Pegasus needs tweaks before it takes flight

Racing is so bereft of innovation that new ideas are especially welcome even if they are flawed. Exhibit A is The Stronach Group's new Pegasus World Cup, scheduled for Jan. 28 with a $12 million purse that would make it the world's richest -- and weirdest -- race.

Its central idea is not truly new, having been borrowed from the futurities of yore, where nomination fees accounted for the entire purse of a race. This is not your grandfather's futurity, however. Instead of soliciting hundreds of nominations, the Pegasus has already sold the 12 spots in its starting gate for $1 million apiece. The buyers, an odd assortment of established horse owners and financial speculators who don't own any horses, can then use their purchased spot to race, lease or share a horse, or sell the berth to the highest bidder. The 12 spots sold out within a week.

The owners of California Chrome and Nyquist are among the purchasers; everyone else is looking for a horse or a buyer between now and January. This creates some intriguing arbitrage situations and hypotheticals. When's the best time to sell your slot? At what point does it start losing value? If the five favorites have secured berths and any additional starters are going to be 20-1 and up, who's going to pay $1 million to get only 6-1 on winning the race?

At different times, it will be either a buyers' or a sellers' market. It will be fascinating to see how it plays out -- if the public is in fact allowed to see. The complex mechanics of berth ownership demands transparency for the wagering public, with all transactions registered and announced. Otherwise, the race will go off under a cloud of hidden ownership interests and suspicions of collusion.

(One small matter to reconsider is the current plan to pay $250,000 to each of the fourth- through 12th-place finishers rather than the usual practice of paying more to the fourth- and fifth-place finishers than the trailers. It would increase the chances of someone buying a slot if the prize for finishing fourth were the customary 6 percent, which would be $720,000, rather than incentivizing someone to run a claimer around the track to salvage $250,000 for running last.)

It all amounts to a whole new model, fantasy racing with a side order of arbitrage. The question is how fair and significant the world's richest race will be under these conditions.

Gulfstream Park, where the race will be held just outside the shadow of its 120-foot statue of the mythical Pegasus stomping a dragon, plans to secure Grade 1 status for the race by swapping it in for the Grade 1 Donn, which would be discontinued. This is the same maneuver that Belmont Park used to get instant Grade 1 status for its new Belmont Derby and Oaks two years ago, substituting them for existing Grade 1 races (the Jamaica and Garden City).

The problem is that strictly speaking, the Pegasus should not be a graded race at all, for the simple reason that it is open only to owners who have bought starting berths. It is less like the Donn than like the rich 2-year-old races here and abroad that are restricted to graduates of a certain yearling auction or 2-year-old sale. Those races are properly denied any graded status despite their gaudy purses.

Supposedly, owners are racing for even more than the $7 million winner's share of the purse, as they allegedly will receive a share of the media and sponsorship rights and the betting handle. The first two seem fanciful sources of revenue -- any cash will be flowing outward to put the race on network TV -- and there might be a more productive use of the takeout from the betting handle.

The central idea of the Pegasus is to raise purse money from owners rather than through an extraction from the parimutuel handle. Horseplayers have been told for generations that they must pay an exorbitant 20 percent takeout on their wagers because of the need to pay purses as well as to staff and maintain a racetrack. Now, however, we have a rare case where the purse has already been funded.

So, why not eliminate the takeout on the race entirely, or at least slash it to a low, player-friendly rate such as 10 percent? That would make this a revolutionary race for the customers as well as the owners.