Archive for July, 2008

It’s almost impossible to keep track of the comings and goings of executives at Magna Entertainment, the racetrack spinoff created in 2000 from Frank Stronach’s highly successful auto parts company, Magna International.

Magna Entertainment owns numerous racetracks, including Santa Anita Park and Golden Gate Fields in California, Gulfstream Park in Florida, Pimlico and Laurel Park in Texas, and Lone Star Park in Texas; it co-owns HRTV with Churchill Downs and operates the Xpressbet account wagering company.

When the public company’s stock price fell below $1 per share earlier this year, the MEC board of directors enacted a 1-for-20 stock split, giving shareholders one share for each 20 they own. A $1,000 investment in MEC (symbol MECAD on NASDAQ) one year ago would be worth just $121 today. A $1,000 investment in MEC when it was created in 2000 would be worth less than $64 today. 

As a sidenote, during the time the stock price was plummeting, Stronach lent his name to a product called Frank’s Energy Drink, complete with "energy girls" and special events, a move that further fueled critics who said Stronach was no longer in touch with what was going on at his racetracks.

The latest departure, Scott Borgemenke, from the position of executive VP of racing, led the Paulick Report on a search of other departures from the executive offices of MEC’s headquarters in Aurora, Ontario, Can., and at various racetracks.

Here are just a few, including statements made by the executives and by Stronach upon their hiring and their leaving:

SCOTT BORGEMENKE
Jan. 28, 2008 - Appointed to the position of Executive Vice-President, Racing.

Said Borgemenke: "I am very excited to be taking on this new position. MEC’s commitment to the racing industry is unmatched. I feel fortunate to be joining a great team and look forward to putting my experience to work on the company’s behalf."

Frank Stronach, MEC’s Chairman and Interim Chief Executive Officer, stated: "I am very pleased to have Scott join our team. I first met Scott a number of years ago and am confident that he will make a positive contribution to MEC."

July 21, 2008 - Borgemenke to leave his position as Executive Vice President, Racing effective July 18.

Stronach stated: "Scott has helped MEC move forward on a number of important operational initiatives. We very much appreciate his efforts, and we wish him well."

Said Borgemenke: "MEC is a company with enormous growth opportunities. I wish my friends there nothing but success, and will continue to provide any counsel I can. I will watch intently as the MEC team implements its strategic plan. Unfortunately, at this point in my life, my corporate and family responsibilities conflict."

CHRIS DRAGONE
Nov. 28, 2007 - Named president of Magna Entertainment’s Maryland Jockey Club tracks.

Said Dragone: "I look forward to working toward improving the racing and entertainment experience for Maryland horsemen and our customers. Working with the other key stakeholders I hope to build upon the platform established by Lou Raffetto and the De Francis family."

Stronach stated: "MEC remains strongly committed to the future success of Thoroughbred racing in Maryland. To this end we will put the full support of MEC behind Chris and the MJC management team."

May 13, 2008 - Dragone to be released as MJC president after Preakness.

Frank Stronach told Washington Post: "Chris is a nice fellow, but we thought (Tom Chuckas) had more experience."

LOU RAFFETTO
Feb. 10, 2006 - Lou Raffetto named president of the Maryland Jockey Club, replacing Joe De Francis.

Nov. 28, 2007 - Raffetto replaced by Chris Dragone as president of Maryland Jockey Club.

Stronach stated: "Lou worked very hard during his tenure with MJC to manage the day-to-day operations and improve the future of Thoroughbred racing in the state of Maryland. We wish him well in his future endeavors."

Said Raffetto: "I wish my colleagues at MJC well going forward and hope that the company will be successful in implementing its long-term plans."

MICHAEL NEUMAN
Feb. 27, 2007 - Michael Neuman named CEO. (Neuman succeeds Stronach, who has been Interim CEO since March 2006.)

Stronach stated, "The Board of Directors conducted an extensive search for candidates who understood the role of horse racing operations, gaming and entertainment to MEC’s business, while also demonstrating a proven track record to execute in the important new areas of opportunity. The Board of Directors is pleased to have attracted a candidate for CEO so uniquely qualified as Michael to lead MEC at this exciting time. We were also impressed with Michael’s understanding of the continued importance of debt reduction and improved operational effectiveness to MEC."

June 22, 2007 - Neuman leaves the company "effective immediately to pursue other opportunities.

Stronach stated: "Michael worked very hard during his time at MEC and we wish him well in his future endeavors."

Said Neuman: "I wish my colleagues at MEC well going forward and hope that the company will be successful in implementing its long-term plans."

JOE DE FRANCIS
July 20, 2006 - Joe De Francis named a Magna Entertainment Director, member of Executive Management Committee and Stronach’s "principal advisor on all technology and distribution initiatives."

Stronach stated: "Over the years, Joe has made an enormous contribution to the horse racing industry and to Magna Entertainment, in particular, and we are delighted that he has taken on this new role. Given Joe’s vast knowledge of both Magna Entertainment and the racing industry, we feel he is the perfect fit for our Board. On behalf of the directors of Magna Entertainment, I welcome Joe to the Board."

