Archive for Hollywood Park

Gaming Decisions Dating Back to 1999 Doomed Hollywood

This week’s LET IT RIDE.COM HOT TOPIC comes from Matt Hegarty of…take a read and VOICE AN OPINION!

Losing bet on gaming doomed historic track

When Hollywood Park closes its doors for good Sunday, it will become the inevitable financial casualty of two bets reaching back to 1999. Those wagers worked out well for the two companies that tied their money to the track – a perverse turn of events considering the gaping hole the track’s closing will leave on the national racing landscape and the track’s deep history.

Hollywood Park was first targeted for a big payoff by Churchill Downs Inc., which bought the track in 1999 as part of a national expansion that had two goals: acquiring simulcast signals and planting stakes in potential casino-gambling markets. Six years later, however, frustrated by the state’s opposition to expanding casino gambling beyond Native American reservations, Churchill unloaded the track – at a $120 million markup from the price it paid.

The buyer in 2005 was a real-estate company, Bay Meadows Land Company, controlled by a California Democratic businessman with deep ties to the state’s legislature, Terry Fancher. His company, too, was betting on getting slot machines or casino games at the track, but unsuccessful efforts supported by Fancher and the rest of the California racing industry to improve Hollywood’s chances at reaping the rewards of expanded gambling failed miserably in the next three years.

Then the real-estate market collapsed.

That collapse was the only reason Hollywood Park held on until 2013. With the track located on valuable real estate, with quick access to nearby LAX and the city’s ports, Hollywood Park’s owners kept it operating solely because razing the facility and redeveloping the land wasn’t prudent until the real-estate market recovered. What’s more, it’s become apparent since a referendum failed in 2007 that the state has no interest in giving racetracks slot machines, and so Hollywood’s owners are finally cashing in their chips for the lucrative world of retail and housing development.

That reality might be off-putting to many local racing fans and historians, but the simple fact is that real-estate developers look at one crucial statistic in gauging the worth of a property: profit per square foot. Hollywood Park sits on a lot of square feet, 238 acres worth of sprawling property that includes a backside generating far more expenses than revenues and a spacious infield unused but by birds, a pretty park no one can picnic in, with value only as a backdrop for photographs that rarely make the papers these days.

Meanwhile, handle nationally on racing went into a free fall at the start of the 2008 economic meltdown after years of stagnation or small declines, although it has stabilized over the past two years. Handle at Hollywood’s summer meeting in 2008 averaged $11.8 million a day, a number that declined to $9.1 million in 2012, while average handle at its 2008 fall meeting was $8.3 million, below its 2012 fall meet average of $8.9 million. At the same time, real-estate values have been steadily creeping up.

“From an economic point of view, the land now simply has a higher and better use, so, unfortunately, racing will not continue here once the 2013 autumn meet is completed,” said the track’s president, Jack Liebau, when finally announcing the closing earlier this year.

Both Churchill Downs and Bay Meadows Land Company made no secret of their goals for Hollywood – slot machines. Churchill decided to bow out as the result of a breathtaking miscalculation by the state’s racing constituents in 2004 to support an industry-drafted referendum that would have forced Native American casinos to contribute 25 percent of their gambling revenues to the state and to local governments. Under the language of the referendum, if a single Native American casino refused to make the payments within 90 days of the referendum passing, the state’s racetracks and card rooms would get a backdoor right to operate as many as 30,000 slot machines.

The referendum was shot down by 84 percent of the voters. In defeat, the racing industry came off as petty and vindictive, eroding support for their efforts for expanded gambling while simultaneously serving up a stark reminder of the unbreakable political clout of the Native American casino lobby.

Frustrated by the vote and bowing to reality, Churchill reached its agreement to sell the track to Fancher’s company in 2005 for $260 million. Tom Meeker, Churchill’s chief executive when the company purchased the track for $140 million in cash from a company controlled by R.D. Hubbard, said after reaching the deal that the state “seems to have forsaken racing,” a reference to the company’s inability to get any authorization for casino gambling. That comment probably didn’t endear the state racing industry to lawmakers, either.

The sale allowed Churchill to retire nearly all of its long-term debt and post a $72 million profit for the quarter. Hollywood’s average handle when Churchill acquired the track in 1999 was $10.38 million for the summer meet and $9.66 million for the fall meet. When the company sold the track in 2005, those numbers were $10.42 million (little change) and $8.94 million (a 7.4 percent decline), respectively.

Fancher picked up right where Churchill left off, even if his language was coded in the type of business-speak that is familiar to anyone who has watched a racetrack set the stage for lobbying efforts to get slot machines. During a conference call to discuss the purchase of the track, Fancher said: “[We] will seek alternative uses for the current racetrack site, in collaboration with the city of Inglewood, in the event that our best efforts are unable to improve the underlying economics of the horse racing industry and stem the tide of horses leaving the state.”

