Archive for the ‘Churchill Downs Inc.’ Category
Friday, May 1st, 2009
It is easy to become a skeptic in the business world when everywhere you look hardworking, loyal employees are being laid off by the thousands. One can’t help but shake the thought our current economic downturn is sometimes used as an excuse to make otherwise unpopular and unwarranted decisions to trim staff. So when a corporation the size of Churchill Downs does right by its employees, attention must be paid.
Not even a year ago, Tricia Amburgey, coordinator of the Chief Party Officer and the new Infield Club, walked into her bathroom and felt like she had run into the door. Realizing she was clear of any structure, Tricia felt her chest and knew something was not right. After a visit to her doctor, she learned the sensation she felt was the onset of breast cancer.
“That was the moment the tumor broke through the breast wall,” explained Amburgey. What ensued was a series of chemotherapy treatments for her stage three condition, a serious but treatable stage of this disease that accounted for over 40,000 deaths in 2008.
For those who have not seen a loved one go through chemotherapy up close, it is a long and often torturous process causing dramatic swings in energy and stamina. When it comes to the workplace, this can become problematic. But that wasn’t the case for Amburgey and Churchill Downs.
“I have heard some negative stories where other employers were not as understanding,” said Amburgey. “But not here. They’ve been just fantastic.”
 The company has gone above and beyond in helping this 17-year veteran of all things Churchill Downs adjust to her new reality. When she is in the office, Tricia’s co-workers are constantly checking in on her and insisting she go home whenever she needs to, almost to the point of being overbearing. They have even gone as far as to put a computer and printer in her home just in case this self described workaholic has to work from home.
That sort of awareness and accommodation is already considered a cut above the call of duty for most places of employment. However, the real magic here seems to have come from the spirit of Amburgey’s co-workers.
At the beginning of her chemo treatments, the others in Tricia’s small Entertainment Business Unit showed their support by wearing pink. As she continued to receive further treatment, this movement spread beyond their four-person unit and within a relatively short amount of time the entire company was expressing their support. This sisterhood of the traveling pinks has become so popular, Churchill has asked all in the crowd who attend Kentucky Oaks Day to Pink Out by wearing their favorite pink outfits in support of all breast cancer patients.
During this same timeframe, Amburgey’s division at Churchill was continuing the work started last summer in trying to build the Kentucky Oaks brand. According to Casey Cook, Senior Director of Marketing and Licensing, it was important the Oaks took on principles that celebrated women’s interests. Sisterhood, celebrity, fashion and charity became the core ideas behind this marketing strategy.
So when Cook and company started to look for a partner to help with this effort, Amburgey’s relationship with the Susan G. Komen Foundation became a perfect moment of kismet. With one in eight women diagnosed with this disease, very few issues affect women like breast cancer. And with the Susan G. Komen international brand so synonymous with the cause, Tricia’s setback became the impetus for a major fundraising initiative.
“I certainly don’t want to take credit for this large idea,” said Amburgey. But when pressed further, she did confess it was her involvement that most likely led to the Komen affiliation.
 For each Oaks ticket purchased, Churchill Downs will be donating $1 to Susan G. Komen to aid in research as they continue towards finding a cure. According to Cook, their goal is to raise $135,000 this year while still promoting a great day for all in attendance. “I think that’s the beauty of the day. You can come out with your friends and family and know you are giving back, helping to fight breast cancer.”
And a worthy fight it is. When asked how Komen has helped her, Amburgey points to the strides taken in the medicine she takes to help nausea caused by her treatment. “I can’t imagine what chemo must have been like 10-15 years ago.” Once she is finished with the chemotherapy, she will be able to plug into an immediate support system that she describes as a “sisterhood”.
That being said, this is one sisterhood Amdurgey would like to stop dead in its tracks.
“Because of what Komen has done, it isn’t a death sentence anymore. Hopefully, we’ll be able to find a cure so my eight year old daughter won’t have to go through this.”
And because of the generosity Churchill has shown, we will be one step closer to that goal. A day at the races never had such high stakes.
Copyright © 2009, The Paulick Report
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Tags: bradford cummings, breast cancer, casey cook, CDI, churchill downs, good news friday sponsored by liberation farm, kentucky oaks, komen, Paulick Report, paulick report good news friday, pink out, Susan G. Komen, tricia amburgey
Posted in Churchill Downs Inc., Good News Friday | 6 Comments »
Tuesday, April 28th, 2009
By Bradford Cummings
Last week, we received some “feedback” on the picture of Paris Hilton that was run on the Paulick Report. Divided almost completely down gender lines, our readers either thought we were modern day heroes or seemed content to categorize us as barbarians still incapable of envisioning a world for women outside of the kitchen. And while the picture was admittedly lacking in some taste, the overarching theme is apparent; Paris Hilton and celebs of her ilk get people talking.
And if they can get people talking, isn’t it actually a good thing that they come to the Derby each year even if they couldn’t tell the difference between quarter crack and a quarterback? Sure, we all shutter at the likes of Nick Lachey, Kim Kardasian and Tila Tequila becoming the face of our most prestigious weekend. They are celebrity sideshows, most famous just for being famous. But in light of our sport’s struggles to get nationwide attention, one can’t deny the exposure when reporters from People, US Weekly and In Touch will actually be at Churchill Downs.
