Archive for the ‘California’ Category
Wednesday, June 3rd, 2009
By Ray Paulick
The Paulick Report has learned that the Thoroughbred Owners of California has submitted an “expression of interest” to buy Santa Anita Park, which is in the process of being sold as part of the bankruptcy proceedings involving the track’s current owner, Magna Entertainment. According to sources, TOC’s plans would be to form a non-profit company to own and operate the Arcadia, Calif., track that averaged nearly 33,000 in daily on-track attendance as recently as 1985 but sees about one-fourth of that number today.
Drew Couto, president of TOC, confirmed Wednesday night that the owners’ organization has filed an intention to bid on Santa Anita but would not offer any additional comment. It is not known if there are individual investors behind the proposed bid or if the funding would be institutional.
The paperwork filed with the expression of interest to bid on Santa Anita is only the first step in the process. TOC will then have to be ruled as a “qualified” bidder after Miller Buckfire and Co., the bankruptcy specialist firm handling the sale of the Magna tracks, reviews its application. The deadline for expressing an interest in bidding was May 27, and formal bids must be submitted by July 31. If necessary, an auction on the properties may take place in September. (Click here for more information on bankruptcy bidding processes.)
There have been many rumors circulating through Southern California that another bidder for the track represents Chinese interests. Internet entrepreneur Halsey Minor has also expressed an interest in acquiring some of the tracks through the purchase of Magna Entertainment’s accumulated debt. MI Developments, which like Magna Enterainment was a spinoff of the automotive giant Magna International, submitted a “stalking horse bid” for a number of the tracks in the original bankruptcy filing in March. Since then, however, MI Developments, the largest shareholder in Magna Entertainment, has backed away under the threat of litigation from many of its institutional shareholders.
There are profound fears in the California Thoroughbred community that if Santa Anita is sold to a development company, racing in the Golden State would soon be extinct. Bay Meadows racetrack in Northern California has been torn down for future development by the Bay Meadows Land Co., which also owns Hollywood Park, where plans for mixed-use development could kill live racing at the end of this year. If Santa Anita is sold for development purposes, the only major track remaining in Southern California would be the Del Mar, which races from mid-July to early September. Gov. Arnold Schwarzenegger has listed Del Mar, which is owned by the state of California, as a potential property the financially troubled state may attempt to sell.
A successful bid by TOC on Santa Anita Park could go a long way toward preserving the California racing industry.
Magna Entertainment also owns Gulfstream Park in Florida, PImlico and Laurel in Maryland, Golden Gate Fields in Northern California, Lone Star Park in Texas, Remington Park in Oklahoma, Thistledown in Ohio, and Portland Meadows in Oregon.
Santa Anita Park, which opened in December 1934, was purchased by Magna chairman Frank Stronach for $126 million in 1998.
TOC was incorporated in 1993 and eventually replaced the California Horsemen’s Benevolent and Protective Association as the recognized organization representing horse owners in the state.
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Tags: california horse racing, drew couto, Frank Stronach, horsemen's benevolent and protective association, magna bankruptcy, magna bidding process, Magna Entertainment, Miller Buckfire, Paulick Report, Ray Paulick, santa anita park, thoroughbred owners of california, toc
Posted in California, Magna Entertainment, santa anita park | 10 Comments »
Tuesday, May 19th, 2009
By Ray Paulick
Betting windows at 33 simulcast sites remained open on Saturday’s Los Angeles Handicap at Hollywood Park until after the Grade 3 stakes race had been run because they did not receive a stop betting signal from the Scientific Games tote system that contracts with California racetracks to handle pari-mutuel wagering.
According to Eual Wyatt Jr., the Inglewood, Calif., track’s general manager, all of the money wagered at those sites – properly or improperly—was “thrown out of the pools” and refunded. Wyatt did not know the amount. He said the 33 simulcast sites all went through a single betting hub. (Click here to view the sites affected and the amount wagered at those sites.)
The incident is under investigation by the California Horse Racing Board.
The past-post wagering was first reported by Mike Maloney, a Lexington, Ky.-based professional horseplayer and industry watchdog on betting issues, in an article posted on the Horseplayers Association of North America web site. Maloney, a frequent speaker at industry gatherings on the issue of integrity of totalizator systems, was recently named vice president of HANA.
Terry McWilliams, a West Coast representative for Scientific Games Racing (formerly Autotote), would not comment on Saturday’s betting irregularities, saying, “I am not authorized to speak on behalf of the company. “ McWilliams referred the Paulick Report to a corporate spokesperson who did not immediately return a phone call. Scientific Games Racing president Brooks Pierce also could not be reached for comment.
Here is one explanation of the incident provided to Hollywood Park officials by George Brannen, Western Regional Director of Scientific Games Racing, in an email provided by the California Horse Racing Board to the Paulick Report. “At stop betting of race 9 for Hollywood Park we were not receiving pools from a group of 33 imports,” Brennan wrote. “All of these import processes were running on the Slave system. We had 7 other systems in the room wagering on Hollywood and of those 4 were on the Slave system and did not get the stop betting message from the California tote. The other 3 systems imports that were on the Master system did get the stop betting and shipped pools final on time. Because of this we were pretty sure that a stop betting message was not sent to any of the 33 imports and made the decision to clear and close those 33 sites. We then stopped the Slave system, promoted the Clone to become Slave, restarted all the Golden Gate imports that were also hung on the old Slave so that Golden Gate would not be delayed. A more detailed report will follow.”
“This is my first recollection of this (type of wagering irregularity),” Wyatt said. “The good thing is whatever mechanical error occurred, it was discovered and those bets didn’t count.”
