Posts Tagged ‘toc’
Wednesday, February 24th, 2010
By Ray Paulick
A Paulick Report reader commenting under the pseudonym of “another young owner” made the following observation in connection with yesterday’s article that surveyed top executive salaries at 18 industry non-profit associations: “Over $3.75 million a year and our industry has never been worse off… we have some great leaders!”
Actually, the aggregate of the 18 salaries was $3,911,096 and didn’t include bonuses, retirement plan contributions or other benefits.
But the point made by “another young owner” was not lost on me. When you consider that executive salary should only be a small fraction of an organization’s expenditures and that there are many more associations and businesses not included in our survey, it makes you wonder: What exactly are we getting for all that money?
Do we really benefit from and need a TRA and an NTRA, a TOBA, an HBPA and a THA, a TOC and a CTT, a Jockey Club and a Jockeys’ Guild? For the ultimate absurdity consider that we used to have two national organizations for racing regulatory bodies—neither of which really had the authority to do anything.
Perhaps when racing was healthy—a regional or local sport that didn’t participate in interstate commerce–there was little need to consolidate some of these redundant organizations. But today, as revenues are in serious decline among racetracks, horse owners, breeders and in virtually every other industry sector, the status quo will not work.
But don’t take it from me. Owner and breeder Satish Sanan, a no-nonsense businessman who has closely examined racing’s organizationally littered landscape, believes the industry will continue in a downward spiral unless it commits to changing its structure.
Sanan, a weekly guest on Steve Byk’s satellite radio show, “At the Races,” has been speaking out in his regular “Our Industry” segment about the need for a new structure. (Click here to listen.) Yesterday, in reaction to the Paulick Report’s salary survey, Sanan said: “If you look at the so-called alphabet soup organizations from TOBA to NTRA to horsemen’s associations, the THA, and the (Thoroughbred) Owners of California, you can add all that crap up, and collectively we are spending millions of dollars. Each one is doing one or two good functions, but not seriously impacting the growth of the industry. It goes back to, do we need this kind of structure and what the hell is it doing for our industry? We need a single structure and in that structure we have got to find a way to generate more revenue, put more money back into the business, hire the best talent.
“When the NFL and NBA created leagues, they brought people in, paid them millions of dollars, and put governance and structure in place and marketed the hell out of their sport and nobody complains about that because they bring in hundreds and hundreds of millions of dollars. Unfortunately, there is not an organization with the exception of maybe individual racetracks that are customer focused, customer centric, customer-service centric.”
Sanan said Breeders’ Cup–where he is on the board of directors and has led a strategic planning committee that is set to announce its final recommendations at a board meeting on Thursday—is the only association on the horsemen’s side of the industry that has focused on revenue growth. “I do not know of another organization that is tasked with growing the business,” he told Byk.
“The leadership of our industry should be thinking like a think tank and working together, talking about how do we transform this business, how do we go back to how this business used to be, how do we attract new owners, keep the existing owners, keep the existing horseplayers, have them bet more and make it more attractive to them and market the sport so we can attract new ones. I’m at a loss as to whose job it is and who thinks about these things on a daily, weekly, monthly basis. Can you name somebody? I (expletive deleted) can’t.”
Byk couldn’t either.
“We have got to streamline our industry,” Sanan continued. “There should be one horsemen’s organization, not 15. Period. There should be one panel that focuses on nothing but all the issues that are integrity-related: safety, medication, tote and wagering, and build confidence so we can attract new people. We need the best of minds with the most creative and innovative marketing programs to attract new horseplayers, new fans and market the hell out of the sport. Shoot, if this was my company I would be doing it.”
And that begs another question: Whose company is it? Who will take the lead here? Which organization will dissolve or be willing to merge with someone else. Which alphabet soup executive will focus more time on doing what’s right for the greater good of the industry instead of fighting to maintain whatever small chunk of turf he controls? Many of these executives are bright people, but the absence of a common-sense structure and industry-wide collaboration is a lethal combination.
There are too many chefs cooking our alphabet soup, and no one is buying it.
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Tags: at the races, Breeders' Cup, ctt, hbpa, Jockey Club, jockeys' guild, NBA, nfl, non-profit, NTRA, Our Industry, Paulick Report, Ray Paulick, satish sanan, steve byk, tha, TOBA, toc, tra
Posted in Industry, Industry Organizations | 53 Comments »
Friday, February 5th, 2010
As if California racing doesn’t have enough challenges, the very recently appointed President of the Thoroughbred Owners of California resigned abruptly today. Below is the press release of this bizarre happening.
Steve Schwartz Resigns TOC Position
Effective immediately, Steve Schwartz has resigned from his position as President of the Thoroughbred Owners of California. Schwartz indicated that, having given this decision a lot of thought, he felt the time and travel involved were beyond his expectations. Spending enough time with family has always been a priority, Schwartz commented. He also expressed how much he enjoys being a part of the California racing industry and he intends to continue to be active whenever possible.
Marsha Naify, Chair of the TOC Board of Directors, stated, “We respect Steve’s decision and wish him all the best in his future endeavors.”
TOC is the official organization serving new, veteran and future Thoroughbred owners in the state. It represents, advances, and protects owners’ interests and rights in legislative, administrative and business matters. Additionally, the organization provides ongoing educational opportunities for current and prospective owners, regularly presenting programs on Thoroughbred ownership. www.toconline.com.
