Posts Tagged ‘Ted Bassett’

First conceived five years ago as a day when veterans, active military and their families could enjoy a day of racing at the Lexington, Ky., racetrack with complimentary admission, seats and a program, Military Appreciation Day has grown steadily under the nurturing of Marrillia, who has no personal connection with family in the military but sees the day as an opportunity for the Keeneland family to give back to those who serve our country.

Working with the United States Army at Fort Knox each spring for the past three years, Keeneland has brought in a thousand recruits fresh from basic training, feeds them, and gives them a day of diversion from the more serious matters for which they are preparing.

When she learned that many of the soldiers had limited opportunities to talk with their families and friends and saw long lines at the track’s pay phones, Marrillia (pictured, left) organized a phone bank, using borrowed cell phones from Keeneland employees and customers, allowing the soldiers to call home for free. “Someone from Windstream was there that day, saw what we were doing and said, ‘We can do something to help,’” said Marrillia. “They came on-board as a sponsor, providing a bank of 50 phones to allow the soldiers to call anywhere in the world.”

The stories Marrillia heard had her reaching for a tissue. “One soldier found out he is going to be the father of a baby girl,” she said. “Another one discovered his son had learned to say ‘I love you.’ It was very touching, and it’s so nice to give them that opportunity.”

Marrillia also learned that Keeneland’s gift shop sold out of disposable cameras within minutes of the soldiers’ arrival at the track. She wanted everyone to take some memories home with them and went to work to find a sponsor to donate some cameras. “Many of them had never seen horse racing before,” she said, “and they wanted pictures. Wal-Mart provided them the cameras to do that this year, donating 1,000 disposable cameras.”

The soldiers consumed more than cameras. Each of them received a $10 food voucher from Turf Catering, and the first year the track ran out of ice cream. “We had no idea how much those boys would eat,” Marrillia said.

During the fall meeting, Keeneland worked with the Kentucky National Guard and the University of Kentucky to set up a satellite feed at the track, allowing military families in Kentucky to have private video conferences with their loved ones in Iraq and Afghanistan. One of the highlights of the last video conference was a soldier overseas getting to see his baby for the first time.

Participants also take part in winner’s circle presentations, and a military band is brought in to add color to the festivities. Keeneland’s regular customers get into the spirit, too, many of them giving up their tables in the dining rooms and buying them food, or inviting them up to the corporate suites.

Marrillia credits Ted Bassett, chairman emeritus of the Keeneland board of trustees and a former member of the U.S. Marine Corps, for helping Military Appreciation Day get off the ground. “I worked one-on-one with Mr. Bassett in the early stages because he was able to cut through so much of the red tape and help make the primary contacts with the military, allowing me to connect with the appropriate people,” she said. “Now that we’ve had a number of these days it’s a little easier. Every year he’s pleased that it’s a new Keeneland tradition.”

Marrillia is the driving force that makes Military Appreciation Day bigger and better each year. “This has been a success because of Christa’s enthusiasm for the project,” said Jim Williams, Keeneland’s director of communications. “She works with Fort Knox, the local military and our sponsors. She’s made it happen.”

Copyright © 2009, The Paulick Report

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Bassett was talking about the emergence of what then were just a few floating casinos in Illinois and the possibility of additional boats in Indiana; 1994 was only the beginning of an era that has seen an unprecedented explosion in gambling in states from New Mexico to New York, from Florida to Louisiana, from Mississippi to West Virginia, and from Michigan to Pennsylvania.

So much has changed in 15 years that even Bassett’s wise, old head must be spinning. In fact, his successor at Keeneland, Nick Nicholson, is now one of the main proponents to get Kentucky’s gambling playing fields level with those of other states. The mythical armada surrounding Kentucky has grown to include a massive floating arsenal of riverboats carrying blackjack and craps tables, and hundreds of thousands of slot machines at land-based compounds.

I understand completely what Bassett was saying. He hated the thought Kentucky’s racing industry would have to cave in to the pressures created by the dominos falling around him in other states. Betting on a horse and throwing money into slot machines are two forms of gambling, to be sure, but one involves an intellectual challenge, an agriculture based business, and a beautiful sport that at times can capture the interest and imagination of an entire nation. The other is a mindless activity that is virtually guaranteed to separate the player from his money: gradually, tantalizingly, but, ultimately, relentlessly.

Sadly, I hate to admit, the former – pari-mutuel wagering on horses – must depend to some degree on the latter – Video Lottery Terminals or slot machines – to survive.