Said De Francis: "It has been a pleasure working with everyone at Magna Entertainment and watching the company evolve. I am thrilled about the direction in which Magna Entertainment is headed and look forward to being a part of this exciting time."

March 3, 2008 - De Francis resigns as a Director.

Stronach stated: "I want to thank Joe for all of his hard work on behalf of MEC over the years and we wish him well in his future endeavors."

PAUL CELLUCCI
March 18, 2005 - Former Massachusetts governor and U.S. ambassador to Canada Paul Cellucci named Executive Vice-President of Corporate Development for Magna.

Said Cellucci: "It has been an honor to serve the people of the Commonwealth of Massachusetts and the President of the United States, but it is time for me to step away from public life. I am very excited about the prospects for MEC and working with Frank Stronach and MEC’s management team to build MEC into a global entertainment company and improve stockholder value.

Stronach stated: "Mr. Cellucci has an outstanding record of public service and will make an enormous contribution to (Magna Entertainment) and he will play a leadership role in our efforts to bring about regulatory reform at the state level aimed at modernizing the horse racing and pari- mutuel industry."

June 30, 2006 - Cellucci resigns.

Stronach stated: "Paul has helped MEC move forward on a number of important initiatives and we are pleased that we will continue to benefit from his counsel as he builds his new consulting practice", said Frank Stronach, MEC Chairman.

Said Cellucci: "MEC is a young company with a great future and I have enjoyed my full-time association with Frank and the other members of management. As I move into this new phase of my career, I look forward to continuing to advise MEC as it successfully implements its strategic plan".

TOM HODGSON
March 8, 2005 - Hodgson named President and CEO of Magna, replacing Jim McAlpine.

Said Hodgson: "Over the past several years, MEC acquired and developed the racing content and technology necessary to become a truly global player in the pari-mutuel industry," Hogdson said. "In order to ensure that MEC remains well-positioned to capitalize on industry opportunities, including alternative gaming and international opportunities, we need to operate with financial discipline."

Stronach stated: "MEC remains committed to its strong vision and leadership position within the horseracing industry. However, at this point in our development, we need to focus on financial and operating discipline at many of our operations. Our entire board, including Jim McAlpine, strongly supports Tom’s appointment as well as the need for improved financial discipline throughout the company. Tom brings a very strong financial background to MEC and he, together with the other members of the MEC executive management committee, will ensure that MEC maintains that focus."

March 14, 2006 - Hodgson resigns, effective March 31. Stronach named interim CEO while search for a new CEO is launched. Hodgson remains a consultant.

Stronach stated: " The Board has decided that, going forward, MEC should seek a CEO with in-depth knowledge and experience in the horseracing and gaming industry who can lead the Company in fully exploiting its opportunities in
this sector….Tom Hodgson has more than achieved our recapitalization plan goals, and we are grateful for his contributions to the Company."

JAMES MCALPINE
Jan. 10, 2001 -James McAlpine named president/CEO.

Stronach stated: "We are delighted to be able to confirm the appointment of Jim McAlpine as President and Chief Executive Officer of MEC. Having worked with Jim for many years while he was a senior executive officer of Magna International Inc., I have complete confidence in his talents and abilities. I believe that this appointment provides MEC with strong, experienced leadership for its new management team."

March 8, 2005 - McAlpine retires as CEO. He remains as a consultant to the company.

Stronach stated: "On behalf of the board of directors of MEC, I would like to thank Jim for his hard work over the past several years in launching MEC and helping to position it for the next stage in its development. We look forward to Jim continuing to contribute to MEC in his new role."

Said McAlpine: "Over the past five years, MEC people have worked diligently to make MEC the company that it is today, a company filled with opportunity. I have enjoyed leading this dynamic group and look forward to making a continuing contribution by supporting Frank, Tom and the executive management committee to see MEC achieve its full potential."

BRIAN TOBIN
March 24, 2004 - Former Canadian governmental official Brian Tobin elected Vice-Chairman of the MEC Board. Tobin is CEO of Magna Development, the majority shareholder of MEC.

Stated Stronach: "Brian will be an excellent director and I look forward to his contributions to our Board’s deliberations."

Aug. 20, 2004 - Tobin resigns.

Stronach stated: "Brian Tobin has been a great team leader and a great team player. The Board of Directors and I wish him well in his future business endeavours."

Said Tobin: "I have great respect for the MEC team and for Frank Stronach."

MARK FELDMAN and JERRY CAMPBELL

July 14, 2000 - Mark Feldman, named CEO (replacing Jerry Campbell, who was named vice chairman of the board).

Said Feldman: "I am thrilled to have the opportunity to work with Jerry Campbell, the other members of the MEC Board of Directors and the talented MEC management team. I am anxious to get started implementing the Company’s multi-faceted growth strategy, including maximizing opportunities to utilize interactive media in sports wagering, development of the Company’s real estate assets with location based entertainment and retail operations and improving cash flow by taking advantage of scale efficiencies in track operations. All of these initiatives will be supported and enhanced by our commitment to developing a strong global brand."