At least that’s what Scientific Games apparently is telling Hollywood Park officials. This isn’t the first irregularity in California regarding the tote company, which in 2008 agreed to a settlement with the California Horse Racing Board over software errors related to “quick pick” wagers. Scientific Games knew of the software flaws for months, yet failed to notify the tracks or CHRB. It wasn’t until a horseplayer discovered the flaws while making “quick pick” superfecta wagers on the 2008 Kentucky Derby that the software problem was made public.
Other Scientific Games tote problems have been reported in other states, including a Philadelphia Park past posting incident last June 28 when wagering sites in Florida did not receive a stop-betting signal from a Scientific Games hub. Maloney reported a past-posting incident on a race originating at Fair Grounds in New Orleans, which also used Scientific Games. The most infamous Scientific Games/Autotote incident, however, involved the 2002 Breeders’ Cup Pick Six scandal when company employees hacked into the system to make Pick Six wagers long after the betting cutoff and took home the entire pool.
Kirk Breed, executive director of the California Horse Racing Board, has ordered an investigation by his agency into the latest Scientific Games mistake. “I have read Scientific Games’ explanation and did not understand what it said,” said Breed. “It is their fault. They basically said it’s a malfunction, and I accept that as their malfunction, so they are taking responsibility. They’re the ones that are going to be charged with responding to whoever lost money or was left out.”
Is Breed satisfied that the past-post wagers on the Los Angeles Handicap were excluded from the pools? “I don’t know. I’m not satisfied with anything at this stage,” he said. “All I have is an explanation from Scientific Games sent to Eual at Hollywood Park and which he sent it to me immediately. He and I talked yesterday. Frankly, I do not understand what they are talking about.
“It’s like the quick-pick," Breed added. “It had been going on for nine months and they didn’t do anything about it and didn’t tell us about it. This is why we are trying to get some real-time monitoring in this state so we can have an independent source looking at our wagering, rather than depending on Scientific Games.”
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Tags: breeders, breeders' cup pick six scandal, California Horse Racing Board, CHRB, eual wyatt, hana, Hollywood Park, Horse Racing, horseplayers association of north america, kirk breed, mike maloney, pari-mutuel wagering, past-posting, Paulick Report, Ray Paulick, scientific games
Posted in California, Regulatory Issues, Tote System, Wagering | 26 Comments »
Tuesday, March 10th, 2009
By Ray Paulick
Racing in Northern California, scrambling to recover from the loss of Bay Meadows racetrack, which was closed in 2008 for planned development, also faces the bulldozing of Golden Gate Fields, the parent company of bankrupt owner Magna Entertainment stated in a Securities and Exchange Commission filing on Tuesday.
MI Developments (MID, stock symbol MIM) is the majority shareholder in Magna Entertainment (MEC, stock symbol MECA). When Magna Entertainment filed for chapter 11 bankruptcy March 5, it revealed a $195-million stalking horse bid from MI Developments for several of the racetrack properties, including Golden Gate Fields. In an amendment to a Form 13D filing on Tuesday, MI Developments said, if successful in acquiring Golden Gate, it will “immediately commence seeking all required approvals to develop the property for commercial real estate uses.” The filing goes on to say, "Racing at Golden Gate Fields would cease prior to commencement of construction on the rezoned property.”
MI Developments and Magna Entertainment are both spinoffs from the auto parts giant, Magna International. All three companies are controlled by Thoroughbred owner and breeder Frank Stronach.
Click here to access the filing; the reference to development of Golden Gate Fields is on page two.
Drew Couto, president of Thoroughbred Owners of California, told the Paulick Report Tuesday night he had assurances as recently as last weekend that MI Developments was only pursuing development of excess property at Golden Gate, and that it would not affect horse racing. Couto said he was told the commercial development would be along the lines of developer Rick Caruso’s "Shops at Santa Anita," slated for the Arcadia track’s north parking lot.
"If this is true, this represents a serious change of position of what was expressed to me and TOC last week," Couto said. "We’ll be following up with MEC and MID to see if this is accurate."
Magna Entertainment had previously sought zoning approvals for a portion of the Golden Gate Fields property, filing plans for a retail, entertainment and lodging development in 2002 in partnership with Caruso. After a few years and a groundswell of community opposition, the push for rezoning was dropped. Many local citizens and environmental groups want the the track property, located on the eastern shoreline of the San Francisco Bay, to be turned into public parklands.
Complicating matters for potential rezoning and development is the fact Golden Gate Fields is located in two cities: the majority of the property, including the section Magna previously sought to develop, is in Albany. A smaller portion, including the stable area, is in Berkeley. Both cities are conservative when it comes to commercial development, particularly on wetlands and shoreline property.
So why would MI Developments say it will seek rezoning of the track with two municipalities that have shown limited interest in commercial development? There is some speculation MI Developments and its board are reacting to institutional shareholders who have threatened possible legal action against MI Developments directors for potential breach of fiduciary responsibility. Those shareholders have expressed previous disagreement with the company’s decision to extend credit to Magna Entertainment and pump millions of dollars into the racing operations. Golden Gate Fields would be worth much more as commercial real estate than it is as a racetrack, and its sale or development might help alleviate some of the criticism from those shareholders.
Bay Meadows, located in San Mateo, opened in 1934 and had been California’s oldest continually operating racetrack. Since being closed and meeting the wrecking ball last year, there’s been no progress on development, and a pile of rubble sits as a reminder of what once was a thriving racetrack.
Golden Gate Fields, which this year inherited most of the dates Bay Meadows ran, held its inaugural race meeting in 1941. It’s anyone’s guess when Northern California’s last major track will hold its final race.
