-1 longshot Mine that Bird just a day after winning the Oaks aboard Rachel Alexandra by more than 20 lengths. Both were the second-biggest winning margins ever in their 135-year-old races.

Borel, whose childlike glee after winning his first Derby aboard Street Sense in 2007 captured the world’s affection, was an emotional volcano, rocking back and forth on his horse on the way to the winner’s circle and high-fiving everyone in sight.

His bettors were rocking, too: A $2 wager to win on Mine that Bird paid a cool $103.

It was a joyous outcome for a Derby that seemed all day to be dimmed by gloom about the weather, the economy and a recent history of horse breakdown tragedies.

Thankfully, no horses broke down. And despite predictions of a Derby downpour, the overnight rains ended before Churchill Downs’ gates opened. There was no need for the ponchos and plastic many spectators brought to the track. Temperatures remained cool but comfortable under lead-gray skies. There wasn’t even enough afternoon sunshine to burn the ample cleavage in the grandstands.

The only unhappy people seemed to be the drink vendors. Mint juleps were selling better than beer, but even they weren’t selling that well. One vendor’s mid-morning pitch: “Mint juleps! Mint juleps! Breakfast of champions.”

Fans posed for photos in front of the new statue honoring Barbaro, the 2006 Derby winner who was euthanized after months of trying to recover from an injury in the Preakness.

Emotions were even more raw as an undercard race for fillies was renamed the Eight Belles, after the courageous filly who broke down and had to be destroyed at the end of last year’s race after running as hard as she could with the big boys. Before that race began, a bell tolled eight times.

Another cloud hanging over the Derby to some extent was the economic recession. The crowd of 153,563 was the seventh-largest, down from 157,700 last year. The previous day’s Oaks day attendance was 104,867, that event’s fourth-largest.

The betting-window lines were almost as long as those at the women’s restrooms, but it was hard to tell if people were betting as much as usual. Some vendors thought fans were cutting back on food and drink.

Nahru Lampkin of Detroit, who over the past 15 years has become something of a Derby celebrity by sitting in the infield playing bongo drums and rapping to passersby, said his tips were off about 20 percent.

He was working hard for every dollar pitched into his plastic bucket, rhyming about the pretty women walking by and offering advice to college students: “Stay in school, don’t be dumb or you could end up playing this drum.”

On the other end of the Derby’s social scale, gourmet smells filled the Jockey Suites, but the crowd seemed a little lighter than usual.  In the halls of rooms with brass door plates identifying them as the venues of banks, railroads and big horse farms, regulars said there was less corporate entertaining than in the recent past.

Still, the Derby attracted its share of the rich and famous. Sheik Mohammed al Maktoum of Dubai was here to see his two entries, Regal Ransom and Desert Party, fail to break his Derby jinx. And billionaire Alice Walton, daughter of Wal-Mart founder Sam Walton, was a guest in the Jockey Suites room of Louisville power couple Laura Lee Brown and Steve Wilson, creators of the 21c Museum Hotel.

The red carpet walk included Motown music greats Aretha Franklin and Mary Wilson, several pro football players and Bobby Flay, the chef made famous by the Food Network.

And if that wasn’t enough celebrity food, two Bravo network Top Chef competitors demonstrated creative hot brown sandwich recipes in the Infield Club. And weight-loss titan Jenny Craig had a horse entered with the ironic name Chocolate Candy.

The Derby fashion parade was as colorful as ever. Some wore seersucker, linen and silk; others denim and khaki. A few showed up in super-hero leotards and tacky hats.

Pete Bush, a Louisville native who now lives in Baton Rouge, La., was decked out in his finest, hoping it wouldn’t rain and ruin his shiny white shoes. “I’d like to wear them more than once,” he said.

The grandstands and luxury suites were filled with shapely women in tight dresses and feathery hats almost big enough for their own Zip Code.