Then he issued a warning to Gov. Arnold Schwarzenegger: “It would be tragic to see racing fall off the landscape in California. Governor, you can do something about it.”

Fancher and supporters of expanded gambling wasted no time in pursuing their goals, working behind the scenes to try to strike a deal to bring slots to the state’s tracks. Those efforts failed to bear any fruit. In 2007, a referendum that would have nullified the state’s agreements with Native American tribes – and opened the door to slots at tracks – failed nearly as spectacularly as the 2004 vote. Efforts to revive the issue have fallen flat ever since.

Fancher had vowed to keep Hollywood up and running as a racetrack only until 2008, but any plans for redeveloping the property then faded in the wake of the dramatic pullback in real-estate investment when credit and land values collapsed as part of the recession. Just in case anyone had any lingering confidence in Hollywood’s future as a racetrack as a result of the delay, however, the owner quickly put those hopes to rest when Bay Meadows Race Course, the company’s other racetrack holding, located in an industrial area south of San Francisco, was torn down late in 2008 and promptly redeveloped.

The larger concern for the racing industry is whether Hollywood’s fate will be shared by other similar racetracks. While crosstown circuit member Santa Anita is probably safe from redevelopment over the short run due to a combination of its billionaire owner’s ability to absorb losses and the property’s few viable redevelopment options in a tony location already crowded with retail and housing, other tracks without expanded gambling will face the same pressures over the long term unless they receive the right to operate slot machines.

With casino-type gambling reaching into nearly every nook and cranny of the continental United States, tracks without gaming have now become few and far between. Tracks in Illinois, Arizona, and Washington fit the bill. Kentucky, surrounded by casino states, obviously stands out, but only one Kentucky track, Turfway Park, is in dire financial straits. Churchill has the cash-cow Kentucky Derby; Keeneland is a not-for-profit that has consistently posted record attendance and handle figures despite the recession (and has sales revenue to fall back on); and both Kentucky Downs and, to a lesser extent, Ellis Park are reaping revenues from Instant Racing machines, devices that so nearly resemble slot machines that they are hardly distinguishable from the real things.

But in Texas and Virginia, two states where casino gambling seems a longshot at best, the future is grim. Tracks in those states, each with its own long equine pedigree, opened in places where racing seemed a sure thing, and at a time when the national gambling expansion was beginning to carry racetracks with it to the land of riches. But that has changed, seemingly irreversibly. Unless racing finds a way to resurrect its fortunes – and wean itself from the slot-machine subsidies that have so distorted the economic and political incentives shaping its present and future – more tracks will go the way of Hollywood Park, white elephants whose once best uses expired long ago.


Does Bob Mieszerski Have Racing’s Hardest Job???

This week’s LET IT RIDE.COM HOT TOPIC comes from Jay Hovdey of…take a read and VOICE AN OPINION!

Mieszerski has melancholy job of promoting Hollywood as it closes

It’s a melancholy job, and it could get to a person if they let it – dwelling on the last running of the Hollywood Gold Cup, the last Californian, the last in a long line of historic Hollywood Derbies. But somebody has to be in charge of spreading the word through traditional and social media as Hollywood Park nears the end of its 75-year run, and who better to do it than Bob Mieszerski.

In his role as the last in a respected lineage of Hollywood Park publicity directors – including Bob Benoit, Nat Wess, Jim Peden, and Mike Mooney – Mieszerski has plowed ahead in these final months as if Hollywood is still the only game in town, which it is, at least until the last fan leaves the house on the afternoon of Dec. 22.

“It’s certainly sad, but when I got this job I was happy and grateful for the opportunity, and I knew this day would eventually come,” Mieszerski said. “Of course, I hoped it would be later rather than sooner.”

Mieszerski is no different from most racing fans. His most vivid experience came at an early age in the company of family, in July 1977, and it just happened to take place at Hollywood Park.

“My grandfather was big into racing, and my grandparents were visiting from New York,” Mieszerski said. “It was when Seattle Slew came to Hollywood after winning the Triple Crown. Of course, my grandfather wanted to go, so there we were, sitting way at the end of the grandstand. The build-up to his appearance was so great, and there was such an incredible atmosphere being one of the 68,000-plus here that day.”

Mieszerski was 20 and had just started working as a copy boy for the Los Angeles Herald Examiner, the “we try harder” afternoon paper in a market dominated by the Los Angeles Times.

Fortunately, Mieszerski’s ambitions were aimed higher. Within the year, his handicapping skills found a home in the selection box alongside such racing household names as Gordon Jones and Jerry Antonucci. By 1985 Mieszerski was the racing reporter on the beat. In 1986 he covered his first Kentucky Derby – won by L.A. hometown heroes Ferdinand, Bill Shoemaker, and Charlie Whittingham – and in 1987 he was at Belmont Park for the paper when Alysheba tried to win the Triple Crown. Later that year, Mieszerski was on the scene at Hollywood Park for a rare meeting of Derby winners when Ferdinand faced down Alysheba in the Breeders’ Cup Classic.