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Tags: drew couto, Frank Stronach, golden gate fields, Magna, magna bankrupt, magna bankruptcy, Magna Entertainment, magna entertainment bankrupt, magna entertainment bankruptcy, meca, mi developments, mim, Paulick Report, Ray Paulick, rick caruso, santa anita, thoroughbred owners of california
Posted in California, Magna Entertainment | 7 Comments »
Monday, March 9th, 2009
By Ray Paulick
Responding to complaints from racing secretaries that horses were being claimed in California races and immediately shipped out of state – often to tracks with purses enriched with slot machine revenue — the California Horse Racing Board in 2005 amended its rules to prohibit any claimed horse from racing outside of the state (except in a stakes race) until 60 days after the end of the meeting at which it was claimed.
The problem with the restrictive regulation, alleges horse owner Jerry Jamgotchian in a lawsuit filed on Monday in U.S. District Court for the Central District of California, is that it is unconstitutional because it violates the Commerce Clause of the U.S. Constitution. Jamgotchian filed the action against the CHRB, its executive director, Kirk Breed, CHRB chairman John Harris and vice chairman David Israel.
Click here to read CHRB rule 1663. Click here for a copy of Jamgotchian’s lawsuit and attached exhibits.
Jamgotchian, no stranger to lawsuits against the CHRB, isn’t the only one who believes the section of CHRB rule 1663, prohibiting a horse claimed in California from racing out of state for an extended period of time, is unconstitutional. In 2003, when the proposed rule was discussed for at least the second time (it also was brought up in 2001), the state’s deputy attorney general, Derry L. Knight, provided informal advice to the board to the effect that the rule, if challenged, would be “found invalid as a violation of the Commerce Clause.”
“A California restriction on the out-of-state racing of a California-claimed horse would, as noted by the opponents of the suggested CHRB rule 1663 amendment, have a very direct extraterritorial effect on the owner of that animal,” the deputy attorney general wrote to then-executive director Roy Wood in September 2003. “Other states imposing similar, or perhaps conflicting, restrictions on the out-of-state racing of horses claimed in their states could lead to the very inconsistent projection of one state regulatory regime into the jurisdiction of another state that (the 1989 Supreme Court ruling, Heely v. Beer Institute) counsels the Commerce Clause is intended to prevent. … It would seem undeniable that the proposed 60-day post-race meeting prohibition of out-of-state racing of a California-claimed horse would have the effect of controlling commercial activity occurring wholly outside the boundary of the state.”
In other words, the rule restricts owners from doing what they feel is in the best interest of the horses they own, and places the CHRB in the position of dictating racing regulations to other states.
The CHRB has issued fines and suspensions against horsemen violating rule 1663. In a 2007 case, CHRB licensee Edgar Clarke was fined $6,000 and suspended 60 days for violating rule 1663. Other CHRB licensees have also had their horses scratched by CHRB officials in other states for violation of this rule.
Jamgotchian says he claimed a filly named Look Closely at Del Mar on Sept. 3, 2006, three days before the end of that track’s meeting, and entered her within the 60-day “jail time” in a race at Turf Paradise in Arizona on Oct. 27. Following a call to a Turf Paradise steward from Ingrid Fermin, then the executive director of the CHRB, Jamgotchian alleges, the filly was scratched because of the 60-day clause in rule 1663.
He said last month he is interested in the private purchase of a recently claimed horse for the purpose of sending it out of state and sought a clarification of the rule from the CHRB’s executive director.
Prior to filing the suit, an attorney retained by Jamgotchian sent a letter to the CHRB asking that the claiming rules be suspended in order for both parties to avoid litigation. The CHRB has not acted on that request.
Amending the rule so that horses could race out of state 60 days after being claimed (rather than 60 days after the close of the meeting at which they were claimed) was discussed at last month’s meeting of the CHRB. Staff analysis prepared for the discussion publicly disclosed the 2003 letter from the attorney general’s office for the first time. The vote to approve the restrictive clause came two years after the attorney general’s advised the CHRB that it was unconstitutional.
John Harris, a member of the board since 2000 and currently the CHRB’s chairman, mentioned potential legal problems with the rule when it was proposed at a 2001 board meeting. “We’re really dealing in interstate commerce, which is not really one of our expertise areas in the Racing Board,” Harris said at the time. “And we can get ourselves into trouble and run up a lot of legal bills and lose.”
Thoroughbred Owners of California opposed the restrictive rules proposed in 2001. Jim Ghidella, then with the TOC, commented: “We believe it is a violation of the Interstate Commerce Clause. I think any time you put a restrictive covenant on property, any kind of property … you lessen the value.”
The proposal came up again in July 2003 when trainer Roger Stein spoke at a board meeting in support of the restrictions. Stein said he claimed numerous horses at Emerald Downs in Washington to send to California, and Washington regulators quickly put in restrictive rules to prevent that from happening again. No action was taken by the CHRB at the July 2003 meeting, and only three months later the board received the opinion from the deputy attorney general.
In 2005, however, after racing secretaries again said horses were being claimed to be sent out of state, the board approved the new restrictions to claiming rules. Harris again commented that “it could be argued on an interstate commerce issue that we’re trampling on that.”
When discussions to change the claiming rule were held last month, CHRB member Jesse Choper, the Earl Warren professor of public law at the University of California school of law, said he agreed with the position taken by the attorney general’s office in 2003. Still Choper said the board “ought to stick with (rule 1663) until someone challenges it …”
“Until we get caught – I mean, challenged,” Harris interjected, drawing some laughter. “Yeah,” said Choper.
“Caught’s kind of a severe term,” Harris added. “But, I mean, that’s what it really amounts to, which is the one reason I was leaning toward a lesser period of time, because that lessens the challenges that might be out there.”
Jamgotchian, who recently won another legal battle against the CHRB in the court of appeals concerning the role of stewards, seems more than willing to offer that challenge. His action seeks the rule be overturned and that he be reimbursed for the cost of the suit, including attorney’s fees.