Said Campbell: "I am pleased to continue to serve as Vice-Chairman and to remain a director of the Company. MEC has a strong balance sheet, has assembled some of the finest and strategically located thoroughbred racetracks in the United States and has the ability to expand, particularly pari-mutuel wagering via off-track betting centers (OTB’s) and telephone account wagering systems, within currently existing regulations."

Stated Stronach: "I would like to thank Jerry for his contributions in establishing the Company and am delighted that he will continue to provide guidance and assistance to the management team as Vice-Chairman. I believe that the management changes…will facilitate our pursuit of the opportunities in media distribution of racing and sports wagering."

Dec. 11, 2000 - Feldman resigns.
Stronach stated: "As was previously announced, Don Amos has been appointed Chief Operating Officer and Graham Orr has been appointed Chief Financial Officer of the Company. Mr. Amos and Mr. Orr are based in Toronto, where they were both previously senior officers of Magna International. Their appointment reflects my desire to remain closely involved with the Company during its formative years. As a result, Mark agreed that it would be more effective to consolidate operations in Toronto, but was not prepared to relocate his family to Toronto. I am pleased that Mark has agreed to continue to provide his services to the Company as a consultant, as he is an outstanding media executive."

Said Feldman: "I continue to be enthusiastic about the growth potential for the Company and its prospects to become a leader in the horse racing account wagering business. It is clear that Mr. Stronach should work closely with the executive team during these early years of developing the Company’s operations. In this regard it makes sense to operate the business from Toronto. I look forward to continuing to assist MEC in its key initiatives in the electronic media fields."

A partial list of other executives who have left the company in the decade since Frank Stronach made his first racetrack purchase (Santa Anita Park) in December 1999:

Bill Baker, Peter Beresford, Rick Cowan, Doug Donn, Roman Doroniuk, Andrew Gaughn, Michael Gilligan, Clifford Goodrich, Ed Hannah, Corey Johnsen, Brant Latta, Jack Liebau, Chris McCarron, Jack McDaniel, Graham Orr, John Perrotta, Lonny Powell, David Romanik, Scott Savin.

By Ray Paulick

Copyright ©2008, The Paulick Report

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(The Paulick Report was contacted by the recently formed Horseplayers Association of North America (HANA) with a response to our recent article on the Thoroughbred Horsemen’s Group and its approach to negotiations with account wagering or advance deposit wagering companies (ADWs). The following commentary does not reflect the views of the Paulick Report but is published in the interest of advancing the discussions on this subject. — Ray Paulick)

It was announced a few weeks ago that Ellis Park in Henderson, Kentucky struck a last hour compromise between Ellis and the KHBPA, allowing for racing to begin in 2008. With it, close to 6% of ADW handle will be going to purses this summer. It appears that Ellis is charging Advance Deposit Wagering (ADS) companies up to 8% signal fees for the right to broadcast Ellis races.

The Thoroughbred Horsemen’s Group’s Bob Reeves said this recently about the deal as reported by Ray Paulick of The Paulick Report: "We are trying to save racing."

We think deals like this will do the exact opposite. And we’ll tell you why.

An ADW normally pays about 5% (which is about what the current free market dictates) for the right to broadcast a signal and sell it to their customers. It is like a web-affiliate bookseller selling a book and keeping a commission. Then the ADW pays expenses, keeps some of the generated handle for themselves to run their businesses, and returns the rest to the player in a few ways:

1) Player Rewards - A video game, maybe a hat, trinkets of some sort, what have you. We all have received these perks.

2) Innovations and Customer-centric Benefits - An improved betting interface, R and D (like Twin Spires TV), free handicapping information (like Ian Meyers’ paddock reports at Premier Turf Club, his deal with Woodsideassociates.com, or partnerships with Thorograph at betfair), free past performances, free video. Things to encourage the player to up their handles.

3) Cash Rewards Through Rebating - Churn baby churn.

This model of giving something back to the player and delivering it in a customer-centric way has resulted in a rise in handles for ADW. Up over 17% last year - our only true blue growth segment.

If ADW’s are charged a higher fee, things like free rewards, hats and shirts; or the interesting innovations we have seen like race replays, and conditional wagering and paddock reports can all be cut. This hurts us in attracting new fans to our Internet platform, as well it alienates our existing customers (ask Vegas how they’d do without comps or adding a concert as an attraction; and ask them now what would happen if they took them away!). All those rewards and incentives are very important, but the most important point however to us as a business: It effectively increases takeouts. If 3% more is charged for a signal, 0.5% might be absorbed by the ADW. Where does the other 2.5% come from? Yes, the customer’s pocket - the customer that already pays for purses to the tune of 21% blended rakes.

When the signal fee is raised 3%, more than likely 2-2.5% will be taken from the cash rewards from certain ADW’s. If you were receiving a rebate of 5% on win wagers at track ‘A’ and they are cut in half you know, we all know what happens, you bet less. With these price sensitive players, where 2.5% can mean a huge difference, it can kill their handle. As Dan, a professional player, said recently to us "Even miniscule reductions of 2 points can make a HUGE impact on a player’s bottom line. The intelligence of the modern player is frankly overlooked by those in positions of decision."