We as an industry are always trying to figure out how to move beyond our current constraints as a niche sport. Our promotional bodies have been ineffective in marketing the sport beyond its core base of fans while bad news shrouds our industry in a veil of negativity. And because of these factors, our ratings on ESPN and other networks are almost embarrassingly low. The circulations for our top publications are dismal and falling further and further behind. Blood-Horse has an average weekly audience just short of 24,000, the Daily Racing Form hasn’t been able to move beyond a race day periodical and the Thoroughbred Times is not even listed on Wikipedia.
In contrast, according to Magazine Publishers of America US Weekly averages 1,773,285 monthly readers, Entertainment Weekly is read by 1,798,445 dedicated followers and industry standard People Magazine draws an army of 3,786,360, making it the the 11th most read publication in the country.
And while a chasm of difference seems to separate these two entities, the 30 and under female audience so coveted by these celebrity gossip rags are also easily drawn to the majestic beauty of our athletes. Exposing this crowd to our sport, regardless of the delivery vessel, pays dividends as we try to expand our reach.
In this 24-hour news cycle, our industry normally can’t even get its foot in the revolving door. And so it is with some hesitation that we must welcome these celebs to our playground. When trying to expand our reach and rescue racing from the throes of bankruptcy, racing beggars can’t be choosers. Just promise us, if you see Paris at the track on Saturday, don’t snub your nose at her. Instead thank her for being there, ask her to strike a pose and tell her you have inside information that she should put all her money on Mine That Bird to win…
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Tags: bloodhorse, daily racing form, Entertainment Weekly, In Touch, Kim Kardasian, Nick Lachey, Paris Hilton, People, thoroughbred times, Tila Tequila, US Weekly
Posted in Churchill Downs Inc., kentucky derby | 29 Comments »
Friday, March 20th, 2009
By Ray Paulick
Can the cable network Bravo do for 3-year-old female Thoroughbreds what it’s done for countless wannabe runway models or packs of shallow housewives in New York City, Atlanta or Orange County, Calif.?
Come to think of it, I’m not sure I really want that to happen.
But with Bravo — the sister network to NBC Sports in the NBC Universal family of media companies – televising this year’s Kentucky Oaks for the first time on May 1, it’s anybody’s guess the type of programming we’ll see. A press release from Churchill Downs says the one-hour telecast (5-6 p.m. Eastern) will focus on the “food, fashion and celebrity experience” associated with the Kentucky Oaks. The NBC Sports production and on-air team televising the Derby on May 2, led by host Tom Hammond, will be available for the Bravo telecast, so here’s hoping they’ll be able to find time to show the horse race, too. With a possible field that includes Stardom Bound and Rachel Alexandra, it could be one of the most interesting and best Kentucky Oaks in recent history.
First, though, let’s give Churchill Downs management credit for hooking the Oaks with the Susan G. Komen for the Cure breast cancer organization. It’s a most worthy cause, and if Friday is still considered by some to be “ladies day,” there may be no better time for the horse racing industry to raise awareness and research money to help find a cure for breast cancer.
But let’s be real for a second. The Kentucky Oaks is one of the best and most important fixtures on the Thoroughbred calendar, and a perfect setup to the following day’s Kentucky Derby. It’s been part of ESPN’s Derby week coverage for many years. Moving the Oaks to Bravo – a network best known for shows like “Project Runway,”
“Top Chef,” “Real Housewives of …” and “Tabatha’s Salon Makeover” – is a sign that Churchill Downs is giving up on growing the Oaks as a sporting event and making it more about fashion and celebrity.
That apparent shift in philosophy (the Kentucky Derby web site is also putting a great deal of emphasis on fashion, parties and entertainment) coincides with business developments involving the longtime horse racing provider to ESPN, the Tulsa, Okla.-based Winnercomm. Winnercomm, for years known as Winner Communications, the company founded by Chris Lincoln and Jim Wilburn, was purchased earlier this year by the Outdoor Channel.
Winnercomm has traditionally been horse racing’s gateway to ESPN, but many of Wilburn’s close associates at ESPN are no longer at the network, so he doesn’t have the “juice” he once had. Winnercomm’s deal with Churchill to provide Derby week coverage ended, as did his agreement with the National Thoroughbred Racing Association to produce racing telecasts.
Churchill Downs opted to negotiate directly with ESPN for programming (without Winnercomm), and in this difficult economy they didn’t really want to be on the hook for the cost of the programming without having assurances they would be able to generate enough revenue through advertising to pay for it. ESPN apparently wasn’t interested in trying to sell the programming, and Churchill didn’t want to work through Winnercomm. Thus, there will be no “Breakfast at Churchill Downs” programming on ESPN or ESPN2, and no “Kentucky Derby Draw” or “Kentucky Oaks” telecasts. ESPN will televise some of the Derby Day undercard, which traditionally has attracted a relatively large audience. The Oaks and other Derby week programming has not done very well in the ratings, though Wilburn always managed to sell advertising for them.