“We believe that the Federal Court will send a clear message to the CHRB to strike this oppressive rule and hope that by eliminating this rule many recently claimed horses from other states will relocate to California,” Jamgotchian said in a press release.
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Tags: California Horse Racing Board, CHRB, claiming restrictions, commerce clause of the U.S. constitution, david israel, derry l. knight, edgar clarke, ingrid fermin, jamgotchian, jerry jamgotchian, jesse choper, jim ghidella, john harris, kirk breed, roger stein, roy wood, rule 1663, thoroughbred owners of california, toc
Posted in California, California Horse Racing Board, Regulatory Issues, Uncategorized | 6 Comments »
Thursday, March 5th, 2009
By Ray Paulick
(UPDATE: Magna Entertainment filed for Chapter 11 bankruptcy protection today. Click here for the company press release, with details on the filing.)
What a long, strange trip it’s been.
Hard to believe, but it’s been just over 10 years since Frank Stronach dove head-first into racetrack ownership with his December 1998 purchase of Santa Anita Park. Or perhaps I should say he did so with his company’s purchase of Santa Anita, since the 76-year-old Canadian auto parts magnate and Eclipse Award-winning owner and breeder has been careful not to spend too much of his own money on any of the racetrack ventures.
The strong-willed Stronach was hailed by many, including this writer, as a savior when he first rode into Southern California and purchased Santa Anita for $126 million. The historic racetrack was then owned by Meditrust, a real estate investment trust that had little to no interest in horse racing, and there were concerns about the sport’s future at the “Great Race Place.”
Stronach had big plans: a new stable area; a gated community to replace the infield parking lot; a grand entrance hall of sorts where horses of all breeds would be in the spotlight and robust women in lederhosen would serve an endless supply of cold beer. “I have no plans to move the mountains,” he joked, in a reference to the San Gabriel Mountains that serve as one of American horse racing’s most beautiful backdrops amidst concerns that he was going to change Santa Anita too much.
One of his biggest early supporters was the late Bob Lewis, a major horse owner and industry leader who had been going to the races at Santa Anita for decades. At a meeting Stronach conducted with horsemen who were worried that Santa Anita’s traditions would be thrown out the window, Lewis stood up and said:“Frank, you and I have had our arguments on the track, but as an owner I want to thank you for your magnanimous willingness to go ahead with your plans for Santa Anita. You’re going to be a breath of fresh air for this place.”
Stronach invested in some capital improvements, adding the new Frontrunners restaurant atop the grandstand and making Santa Anita’s track apron more appealing for railbirds. But big plans for a new stable area and other improvements were put on hold while he turned attention to his growing appetite for additional acquisitions.
He purchased Gulfstream Park in July 1999 for $95 million from a Japanese company that, like Meditrust, wasn’t interested in horse racing. Optimism abounded that racing in South Florida would improve. He also acquired land in Palm Beach County north of Gulfstream and built a state-of-the-art training center.
Then came deals to buy Golden Gate Fields along with the racing license for Bay Meadows in Northern California (though not the land on which the track was located); Thistledown in Ohio and Remington Park in Oklahoma; Portland Meadows in Oregon; Lone Star Park in Texas; and Laurel and Pimlico in Maryland. He also built Magna Racino, a racetrack/casino in his native Austria (since closed), and purchased plots of land for the possible development of a new track in Northern California and another in north central Florida. He started a racing cable network, HRTV, and an account-wagering company, Xpressbet. Once, when he disagreed with something I wrote in Bloodhorse magazine, he threatened to buy that publication – and he was serious.
There were rumors Stronach was set to purchase Suffolk Downs near Boston, Emerald Downs near Seattle, Monmouth Park in New Jersey, even Fairmount Park in Southern Illinois, among other tracks. In some ways, he looked like a kid in a candy store, and racetrack owners everywhere who were looking to unload their properties were hoping to catch his eye.
By now, Stronach’s racetrack interests were part of Magna Entertainment (MECA), a publicly traded spinoff of his Magna International (MGA) auto parts company that was formed in March 2000. A few years later, another Magna International spinoff, MI Developments (MIM), the real estate branch of the parent company, became the majority shareholder of Magna Entertainment after large shareholders in the auto parts concern protested that too much of their money was being invested in racetracks.
Stronach controlled the majority of the voting shares in all of the companies because of how they stock was structured into different classes. That allowed him to handpick board members and run the companies the way he saw fit. R.D. Hubbard, a very savvy businessman and racetrack owner who has had more than a few boardrowom battles of his own, told me very early on that only a fool would make a serious investment in a company that sells a majority of its stock in non-voting shares.
There was a constantly revolving door of top managers at Magna Entertainment and at many of the company’s racetracks that made it nearly impossible to ascertain who was in charge. (Click here for a partial roster of former Magna executives.) Some good people were brought in, but were never given the chance to manage without Stronach’s hands-on supervision. Other hires were head scratchers, including the appointment of former jockey Chris McCarron as general manager of Santa Anita. Stronach even called me once to see if I was interested in running one of his racetracks, something in which I had no experience or interest. I politely declined.
Interestingly, this is not how Stronach ran Magna International or his hugely successful breeding and racing operation, Adena Springs, where management was stable for years.
Stronach himself seemed to be afflicted with attention deficit disorder, lurching from one idea or project to another. All the while Magna Entertainment was accumulating massive debt that now totals $600 million and losing hundreds of millions of dollars. “We’re turning the corner,” he would say to increasingly skeptical analysts during conference calls to review financial results. Sometimes his focus bordered on the bizarre; witness his dive-off-the-deep-end launch of Frank’s Energy Drink, which now appears to be about as successful as his racetracks. Or his latest missive on how there should be changes in determining winners of Eclipse Awards, something Stronach wrote just days before Magna defaulted on the first of several debt obligations coming due this month.
