Sunday, June 17, 2018
I'm Not Dead Yet: Is Thoroughbred Racing's Aging Fan Base an Illusion?

Yet another Monty Python reference? Following our most recent post this makes two consecutive blog article titles with a nod to the influential British comedy group. A coincidence or a trend I cannot say with certainty. Probably a coincidence unless I'm starting to channel John Cleese. Consider yourself warned.

One of the salient themes in McKinsey and Company's study "Driving sustainable growth for Thoroughbred racing and breeding", presented at the annual Jockey Club Round Table in Saratoga Springs last month, centered on the problems with a "mature" fan base. Actually, an aging fan base. Ok, a dying fan base. Evidently the combined mortality rate and defection rate for Thoroughbred racing fans exceeds the rate of new fans discovering the sport. As a researcher, I'm sort of in awe of the requisite data necessary to perform the calculations underlying this claim. An estimated mortality rate specific to Thoroughbred horse racing fans? That's impressive.

McKinsey did not tell us how they did it, so we can't really challenge their methodology. But that won't stop us from offering a different perspective.

We'll be referencing a few different surveys along the way here. This table provides a snapshot of the methodological details for the various age3surveys so that we can place any reported results in proper context. Extreme caution is the order of the day when making comparisons between surveys that may have targeted different populations, used different sampling techniques, and asked different questions.

Unfortunately, we know next to nothing about the McKinsey survey, which means we'll have to make an assumption or two along the way. That's never fun and always dangerous, but our hands are tied in this regard.

If any of these terms are unfamiliar to you, just click here on the appropriate term for an explanation: population, sampling, weighted results, convenience sample, RDD.

For further information, the Thorotrends survey results and methodology, including comprehensive data tables, are available to anyone interested.

Let's begin with this stark statement from McKinsey's presentation: "From our research, the average age of a fan today is 51 (vs. 43 for football and baseball, 35 for basketball, and 46 for poker). Approximately 2% of fans die each year, and the average age will increase by 6 years by 2020."

The first thing that jumps out here is the estimated average age of baseball fans. I have to think that MLB would be doing cartwheels to learn that the average age of its fan base is on even terms with the NFL. But, our focus is elsewhere so we'll put that finding aside while wondering if the McKinsey sample is supposed to be representative of the general population.

age2The average age of a Thoroughbred racing fan is estimated to be 51. We won't quibble with that since it sounds approximately right. It sounds approximately right because we look around at the racetrack and see a mostly middle-aged crowd. It also sounds approximately right because we can compare this estimate with estimates from our other surveys.

Given that these different surveys define "Thoroughbred racing fan" differently, either implicity or explicitly, and measure fan age using different questions with different response options, it's remarkable how little spread we observe in these estimates. Thoroughbred racing's followers are, on average, around 50 years old. Despite the younger vibe you might observe at Del Mar, Keeneland, or Churchill Downs on a Friday night, this is where we are. And maybe, this is where we have always been.

Despite that positive start, the remainder of McKinsey's statement gets a little squirrely. "Squirrely" is not a term one typically encounters in scientific circles, but this is just a blog so we can use it.

"2% of fans die each year." There you have it. A mortality rate specific to Thoroughbred racing fans. The estimation of such a number strikes me as a very tough nut to crack. But there it is. Perhaps their survey included a section on health, diet, alcohol and tobacco use, etc. In any case, they did not tell us how the 2% estimate was computed. We'll move on.

"...the average age will increase by 6 years by 2020." Sheesh. In the year 2020 the average age of Thoroughbred racing fans will be approaching 60. Again, we don't know how they know this. But we know the statement is supported by undisclosed calculations and assumptions.

I have trouble with this. I just can't get with the program.

It would be one thing if the evidence was based at least in part on a robust time series of data like the ESPN Sports Poll or Nielsen TV ratings. But evidently that is not the case.

The NTRA informed us that, based on empirical research, the number of Thoroughbred racing fans (both casual and avid) is steady and consistent over a recent 10 year period. I have to believe that a rapidly aging fan base would surely have been identified in the NTRA's consumer research time series.