Sources have said ESPN will not have live programming from Pimlico during the week of the Preakness, either, though there may be programming from Belmont Park leading up to the Triple Crown’s final jewel. The Derby and Preakness telecasts are shown on NBC, while the Belmont is on ABC, a sister network to ESPN.
Complicating all of this is the fact that Churchill Downs and Magna, which owns Pimlico, home of the Preakness, are partners in the racing cable network HRTV. If the Oaks and Pimlico’s Black-Eyed Susan (which, like the Oaks is on a Friday), were telecast on ESPN or ESPN2, that network most likely would have wanted exclusivity, which would have prevented HRTV from showing the races live.
Like many things in racing, there is no central leadership here. The NTRA, which has its own deals with ESPN for prep races leading up to the Kentucky Derby, has never been given the responsibility of negotiating TV time for the Triple Crown tracks, which have done so on their own or through Triple Crown Productions. The Triple Crown itself is now divided between NBC (Derby and Preakness) and ABC (Belmont). Bob Evans, the CEO of Churchill, is widely viewed as someone who is more interested in technology than television. Magna, of course, has its own problems with bankruptcy, Wilburn, horse racing’s former “go to” guy for getting the sport on ESPN, has lost his clout with the “worldwide leader in sports.”
Perhaps all of this might make a good reality show … on Bravo!
Tags: Bravo, churchill downs, espn, kentucky oaks, NBC, Paulick Report, Project Runway, Ray Paulick, Susan G. Komen, Winnercomm
Posted in Churchill Downs Inc., kentucky oaks | 13 Comments »
Thursday, March 19th, 2009
By Ray Paulick
Purses for Thoroughbred horsemen in Illinois hit a 10-year low in 2008, and things may only get worse if the Illinois legislature enables Churchill Downs Inc., the owner of the state’s biggest track, Arlington Park, to get the Advance Deposit Wagering language it is seeking.
Illinois horsemen have had to put up with a ridiculous law since 1995 that allows racetracks to “recapture” money from purse accounts the law says tracks have lost on live handle since the authorization of full-card simulcasting. Since 1995, over $170 million has been taken from purses earmarked for Thoroughbred and harness horsemen and handed over to the racetracks. (For more details on the recapture provision of the Illinois racing law, see page 10 of the Illinois Racing Board’s annual report for 2008, which can be viewed here.)
This law needs to be repealed, and representatives of the harness and Thoroughbred horsemen’s organizations are working in the state capital in Springfield to do so. Racetracks seem to have more clout, however, and it will be no easy task.
Lobbyists for racetracks and ADW companies are also pushing for approval of Advance Deposit Wagering in Illinois, a state that permits casino wagering, off-track betting and has offered a lottery for many years. Those lobbyists represent Arlington Park, which is owned by the same Churchill Downs Inc. that operates TwinSpires.com. The largest shareholder in CDI is Richard Duchossois, the Chicago industrialist who owned Arlington Park before merging it into CDI. Another company pushing for ADW approval is Youbet.com, one of whose principals is Chicago billionaire Jay Pritzker, heir to the Hyatt Hotel chain. A member of the Youbet.com board of directors is former Illinois Gov. Jim Edgar (one of those rare Illinois politicians who has avoided public scandal or indictment). Edgar knows his way around Springfield.
ADW would be a good thing for Illinois, provided that the horsemen are taken care of. The fear is, however, that Churchill Downs and its lobbyists are crafting a bill that will be more to their benefit than it is to the horsemen.
An example: the bill ( SB1298, which has passed out of committee and is on the floor of the Senate waiting approval), includes an amendment that permits Advance Deposit Wagering terminals to be placed at Illinois tracks. The language of the bill (see page nine, line nine of SB1298) suggests an “organization licensee” (in other words, a racetrack like Arlington with its own ADW) may operate Advance Deposit Wagering without horsemen’s permission. If a track doesn’t own an ADW, it may contract with a third-party company, with horsemen’s permission, to operate Advance Deposit Wagering. In other words, it appears tracks that operate their own ADW can do so without contracting with horsemen.
What does this mean? It could mean that Churchill Downs Inc. will do everything it can to move handle from traditional on-track or OTB facilities in Illinois to its ADW platform, TwinSpires, where it would almost certainly retain a greater percentage of the revenue. We’ve already seen how it works in Kentucky, where a wager placed by a Kentucky resident through TwinSpires on a Churchill Downs race produces far less revenue toward purses and more for TwinSpires and its parent company, than would a wager made on-track or at an intertrack wagering facility in Kentucky on a Churchill Downs race. The percentages are even worse for bets made on out-of-state races by Kentucky residents through TwinSpires, versus at a simulcast facility. (See the graphs on pages 16 and 17 of a presentation on purses I made to the Kentucky Thoroughbred Farm Managers Club earlier this year for an explanation of how the revenue is divided.)
Illinois horsemen have to be careful not to let the racetrack and ADW companies dictate the language of this bill, or they are going to see purses fall even farther – if that’s possible.