With a conservative elasticity of demand of 4 for rebated high volume players, this takeout increase could result in a 10% drop in handle (many would argue it would be much more). Not to mention any new players (especially the younger demographic we covet) that are attracted to some of the perks like free past performances, or innovations, will find they are not there any longer, and it makes the customer experience deficient in a demanding 21st century business model. Online poker anyone?

It’s like going to McDonald’s and finding out that yes, the price of a Big Mac was raised 30 cents, so you might eat one less a month now; or maybe go to Wendy’s instead, but not only that: Now your more expensive Big Mac is served not complete in a nice wrapper, but in a do it yourself kit. When sales of Big Macs go into the tank, it would not surprise any executive at McDonald’s, they would know they cut their own throat.

Increasing takeouts, poor customer service and an absence of both soft and hard innovation through reinvestment is something we should have learned has helped kill this business by now. Year after year the evidence is overwhelming. In fact, this study written several years ago by a gambling expert and reported to racing, stressed the takeout point and making sure these players are taken care of.

Racing has lived with rising rates of takeout for so long that they have become a way of life. They are the line of least resistance whenever the industry needs money. It is all too easy for the industry to see that if we have a constant $100 in handle, and we raise the takeout by one percent, we’ll make a dollar more. It is much less easy to see that handle is not constant and, over the longer term if not the short, we won’t have that $100 any more.

If we don’t offer a low takeout (via rebate) to customers, we’re going to lose them, or at least a significant portion of their money. Hence the efficacy of rebates: they target reductions in the takeout to the customers who would respond the most to them.. (Analysis of the Data and Fundamental Economics Behind Recent Trends in the Thoroughbred Racing Industry, 2004)

Sometimes I wonder. I really do. Do we actually want racing to lose market share? If we do, we are certainly doing a good job at it.

Everyone needs to work together in the current ADW impasse and the business must know where players stand. If players are not heard from and respected, we will not grow the pie, we will simply end up having less of a pie to split.

This opinion piece was submitted by a HANA member at Pull the Pocket blog spot. We will be discussing the ADW situation and offering solutions over the next few weeks; including a white paper. The paper will show what we think ADW should look like for the 21st century and beyond - it will include, but it is not limited to, open access, fair prices for all players (not just whales), and fairness to the producers - the track and horsepeople. The overall goal is one thing and one thing only - to grow the sport. This is an opinion to kick off the discussion - players matter. We matter. If you would like to join HANA click here. It’s free.

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A new program awaits backstretch workers when the New York Racing Association kicks off its summer meeting at Saratoga racetrack in Saratoga Springs, N.Y., on Wednesday, thanks to John Hendrickson and his wife, Marylou Whitney, the longtime Queen of Saratoga.

Mike Veitch wrote in the Saratogian newspaper on April 30 that Hendrickson was putting together a program for "themed" dinners every Sunday night in addition to movies five nights a week during the 36-day meeting that runs through Labor Day, Sept. 1.

The dinners are being prepared by the same caterers who do the fund-raising galas for which Marylou Whitney is so famous. Hendrickson is coordinating the program with the Racetrack Chaplaincy and the Backstretch Employees Services Team (BEST). According to Veitch’s article, the dinners will take place on the Yaddo grounds adjacent to the "Jockey Y" recreation facility on Union Avenue.

Next Sunday’s kickoff dinner, as a tribute to the many Hispanic workers on the backstretch, is a Mexican fiesta, and will be funded by Whitney and Hendrickson.

Groups or individuals funding the other dinners are: Aug. 3 (Chinese), Stewart’s Shops; Aug. 10 (Italian), Ron and Michelle Riggi, Gainesway Farm and Overbrook Farm; Aug. 17 (Cuban), Jack and Debby Oxley and Tracy and Carol Farmer; Aug. 24 (Barbecue), Price Chopper; and Aug. 31 (Thanksgiving), Three Chimneys Farm, Live Oak Plantation, and Lane’s End. Additional sponsors for the program include Ed and Maureen Lewi, Pomegranate Inc., Allerdice Rentals, Panza’s Restaurant, Dogwood Stables, NYRA, Racetrack Chaplaincy and BEST.

Movies will be shown Wednesday through Sunday nights throughout the meeting on a 9 x 12 screen, either with Spanish subtitles or in Spanish. Commercial popcorn machines have been purchased by sponsors for the movies.

"Everyone I asked to help out said ‘yes,’" said Hendrickson, recently named but not yet confirmed as a member of the reconstituted NYRA board of trustees by powerful Senate Majority leader Joe Bruno, who announced his retirement this year. "This is a way trustees should get involved," he added.

With Bruno gone, New York racing no longer will have a strong advocate in state government. David Paterson, who became New York governor in March following the sex-scandal resignation of Eliot Spitzer, has made public comments critical of NYRA since taking office. At one point he even hinted that the process to give NYRA a franchise renewal be reopened.

