Looks like it might be avery bad lick granuloma, though to be honest I have'nt seen one in that place on the dog before: usually on the front of fore legs and feet: here's what I googled.....
Quote:
Lick granulomas often start as a tiny sore spot on the skin which gets worse as your dog continues to lick it. They tend to look like hairless, thick sores that have scarred over and have ulcerated and oozing centers. And, as most anyone who has had a dog with a lick granuloma knows, applying sprays and ointments simply doesn't seem to help. If you suspect that your dog may have a lick granuloma,