Posts Tagged ‘reynolds bell’

Several things stood out when the results were announced on Tuesday. First, I believe they represent a victory for continuing the trend toward transparency and openness for the organization. There should be no turning back to the days of secrecy with how the industry’s money is being spent at the Breeders’ Cup. Minutes to board meetings should be posted on the Breeders’ Cup web site, information about committees and subcommittees needs to be published, and decisions should no longer be made in a vacuum. I believe the board of directors, which has taken steps in the right direction over the last couple of years, has been put on notice in that regard during this year’s vote by nominators.

Second, I believe the results showed dissatisfaction with the status quo. Two members of the smaller operating board of directors, Don Dizney of Florida and Tracy Farmer, were not re-elected to the larger board of members and trustees. It’s that larger board that decides who to elect for the smaller operating board, and to be a candidate you have to be on the board of members and trustees. Dizney and Farmer will be replaced on the smaller board after having been defeated in the election.

Third, the results show the strength of stallion farms and coalitions, something I wrote about last year. I don’t think any one stallion operation has the votes to elect an individual to the board of members and trustees, but several farms working together can do so. And there was coalition building going on prior to and during this election process.

Finally, and perhaps most significantly, the leading vote getter among Breeders’ Cup nominees, Richard Santulli, is the same man rejected by a majority of members and trustees voting for the smaller board of directors last year. I wrote then that the members and trustees made a huge mistake in not electing Santulli to the board. He is a man with great energy, enthusiasm for this industry and great business experience that could be put to extraordinarily good use by the Breeders’ Cup. He is chairman of NetJets and often is mentioned as a potential heir apparent to Berkshire Hathaway’s Warren Buffet. Perhaps the “old guard” on the board of members and trustees voted against Santulli because NetJets dropped its Breeders’ Cup sponsorship, or maybe because he is closely associated with Thoroughbred Daily News Publisher Barry Weisbord, who can be a prickly critic of the status quo. It’s also widely believed that Santulli felt the Breeders’ Cup should have sought executive experience from outside of horse racing when current Breeders’ Cup president and CEO Greg Avioli was given the job in 2007. Putting him on the smaller board could add some discomfort to management.

Whatever the reason, the nominators in this election voiced strong disapproval of the vote to keep Santulli off the operating board. Let’s hope he still has the interest in giving his time, energies and insights to the industry and will submit his name for nomination later this month.

There are six open spots on the board of directors, and if dissatisfaction with the status quo and the old guard carries over into that election, we could have a significant change in philosophy on the operating board. As mentioned, the board positions currently held by Tracy Farmer and Donald Dizney are open because they failed to be re-elected to the board of members and trustees. The other four candidates that are up for re-election are Reynolds Bell, Don Robinson (appointed to fill out the remainder of the term held by B. Wayne Hughes, following the decision by Hughes to resign from the board earlier this year), G. Watts Humphrey and Bob Manfuso.

Bell and Humphrey are closely associated with Lane’s End Farm, owned by William S. Farish, the father of current Breeders’ Cup board chairman Bill Farish. For years, Humphrey and the senior Farish were the guiding force of the Breeders’ Cup executive committee, back when the organization practiced limited transparency and operated under the auspices of a self-perpetuating board.

While the old guard from the Jockey Club (Farish is a Jockey Club member, his father-in-law is chairman Ogden Mills (Dinny) Phipps and his father is vice chairman, Humphrey is a longtime member and former steward, and Bell is a member and current steward of the club) did maintain control in the last board election, their grip on power has been weakened. I expect the slate of candidates from opponents of the status quo/old guard to make a concerted effort to defeat Humphrey and Bell in the upcoming election. Sources say Bell, who does extensive bloodstock work for Lane’s End, has been hand-picked by the Farishes to replace Bill Farish as Breeders’ Cup chairman if Farish serves five years, the limit for a chairman under the organization’s current bylaws. He has served three years in that role.

There will be much more here in the coming weeks on the Breeders’ Cup board election, which takes place during a meeting of the newly elected members and trustees on July 9. Candidates seeking a position on the board have until June 30 to state their intention to run.

Copyright © 2009, The Paulick Report

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“Just because I’m paranoid doesn’t mean they aren’t out to get me.” Anonymous.