Paterson has an interesting family tie to the sport and to the Whitney family that he mentioned briefly during the Belmont Stakes telecast June 7. His great-grandfather was a farrier who shod Harry Payne Whitney’s Upset for his victory over Man o’ War in the 1919 Sanford Stakes. It was Man o’ War’s only career loss and it is widely believed to have brought the term "upset" into the English vernacular.

H.P. Whitney was so happy following the Sanford he gave houses to several of the men who contributed to Upset’s victory, including one to Paterson’s great-grandfather. That was the house Paterson lived in as a child, according to Hendrickson, who says the governor affectionately calls Marylou Whitney "Cuz."

I guess a governor can get away with that. Everyone else around the area calls her the Queen of Saratoga. And it’s easy to see why. She is a beloved figure who has raised money for charitable causes for decades, especially in New York’s Capital District.

One of my only experiences with Mrs. Whitney came in a very odd way. While visiting the area before the race meeting one summer a dozen or so years ago for an event at the National Museum of Racing in Saratoga Springs, I saw her in the lobby bar of the Marriott Hotel near the Albany airport. There she was in the middle of a big crowd, playing darts with college-aged kids in a fundraiser for some charity I’ve long since forgotten. Television cameras were there with live coverage of the event during the local news, and she was encouraging people to come down to the Marriott and challenge her to a game.

Her energy then was amazing, and her dedication to worthy causes like the new backstretch workers program at Saratoga remains strong to this day.

By Ray Paulick

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Saratoga typically dominates the racing scene in late July and August, so it was good news for Del Mar that the West Coast track had its opening a week earlier than the Spa this year, putting it in the national spotlight at least for a few days.

And a very good debut  it was, with the largest opening-day crowd in history – despite an increase in parking and admission prices, soaring gasoline prices and a spiraling economy. A stubborn TVG (do they have any friends left in the industry?) continues to make it difficult for fans to wager online, and that factor had to contribute to a 10% drop in handle.

Last year’s problems with the newly installed Polytrack (the afternoon heat softened the wax, making it more like mushytrack) seem to have been corrected, and the race times in the afternoon are several seconds faster than they were in 2007. Just as important, the track is safe – so far. But horseplayers can’t be blamed for holding back a bit on their Del Mar wagers if they’re uncertain about the kind of track they’ll be getting. More closers than front-runners seem to be winning, but the track is playing fair.

Speaking of playing fair (or not), why did the controlling members of the Breeders’ Cup board of members and trustees gang up to keep NetJets founder Richard Santulli off the 14-member operating board of directors in a recent election? Santulli is a highly respected businessman who brings everything to the table you’d think the Breeders’ Cup board needs. Apparently, however, he lacked the one thing the controlling members wanted: a nodding head.

One fellow the controlling board members favor is Terry Finley, the founder and president of West Point Thoroughbreds, a successful racing partnership. The week after Finley was re-elected to the Breeders’ Cup board, the organization teamed up with West Point in a creative promotion  for the popular ESPY Awards on ESPN that gave all the participating celebrities and athletes the opportunity to redeem a free share in a West Point horse and enjoy a free, VIP trip to the Breeders’ Cup championships. West Point in turn would be able to promote the celebrity/athletes as a West Point partner. No matter how innocent the choice of West Point may have been, it’s amazing no one within the Breeders’ Cup saw the potential to read this as another good ol’ boy deal of “we’ll scratch your back if you scratch ours.”

A guest editorial submitted to the Paulick Report by Kentucky Congressman Ed Whitfield is sure to have heads shaking with disagreement in some corners over Whitfield’s proposal to amend the Interstate Horseracing Act of 1978 to address some of the issues the industry is struggling with, including medication. Kentucky’s newly configured racing commission and the California Horse Racing Board took steps this past week to regulate anabolic steroids, and that’s a good thing, but Whitfield’s efforts may be gaining momentum in Congress.

A Paulick Report reader called it typical for the “land of fruits and nuts” when Calilfornia Gov. Arnold Schwarzenegger appointed former actress Bo Derek  to the California Horse Racing Board, but what’s wrong with having someone whose life is largely committed to the protection of animals (horses in particular) on a governmental board that regulates horse racing? We weren’t the only one to call the appointment a “10.”

Interesting that on the same day the Paulick Report was writing about the death of print coverage of horse racing (at least in the Los Angeles Times, the nation’s fourth-largest newspaper that axed its two racing writers) , Jess Jackson was stimulating interest with an online poll asking the public to help him guide Curlin through the rest of his racing career. Sure, it’s a gimmick, but it’s a smart one that got a lot of people talking about racing’s biggest star instead of racing’s biggest problems. Within a couple of days, more than 10,000 people had voted in the poll. Go here  to vote or see the current results of the poll.

Anyone else wondering what’s up at the Downs? Churchill Downs, the publicly traded company cut a couple of dozen jobs  this past week in the wake of a falling share price. CEO Bob Evans hasn’t pulled a rabbit out of his hat yet, and neither has the team of techies he put together in California’s Silicon Valley to develop new products and ideas. Confrontations with horsemen over distribution of account wagering revenue haven’t been productive to Churchill Downs or the industry. 