Cynthia Lundeen, who designs hats in Cleveland, Ohio, was in her element, posing for pictures in one of her own creations while her husband followed along in a tuxedo and a big hat of his own.

“On Derby day, everyone is so happy,” Lundeen said. “If the whole world could be like Derby day, the world would be a better place.”

Click on each photo to enlarge:

Would more gambling be good for Kentucky?

April 7, 2009

I’m not much of a gambler, but I don’t have anything against it.

I’ll probably lose a few dollars at Keeneland this month, and a few more dollars at Churchill Downs on Derby Day, and have fun doing it. Plus, I’ll know I did my small part to keep beautiful horses grazing in bluegrass fields.

I buy a lottery ticket every now and then — when the jackpot gets really big — even though I know I probably have a better chance of being struck by lightning than cashing the ticket.

With the economy hurting and state government revenues far below the budget, the governor is likely to call legislators back to Frankfort this summer to consider tax reform. I hope they create real reform, because we badly need a tax system that produces enough reliable revenue to meet Kentucky’s needs.

Odds are, the discussion will lead to more talk about expanded gambling. The drumbeat for slot machines at racetracks and casinos has been getting louder for years, and this economy is causing more people to listen.

I wish I knew the answer to the big question: Would more options for gambling be good or bad for Kentucky?

Let’s look at the pros and cons. We won’t get bogged down in numbers, because I think most of the numbers thrown around are little more than wild guesses. It’s like many forms of economic forecasting: They make weather forecasting look like exact science and voodoo almost seem respectable.

First, let’s take an easy argument: Slot machines or casinos would keep many Kentuckians from driving across the Ohio River to gamble. That’s probably true.

Here’s another argument: Expanded gambling would bring a lot of additional revenue to state government, perhaps reducing other tax burdens. That may be true, although I suspect it would generate a lot less money than supporters claim.

The trouble is that the extra revenue reflects only one side of the ledger. For each million of gambling revenue that comes into state coffers, how many million more must be shifted from the pockets of Kentucky gamblers into the pockets of the gambling industry?

What’s the social cost of expanded gambling? In other words, how many children will go unfed? How much rent and child support will go unpaid? Sure, some of that new state revenue will go to offset gambling’s collateral damage, but it probably won’t be enough. When has Kentucky ever adequately funded social services?

Will expanded gambling grow Kentucky’s economy? We will keep many of our current gamblers from taking their money across the Ohio River. We may even lure some gamblers to Kentucky from neighboring states.

But we won’t be making Kentucky’s economic pie much bigger; we’ll just be slicing it differently. For the most part, new money spent on gambling would be money now spent on something else in Kentucky.

For all of those reasons, I’ve never thought government-assisted gambling was good public policy. Besides, gambling sends taxpayers the same unrealistic message it sends gamblers: You don’t need to work for the success you want, you just need to have Lady Luck on your side every now and then.

The best argument I’ve seen for expanded gambling in Kentucky is that it would help keep those pretty horses in bluegrass fields — and all of the jobs and economic activity they create. Not to mention the positive image the horse industry gives Kentucky. Horses are our international brand — and a good one, at that.

Kentucky’s thoroughbred industry wants racetracks to be allowed to have slot machines to provide more money for higher race purses and breeder incentives. That’s because other states with expanded gambling are doing that, threatening Kentucky’s preeminence.

Anyone who has been the parent of a teenager is suspicious of the “but everyone else is doing it” argument. In this case, though, the problem seems legitimate, even if the proposed solution is, at best, a short-term fix.

For one thing, I think it’s naïve to think Kentucky’s thoroughbred industry will be able to keep gambling to itself. There’s just too much money at stake. Other powerful interests will want slot machines, or full casinos, or some of the gambling money the horse industry hopes to keep for race purses and breeder incentives.

Besides, what’s the long-term future of any industry that depends on something else to prop it up? If thoroughbred racing hopes to survive and thrive in the long term, it must create more fans. Other tracks must cater to fans the way Keeneland and Churchill Downs do. Racing must find a way to support itself, not find something else to support it.