There appears to be a mixture of both paranoia and rational thinking when it comes to how governance over the Breeders’ Cup has evolved in the last decade among the different camps that have fought behind the scenes to control this critically important industry organization.

For most of its 25-plus years, the Breeders’ Cup was run by a small executive committee headed by Jockey Club vice chairman and Lane’s End Farm owner William S. Farish, and later by G. Watts Humphrey, a Jockey Club steward and a partner in many of Farish’s equine interests. Board meetings were perfunctory events where self-perpetuating members of the Breeders’ Cup board did little more than rubber-stamp decisions made by the executive committee. Breeders’ Cup management carried out those directives.

Some breeders grew increasingly frustrated over this “private club” style of leadership and made demands for change: specifically, a more democratically elected Breeders’ Cup board of directors and one that isn’t controlled by a small executive committee. Significant change came in 2005 with amended corporate bylaws and articles of incorporation that allowed breeders who nominate foals and stallions to the program to vote for a board of 39 members and trustees. Those members and trustees would then elect a smaller operating board of directors to guide the organization.

At first blush, it looked as though the individuals who had controlled the Breeders’ Cup (namely Farish and Humphrey) were acceding to a democratic system (or at least one based on one vote per $500 in Breeders’ Cup nominations). But a closer look suggests they may have found ways to tip the scales of the election in their favor. In fact, a Farish has been able to maintain control of the Breeders’ Cup under the new election process, but it’s William Farish’s son, Bill, who has held the title of chairman of the board since the new system was adopted and the first reconfigured board of directors elected in 2006. 

The "election" of Bill Farish as chairman was a fait accompli even before the new board had its first meeting. "We have decided to elect Bill…" several newly elected directors were told on the eve of that first meeting, at which there was little discussion about a chairman. Farish has two years left to be chairman (term limits prohibit anyone serving more than five consecutive years as Breeders’ Cup chairman or vice chairman), and ground work is said to already be under way for Reynolds Bell, who does bloodstock work for Lane’s End, to replace Farish as chairman.

Back to the election of members and trustees. There is a section of the bylaws that permits the standing board of members and trustees to veto anyone voted onto the board by stallion and foal nominators. That authorization hasn’t been used since it was incorporated into the bylaws, but why is it even there? Is it possible this may be used in the event the people in control of the Breeders’ Cup become paranoid and worry that their grasp on power is in jeopardy?

Another example: Why would the current bylaws allow corporate officers (including paid employees) to participate in the election for the board of directors? Whether you are paranoid or thinking rationally, you’d have to assume that the paid officers, if they wanted to keep their jobs, would vote to maintain the status quo. The same goes for the section in the bylaws that allows past presidents to vote in the board of directors election. Currently, James E. Bassett III and D.G. Van Clief Jr. are permitted to vote for the board of directors at the annual meeting of members and trustees. Whenever the tenure of current president and CEO Greg Avioli ends, he will also have the right to vote for members of the board of directors.

Would it be paranoid to suggest that these three officers and two past presidents would be considered “safe” votes for the incumbents, as, represented by Farish and son?

For this year’s election of the board, to be held in July, the three corporate officers have agreed to abstain from voting. That’s a good move to alleviate concerns over conflict of interest, but the clause permitting their vote should be stricken from the bylaws. Past presidents Bassett and Van Clief should also agree not to vote in the election, and there is no reason to include past presidents in this decision making process.

Then there is the matter of the Founding Members, those individuals who put up $10,000 apiece as seed money when the Breeders’ Cup was established. The current founding members are Brownell Combs II (formerly of Spendthrift Farm), William S. Farish (Lane’s End), Jim Friess (appointed by Claiborne Farm’s Seth Hancock, the actual founding member), Brereton C. Jones (Airdrie Stud), John T. L. Jones Jr. (director emeritus of Walmac Farm)and John Nerud. It may have seemed like a good idea at the time to give certain lifetime rights to these individuals, but at least two of these founding members are no longer active in the business and it makes no sense for them to be able to vote annually on the election of board members. This is especially true when you consider the individuals (Sheikh Mohammed, John Magnier, Robert Clay, Tom Simon, Duncan Taylor, among others) who have put up huge sums in nominations and have to stand for election in order to have a vote for the board of directors.