By Ray Paulick

Copyright ©2008, The Paulick Report

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Though a leading Thoroughbred owner said "it didn’t pass the smell test," there was nothing fishy about a Breeders’ Cup board member getting a potentially huge publicity boost when the Breeders’ Cup placed a free ownership interest in some of his horses in 125 "gift bags"  distributed to prominent celebrities and athletes attending Wednesday night’s ESPY Awards in Los Angeles. At least that’s the word from the Breeders’ Cup executive who put the promotion together.

ESPY host Justin Timberlake, presenter Will Ferrell and star athletes ranging from David Beckham to Brett Favre and Danica Patrick were among those who received the 125 gift bags loaded with goodies: apparel, luggage, jewelry, technology, spa treatments and entertainment experiences were among the 50-plus freebies stuffed in each bag and handed out to the celebrities attending the ESPY Awards, which was taped Wednesday and airs Sunday night on ESPN at 9 p.m. Eastern.

According to Peter Rotondo, vice president of media and entertainment for the Breeders’ Cup, Indy car driver Helio Castroneves went through the gift bag for the ESPY telecast and identified the Breeders’ Cup package, which included a VIP experience at this year’s event and a small ownership interest in a horse, as the "number one" giveaway because "I get to own a horse." The certificate included a large cardboard cutout of a racehorse.

The horse ownership is a 2% stake in one of three Thoroughbreds offered by New Jersey-based West Point Thoroughbreds. To claim ownership to the non-transferable certificate, the athlete or celebrity must call West Point to redeem the certificate and agree to allow their name to be used in future promotions by West Point. 

Rotondo said West Point was the only racing partnership contacted about the promotion. West Point is operated by Terry Finley, a member of the 14-member Breeders’ Cup board of directors who was recently re-elected in a hotly contested vote July 11 among the 48-member board of members and trustees. Finley is also a close friend of Breeders’ Cup CEO Greg Avioli. 

And those factors, a competing racing partnership owner said, "didn’t pass the smell test."

"That is so predictable," another partnership operator said. "This is a great opportunity for West Point to promote its business. It was an inside job, obviously. It’s just the way they go about their business at the Breeders’ Cup." 

A third individual, who sits on the board of members and trustees, called the non-bid selection of West Point "outrageous," adding: "It’s clear the Breeders’ Cup board doesn’t feel accountable to the members and trustees or to the rest of the nominators who fund the entire organization."

Peter Land, the chief marketing officer and Rotondo’s boss at Breeders’ Cup, defended the practice. "My job is to work with the board," Land said. "Different board members offer up different ideas. We have a great relationship with our board members, and have worked with (board members) R.D. Hubbard and B. Wayne Hughes on other projects. Terry (Finley) was very receptive to (the ESPY promotion), so we worked with his marketing people."

Asked whether it was "free" publicity for West Point, Land said that it wasn’t: "He’s got to give up partnership interests in the horses," Land said.

Rotondo said he gave no thought to whether or not Finley was a board member when he contacted his close friend, Justin McDonald, a former associate of Rotondo from his days at the NTRA who is now doing marketing work for West Point.

"The whole point of doing this was to get a little buzz for the Breeders’ Cup," Rotondo said. "The second thing was, let’s do something cool to give people something to talk about it. Third, it’s great for West Point if someone redeems the certificate. When I brought the idea to Justin, who’s like a brother to me, he said, ‘We’ll do it.’"

In hindsight, Rotondo admitted the selection of West Point "could" give them a leg up on other racing partnerships in the competitive marketing battle for new investors and racehorse partners. 

"Look, it’s good for the whole sport if Justin Timberlake wants to own a piece of a horse," Rotondo said.

And it’s even better for West Point Thoroughbreds to land a celebrity racehorse owner.

Rotondo’s concept was extremely clever, and if anyone redeems the ownership certificates it’s a winner. It’s a good way to generate publicity involving the Hollywood celebrities the Breeders’ Cup desperately want to bring to their championship races at nearby Santa Anita Park this year and in 2009. It’s too bad other partnerships weren’t invited to participate or even bid on the promotion.

An unintended consequence of this promotion will be hard feelings among those who were left out of the process.

By Ray Paulick

Copyright ©2008, The Paulick Report

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Churchill Downs Inc. notified a number of its Louisville, Kentucky, employees today that their services will no longer be needed, the Paulick Report has learned. The job cuts also extend to Bloodstock Research Information Services, the Lexington, Kentucky-based information and wagering company purchased by CDI a year ago.

According to sources, as many as a dozen full-time Churchill Downs employees were terminated , including senior director of marketing Brent Alexander, who was credited with creating a contest to name a "chief party officer" for the infield Kentucky Derby week. According to an article published earlier this year in the Evansville Courier & Press, Alexander was a West Point graduate who worked in the marketing departments of the Tennessee Titans and Chicago Bears of the National Football league.

Other terminated staff involved in group sales, backstretch security, and the on-site greenhouse in Louisville, according to sources. Up to 12 employees at BRIS were believed to be shown the door. It is not known whether any of the cuts were made within the relatively new product development team located in California’s Silicon Valley.