“The Herald Examiner was very big into racing when I started,” Mieszerski said. “One of the first times I came to the press box at Hollywood Park was just a weekday afternoon. There were six or seven Herald Examiner people there, including Gordon, Jerry, Allan Malamud, Jack Disney. Racing was a big part of their lives.”

As a survivor, the unflappable Mieszerski takes a backseat to no one. In 1989 he was about to get on a plane bound for the Breeders’ Cup in Miami when he got word that his paper had folded. Within days he was hired as lead handicapper and reporter at the Los Angeles Times. When the Times eventually scaled back its racing coverage and downsized its sports staff, Mieszerski eventually found a home at Hollywood Park, beginning the spring of 2010.

“Working here when Zenyatta won another Vanity and then her final California appearance later that year in the Lady’s Secret – those were almost like the old days,” Mieszerski said. “The crowds may not have been as large as in the past, but for her they were just as intense.”

Now, in these waning hours of Hollywood Park, Mieszerski lords over a large press box built for big-time events but now home to only a handful of regulars. There probably will be a few extra media mouths to feed this weekend, when Saturday’s program includes potentially entertaining runnings of the Generous Stakes and the Miesque Stakes for 2-year-olds on turf, while Sunday’s card is topped by one last Matriarch for fillies and mares and the 72nd and final running of the Hollywood Derby.

All that’s old hat as far as publicity is concerned. The real story is the closure of the racetrack, and Mieszerski has had plenty of interest.

“I’ve tried to act like it’s just another meet,” he said. “I have a job to do, and hopefully we can get some coverage on some of the bigger races. You do get a little more interest knowing the track is going away. John Branch is here for the New York Times to write about the closing. The L.A. Weekly has a feature coming out. People will say, ‘Oh, it’s going away. We’d better get out there.’ That’s just human nature, and as we get closer to the end there will be more people interested.

“I wasn’t a Raiders or a Rams fan, but I understand the agony of a team leaving town,” Mieszerski added. “It’s somewhat like that. As far as people are concerned Hollywood Park has always been here. The seasons were the same every year. And now for that to suddenly change is going to be very different, and very . . . strange. That’s the best way I can describe it.”


If Hollywood Closes, Will Del Mar Pick Up Fall Dates?

This week’s LET IT RIDE.COM HOT TOPIC comes from Lyndsay Winkley and Ed Zieralski of UT San Diego…take a read and VOICE AN OPINION!

Del Mar considering fall racing dates

DEL MAR — It’s been apparent for some time that horseracing’s days are numbered at Betfair Hollywood Park, but only recently have tracks in Southern California begun to address it, starting with Del Mar and Los Alamitos in Orange County.

Joe Harper, president and CEO of the Del Mar Thoroughbred Club, said Del Mar would like to host a short fall meeting so long as it included the Breeders’ Cup dates in late October or early November. Del Mar plans to expand and install a new turf course for the 2014 meeting and has designs on hosting the Breeders’ Cup Championships as early as November, 2015.

Los Alamitos would like to house more horses and stage more thoroughbred racing and training in addition to its year-round night racing for quarter horses, according to a recent article in Bloodhorse Magazine. Los Alamitos officials plan a $12 million expansion that will add 700 horse stalls to the 300 stalls they currently have dedicated to present thoroughbred racing. They’ll also improve a grandstand that holds 15,000 spectators now. Los Alamitos currently houses 1,100 quarter horses.

Harper said Los Alamitos would be a good location for a limited, three-days-a-week meeting in the spring and a year-round venue for training.

“A year-round training facility won’t work at Del Mar,” Harper said. “It won’t work at Santa Anita. Los Alamitos, from my point of view, is the best place. We have a very good relationship with (track executive and consultant) Brad McKinzie and Doc Allred (owner of the track). Doc’s word is his bond. We’d love to do business with them.

“But for us, any expansion of dates will be done with one thing in mind,” Harper added. “Don’t screw around with the summer meeting. Those dates work great. So we’re not going mess with that at all.”

The matter was discussed Tuesday at the Del Mar Race Track Authority and Race Track Leasing Commission meeting. Tim Fennell, CEO and general manager of the Del Mar Fairgrounds and Racetrack, said he would be in favor of additional dates in the fall for racing. Any expansion of racing would have to go through a series of state governing bodies, but Fennell said he would push for the approvals.

Harper said Del Mar’s fall racing would be an “Oak Tree-type meeting.” Santa Anita Park hosted the fall meeting and the Breeders’ Cup last November and will do so again this November. Del Mar has been in discussions with the Breeders’ Cup and sent a proposal last spring in hopes of luring a future world championship to the surfside track.