Of course, bad news for horsemen could be very good news for Churchill Downs. Perhaps that’s why Duchossois continues to load up on CDI stock. I reported last September that Duchossois was gobbling up shares in CDI, and he’s been on two buying spree since. He spent more than $1.3 million to buy over 42,000 shares in November and in recent days spent another $285,000 on over 12,000 shares.
Copyright © 2009, The Paulick Report
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Tags: advance deposit wagering, ADW, Arlington Park, CDI, churchill downs, Churchill Downs Inc., duchossois, gov. edgar, illinois horse racing, illinois racing board, jay pritzker, jim edgar, kentucky thoroughbred farm managers club, pari-mutuel wagering, Paulick Report, pritzker, Ray Paulick, recapture purses, richard duchossois, sb1298, twinspires, twinspires.com, youbet, youbet.com
Posted in Account Wagering, Churchill Downs Inc., Illinois | 14 Comments »
Monday, March 16th, 2009
By Ray Paulick
Legislation approved by the Kentucky state Senate on Friday would pave the way for the Breeders’ Cup to make an emergency return to Churchill Downs this year in the event complications with Magna Entertainment’s bankruptcy prevent the Oak Tree Racing Association from hosting the two-day championships this fall at Santa Anita Park in California as scheduled.
The economic development bill, HB229, passed the House earlier this session and was amended by the Senate on Friday to include several incentives, including a pari-mutuel excise tax credit submitted by Republican Sen. Damon Thayer that would only go into effect if the Breeders’ Cup is held in Kentucky a minimum of two times between 2009 and 2012. The credit would remain on the books indefinitely, provided the Breeders’ Cup returns to Kentucky on a continuous basis of at least once every three years. Churchill Downs has hosted the Breeders’ Cup six times, in 1988, ’91, ’94, ’96, 2000 and ‘06 — more than any other track. The Keeneland Association is also looking into substantial expansion to its racing facility in Lexington in order to become a potential Breeders’ Cup host.
The pari-mutuel excise tax credits go to the racetrack, which contracts with Breeders’ Cup for distribution of pari-mutuel handle and other sources of revenue from the championships.
The 2010 Breeders’ Cup is scheduled for Churchill Downs, but no sites have been determined for future runnings. If this year’s Breeders’ Cup stays in California, Thayer told the Paulick Report that for the 2010 tax credits to kick in, the Breeders’ Cup will have to be contractually obligated to return to Kentucky in 2011 or 2012. He estimated the tax credit was worth $700,000 when the Breeders’ Cup was last staged at Churchill Downs as a one-day event in 2006. The amendment requires a minimum of $500,000 of the tax credit be used to fund Breeders’ Cup undercard races.
Thayer worked for the Breeders’ Cup from 1999 until parting ways with the organization in 2007, when he was vice president of event management. He started his own consulting firm and was given a six-month deal with the Breeders’ Cup to help with the 2007 championships at Monmouth Park – its first year as a two-day event – but that deal was not renewed.
The racing industry veteran and second-term state senator pushed for the Breeders’ Cup incentives in spite of any bitterness over his parting with the organization.
“As a legislator I have a responsibility to enact policy that I believe is beneficial to the commonwealth and having the Breeders’ Cup in Kentucky is an economic windfall for the state,” he said. “The University of Louisville said it has a $30-million impact for a one day event, and I’m no economist but I would think a two-day event could be worth $40-$50 million. Plus, the horse sales in Lexington that follow the Breeders’ Cup benefit by the Breeders’ Cup being in Kentucky. A rising tide lifts all ships. I tried to put any of my personal feelings aside and try to do what was right for Kentucky and the horse industry — which are not mutually exclusive, by the way.”
Though Breeders’ Cup president Greg Avioli has publicly stated the bankruptcy of Magna should not affect the ability of the Oak Tree Racing Association to host the event this year, Breeders’ Cup has retained legal counsel that specializes in bankruptcy and has Churchill Downs pegged as an emergency backup site. There are some fears that a bankruptcy trustee could nullify any leases that are not profitable to Magna, which could leave Oak Tree without a home.
“I’m well aware of the issues with Magna and how it could affect the Breeders’ Cup and Oak Tree, and that’s why I included 2009 in the Breeders’ Cup tax credit legislation,” Thayer said. “If there’s a chance Kentucky could get it back, I wanted to make sure the definition included a two-day event instead of a the one-day event that’s currently on the books.”
Thayer also submitted a one-day pari-mutuel excise tax credits to all Kentucky tracks that race 30 days or more, with Kentucky Oaks, Derby and Blue Grass days not eligible.
The same economic development bill includes a sales tax rebate for Kentucky Speedway, which is now owned by billionaire Bruton Smith’s Speedway Motorsports. The rebate will pay for 25% of the renovations to Kentucky Speedway if the track is able to secure a NASCAR event.
The bill returns to the House, where it is expected to be passed during the final two days of the General Assembly’s regular session March 26-27.