This is at least the third round of job cuts at Churchill Downs since Bob Evans replaced Tom Meeker as CEO of the company two years ago.

Shares in the publicly held company (symbol: CHDN  have fallen sharply in the last few months from a 52-week high of 57.55. Share prices jumped nearly 3% today with mid-afternoon trading at 34.58 per share.

By Ray Paulick

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Del Mar racetrack on opening day is a little like that restaurant Yogi Berra used to talk about: "No one goes there anymore; it’s too crowded," he has often been quoted as saying.

There were 43,459 on-hand Wednesday, the largest opening in the track’s history and the second-largest crowd ever behind the 44,181 who turned out for the 1996 Pacific Classic when Cigar was upset by Dare And Go.

Many of the daily regulars at the track where the turf meets the surf stay home on opening day to avoid the gridlock that begins on the city streets and extends to the admission gates and throughout the facility. 

Some of the attendees might have been aware there was horse racing going on throughout the day, but as always more people were at the Del Mar opening to see and be seen rather than watch Thoroughbreds racing. Some also might have noticed that the Del Mar Thoroughbred Club doubled the price of clubhouse admission just for opening day from $10 to $20, but that had no apparent effect on attendance. Neither did the $4.75 per gallon gas prices or the foreclosure crisis that has hit California particularly hard.

The decision to raise opening day prices was made before some of the problems in the economy surfaced, said Joe Harper, the longtime president of Del Mar. "As someone who takes nine kids to Sea World, coming to Del Mar is still a pretty good deal," Harper said.

The track’s marketing team said past surveys indicated to them that a majority of the opening day fans weren’t aware of admission prices. Track regulars who are in the Diamond Club rewards program pay just $3 for grandstand admission and $6 for the clubhouse.

This was the second year for the synthetic Polytrack surface, and Del Mar has changed its maintenance procedures to speed up the track in the afternoons. There were numerous complaints by horsemen in 2007 that the surface became too slow in the afternoon heat, especially compared to its condition during morning training hours. The temperature of the surface is now being monitored throughout the day, and water is added to cool it down whenever necessary. That process began shortly after training hours on Wednesday.

The result was a much faster track, with several track records set throughout the day.

No opening day would be complete without the "One and Only Truly Fabulous Hats Contest," which has become a popular tradition at the track. Some of the hats are fashionable and others are outrageous and ridiculous. Some of them come with message. One of the day’s winners, in the "best flowers" division, was Crystal Chessher, whose pink floral hat was a tribute to the Susan B. Komen Race for the Cure breast cancer awareness charity. Dozens of ribbons attached to the flying saucer-sized hat had the names of breast cancer patients who were an inspiration for Chessher.

On a far lighter note, one of the finalists in the "funniest or most outrageous" category wore a Batman costume topped off by a bizarre horse’s head hat. He was accompanied by someone dressed as the Joker. Batman was chased out of the winner’s circle area by track officials before the post parade for the day’s seventh race for fear he might scare the horses.

It’s a good thing there weren’t any young children around.

By Ray Paulick

Copyright ©2008, The Paulick Report

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UPDATE: On Thursday morning, according to sources, TVG exercised its exclusivity and told the Thoroughbred Owners of California that it would not allow some of the other account-wagering companies to offer online betting on Del Mar. As a result, TwinSpires.com and XpressBet customers in certain states may only bet on Del Mar using their telephone, and not via the Internet as previously allowed.

 A last-minute deal between several account-wagering companies and the Thoroughbred Owners of California gave the companies permission to offer on-line and telephone betting on Del Mar, which launched its summer meeting Wednesday.

Drew Couto, president of the owners’ organization, said several account-wagering companies agreed to terms just prior to the 2 p.m. (Pacific) first post, but that things "went sideways" with TrackNet Media, which negotiates on behalf of Churchill Downs’ TwinSpires.com and Magna Entertainment’s XpressBet. A little over two hours later, Couto said, TrackNet Media also agreed to the conditions sought by the TOC. The Paulick Report heard from horseplayers who said they were able to watch and wager on Del Mar throughTwinSpires.com midway through the opening-day card.

The deal, Couto said, calls for the same undisclosed rate structure that was in place in 2007, but requires the account-wagering companies to enter into non-binding discussions with the Thoroughbred Horsemen’s Group, which represents TOC and other horsemen’s organizations throughout the country in contract negotiations with account-wagering companies.

The deal essentially says "let’s begin a dialogue" between the wagering companies and the Thoroughbred Horsemen’s Group, Couto said.

The Del Mar Thoroughbred Club is in the final year of its contract with TVG, which has the exclusive rights to televise Del Mar’s races. Until Wednesday, it appeared horseplayers wanting to bet on Del Mar would have to wager through TVG or its sub-licensee, Youbet.com. The deal now allows horseplayers in many (but not all) states to bet on Del Mar through most of the account-wagering platforms. Couto said the companies representing approximately 90% of the 2007 account wagering handle are on board for the 2008 meeting.

The agreement continues a program pushed by the California Horse Racing Board, which gives fans the opportunity to wager on all California tracks through their preferred account-wagering company and not have to hold multiple accounts.