In the early years, he seemed to love the limelight that came with owning racetracks. At a public forum at Gulfstream Park in 2001 that he used as a platform to publicize his views on the industry, Stronach said with glee, “I can’t wait to tear this place down.” Sure enough he did, rebuilding what many thought was a perfectly good grandstand and spending hundreds of millions to create a racetrack (and now casino) that is widely detested. He made similar promises to tear down and rebuild Pimlico, which would have been applauded, but those plans never got off the drawing board. Of course, Magna’s history in Maryland has been tainted by their recent folly in failing to file an adequate slot machine application for Laurel, after voters approved a statewide referendum last November. The company is now the laughingstock of the Free State.
Stronach also used his prominent position as owner of the nation’s largest racing company to air his differences with the National Thoroughbred Racing Association and Breeders’ Cup, calling for democratic elections to the organizations’ boards of directors (while overlooking the fact that his own companies weren’t democratic because of the different classes of voting and non-voting stock). His ideas did have merit, and he deserves credit for helping bring greater transparency to some racing organizations.
Stronach once told me that he would “create his own Breeders’ Cup” because of differences he had with that organization. A couple of years later, he made good on that promise, creating the Sunshine Millions, an annual event at Gulfstream and Santa Anita that matches Florida-breds vs. California-breds.
The late Bob Lewis, his onetime supporter, began to publicly criticize Stronach’s comments about the NTRA and other industry initiatives. “Frank got mad and stopped talking to me after that,” Lewis told me. Then, with his broad, trademark smile, Lewis added, “So, naturally, whenever he’s at Santa Anita I go out of my way to reach out my hand and say hello to him.”
Clearly, Stronach can no longer be having fun as a racetrack owner. Though sources complain that he has surrounded himself with “yes” men at the corporate level — executives like Dennis Mills, CEO of MI Developments — he cannot help but hear the criticism that has come his way from racing fans, horsemen, state regulators, and shareholders in his various companies.
Magna Entertainment is teetering on the verge of bankruptcy, and institutional shareholders in MI Developments are threatening legal action if they feel that company’s board of directors breaches its fiduciary responsibility by extending additional credit to Magna Entertainment. Though some of its tracks are performing moderately well in this desperate economy, it’s too little too late, and the debt load is more than the company can absorb.
It’s sad, really, when I think back to the energy (sans Frank’s Energy Drink) and commitment Stronach brought to this endeavor 10 years ago. He had ideas – some good and many bad – that he felt could help reinvigorate racing. I have no doubt that his intentions were always to make Thoroughbred racing more appealing and successful. But his appetite for domination of the industry and his “my way or the highway” management style were a recipe for disaster. Several former Magna executives told me they tried to talk Stronach out of many bad decisions, but he seldom paid attention to them.
“You’ve got to listen, right?” Stronach said during a horsemen’s meeting at Santa Anita in April 1999. Unfortunately, he failed to take his own advice over most of the last decade. Now he’s paying the price, but so is the rest of the Thoroughbred industry. No one can be certain where those bad decisions will take us.
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Tags: chris mccarron, dennis mills, Frank Stronach, frank's energy drink, gulfstream park, HRTV, Magna, magna bankrupt, magna bankruptcy, Magna Entertainment, magna entertainment bankrupt, magna entertainment bankruptcy, magna international, magna racino, meca, mi developments, mim, Paulick Report, Ray Paulick, santa anita, santa anita park
Posted in California, Magna Entertainment, Maryland Jockey Club, Race Tracks, gulfstream park, santa anita park | 21 Comments »
Thursday, March 5th, 2009
By Ray Paulick
Southern California horsemen who failed to withdraw funds from the paymaster at Santa Anita Park by 1 p.m. (Pacific) Wednesday will be unable to access their money for the next three days while the funds are transferred to a new account managed by the Thoroughbred Owners of California.
Horsemen were notified of that development Wednesday by the California Thoroughbred Trainers organization, as Santa Anita’s parent company, Magna Entertainment, appeared to be preparing to file for federal bankruptcy protection.
“The three day delay is so that new checks can be printed and paperwork can be completed,” the memo from CTT said. “Beginning next week, things will return to normal and you will be able to withdraw funds at your request.”
The memo went on to say the funds will continue to be handled through the paymaster’s office but that the account will be managed by TOC instead of Magna.
Any horsemen with questions should call the CTT office at (626) 447-2145 or the TOC at (626) 574-6620.
UPDATE: TOC also communicated the news to its membership on Wednesday concerning the paymaster account. Following is the text of a memo sent from the TOC to its members:
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"Over the past several days, news reports have circulated suggesting that MEC’s continuing financial difficulties leave open the possibility of an imminent bankruptcy filing.
In order to protect the interests of California Thoroughbred horsemen and women in the event such a filing were to occur, TOC began negotiating with MEC representatives last week for the transfer of horsemen’s funds held in paymaster accounts at Santa Anita and Golden Gate Fields.
We are pleased to advise that appropriate arrangements have been concluded by the parties. Under this agreement, the balance of funds existing in these accounts at the close of business today (2:00 p.m. PST) will be transferred to two segregated accounts, to be held in trust by TOC. This means that checks issued prior to that time will be processed using horsemen’s funds that will remain with MEC until those checks are cashed and clear. As for the balance of funds in horsemen’s accounts at the close of business tomorrow, these funds will be transferred to and held in trust by TOC for the benefit of account holders, subject to audit by the CHRB.