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Tags: 2009 breeders' cup, 2010 breeders' cup, Breeders' Cup, Breeders' Cup championships, churchill downs, damon thayer, Greg Avioli, hb229, Keeneland, magna bankruptcy, Magna Entertainment, magna entertainment bankruptcy, oak tree racing association, Paulick Report, Ray Paulick, santa anita park
Posted in Breeders' Cup, Churchill Downs Inc., Keeneland, Kentucky, Magna Entertainment | 3 Comments »
Friday, March 6th, 2009
By Ray Paulick
While Thursday’s Chapter 11 bankruptcy filing by Magna Entertainment (MEC) leaves a multitude of unanswered questions about the future of the racetracks the Frank Stronach-controlled company owns, there was a positive reaction from the investment community concerning MI Developments — another Stronach company spun off from the auto parts mothership Magna International – which is the majority shareholder in MEC.
Shortly after news of the bankruptcy filing was released in the afternoon, the share price of MI Developments (MIM) shot upward, jumping over $1 from 3.50 to 4.55 on heavy trading. Thursday’s closing price remained relatively steady after the market opened Friday morning.
Nevertheless, MIM is far off its 52-week high of 30.26. Like many stocks, it began a steep descent in mid-September when the global financial crisis first hit, but MIM has underperformed against the markets. Institutional shareholders Greenlight Capital and Farallon Capital Management have protested moves by the company to keep Magna Entertainment out of bankruptcy by extending loan deadlines and infusing cash into the company’s operational budget. Its principals have not publicly weighed in on the bankruptcy filing.
It’s too early to tell how MIM’s move to bid on some of the Magna racetrack properties (Golden Gate Fields, Gulfstream Park and the surrounding shopping mall, Palm Meadows training Center, Lone Star Park, and AmTote) will play out. The "stalking horse bid" of $195 million includes $44 million in cash, $15 million in an assumed capital lease, and $136 million in existing debt) may be topped by other interested parties. The other properties, including Santa Anita Park, Pimlico and Laurel, Thistledown, Remington Park have purportedly been on the market for some time now, but there have been complaints from shareholders and some interested outside parties that Stronach and his key executives have not been earnest in their efforts to sell.
Who might be interested in some of the properties that Stronach bought in Magna’s name in a buying frenzy from 1998-2002? Halsey Minor, the internet entrepreneur who previously attempted to buy Hialeah Park from John Brunetti and offered to pucrhase one of the loans MIM extended to Magna Entertainment, could still be a player. So might Churchill Downs, the publicly traded company that has little debt and a strong balance sheet. However, Churchill already exited the California market in 2005 when it sold Hollywood Park to a real estate development company, so it’s questionable whether or not it would have any interest in Santa Anita or Golden Gate. There have been reports in Florida that Churchill-owned Calder race course could be the site of either a baseball stadium or convention center at some point, although that seems less likely now that the track is being converted to a racetrack/slots casino. So its interest in Gulfstream Park is in doubt.
It is not inconceivable that some wealthy individuals involved in owning racehorses – among them Dubai’s Sheikh Mohammed — could step forward to make a bid, either individually or in partnership, particularly on Santa Anita, which many see as a critical lifeline for horse racing in California. It’s expected that Hollywood Park will be closed for development in the next few years, as it is owned by the same company that shut down Bay Meadows with the intention of developing it (though development of the property is said to be at a standstill).
In the meantime, there have been assurances that all of the Magna tracks will continue to operate, just as United Airlines planes continued to fly after that company filed for bankruptcy protection in 2002. In the case of United, there were serious cuts made in operations and employee benefits. The company emerged from bankruptcy a little more than three years after originally filing.
And Stronach has not indicated that he wants to get out of the business of owning and operating racetracks. He may do everything within his power to retain the tracks under one of the Magna umbrellas.
“The fact that MEC’s day-to-day operations will continue uninterrupted throughout the Chapter 11 process is good news to industry participants, including thousands of horsemen and employees, as well as customers," said Alex Waldrop, president and CEO of the National Thoroughbred Racing Association.
Magna and its tracks remain members of the NTRA, though it isn’t known if or when their $400,000 in annual dues (which are billed quarterly) will be paid. The NTRA went through a similar situation when the New York Racing Association filed for Chapter 11 bankruptcy protection in 2006. NTRA senior vice president Keith Chamblin said NYRA made good on all of its dues when it emerged from bankruptcy.
Greg Avioli, president and CEO of the Breeders’ Cup, said the filing by Magna should have no bearing on plans to return to Santa Anita this fall with the two-day championships, which are being hosted by the Oak Tree Racing Association. Oak Tree, which hosted the 2008 championships, leases the facility and staff from Santa Anita for its fall meeting.
“Our agreement is with Oak Tree, so at this time based on the information available to us, we fully expect to have the event there,” Avioli said. In the meantime, the Breeders’ Cup has retained the same bankruptcy counsel used when NYRA’s looming bankruptcy threatened the 2005 Breeders’ Cup at Belmont Park. It is expected that Churchill Downs would serve as a potential backup site if developments threaten Santa Anita or Oak Tree.
Perhaps Avioli’s key phrase is "based on the information available." No one really knows how this bankruptcy will proceed at this stage — not even Stronach.. We’ll learn more when the legal proceedings begin.