Of course, all of that is easier said than done. And if it can be done, it won’t happen quickly. Racing, like the economy, is where it is. So what should we do now?

Would more options for gambling be good or bad for Kentucky?

It’s a question we all need to ask ourselves, ask each other and ask our elected leaders. Because if there were ever a year it could happen, I’ll bet this is it.

Spring comes to Keeneland early in the morning

April 3, 2009

Before the sun is up, horses are on the track.

Riders in thick jackets and leather chaps ease them up the stretch and gallop them back down, around the turn.

Hooves pound. Steam puffs from big nostrils. The grandstand casts a giant shadow holding winter’s last chill.

Behind the rail, rows of green benches wait to be straightened. Their only occupants are the last fat drops of an overnight rain.

Men and women with rags carefully wipe each grandstand seat. Mop the floor. Hang the bunting. Above them, birds dart in and out, looking for a perch.

Down by the racing office, people stand with steaming cups of coffee. Many wear caps embroidered with the names of famous farms and recent champions. Three Chimneys. Big Brown.

Conversations are spiced with accents from down the road — and New York, and Ireland. Warming up yet, John? How have you been? Two exercise riders chat in French. Hot walkers speak Spanish. Between two owners, whispers in Japanese.

Some stare off into the distance, closely watching one of a dozen horses breezing by. Others pace with cell phones, telling someone far off that their horse looks good, is exercising well, will be ready to race. You should be here. Man, it is so pretty!

The rising sun casts a soft glow on flowering white trees and limestone walls. Freshly mown grass rolls out like an emerald carpet, rippled with the shadows of fences and trees. The track’s edge is a patchwork of budding green, flowering pink, forsythia yellow.

The stone-framed tote board and video screen forms a dark wall in the infield, waiting for a big jolt of electricity to bring it to life. Soon, it will chronicle the rise and fall of afternoon fortunes.

Out back, crunchy fine gravel leads to white block stables beneath severely trimmed trees. The remaining limbs reach skyward like arthritic fingers, waiting for leaves to hide their ice-inflicted wounds.

Outside the stables, grooms with white buckets of warm water carefully wash each tired horse. Steam rises from silky coats of chestnut brown and dappled gray. Ankles are carefully felt.

Many cars and pickup trucks are parked outside the stables, New York and Florida plates scattered among the Kentuckys. Old bicycles that were pedaled out Versailles Road in the dark stand propped against trees.

The track kitchen is alive with clattering plates and conversation. I’ll take the special. Sausage or bacon? Apples or grits? Coffee in a thick stone mug. That’ll be $5.26. Customers gaze at framed photographs of champions on the walls — and dream.

By mid-morning, sunshine reaches into the paddock and touches the big, white sycamore tree. Raindrops begin to dry off neatly trimmed boxwoods along the rail. A man with a leaf blower sweeps grass clippings from soft pavers.

A beer truck and an ice truck release their cargo. Kegs are stacked by concession stands and boxes beside rows of betting windows in the dim underneath of General Admission. Men with yellow ladders move from one rafter-mounted TV screen to another, pulling off fabric covers.

White metal tables, each with five chairs, stand beside pansies freshly planted in green washtubs. The sound of a sweeping broom echoes from a stone corridor that leads to the clubhouse. In a gift shop window, colorful Derby hats wait for just the right pretty head.

Soon there will be people; lots of people. Colorful dresses, navy blazers, khakis and bright ties. White parasols along the grandstand balcony. A sea of sunglasses and sunburns below.

Burgoo and beer. Crab cakes, fried green tomatoes and bread pudding bathed in sweet bourbon sauce.

It must be spring. It must be Keeneland.

Click here to watch a video of the sights and sounds of Keeneland by Herald-Leader photojournalist David Stephenson

Click on photos below to enlarge.