Given the change in custody and control of these two paymaster accounts, TOC anticipates – and therefore apologizes in advance to accountholders for – what could be a 72-hour delay in accessing account funds. The delay is the result of contractual and process changes, the issuance of new checks, and coordination with the paymaster account software vendor. TOC expects all customary paymaster services to be resumed thereafter. In the interim, other than the disbursement of funds, Santa Anita, Golden Gate Fields, and TOC expect all other paymaster services and functions to continue uninterrupted, including the ability to deposit funds and/or the ability to make claims.
We thank you for your understanding and patience while this transition occurs. Please be assured that TOC believes horsemen’s interests will be better served and protected by this effort.
TOC wishes to thank the CHRB for its assistance in this matter, and the management and staff of Golden Gate Fields and Santa Anita, without whose cooperation this prudent and necessary transition would not have occurred."
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Tags: california thoroughbred trainers, ctt, magna bankruptcy, Magna Entertainment, Paulick Report, Ray Paulick, santa anita park, thoroughbred owners of california, toc
Posted in California, Magna Entertainment, santa anita park | 1 Comment »
Wednesday, March 4th, 2009
By Ray Paulick
The California Horse Racing Board has called for a special meeting on Friday to discuss what it calls the “imminent” bankruptcy filing of Magna Entertainment and the effect that action may have on two current race meetings at Magna-owned tracks, Santa Anita Park east of Los Angeles and Golden Gate Fields near San Francisco, as well as on the company’s ExpressBet advance deposit wagering platform.
The meeting will be held in the Baldwin Terrace Room at Santa Anita in Arcadia, Calif., at 10:30 a.m. (Pacific).
During a public session, the board will discuss financial conditions of the two tracks and take action on licenses for the current race meetings and on the ADW license of ExpressBet. It will also seek assurances from Magna that the wagering public and horse racing industry participants are financially protected in the event of a bankruptcy filing under federal law. Of concern is money belonging to horseplayers that is held by XpressBet and owner, trainer and jockey funds held by the horsemen’s bookkeeper at the two tracks.
Horseplayers are particularly concerned because of a recent bankruptcy filing of the Hinsdale Greyhound Track in New Hampshire, in which account wagering funds belonging to bettors were frozen. Officials with the Thoroughbred Owners of California reportedly have had ongoing discussions with Magna officials about having access to owners’ money in the horsemen’s bookkeeper’s account if and when the company files for bankruptcy.
The CHRB also will discuss contingency plans and take appropriate action in the event Magna is unable to secure “debtor in possession financing,” which presumably would allow the two tracks to continue operations. Among the possibilities are substitute race meet licensees in the event Santa Anita, Golden Gate and XpressBet are forced to close their doors.
Magna has defaulted on one loan and has other debt obligations due in coming days that it is not expected to meet.
Copyright © 2009, The Paulick Report
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Tags: advance deposit wagering, California Horse Racing Board, expressbet, golden gate fields, Hinsdale Greyhound track, magna bankruptcy, Magna Entertainment, Paulick Report, Ray Paulick, santa anita park, thoroughbred owners of california, toc
Posted in Account Wagering, California, California Horse Racing Board, Magna Entertainment | 4 Comments »
Wednesday, February 4th, 2009
By Ray Paulick
December was a cruel month for Richard Shapiro, who stepped down as chairman of the California Horse Racing Board on Dec. 15, only a few days after learning that a significant portion of his life savings and pension was lost in the $50-billion Ponzi scheme allegedly perpetrated by Bernard Madoff.
January wasn’t much better.
Shapiro on Jan. 12 sent a letter asking for help from his Congressman, Brad Sherman, a Democrat representing the San Fernando Valley near Los Angeles. He suggested, among other things, that Sherman push for the Internal Revenue Service to relax time restrictions for victims to recover taxes they paid on false income reported to them by Madoff. Shapiro sent the letter to some other members of Congress and to another Madoff victim he knew, asking that he consider writing similar letters to elected officials. He also suggested his friend contact others who lost their investments, urging them to write members of Congress for help.
Shortly thereafter, the letter Shapiro thought was private was being widely distributed by California-based Thoroughbred owner Jerry Jamgotchian, who for the past few years has been a relentless critic of Shapiro and many of the policies he influenced as CHRB chairman. Shapiro’s personal tragedy became a very public matter.
How Jamgotchian got a copy of Shapiro’s letter, however, is in dispute.
Shapiro insists Jamgotchian was forwarded a copy of the letter by Los Angeles attorney Roger Licht, whose CHRB seat Shapiro filled when he was appointed to the board by Republican Gov. Arnold Schwarzenegger in October 2004. Licht, an appointee of Democrat Gray Davis, served from February 2001 through July 2004, including one year as chairman, in 2003. Shapiro was chairman from January 2006 until his resignation from the board last December.
Both Licht and Jamgotchian deny Shapiro’s charge that Licht sent Jamgotchian a copy of the letter.
The other Madoff victim contacted by Shapiro forwarded a copy of the letter to Los Angeles entrepreneur Steve Weston, who also was victimized in the investment scam. When rumors about Shapiro being stung by Madoff began circulating in horse racing circles, Shapiro contacted Weston to find out whether he had forwarded the letter to anyone else, and Weston confirmed he had sent it on Jan. 13 to Licht, who was representing him in the Madoff case.
On Jan. 15, when the first published reports of Shapiro’s letter to Rep. Sherman appeared, Weston sent an email to Shapiro saying he had “queried Licht as to whether or not he had sent it to anyone. It was at that point,” Weston continued, “that he told me that he had faxed it to some guy I had never heard of named Jamgotchian. When you and I spoke later that same morning you asked me to call Licht and confirm who he had sent it to and ask them to stop sending it out, I did as you asked. I called Licht again and he confirmed it was Jamgotchian he had sent it to. He placed the phone down so that I could hear him call this guy and I heard him ask Jamgotchian to please stop sending the letter out to anyone else. When he got back on the phone with me he told me that Jamgotchian had told him that he would stop.”
