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Sponsor deals not smooth as silks

Dec 15th, 09
It all started in New York, which is funny when you think of it since some rules there are as archaic as those in the heart of the Blue Grass. The decision was made with little fanfare. Jerry Bailey walked out of the jockeys' room at Belmont Park and Gary Stevens did as well and Jose Santos came along and there they were, bold letters marching down their legs, first riders to ever wear corporate advertising on their silks at a major horse racing event.


	Sporting an Anheuser-Busch logo on his pants, Jose Santos rode Funny Cide in the 2003 Belmont Stakes.

It happened not so long ago, before the Belmont Stakes of 2003, a groundbreaking moment ironic in its lateness -- especially considering the evolution of the times. Executives with Visa, then-sponsor of the Triple Crown, called the unannounced move "ambush marketing," expressing extreme displeasure at sharing valuable airtime with Wrangler, the logo worn by Stevens and ultimate winner Bailey on Empire Maker, and Anheuser-Busch, worn by third-place finisher Santos aboard Funny Cide.

Earlier in the year, several riders had been fined $500 each for simply wearing the Jockeys' Guild logo, a 3x5 patch, hand-sewn onto the pants leg of their right thigh above the knee. By 2004 they were threatening a boycott of the Kentucky Derby as the Kentucky Horse Racing Authority attempted to enforce a rule that banned advertising "not keeping in the traditions of the turf." A lawsuit ensued in the aftermath, with Bailey, Santos, eventual Jockeys' Guild chairman John Velazquez and others acting as plaintiffs in the case. And although the riders ultimately won the right to wear advertising based upon first-amendment rights, the battle over sponsorships continues to this day.

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When Velazquez enters the paddock at a New York track on any given afternoon, his white pants gleam bright and spotless and are marked only by a tastefully-embroidered "Johnny V" on the waistband at the base of his spine. Unlike other athletes whose corporate sponsorships may be arranged on a yearly or seasonal basis -- think Tiger Woods and Nike, DuPont and Jeff Gordon -- it is impossible for Velazquez, one of the nation's leading riders, to make a similar deal. New York State Racing and Wagering Board Rule 4041.6, Wearing of advertising or promotional material, section b, requires a sign-off from every owner or authorized agent of every horse in every race he rides. Last year, Velazquez rode 1,180 starters.

"If I want to do a yearlong deal with Pepsi and Johnny Velazquez, I can't," said Kelly Wietsma, president of the equine public relations firm Equisponse. Wietsma has been at the forefront of jockey advertising deals since she facilitated the 2003 agreements for Bailey, Stevens, and Santos.

"Lack of uniformity is why corporate sponsorships have never taken off for jockeys like they have for other athletes," she said.

But owner representatives like Dan Metzger and Tom Ludt of the Thoroughbred Owners and Breeders Association (TOBA) said it is impossible for jockey sponsorships to mirror those in other sports, since the jockeys form but one section of a multi-faceted racing team.

"In golfing, Phil Mickelson is 100 percent of the product out there on the green," Metzger, TOBA president, explained. "In racing, the jockey has an important role to be sure, but he joins the horse."

Metzger has a point. The horse is financed by an owner, trained by a trainer, cared for by a groom, exercised by an exercise rider -- all parts of the team on the route to the winner's circle.

"It's more appropriate to compare our hoped-for model to NASCAR," Metzger said, "where Jeff Gordon's agreement is done between car driver and sponsor with a secondary agreement between the sponsor and the owner of the car."

The words "hoped-for" are key in an issue further clouded by the fact that, since horse racing has no national uniformity or governing body, rules vary from state-to-state. In California, for instance, jockeys do not have to obtain permission from owners prior to wearing advertising. They simply submit the advertising for review to stewards at the racetrack where it will be worn, and, meeting certain size and placement guidelines as stated in California Horse Racing Rule No. 1691 (section d), they're good to go.

"We've had no problem here in California at all," said Jockeys' Guild regional representative Darryl Haire. "The rule has been that way for four or five years now, and it hasn't been an issue."

According to Haire, jockeys Tyler Baze, Aaron Gryder, Alex Solis and Corey Nakatani, among others, all arranged sponsorship deals with various casinos, hotels, and Internet-based companies. Baze's agent, Ronnie Ebanks, said his rider has had a deal with MagicJack.com for about two years and continues to wear advertising for the Internet-based phone company to this day.