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Tags: alex waldrop, Breeders' Cup, Greg Avioli, keith chamblin, magna bankrupt, magna bankruptcy, Magna Entertainment, mec, mec bankruptcy, meca bankruptcy, mi developments, mim, National Thoroughbred Racing Association, New York Racing Association, NTRA, nyra, nyra bankruptcy, oak tree racing association, Paulick Report, Ray Paulick, stronach bankruptcy
Posted in Breeders' Cup, Churchill Downs Inc., Halsey Minor, Magna Entertainment, National Thoroughbred Racing Association, New York Racing Association, santa anita park | 9 Comments »
Thursday, January 22nd, 2009
By Ray Paulick
Is anyone really surprised to see Churchill Downs Inc. involved in yet another dispute with horsemen’s organizations over contractual terms for account wagering or advance deposit wagering? The incident in California involving TrackNet Media, the company CDI owns in partnership with Magna Entertainment, is the latest in a series of contractual and legal disputes between the Louisville, Ky.-based company and horsemen’s organizations in several states.
The common thread in all of the disagreements is an effort by Churchill Downs to squeeze as high a percentage as possible for its TwinSpires ADW platform. In so doing, purses and state breeding programs, and in some cases racetracks, will get a smaller slice from account wagering dollars.
The formation with Magna of TrackNet Media in 2007, along with the subsequent launch of TwinSpires and the purchase of the AmericaTAB account wagering company, Bloodstock Research Information Services and an interest in the Horse Racing TV cable network, has made Churchill Downs a major player in the ADW world. The company can offer content (through its racetracks), wagering services (TwinSpires, which absorbed many of the AmericaTAB customers), television distribution (HRTV) and past performance information used by horseplayers (Bloodstock Research).
CDI is also rumored to be the leading candidate to buy TVG, the largest ADW company in terms of customers and pari-mutuel handle, and with much greater distribution on cable and satellite television than HRTV. TVG is believed to be getting a larger share of account wagering revenue than any of the other ADW companies, at least in California, in part because of their investment in programming and distribution. If CDI ends up owning TVG and keeping its customers, it will be the leading ADW company in the U.S. It also may put an end to a lawsuit filed by TVG’s owners against HRTV for alleged infringement of company patents.
TrackNet Media negotiates ADW contracts with racetracks, including those owned by Churchill or Magna, which is what happened in the current California dispute. In essence, then, a company owned by Churchill and Magna may be negotiating on behalf of ADW companies owned by Churchill and Magna with racetracks owned by Churchill and Magna – an interesting scenario, to say the least. In some cases, as in California, those negotiations do not include representatives of horse owners.
Many industry participants who have been following CDI’s activities over the last 18 months are convinced the company is intent on moving wagers made on track or at simulcast facilities – including those owned by Churchill Downs – to its TwinSpires ADW platform. The reason? Churchill is positioning itself to make more from each dollar wagered through TwinSpires than it does from a dollar wagered on-track or at one of its off-track betting facilities.
The company has refused to negotiate with the Thoroughbred Horsemen’s Group, a company formed in November 2007 to act as an agent on behalf of its members (local horsemen’s organizations throughout the United States) on ADW contracts. In fact, last year, when horsemen in Kentucky and Florida exercised their rights under the Interstate Horseracing Act to cut off signals for simulcasting or account wagering, CDI sued several local horsemen’s organizations and the Thoroughbred Horsemen’s Group, alleging anti-trust violations.
Some parties were dropped from the suits when CDI and local horsemen’s organizations reached contractual agreements on ADW revenue splits (in some cases, very short-term agreements). But at least one of the defendants, the Kentucky Horsemen’s Benevolent and Protective Association, which countersued CDI, opted not to have the legal action dropped after CDI and the horsemen reached an agreement on account wagering for the 2009 Churchill Downs spring meeting.
It’s an interesting case. In its counterclaim, the Kentucky HBPA pointed out a clause in the purse contract between Churchill and Kentucky horsemen that dealt specifically with possible future ownership of an account wagering company by CDI. The contract, said to be written by the Kentucky HBPA’s longtime counsel, the late Don Sturgill, with Sturgill, Turner, Barker & Maloney, was executed before CDI got into the account wagering business and is effective through the end of 2009.
The counterclaim (click here for a copy) against CDI reads: “Section 4E of the contract clarifies that wagers made on races through an ADW owned by CDI, i.e. TwinSpires, are to be treated as if made physically at Churchill Downs racetrack for purposes of determining the percentage of monies to be paid into the Horsemen’s Account for horsemen’s purses. Section 4E specifically states:
“Telephone Account or Other Electronic Media Wagering: For purposes of determining the amount of purses to be paid under this Paragraph 4, a telephone account wager or other wager made through an electronic media wagering system, the majority of which is owned by Churchill, shall be deemed to have been made at the racetrack or Trackside (Churchill’s OTB facility), as the case may be, and Churchill revenues received therefrom shall be allocated and paid to Horsemen as purses in the manner decribed in the appropriate subparagraph of this Paragraph 4. Fifty percent (50%) of any source market or other similar fees received by Churchill from telephone account wagering systems as a result of wagers made in Kentucky on races simulcast from within or outside of Kentucky shall be allocated and paid to the Horsemen as purses. For purposes of this Agreement, the term “source market” or “other fees” shall mean: any and all fees paid to Churchill and/or its horsemen by Television Games Network or any other account wagering entities not owned by Churchill for the right to accept wagers from account holders located in the state of Kentucky.”