Licht was asked by the Paulick Report if he had sent a copy of the letter to Jamgotchian. “No,” he said. “What’s this all about? You’re the third reporter who’s called about this.”
When Weston’s email to Shapiro was read to Licht, he responded, “I don’t know what Steve Weston is talking about.”
“He told you that?” Weston said, when informed by the Paulick Report of Licht’s comments. “I have emails from him to me apologizing for what he did. I was also on the phone with him when he called Jamgotchian and asked him to stop sending it around. Did he actually deny it? I’m surprised to hear he would lie like that.”
Weston went on to say it would be “ludicrous” to criticize Shapiro or anyone else who invested money with Madoff. “Look at the people who got burned,” he added, “people like Mort Zuckerman and Steven Spielberg. Some of the smartest people in the financial world were victims. This was a failing of the SEC. No investor’s judgment should be called into question.”
“I question the ethics, morals and purpose for Mr. Licht in turn forwarding a copy of the letter to Jerry Jamgotchian,” Shapiro said in a statement. “Clearly doing so was not related to the services he was asked to perform as an attorney representing a client, and his dissemination of my letter to an unrelated third party was done with the sole purpose of malicious intent towards me at the minimum.” Shapiro now questions if it’s possible “much of what Jamgotchian has claimed for years has in fact been fed to him by Licht since he was a prior member of the CHRB.”
Jamgotchian readily admits distributing Shapiro’s letter but categorically denies receiving it from Licht.
“Shapiro is nothing but a blatant and pathological liar,” Jamgotchian said. “Put that in red letters and bold. Somebody faxed it to me. I got it two days after the fact, and I immediately started blasting it out (Jan. 14). I got it from somebody in the press. Why would I get anything from Roger Licht? That’s like saying I got it from (CHRB acting chairman) John Harris. They’re (CHRB) not going to help me with this.”
Jamgotchian’s public criticism of the CHRB and Shapiro began in 2005, after Licht had left the board. Jamgotchian has filed several complaints against the CHRB since then and has been a constant thorn in Shapiro’s side. The Paulick Report asked Jamgotchian why he has been so critical of Shapiro, who is best known for pushing the mandate that California tracks install synthetic surfaces.
“The destruction of California racing,” Jamgotchian said. “My inability to race in California. The destruction of the California breeding industry. The inability to race on dirt tracks. Millions of dollars he’s cost me as an owner. Loss of purses in California. The ADW mess. Reduced track attendance. Closing of racetracks in California. Increased training and vet fees. When I sold all my horses at a huge loss at Barretts. He’s solely responsible for it. He and his stupid decisions with synthetic racetracks, heel nerving and other mistakes he’s made. The last thing he did was get the CHRB budget thrown out in front of the GO (Governmental Organization) Committee.”
In a later email, Jamgotchian wrote: “Shapiro vacuous decisions has put track employees, tote sellers and many horseracing people out of work and took away their dreams!”
After feeling his personal life had been invaded, Shapiro contacted Bloodhorse magazine and Thoroughbred Times to tell his side of the story and express his belief that Licht was responsible for sending a copy of the letter to Jamgotchian. Neither publication, Shapiro told the Paulick Report, would publish the story.
For his part, Shapiro said he has “endured for years the insults and ridiculous claims” from Jamgotchian. “It is beyond the bounds of decency that (Licht and Jamgotchian) would find joy in someone else’s difficulties,” he said.
Shapiro also said his resignation from the board was unrelated to the financial problems resulting from his Madoff investments. Shapiro, in fact, did tell the Paulick Report during a visit to Lexington for the Keeneland September yearling sale that he was contemplating leaving the CHRB and pursuing a non-regulatory industry position. He has been widely rumored to be a leading candidate to head up the Sacramento-based Federation of California Racing Associations.
“I remain committed and hopeful of helping the sport in any way possible,” he said.
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Tags: bernard madoff, brad sherman, California Horse Racing Board, jerry jamgotchian, john harris, mort zuckerman, Paulick Report, Ray Paulick, richard shapiro, roger licht, steve weston, steven spielberg
Posted in California, California Horse Racing Board, People | 12 Comments »
Friday, December 5th, 2008
By Ray Paulick
Procaine, the local anesthetic detected above threshold levels in the Todd Pletcher-trained filly Wait a While when she finished third in the Oct. 24 Breeders’ Cup Filly & Mare Turf at Santa Anita Park, is used in association with penicillin G to prolong the minimum inhibitory concentration of the drug; in other words to keep penicillin in the bloodstream longer.
The California Horse Racing Board filed a complaint against Pletcher for violation of CHRB Rules 1943.2, 1844 (a) (b) (d), and 1887 after the Maddy Laboratory at the University of California-Davis detected an excessive amount of procaine. The Pennsylvania Equine Research Laboratory, a split-sample lab chosen by Pletcher, confirmed the test.
Procaine, which in its pure form can act as a stimulant, is a Class 3 drug in California. The penalty level for its presence is Class B, which calls for redistribution of the purse (Wait a While won $213,000), a minimum 30-day suspension absent mitigating circumstances, and a minimum fine of $500. Hollywood Park stewards will conduct a hearing Dec. 14 on the disqualification of Wait a While. No hearing date has been set for Pletcher.
Because procaine is extremely sensitive in testing, some veterinarians will use intravenous penicillin on a horse that may be close to a race rather than procaine penicillin. That, however, can cause an increase in the incidence of diarrhea, according to one veterinarian. Withdrawal times for procaine can vary, with some horsemen reporting positive tests for the drug for as long as three weeks after its administration. The Racing Medication and Testing Consortium recommends a 15-day withdrawal time for procaine penicillin G. The CHRB has no specific withdrawal times but offers free pre-race testing to determine whether or not procaine has cleared a horse’s system.