The debate has gone on long enough in Kentucky. Fifteen years! There probably isn’t a resident in Kentucky who can’t jump in his car and within two hours be feeding a slot machine in a neighboring state. Thousands of Kentuckians are doing just that, every day, and it’s costing the state hundreds of millions of dollars each year in lost revenue. Worse, it’s threatening the very future of Kentucky’s largest and most important industry: the Thoroughbred.

I wrote earlier this week that slots revenue may in the long run be fool’s gold in many states, and I stand by that statement. Any non-essential industry that relies on subsidies to exist is skating on thin ice, because those subsidies can very well be taken away with the slash of a legislator’s pen. The racing and breeding industries in most American states would have to be put into that “non-essential” category. But Kentucky is different. Take away the horse farms and the nearly 100,000 jobs they have created, and you will have a state plunged into a deep, deep economic recession. No other state is so dependent on this major agribusiness. Furthermore, Kentucky’s identity to the rest of the world is so tied to horses that it would forever be changed.

It’s therefore essential that legislators, from Ashland to Hopkinsville, from Paducah to Williamsburg, understand that the armada is no longer mythical, that the assault is ongoing, and that the battle is in serious danger of being lost.

This subject has been debated, not just in the halls of Frankfort and the breeding sheds of Central Kentucky, but on the national airwaves. On Wednesday of this week and next week, Steve Byk’s At the Races radio show on Sirius channel 126 (4-7 p.m. Eastern) is devoting the entire three hours to the issue, “Kentucky in Crisis.” Byk’s guests this week were John Sikura of Hill ‘n’ Dale farm, Kentucky state Sen. Damon Thayer, Eclipse Award-winning writer Billy Read and trainer Chuck Simon.

Click here to listen to Wednesday’s enlightening “Kentucky in Crisis” program.

I’ll be on next Wednesday’s program, following scheduled appearances by Greg Stumbo, the Kentucky House Speaker whose VLT legislation cleared a House committee yesterday, lobbyist Gene McLean and former Kentucky Gov. Brereton Jones, the owner of Airdrie Stud.

VLTs or slot machines cannot be racing’s salvation. The sport is failing, not just in Kentucky but throughout the United States, because it has failed to adequately address a number of serious challenges. The racing product needs attention, and its business model is broken both on a local and national level, and simply putting additional money into purses is not going to fix the product on its own. It will, however, give the industry an opportunity to invest in its own future, something it has not been able to do since the mythical armada transformed into a very real threat to the survival of Kentucky’s most important industry.

Copyright © 2009, The Paulick Report

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In the 46 years since the Breeders’ Sales Company – a co-op established by Central Kentucky breeders — was handed over to Keeneland, the Lexington, Ky., auction house/racetrack has gross receipts of more than $13.5 billion through its sales of weanlings, yearlings, 2-year-olds in training and breeding stock. During that time, the Paulick Report estimates Keeneland has earned commissions of approximately $750 million from horses sold and from buybacks (based on 5% commission from 1962-2000, and 4.5% from 2001 to the present).

That estimated three-quarters of a billion dollars in revenue does not include entry fees from the thousands of horses sold each year (UPDATE: see comment section for a clarification on entry fees) or Keeneland’s portion of the takeout on live racing, simulcasting and account wagering.

What does Keeneland do with all that money?

Because it pays no dividends to its shareholders the way most publicly-held companies do, Keeneland distributes its sizable profits in other ways. For starters, it supplements overnight purses during its two race meetings in the spring and fall, making those meetings among the highest in daily average purses among all North American tracks. The 2008 spring meeting offered total purses of $10,016,860, a daily average of $626,054.

Keeneland makes frequent upgrades to its physical plant, for example adding luxury suites in the early 1990s and expanding its sale pavilion in 2004. It recently contracted with HOK Sport, a leading stadium architecture firm, to examine the possibility of expanding Keeneland to accommodate larger crowds and possibly host future Breeders’ Cup championships. It is currently too small to host a Breeders’ Cup.

Finally, Keeneland makes charitable contributions to the local community and to the horse industry. Since 1936, according to its media guide, Keeneland and its Keeneland Foundation have given more than $15 million to various charities.

As detailed in the Paulick Report’s first installment of this history of Keeneland, the track was funded by Kentucky horsemen and local citizens through an offering of preferred, non-voting stock and common stock that gave shareholders voting rights in certain company affairs. At some point, certainly as early as the 1950s, Keeneland general manager W.T. Bishop began approaching stockholders and requesting they return their shares of common stock to Keeneland. That effort went on for years and was largely successful, in part, some sources say, because Bishop and other Keeneland directors or executives persuaded the stockholders that the shares had no real value, since dividends were not permitted under the 1935 articles of incorporation. As an enticement to return the shares to the association, sources have said Keeneland may have offered lifetime membership in the Keeneland Club or coveted clubhouse or grandstand boxes.