The HBPA claims that Churchill Downs has not paid horsemen in accordance with that clause in its purse contract, and estimates a $3 million shortfall in purses.
Judge John Heyburn II of the U.S. District Court for the Western District of Kentucky at Louisville has ordered a Feb. 19 conference to discuss and argue the pending motions in the case. Judge Henburn also wrote a draft (which can be seen by clicking here) containing “a statement of the relevant facts and Plaintiff’s (Churchill Downs) legal theory as well as discussion of the standing, statutory immunity and contract issues.”
The HBPA must feel as though they are on solid ground with their counterclaim against CDI. Otherwise, why wouldn’t they have agreed with CDI to have the legal action dropped?
Account wagering has brought about many changes in the pari-mutuel industry. It’s clear that what is decided now on the division of revenue, either in the courts or among horsemen, tracks and ADW companies, will have a major bearing on the future economics for horse owners, tracks and the wagering companies, as well as on the horseplayers who fuel the game.
Let’s hope these issues are resolved while we still have people interested in betting on our sport.
The Paulick Report is interested in what you think about this issue. Write a publilc comment in the section below, and take the Daily Paulick Poll (located on the left-hand column of the home page) about whether you think it’s in the best interests of horsemen and fans for Churchill Downs Inc. to purchase TVG.
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Tags: Account Wagering, advance deposit wagering, ADW, americatab, ameritab, anti-trust laws, bloodstock research, bris, CDI, churchill downs, don sturgill, hbpa horsemen's benevolent and protective association, Horse Racing, horseplayers, HRTV, judge john heyburn, kentucky HBPA, Magna Entertainment, pari-mutuel wagering, Paulick Report, Ray Paulick, sturgill turner barker & maloney, Thoroughbred Horsemen's Group, tracknet media, tvg
Posted in Account Wagering, Churchill Downs Inc., Industry Organizations, Simulcasting, Wagering | 9 Comments »
Thursday, January 15th, 2009
By Ray Paulick
Since Churchill Downs founder Col. Meriwether Lewis Clark borrowed the concept for the Kentucky Derby from Epsom Downs in Great Britain, where the Epsom Derby was first run in 1780, doesn’t it make perfect sense for an Englishman to call America’s famous “Darby”?
That’s what apparently is going to happen beginning with this year’s 135th running of the Kentucky Derby, the Paulick Report was told by several sources. Mark Johnson of England is expected to be named the new announcer for Churchill Down at a press conference at the Louisville, Ky., track on Thursday morning at 10 a.m. Johnson would become only the sixth “voice of the Kentucky Derby,” filling the void left following the untimely death of the popular Luke Kruytbosch last July.
Johnson was one of five guest announcers who took turns at the microphone during the Churchill Downs fall meeting in an on-the-job audition. The others were Larry Collmus, Bobby Neuman, Travis Stone, and Michael Wrona. Though he fared poorly in a Paulick Report Daily Poll (Wrona got the highest percentage of votes, 47%, followed by Collmus, with 28%), Johnson got a very favorable response in a detailed survey of the five announcers on the Churchill Downs website, sources said.
A 42-year-old native of Skegness, Lincolnshire, in the east of England, Johnson got an early start in his career, calling imaginary races of the wooden horses he would put on his family’s dining room table at the age of three (according to an article in Globeform). A few years later, he’d watch the Saturday races on television with the sound turned down, making up his own call of the races. “I probably commentated on my first Grand National when I was six,” Johnson told Globeform. “It became an obsession, and I am like the boy who wanted to be an astronaut and went to the moon. This is what I always wanted to do.”
Johnson got his first break calling point-to-point races at a small race meeting in 1987, but three years later moved up to Aintree, home of the Grand National, one of the best-known steeplechase races in the world. A few years later, he had the chance to call the Grand National itself, a race that requires two announcers.
He went on to work at several other tracks – including Sandown, Kempton Park, Cheltenham, Goodwood and Stratford — and moonlighted on television for At the Races, which showed American races in the evening hours. Johnson called the Epsom Derby on five occasions (including this call of Galileo’s 2001 Derby victory), the St. Leger and the Cheltenham Gold Cup, among other big races.
Johnson caused a ruckus back home with some comments about the Epsom Derby that were viewed as derogatory, made during an interview with Jennie Rees of the Louisville Courier-Journal last November when he was auditioning at Churchill Downs. His comment that “a lot of people don’t care” about the Epsom Derby didn’t go over very well in England.
If Johnson is, indeed, given the nod to call the Run for the Roses, he’ll find out on the first Saturday in May that people in this country do care about the Kentucky Derby. He promised Rees in that interview he’ll even be sure to pronounce “Derby” the way we say it here in America.