Laws are similar in Florida and Maryland, but it's another story in Kentucky, where lengthy guidelines (section 15, Advertising, of 810 KAR1:009, Jockeys and apprentices) require the approval of the managing owner of the horse, or the owner's duly authorized agent, along with the approval of the stewards and the licensed racing association or racetrack.

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	During the Triple Crown races of the past two years, jockeys like Calvin Borel were allowed to wear silks emblazoned with the NetJets logo.

Because of this disparity between states, major corporate sponsorship deals for jockeys have come to center around three key events -- the Derby, Preakness, and Belmont -- rather than difficult-to-maneuver yearlong deals. As one owner said, "Let's face it, corporations aren't really interested in buying ads on a Tuesday at Philadelphia Park."

These Triple Crown races have been the center of intense controversy over jockey advertising deals -- especially those related to the Derby -- since Bailey made the effort to carry the Wrangler sponsorship over to 2004. According to the retired Hall of Fame rider, the attempt resulted in such a battle with industry organizations that he never pursued sponsorship opportunities again.

"It frustrated me," Bailey said. "I thought whatever avenue it took to bring Madison Avenue into our game would be good. Most jockeys were open to the idea of revenue sharing, designating some of the revenue for the owners or trainers or grooms or exercise riders or whatever, but instead of welcoming the concept and saying, 'How can we perpetuate this or share it and make it grow?' it became such a big fight. It wasn't worth it."

"The lack of trust (between industry groups) ... is astounding," said Terry Meyocks, national manager of the Jockeys' Guild. "It is a major problem in our industry and a reason why the sport faces so many challenges ... consequently, coordinated initiatives fall by the wayside, the entire sport suffers, and those who do try to make a difference give up."

The uproar finally seemed to be subsiding in the past two years, when all of the riders in the 2008-2009 Kentucky Derby, Preakness, and Belmont Stake were permitted to wear advertisements for the aviation company NetJets. For both years, three separate deals were struck, race-by-race, between individual riders and owners with the Guild's facilitation. This year the Derby sponsorship netted $125,000 to the Permanently Disabled Jockeys' Fund, $75,000 to the Thoroughbred Retirement Foundation, and $150,000 to the jockeys (about $7,900 per rider).

The owners did not receive any of the advertising revenues, and that fact did not slip by unnoticed. David Sweitzer, executive director of the Kentucky Thoroughbred Association/Kentucky Thoroughbred Owners and Breeders Association, told Ron Mitchell of The Blood-Horse that there was some confusion on the part of owners as to where money from the 2009 deal was going, "with many left with the understanding that all of the advertising revenue was going to charitable purposes."

According to Sweitzer, Mitchell wrote on Dec. 2, some owners believed that 100 percent of the money was going to the Permanently Disabled Jockeys Fund -- and "when they learned that was not the case, it was too late to do anything about it."

Meyocks, however, is quick to counter claims that the deals were not transparent. He said a complete breakdown of fund distribution was made available to any owner who requested one, and many owners did not sign off on the deals without first looking at the breakdown.

"It has been insinuated that the Jockeys' Guild has been deceitful with regard to the disposition of the paid endorsements," Meyocks said. "This is simply not true ... further, all checks were distributed by NetJets to both the riders and the charities. The Jockeys' Guild never received any money to distribute and never received any compensation to offset the costs incurred in spearheading the drive."

Owners who did not think to ask for the figures may have been understandably distracted at the time, Metzger said. Permission slips for the 2009 Kentucky Derby, for example, were recruited during the week of the race -- a hectic time for all parties involved.


	Jockeys and owners may need to come to an agreement before sponsorships become commonplace.

"In the case of the Kentucky Derby owners, for the most part, you're thinking about your horse and getting into one of the 20 stalls in the starting gate and there's a lot on your mind in the days leading up to that race," Metzger remarked. "That's why we're hoping to work with the jockeys well in advance to come to an agreement supported by the majority of the owners."