At any rate, of the 3,500-plus shares of Keeneland stock originally sold, only a few remain in the hands of individuals. Those individuals are entitled to attend the annual shareholders meeting, which usually is held in October. At that meeting, shareholders are given an opportunity to inspect the financial records of the company, but no financial materials are distributed.

The vast majority of shares given back to Keeneland are controlled by three trustees who make all of the critical decisions for the company. Keeneland’s board of directors is viewed as a “rubber stamp” board, according to several board members who spoke with the Paulick Report. “It’s usually ‘Here is what we’re going to do, and thank you for coming,’” one longtime board member said. Another said financial documents distributed at Keeneland board meetings are skeletal compared with those of other boards.

The current trustees are Will Farish, Louis Lee Haggin III and William M. Lear Jr. An attorney who is not active in the horse business, Lear only recently replaced another attorney, William T. “Buddy” Bishop III, the son of the longtime Keeneland general manager. Buddy Bishop, who died earlier this year, was named a trustee in 2005 following the death of Charles Nuckols Jr. Farish was named a trustee in 2005 as a replacement for James E. “Ted” Bassett III, who had to step down because of age requirements. Bassett has been associated with Keeneland since 1968 and served as its president and board chairman.  Haggin is the longest-running trustee.

There is little known about if, how or when a voting trust was established to represent the shares turned back to Keeneland. It also isn’t known how that trust might have been established, or whether it may have been created by a specific document. It is also unclear if there is a beneficiary to the voting trust, and who or what that beneficiary might be.

Phone messages and a fax to Bassett from the Paulick Report asking specific questions about the voting trust were not answered.

In 2002, a new holding company, called Keeneland Trustees, Inc., was incorporated in Kentucky as a non-profit corporation. The articles of incorporation of Keeneland Trustees Inc. state that the purpose of the corporation is “to operate for any lawful purpose or purposes, including, but not limited to, holding shares of stock of Keeneland Association, Inc. or ownership interest(s) in any other entity(ies) and perpetuating the purposes for which Keeneland was formed, including promoting the sport of horse racing, improving the breed of Thoroughbred horses and conducting annual race meetings. The Corporation is authorized to exercise any powers conferred upon corporations formed under the Kentucky Nonprofit Corporation Acts as may be necessary or convenient in order to accomplish the above-described purposes.” The officers of that company coincide with who serves as Keeneland’s trustees.

In other words, the Keeneland Association is now owned by Keeneland Trustees, Inc.

If Keeneland Trustees, Inc. is viewed as a non-profit company by the Internal Revenue Service, its IRS Form 990 is to be made available for public inspection as required by section 6104. However, Keeneland vice president Harvie Wilkinson and treasurer Jessica Green told the Paulick Report upon a request to view IRS Form 990 that Keeneland Trustees Inc. is not a non-profit company.

The Keeneland Association is a for-profit company and has been since the late 1950s. Its earnings are taxed, but the IRS apparently does not have the benefit of a second level of taxes that it enjoys with public companies whose shareholders pay an individual tax on dividends. Keeneland retains a large portion of its annual earnings after subsidizing purses and contributing to its Foundation. Its cash reserves, sources have told the Paulick Report, are in the hundreds of millions of dollars.

“They don’t know where to spend all that money,” one longtime Keeneland consignor said.

Some have suggested the retained earnings could present a tax problem, and that is one reason Keeneland is looking at an expansion project that could take a huge bite out of those cash reserves. Potential legal issues might also help explain why the last two individuals appointed Keeneland trustees are attorneys.

Breeders who have sold the billions of dollars of horses that have helped Keeneland earn that approximately $750 million since the Breeders’ Sales Company dissolved in 1962 might want to have a say in how some of those earnings are spent. Is it, for example, in the best interest of those breeders for Keeneland to expand its facility at great cost in order to attract the Breeders’ Cup? That’s a big investment for one extra day of racing every few years.

Nick Nicholson, the track’s current president, thinks not just breeders but others should have a say in Keeneland’s direction. In announcing the recent deal with HOK Sport to look at expansion, Nicholson said: “The citizens of our community, the state, and the Thoroughbred industry have a sense of ownership in Keeneland, and we respect and embrace that. Keeneland is an important part of Central Kentucky’s history and landscape, and we feel all should have a voice in its future.”

Keeneland was formed because of the widespread support of horsemen and the local community, and it became an extremely profitable company because of the many Thoroughbred breeders who sell their horses there.

It would be a refreshing change to see more than three people have a say in Keeneland’s future.

Copyright © 2008, 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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