To the credit of the Breeders’ Cup, there has been progress (click here to read the Paulick Report article on this year’s election), though it would not have been made without criticism, paranoid or otherwise, of how the current election system is shaped. The old guard that’s run the Breeders’ Cup has come a long way, but there’s more to be done.

Copyright © 2009, The Paulick Report

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The process began on Monday, May 4, when stallion and foal nominators could begin nominating candidates to run for 13 openings on the 48-person Breeders’ Cup board of members and trustees. By now, nominators should have received a letter from the Breeders’ Cup with a customer login and passcode to access a secure voting website that will be open for one week until May 11. Individuals must receive a minimum of 50 votes to be nominated (one vote is assigned for each foal nominated to the Breeders’ Cup and one vote for each $500 in stud fees for nominated stallions). There are 39 elected positions on the board of members and trustees, each with three-year terms, and 13 positions are up for election every year. The other individuals on the board of members and trustees are founding members of the Breeders’ Cup, past presidents and corporate officers.

When nominators go to the voting site, they should have access to a complete list of nominators and the total votes each nominator is eligible to cast. The disclosure of the nominators and number of votes is new to this year’s election.

The next step (from May 12-15), following the closing of nominations, is tabulation of the list of nominees. Individuals that received the required 50 votes are sent a consent form and will be requested to provide a short biography and suitable photo.

On May 18, True Ballot, a company that specializes in elections for labor unions, professional organizations, etc., mails nominators a letter with customer login and password information for secure online election voting. Nominators may request a paper ballot if they prefer.

Voting for the members and trustees election is open from June 1-15 among all nominators to the Breeders’ Cup program.

Following are the 13 members and trustees whose terms are expiring this year: John Amerman, Boyd Browning, Alice Chandler, Donald Dizney, Tracy Farmer, Tom Ludt, Clem Murphy, B. Wayne Hughes, Ogden Mills Phipps, Dan Pride, Richard Santulli, John Sikura, and Frank Stronach. These members and trustees whose terms are expiring are automatically re-nominated unless they opt out of the election.

On June 22, True Ballot will report the results of the members and trustees election and Breeders’ Cup will publish the results. Those results won’t be made official, however, until the annual meeting of members and trustees is held on July 9, and the candidates with the most votes are put up for election by the existing members and trustees. Prior to the vote at the annual meeting, according to section 4.2 of the Breeders’ Cup bylaws, nominations from the floor can also be made by members and trustees.

All members and trustees wishing to be candidates for two-year terms on the smaller board of directors have until 5 p.m. on June 30 to submit their names to Jim Philpott, the Breeders’ Cup corporate secretary. While the election for those open board positions (there are six this year) is conducted during the July 9 annual meeting of members and trustees, individuals unable to attend may vote through the election web site or via proxy, provided the member holding the proxy reveal the identity of each proxy he or she has received at the annual meeting. Each member is entitled to vote for up to six candidates.

The six board members whose two-year terms expire in July are: Reynolds Bell, Don Dizney, Tracy Farmer, Don Robinson (who is serving the remainder of the term of B. Wayne Hughes, who resigned from the board in January), G. Watts Humphrey, and Robert Manfuso. There are 13 elected board members, plus Breeders’ Cup president/CEO Greg Avioli.

Breeders’ Cup will publish the results of the board election, including votes, at the conclusion of the July 9 meeting.

Officers are elected at a subsequent meeting of the newly elected board of directors. According to Breeders’ Cup bylaws, no individual may serve more than five consecutive years as chairman or vice chairman of the board. Bill Farish of Lane’s End Farm is in his third year as chairman.

In a memo to the Breeders’ Cup members and trustees, Farish outlined the changes to this year’s election (publication of vote totals by nominator, full election results, on-line voting for both elections, proxy procedures, and officers electing to abstain in board of director election). “These changes to the election procedures are intended to provide full transparency to all nominators and ensure confidence in the election process,” Farish said in the memo.

The changes were requested by members and trustees who felt previous elections lacked sufficient transparency.

Additional changes have been requested, including amendments to the bylaws that would eliminate voting in the election for the board of directors by current officers (they have voluntarily abstained from the upcoming election); voting in the board of election by past presidents (James E. Bassett III and D.G. Van Clief Jr.); and voting in the board of election by founding members of the Breeders’ Cup, some of whom are no longer active in the Thoroughbred industry.