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The idea of sponsoring the field -- that instead of going out to seek a patchwork of endorsements on their own, all riders in the Triple Crown races would wear advertisements for the same company -- seems to be catching on. But Tom Ludt, president of Vinery Stables, says owners should definitely get a cut of any such deals made in 2010 and beyond, and he's not the only one thinking that way. Ludt is a board member of the Kentucky Horse Racing Commission and TOBA and has been involved with talks with the Guild to facilitate a model for revenue sharing from jockey advertising worn during the Triple Crown.

While Ludt sees the jockeys as vital players, he also wants to make sure that all owners -- from large racing stables to smaller operations -- are represented on the industry's biggest days.

"The jockeys are saying 'We want to make money off of this,' well, so do the owners," he said. "We're the ones putting money into this game. It's not cheap; it's expensive. The situation is complicated and the more you dig the harder it becomes because you're trying to appease all the different parties who deserve a part of the pie."

One plan suggested during talks included a flexible form for the Triple Crown agreements -- a, b, or c options that an owner could select when signing off -- sending all or none of the funds to charity or divvying the proceeds according to a predetermined split. This idea seems practical given the degrees of variation between previous sponsor-jockey agreements; when Weitsma inked a $200,000 deal between owner Roy Chapman, jockey Stewart Elliott, and sponsors Inphone before the 2004 Belmont Stakes, for instance, Chapman gave his approval based on a four-way split between Elliott and the colt's exercise rider, groom, and barn foreman. And last year, when Kent Desormeaux and IEAH came to an agreement on a UPS sponsorship deal believed to have been in the $500,000 range, Desormeaux took home a third of the money and the owners kept the rest.

Ultimately, the organizations are also looking at a proposal which would give 40 percent of jockey advertising revenues to the rider, 40 percent to the owner, and 10 percent each to Thoroughbred Charities of America and the Permanently Disabled Jockeys' Fund. The Guild agreed to this proposal and is waiting for TOBA to gather feedback from its' members.

In the meantime, suggestions have also been made to reconfigure jockey sponsorships into "owner endorsements," an option which the Guild vehemently opposes.

"These actions threaten to turn a promising opportunity with the TOBA agreement for a win-win situation into a disaster in which everyone loses," Meyocks said. "Why go back on the progress that has been made thanks to the help of tracks like Churchill Downs, key industry individuals, and the riders?"

Meyocks pointed out that the recent arrangements have not only been a boon to the sport where jockeys are concerned; in the past two years, more than $1 million has gone to industry-based charities from the sponsorship money received from NetJets, contributions from Triple Crown jockeys such as Velazquez, who donated his full portion of the revenue to charity, and additional donations from individuals such as WinStar Farm's Bill Casner and NetJets' Richard Santulli.

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Overall, there's no doubt progress has been made in the situation as Ludt said, "Six or seven years ago we weren't even talking about this."

But concerns have been raised by members of the Guild that an agreement for the Triple Crown races will not be reached before the next season, which begins in May of 2010, and signs would certainly point in that direction. KHRC rules committee chair Ned Bonnie told The Blood-Horse's Ron Mitchell in a Dec. 2 report that it is more important for the parties involved in the jockey advertising negotiations to work toward a solution that can be used in the future, even if an agreement is not worked out in time for the 2010 events.

"We are trying to get our portion done before the 2010 Kentucky Derby," Metzger said of TOBA's timeline. "At the same time, I think the (Kentucky) rule in place now does pretty adequate job of protecting the interests of the owners. In the past, advertising has gone through the jockeys and the owners presented with piece of paper to give their consent, many times without knowing financial details of the sponsorship. I think the main focus and goal is that there should be full transparency between owners and jockeys regarding these sponsorships."

Regardless of the details of agreements between various industry groups, one thing is certain; if the Thoroughbred racing industry is going to move to the next level where corporate endorsements are concerned, jockeys and owners have to come to a meeting point.

"If we can start to bring in these fields as a whole it will give the sponsors a much more tangible assurance," Weitsma said. "But right now, the way things stand between the various groups, I don't feel comfortable pursuing a sponsor."

Claire Novak is an award-winning journalist whose coverage of the thoroughbred industry appears in a variety of outlets, including The Blood-Horse magazine, the (Albany, N.Y.) Times Union and NTRA.com. She lives in Lexington, Ky.

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