According to sources close to the Pletcher stable, Wait a While may have been treated with procaine penicillin for a respiratory infection roughly 18 days before the Breeders’ Cup. She won the Yellow Ribbon Stakes on Sept. 27. Wait a While has been retired with 12 wins in 24 starts and earnings in excess of $2 million. She raced for Alan and Karen Cohen’s Arindel Farm. Alan Cohen is the owner of the Florida Panthers of the National Hockey League.
Pletcher, the winner of four consecutive Eclipse Awards as North America’s outstanding trainer from 2004-07, could not be reached for comment. He last served a medication suspension in December 2006 and January 2007 when he lost an appeal regarding a 2004 positive test for mepivacaine and was suspended for 45 days.
Pam Blatz-Murff, senior vice president of racing for the Breeders’ Cup, said that organization currently has no sanctions against trainers whose horses test positive for any substance other than anabolic steroids. The Breeders’ Cup instituted penalties that could lead to a lifetime ban for a trainer with multiple anabolic steroid positives in the World Championships races.
"It is being discussed right now to determine what we might or might not do in the future to maybe tighten up the regulations from our side of the fence," Blatz-Murff told the Paulick Report. "This (charge against Pletcher) was just announced and we certainly support all of the actions of the CHRB. It’s a little early for us to make a statement other than our support of their function. How we progress and the improvements that are made is something that will unfold in the next months going forward.
"Obviously, Todd will have representation and he has due process," she added.
Copyright © 2008, The Paulick Report
Tags: alan cohen, arindel farm, California Horse Racing Board, CHRB, class 3 drug, karen cohen, maddy laboratory, Paulick Report, pennsylvania equine research laboratory, procaine, procaine penicillin, procaine penicillin g, racing medication and testing consortium, Ray Paulick, rmtc, split sample, todd pletcher, wait a while, yellow ribbon stakes
Posted in Breeders' Cup, California, California Horse Racing Board, Horse Health, Medication, Regulatory Issues | 13 Comments »
Sunday, November 30th, 2008
By Ray Paulick
When IEAH Stables bought an interest in 2007 Remsen Stakes winner Court Vision from WinStar Farm earlier this year, the son of Gulch had the look of a Derby horse. He eventually lived up to that billing, though his Grade 1 Derby victory came not on the dirt at Churchill Downs on the first Saturday in May but on the Hollywood Park turf on the last Sunday in November. Under Ramon Dominguez, who earlier in the day won the Grade 1 Matriarch Stakes with Godolphin Racing’s Cocoa Beach, Court Vision made an eye-catching run from last at the top of the stretch to win the Hollywood Derby by three quarters of a length, defeating Cowboy Cal and Midships.
Trained by Bill Mott, Court Vision covered a mile and one-quarter on firm turf in 2:01.43 as the 7-2 second choice in the betting. It was his fifth win in 12 starts and first in a Grade 1 event.
After winning three of four starts as a 2-year-old, Court Vision regressed somewhat on the road to the Triple Crown, finishing third in both the Fountain of Youth at Gulfstream Park and Wood Memorial at Aqueduct. After a disappointing 13th behind IEAH’s Big Brown in the Kentucky Derby, Mott switched the colt to turf, where he finished fourth in the Colonial Turf Cup and an unlucky second, beaten a nose, in the Virginia Derby, both races at Colonial Downs.
Back on dirt in the Travers at Saratoga, Court Vision was never a factor when sixth behind WinStar’s Colonel John, then ended his six-race losing streak with a victory in the Jamaica Handicap on turf at Aqueduct (the first time Dominquez rode him).
Muny set the pace from the outside post position in the Hollywood Derby, going a half mile in :49.41, six furlongs in 1:13.40, and a mile in 1:37.56. Cowboy Cal overtook the frontrunner in midstretch, but didn’t have enough to withstand the fast-finishing Court Vision, who caught him in the final strides. Midships closed well to get third. Based on Court Vision’s position at the one-mile call on the Equibase chart, he flew home his final quarter-mile in about 22 3/5 seconds.
Bred in Kentucky by the W.S. Farish and Kilroy Thoroughbred Partnership, Court Vision was produced from the Storm Bird mare Weekend Storm, a half sister to leading sire A.P. Indy.
Video of the Hollywood Derby.
Earlier in the Hollywood Park Turf Festival program, favored Cocoa Beach rallied in the stretch to catch the front-running second-betting choice Precious Kitten and win the Matriach by three-quarters of a length. Juddmonte Farms’ Visit was third.
Cocoa Beach, second to Zenyatta in her last start, the Breeders’ Cup Ladies’ Classic, was trying the grass for the first time since her maiden victory in Chile in January 2007. She was purchased by Godolphin last year and sent to Dubai, where she won two of four starts and was third in the UAE Derby. The 4-year-old daughter of Doneraile Court won her first two American starts, including the Grade 1 Beldame at Belmont Park, before running second in the Breeders’ Cup on the synthetic Pro-Ride track. She is trained by Saeed bin Suroor. Cocoa Beach covered the mile on firm turf in 1:35.49.
Matriarch chart.
Video of the Matriarch.
Video of the Hollywood Turf Festival graded races.
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Tags: Beldame, Big Brown, bill mott, Cocoa Beach, colonel john, court vision, cowboy cal, Doneraile Court, dubai, farish and kilroy, Godolphin, gulch, hollywood derby, IEAH, jamaica handicap, kentucky derby, ladies' classic, matriarch, midships, muny, Paulick Report, precious kitten, ramon dominguez, Ray Paulick, remsen, saeed bin suroor, uae derby, visit, William S. Farish, winstar farm, zenyatta
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