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Tags: 135th kentucky derby, aintree, bobby neuman, churchill downs, epsom derby, epsom downs, grand national, Horse Racing, kentucky derby, larry collmus, luke kruytbosch, mark johnson, meriwether lewis clark, michael wrona, Paulick Report, racecaller, Ray Paulick, run for the roses, travis stone
Posted in Churchill Downs Inc., kentucky derby | 8 Comments »
Monday, December 22nd, 2008
By Ray Paulick
Though Tom Meeker hasn’t been directly involved with the Thoroughbred industry since stepping down as CEO of Churchill Downs Inc. in August 2006 after 22 years at the helm, he has been an interested sidelines observer. Never one to mince words, Meeker said he doesn’t like what he sees right now, particularly the battle going on between racetracks and horsemen over advance deposit wagering. At the center of the fight on the racetrack side is the man who replaced him at Churchill Downs, Bob Evans.
“The squabbling that is going on right now could not have occurred at a more inopportune time,” Meeker told the Paulick Report. “Throwing grenades back and forth while the industry is crumbling around them does no one any good.”
Meeker said he doesn’t side with either party in the dispute. “In the cold light of day I side with horsemen on a couple of things, but track management is investing their capital and trying to put together a system. I’m not sure there’s a whole lot of money in the ADW business, and the margins can’t be great. I don’t think TVG and Youbet have done that well.
“Racing needs to get much more aggressive about marketing, and there needs to be a consolidation of racetracks and a number of functions so you can run the business in a more orderly manner. With the economic downturn and the squabbling that’s going on, it’s not a good thing. Everyone is just trying to whack up a smaller and smaller pie.
“The fighting makes no sense. There may be irrational people on the racetrack side or among the horsemen, but at some point even the most ill-informed or most radical will have to realize that we can’t keep doing this.
“And I don’t see any sense of urgency on anybody’s part,” he added. “I could think of 10 different things that can be done. Let’s agree that we don’t know the answer today, but let’s come to an agreement and have a reopener in a year or two years. We can’t afford not to have this thing out in the marketplace right now because we are losing customers. It takes five times as much energy and money to regain customers that you’ve lost than it does to keep them.”
Meeker said it’s important for racetracks to get into the ADW business . “They will use it as their primary marketing tool, whether it’s ADW or the various deployment devices – interactive television, telephone , the internet, whatever. That’s going to be the marketing arm of racing.”
Meeker sees other issues that have plagued the industry for decades. “We need consolidation in so many areas,” he said. “We have all these racing commissions, horsemen’s groups, what have you. There’s no sense of coordination at all on racing programs among different tracks. If Churchill were to cut out a few days of racing, somebody else would jump in and add more days. We need to cut back on the number of racing days."
He seems happy to let someone else deal with those issues. “For the last few years I’ve just been a mere mortal. I get online now and then and read the racing rags and other things, but I haven’t spoke to Evans since the day I left.”
Copyright © 2008, The Paulick Report
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Tags: Account Wagering, adw advance deposit wagering, bob evans, churchill downs, Horse Racing, pari-mutuel wagering, Paulick Report, Ray Paulick, tom meeker, tvg, youbet
Posted in Account Wagering, Churchill Downs Inc., People, Simulcasting, Wagering | 14 Comments »
Wednesday, December 10th, 2008
By Ray Paulick
Stock in Magna Entertainment, which only five months ago went through a 1 for 20 reverse stock split to keep from being delisted by NASDAQ because its share price had fallen under $1 for 30 consecutive trading days, has dropped below that threshold again.
After opening the day at $.89, share prices in the company (MECA) had fallen to $.74 by mid-afternoon after light trading. The stock has fallen steadily since the reverse split was enacted on July 22, a move that dramatically reduced the number of outstanding shares but bumped up the price from $.37 to $6.56.
MECA share prices held relatively even until mid-September, when the global financial crisis began to unfold, and the stock has tumbled since then. MECA closed at $1.75 on Sept. 30, spiked to $3.97 on Nov. 4, then quickly fell again, closing below $1 on Dec. 8, the first time since the split it fell below that mark.
MECA received noticed Feb. 12 that it had fallen out of compliance with NASDAQ regulations after share prices closed below $1 for 30 consecutive days. The reverse split was designed to keep the company in compliance
The racetrack operating founded and controlled by Thoroughbred breeder and auto parts mogul Frank Stronach owns such tracks as Santa Anita Park and Golden Gate Fields in California, Pimlico and Laurel Park in Maryland, Gulfstream Park in Florida, Lone Star Park in Texas, Remington Park in Oklahoma, and Thistledown in Ohio. It has slot machine operations at Gulfstream Park and Remington Park. However, the company has significant debt and has never turned a profit. It also runs an account wagering company, Xpressbet, and is co-owner with Churchill Downs Inc. of the HorseRacing TV cable channel.
Plans were recently announced to restructure the company, pending the approval of shareholders in MI Developments, another Stronach company that is the largest shareholder in MECA.
Since Stronach took MECA public in 2000, the value of its stock has fallen 99.2%.
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Tags: Frank Stronach, gulfstream park, Horse Racing, horse racing tv, HRTV, Magna, Magna Entertainment, meca, mi developments, mid, nasdaq, Paulick Report, racetracks, Ray Paulick, reverse stock split, santa anita park, stronach, xpressbet
Posted in Churchill Downs Inc., Magna Entertainment | 4 Comments »
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