Is there something big that McKinsey is missing? I think that there is, and I'm not alone.

We wrote in great detail about the fan base for Thoroughbred horse racing in this space not long ago. It is a wonderfully fascinating area of study. I find it to be compelling because of the complexities. The fact that this industry straddles two worlds - sports and legal gambling - means that it requires a very thoughtful approach to understand its fans and customers.

age1Let's take a look at the results from a question that appeared in three of the surveys we've been referencing... "length of involvement with the sport". It is a rare luxury to be able to compare results from different surveys based on a virtually identical question, so we'll pounce on the opportunity.

A word about the different groups represented in the surveys is in order. McKinsey (we presume) is a scientific general population survey. It is unclear if horse racing fans, per their definition, were oversampled. Thorotrends is an unscientific online survey of Thoroughbred racing enthusiasts. HANA, the horseplayers' advocacy group, is a membership survey. Although each survey represents the opinions of fans, there is a meaningful difference as to degree of involvement.

The comparative results illustrate a "climbing the ladder of involvement" effect, with McKinsey's fans the least involved, Thorotrends' enthusiasts more involved, and HANA's members the most involved. The longer a fan has followed the sport, the more involved they have become, through increased wagering, ownership, and overall engagement.

These numbers, however, tell us little about the quality of involvement over a span of years. Let's be honest... horse racing is not a new kid on the block. It is in fact the oldest organized sport in the United States. Virtually everyone understands what it is about and is exposed to it at an early age... through TV, movies, literature, culture, or a litany of other ways. There is a seed of awareness planted, and perhaps a seed of curiosity. Maybe even a visit to a racetrack.

But then life happens... career and family. Even those hooked early on lapse in their involvement to pursue other, perhaps more practical, interests. But the seed is still there.

I have a theory that many rediscover Thoroughbred racing later in life. Their latent interest in the sport is rekindled, or ignited for the first time, at a lifecycle point that admits the time and wherewithal required for a deeper involvement.

For some this point might coincide with full or partial retirement. For others when their home becomes an empty nest.

But if you believe that this rediscovery happens, then Thoroughbed racing has a steady flow of "new" fans who are in their 50s and 60s. I don't know how these people answer the question "How long have you followed horse racing?" in a survey. Even though they may have only watched the Kentucky Derby on TV over a decade or two, would they identify as a long-time follower of the sport?

I'm not the first to theorize about the existence of this nuanced phenomenon. Read a really nice piece from Charles Carroll. The gentleman shares similar speculations on the scenario we've outlined. And he has data. The always insightful Jeremy Plonk hit all the right notes with this piece from late last year.

The implications are clear. An older fan base is not necessarily equivalent to an aging fan base. I'm quite amenable to being persuaded that Thoroughbred racing's fan base is aging. Show me the data.

And if the fan base is not aging but relatively stable in the 50ish range, marketing needs to be informed by that knowledge. I read somewhere that 10,000 boomers retire everyday. They are "expected to splurge mostly on themselves as they move households and pursue active lifestyles." How many of them are predisposed to become involved with horse racing again, or for the first time in a tangible way? Some will find their way on their own, while many others need a nudge.

age4Let's take a look at some results from the Pew survey in a little detail. Here is a comparative demographic profile of gamblers. Are you surprised? Are you surprised that people who wager on horse racing tend to be more well-educated with higher incomes than those who enjoy other forms of gambling?

These are the kinds of insights that need to shape marketing. By the way, boomers are more college-educated than any previous generation.

When was the last time you saw a racetrack promotion that simply depicted a middle-aged patron explaining why he or she enjoys handicapping so much? Why he or she relishes the racetrack experience? Someone the viewer can identify with. That kind of promotion will work. This will not.

My gratitude to the Pew Research Center for making their survey data available to researchers and scholars for further analysis. The Pew Research Center bears no responsibility for the analyses or interpretations of the data presented here.