For now, Del Mar has no plans to add racing until Betfair Hollywood Park is closed. Bay Meadows Land Co., which owns the track’s 238-acre site, has been approved for a $2 billion commercial and retail development on the site. But financing has been an issue. Bay Meadows refused to commit to more racing after its racing meet ends in December.

Fairplex Park in Pomona was considered the ideal place to expand thoroughbred racing and add additional stalls for stabling the horses that will be stall-less when Hollywood Park closes. But Fairplex Park officials withdrew from consideration as an alternative to Hollywood Park, leaving the industry scrambling to find another year-round stabling and training venue.


Is Takeout the Key to California Racing’s Struggles???

This week’s LET IT RIDE.COM HOT TOPIC comes from Art Wilson of Inland Valley Daily Bulletin…take a read and VOICE AN OPINION!

TOC just doesn’t seem to get it

The guys and gals who comprise the Thoroughbred Owners of California may soon be receiving a huge thank-you note from the folks at Tampa Bay Downs in Oldsmar, Fla.

The TOC may not realize it, but it had a huge hand in Tampa Bay Downs’ 8 percent increase in all-sources handle for a 90-day record meet that wrapped up last Saturday.

A lot of large bettors who normally might have been wagering on California races turned to Tampa Bay Downs this year after a new bill in Sacramento, strongly supported by the TOC, raised the takeout on exotic bets as much as 3 percent and spurred a players’ boycott of the California tracks.

The biggest winner was Tampa Bay Downs, which lowered the takeout on its pick three, pick four, super high five and pick six from 19 to 18 percent and saw its business flourish during a time when others in the industry are blaming the economy for slumping numbers instead of looking in the mirror.

The officials at Tampa Bay Downs obviously get it – less (takeout) equals more (handle).

It’s a simple formula, really, but one the folks at the TOC seem to have trouble grasping.

“I am very pleased with the outcome of our season,” Tampa Bay Downs vice president and general manager Peter Berube said in a statement. “Fans and horsemen alike enjoyed a relatively dry and warm winter here, which certainly helped us increase attendance and on-track handle.

“Overall, we credit our lower takeout, large fields, 18 percent more turf racing and greater access to the California market as key to our success, as well as a larger simulcast following nationwide.”

Large fields?

Whereas local bettors are stuck with more six- and seven-horse lineups than we can stomach, Tampa Bay’s field size increased 1.8 percent to 9.11 horses per race this meet.

Track management also rolled the dice and went with an 18.5 percent increase in turf races, which generally draw more horses, as a way to boost field sizes.

It all led to $30.4 million more in all-sources handle.

The boom in business also led track officials to raise purses in February, and they were able to do it without an increase in takeout like the one that hamstrung Santa Anita this past meeting.

Santa Anita president George Haines admitted on closing day of the Arcadia track’s meet that he would love to have had a low-takeout early exotic bet like the 50-cent pick five that Hollywood Park debuted on opening day of its spring-summer meet.

Unfortunately, the TOC didn’t see the need until it was too late for Santa Anita.

Now, Hollywood Park is reaping the rewards of an early pick five that has a 14 percent takeout and is quickly becoming the most popular bet in Southern California.

Want proof?

On Thursday, Hollywood Park had its first pick five and pick six carryovers of the season. Guess which one had the larger handle – the low-takeout pick five or the pick six, which includes a takeout of 23.86 percent?

Uh huh.

The pick five had a total handle, including a $107,487 carryover, of $907,117, compared to the pick six, which produced a handle of $655,774, including a carryover of $91,681.

There was $235,537 more bet into the pick five Thursday than the pick six, which is quickly taking a backseat to the new kid on the block.

As one longtime bettor wrote in a mass e-mail to industry officials: “It’s not rocket science yet it took how many months/years to get the (low-takeout pick five) put in? Good for Hollywood Park and everyone else that fought for this bet. I wonder how many CHRB board members and TOC board members get it? Lower the takeout and get on the right side of things for once.”

According to Equibase charts, Hollywood Park’s all-sources handle was down 8.4 percent through the first three weeks of the meet, and the total exotic handle showed a 10.8 percent decline from a year ago.

Hollywood Park’s numbers for all-sources handle would be down even more if not for the pick five, which has generated more than $2.7 million through the first 13 days of the meet – $352,750 more than pick six wagering.

The field sizes, which we were told would increase with the larger takeout, have shown a small decrease from 8 horses per race in 2010 to 7.72 – a 3.5 percent decline.

Yes, the TOC needs to wake up and admit that lower takeout means higher handle, which in turn leads to an increase in purses.

The folks at Tampa Bay Downs get it.

Let’s hope the TOC realizes the error of its ways soon, before we’re all betting Tampa Bay Downs when there’s no more racing in California.