I’ll have my own thoughts on the Breeders’ Cup election process in a follow-up commentary tomorrow.

Copyright © 2009, The Paulick Report

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What you won’t hear in the report is how the tentacles of the Jockey Club and some of its individual members strategically reach into various organizations and businesses in an effort to exert control throughout the Thoroughbred industry.

To quote from the book, “The Right Blood: America’s Aristocrats in Thoroughbred Racing,” by Carole Case: “This is a story about money and power, and about a particular group of rich and powerful Americans—the men (and a very few women) of the Jockey Club. With its founding in New York City at the turn of the twentieth century, the Club took the reins of Thoroughbred racing in the United States, and it has never entirely let them go. For more than a century, then, the Jockey Club has dominated horseracing in this country.”

For better or worse, the Jockey Club, which has been ruled since 1982 by chairman Dinny Phipps and vice chairman William S. Farish, has considerable power over the Breeders’ Cup, Keeneland, National Thoroughbred Racing Association, the Thoroughbred Owners and Breeders Association and its American Graded Stakes Committee, Bloodhorse magazine, and the New York Racing Association, among others.

Here’s a quick rundown.

– William Farish’s son, Bill, is the board chairman of the Breeders’ Cup, which before its governance was changed a few years ago, had been tightly controlled by the senior Farish and his longtime friend and horse business partner G. Watts Humphrey. The battle over control of the Breeders’ Cup board has been detailed by previous articles in the Paulick Report..

– The senior Farish replaced Ted Bassett in 2006 as one of the three trustees who oversees Keeneland’s operations. Keeeland’s president, Nick Nicholson, is a former executive with the Jockey Club. There is some speculation that one of the senior Farish’s goals is to expand Keeneland to the point where it can bid to become a permanent host for the Breeders’ Cup, making it the Augusta National of the racing industry.. An expansion is on the drawing board now, with Keeneland making a possible Breeders’ Cup bid as early as 2011.

– The NTRA board is populated by several Jockey Club members, including Humphrey and Robert Clay, plus Jockey Club president Marzelli, and three racetrack executives — Nicholson of Keeneland, Bob Elliston of Turfway Park (owned in part by Keeneland), and Charles Hayward of the New York Racing Association, which has been controlled by Phipps for more than 30 years. At one point, the NTRA and Jockey Club shared office space in New York.

– The Thoroughbred Owners and Breeders Association has had some semblance of independence from the Jockey Club in recent years, through its chairman, Bill Casner, who is not a Jockey Club member but has been asked to speak at Sunday’s Round Table. Casner was recently succeeded by Reynolds Bell, currently a steward of the Jockey Club and a bloodstock agent whose major client is Farish’s Lane’s End Farm. Dell Hancock, whose family’s Claiborne Farm boards the Phipps family mares, served as chair of the American Graded Stakes Committee until recently being succeeded by Peter Willmot. Steve Duncker, currently the board chairman of NYRA, was a previous Graded Stakes Commiteee chair.

– Stuart Janney is chairman of Bloodhorse magazine, whose board also includes Bill Farish, G. Watts Humphrey, D.G. Van Clief, and Antony Beck—all Jockey Club members with the exception of Beck, who is very close friends with Bill Farish. Janney is a Jockey Club steward, a cousin of Dinny Phipps, and chairman of Bessemer Trust, the company founded by Phipps’ great-grandfather. He succeeded Humphrey as chairman, who in turn succeeded Bayard Sharp, Farish’s late father-in-law.

– The New York Racing Association’s close relationship with the Jockey Club is no secret. Its tracks serve as playgrounds for many Jockey Club members, most notably Dinny Phipps, who has the most desired finish line boxes at the NYRA tracks. The Jockey Club even has offices at the New York tracks. The Jockey Club once officially ruled New York racing, but lost its official control when a horseman named Jule Fink went to court after being denied an owner’s license. NYRA’s board is populated with Jockey Club members, and its chairman, Steve Duncker, like most chairman before him, is a member of the Club as well.

The tentacles clearly reach into breed associations, regulatory agencies and other organizations throughout racing and breeding.

What isn’t clear is why the Jockey Club, led by its chairman and vice chairman, wants so desperately to control the industry, and what they plan to do with that control.

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