By Ray Paulick

Copyright ©2008, The Paulick Report

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Enough with the titillating shots of Bo Derek from the movie "10" or the Playboy cover and photo spreads - not to mention that semi-nude, bareback publicity photo from "Bolero." That was nearly 30 years, for God’s sake. 

Well, how about just one great shot of Bo from her acting days, especially if it’s related to horses? After all, her 2002 autobiography was entitled "Riding Lessons: Everything That Matters in Life I Learned From Horses." 

The appointment of Bo Derek to the California Horse Racing Board by her friend, Arnold Schwarzenegger, the former actor and one-time anabolic steroids-abusing bodybuilder who is now governor of the Golden State, is certain to draw derisive laughter from some corners of the Thoroughbred industry. But that’s not fair: Bo knows horses.

She may be a high-school dropout , but there’s a lot about horses - especially Thoroughbreds — that you don’t have to go to school to learn For example, horses shouldn’t be abused , and shouldn’t be shipped thousands of miles to be carved up and served on someone’s dinner plate in Belgium.

Bo Derek has lived an exemplary life on behalf of our equine friends. She breeds and owns Iberian horses, and has been a longtime advocate for horses and other animals through her work with the Animal Welfare Institute. She has been around racing for a number of years, and not just to have her picture taken on Millionaire’s Row on Kentucky Derby day.

A couple of years ago, Ms. Derek was a guest of honor at Darby Dan Farm in Lexington, Kentucky, for a fund-raiser involving one of the farm’s stallions, Perfect Soul. The horse’s owner Charles Fipke, the Canadian diamond miner and adventurer with a very good eye for fillies, arranged to have the proceeds from 10 seasons to Perfect Soul divided evenly among three charities of Bo Derek’s choosing: the Animal Welfare Institute, Galapagos Forever Fund and the Thoroughbred Retirement Foundation. It was a good publicity ploy, helping drive interest in the stallion for his second year in the breeding shed, but the bottom line was she did it to raise $150,000 for a good cause. I’m sure she’s raised that much and more for additional animal welfare causes, using her celebrity as a magnet.

I was starstruck at the Darby Dan event, circling around Ms. Derek every chance I had and waiting for the right time to introduce myself and ask if I could get a souvenir snapshot of this ageless beauty from "10" with my daughter. When I built up the nerve to ask, she put me completely at ease, and even suggested that I might want to have my picture taken with her, too. She was, as Darby Dan owner John Phillips pointed out today while recalling the reception, "a very genuine person."

On the way home that night, my daughter made me feel really old. "Who’s Bo Derek?" she asked. "She’s really nice." I explained her early movies and the impact she had on young and old men but should have said simply: "She’s a horse lover."

I would be very surprised if Ms. Derek is up to speed on the many more technical aspects that the California Horse Racing Board is required to study and regulate. That’s OK, they’ve got lawyers for that. I very much doubt there will ever be anyone on this board who has a greater interest in protecting the welfare of horses.

The appointment of Bo Derek by Gov. Schwarzenegger was a perfect "10." 

By Ray Paulick

Copyright ©2008, The Paulick Report

The two full-time horse racing writers at the Los Angeles Times, Larry Stewart and Bob Mieszerski, were among the 150 editorial employees of the struggling paper to be terminated on Monday.

Times publisher David Hiller also was axed, the paper reported on Tuesday.

The Los Angeles Times has the fourth-largest circulation among daily papers in the United States, with circulation of over one million. Like many mainstream media print publications, however, the Times has fallen on hard times and has gone through several rounds of staff and budget cuts. The Times is owned by the Tribune Co. of Chicago, which also owns the Chicago Tribune, Baltimore Sun and eight other newspapers. The editor of the Chicago Tribune also resigned Monday, suggesting turmoil at that paper, too.

News of the terminations of Stewart and Mieszerski was first reported at www.sportsjournalists.com and picked up on a fan’s forum on the Del Mar Thoroughbred Club’s Web site. The Paulick Report confirmed the terminations through sources.

The loss of the two full-time racing writers came just before the opening of the Del Mar meeting on Wednesday and three months before the Breeders’ Cup comes to Santa Anita Park in the Los Angeles area. It remains to be seen whether anyone will replace Stewart and Mieszerski, who both were longtime employees of the paper. Stewart was a media critic before moving to the horse racing beat about a year ago (following the retirement of full-time racing writer Bill Christine, who took an early buyout). Mieszerski reported on racing and was a handicapper for the paper, making selections and a graded morning line for the Southern California tracks. 

There are no longer any writers working full-time on horse racing at California  daily newspapers, with the exception of those employed by Daily Racing Form. There are only a handful of full-time racing writers working at papers in the U.S.

UPDATE: In Wednesday’s San Diego County edition of the LA Times, there was no reference to opening day at Del Mar, and no listing of entries or handicapping selections. The LA Times apparently has completely dropped its horse racing coverage. This doesn’t bode well for the Breeders’ Cup later this year.

By Ray Paulick

Copyright ©2008, The Paulick Report