Tags: Marsha Naify, Paulick Report, Ray Paulick, Steve Schwartz, thoroughbred owners of california, toc
Posted in California | 11 Comments »
Thursday, January 21st, 2010
By Ray Paulick
Trainers in Northern and Southern California have elected a new board of directors to California Thoroughbred Trainers after the sitting board agreed to resign en masse when confronted by possible decertification last year by a new organization, California Horsemen for Change, started by one-time California Horsemen’s Benevolent and Protective Association leader Darrell Vienna.
Ed Halpern, executive director of the CTT, said the following nine trainers were elected to the new board: Bob Baffert, Jeff Bonde, Gloria Haley, Terry Knight, Doug O’Neill, John Sadler, John Shirreffs, Darrell Vienna, and Kathy Walsh. Bonde, Haley and Knight were elected to represent Northern California, while the remaining six represent Southern California.
Baffert, Bonde, O’Neill, Sadler, Shirreffs, Vienna, and Walsh were listed as supporters of California Horsemen for Change in a letter written to trainers last October. Shirreffs was the only member of the previous CTT board reelected in balloting that took place from early January until Jan. 18.
The new board is scheduled to meet and elect new officers next Wednesday. Jim Cassidy served as the last CTT president.
“I’m hopeful this election will generate a new sense of participation among the membership,” said Halpern.
When the Thoroughbred Owners of California was created 15 years ago, replacing the HBPA in matters such as purse negotiations with racetracks, the CTT was created to deal with backstretch conditions, track safety, and benevolence matters. As California racing’s fortunes have declined in recent years, there has been growing unrest among trainers over a number of issues.
California Horsemen for Change pointed to the following as areas of concern:
- the closing of Fairplex Park to stabling and training due to revenue shortfalls;
- the poor economic state of the racetracks and the uncertainty over the future of Hollywood Park, Santa Anita Park, Golden Gate Fields and Del Mar;
- questions about the safety of synthetic tracks;
- a desire to be more closely engaged with TOC.
(For additional background on the dispute among California trainers, click here to read an earlier Paulick Report article on the issue.)
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Tags: Bob Baffert, california horsemen for change, california thoroughbred trainers, ctt, darrell vienna, doug o'neill, ed halpern, gloria haley, jeff bonde, jim cassidy, john sadler, john shirreffs, Kathy Walsh, Paulick Report, Ray Paulick, terry knight, thoroughbred owners of california, toc
Posted in California, Trainers | 6 Comments »
Wednesday, October 21st, 2009
By Ray Paulick
UPDATED 9 P.M.
(NOTE: Several hours after the following story was published, the Paulick Report received a press release from the group known as California Horsemen for Change in reaction to the email distributed by the California Thoroughbred Trainers to some of its members. Click here to read the press release from California Horsemen for Change.)
The civil war that broke out recently among California trainers has escalated as a result of the following email that warns horseman what could happen if California Thoroughbred Trainers is decertified. A group calling itself California Horsemen for Change is staging a palace revolt to either replace all nine members of the CTT’s current board of directors through a special election or get enough signatures from trainers to have the CTT decertified.
Click here for a previous Paulick Report story providing background on the war between the California trainers and here for a press release from the California Horsemen for Change.
Following is the warning email distributed by the California Thoroughbred Trainers to its members:
WARNING!
An organization has been formed that is attempting to eliminate the CTT. That group plans to ask the CHRB to make it the representative of all the trainers. Be aware that:
-
YOUR SUPPORT OF A NEWLY FORMED TRAINER GROUP COULD HAVE SERIOUS NEGATIVE FINANCIAL AND POLITICAL IMPLICATIONS
-
WE URGE YOU NOT TO SUPPORT THE ELIMINATION OF THE CTT
-
WE URGE YOU NOT TO SIGN ANY PETITION TO DECERTIFY THE CTT
Joining that group or signing a petition to decertify the CTT could have the following consequences:
· IT COULD THREATEN THE CTT / CHSA WORKERS’ COMPENSATION INSURANCE PROGRAM, RESULTING IN HUGE INCREASES IN YOUR PREMIUM
· IT COULD LEAD TO TERMINATION OF THE CURRENT INSURED PENSION PLAN AND REQUIRE THAT YOU BE LIABLE FOR BENEFITS DUE TO YOUR EMPLOYEES UNDER ANY NEW INSURED PLAN
· IT COULD KILL INDUSTRY EFFORTS TO PURCHASE SANTA ANITA AS A HORSEMEN’S NON-PROFIT
· IT COULD PUT AN END TO CURRENT DISCUSSIONS BETWEEN THE CTT AND THE TOC REGARDING UNIFICATION OF THE ORGANIZATIONS
· IT COULD LEAD TO A LOSS OF REPRESENTATION ON THE RACING MEDICATION & TESTING CONSORTIUM (RMTC)
If your desire is to change the management, directors, and direction of the CTT while bringing the industry new leadership, there is a much easier, faster, and sensible way to do so without creating these risks.
WHY COULD A DECERTIFICATION PETITION COST ME MONEY?
Simply put, AIG could refuse to continue with the current workers’ compensation program. This program was built on personal relationships with AIG and trust in the CTT management of the program. The program could not be replaced. There are no other insurers out there that will provide such low-cost coverage. Your only option would be State Fund at three to four times what you are now paying. In the current environment, AIG is being very careful about the way they do business. In July of each year, they are owed $11 million in premiums from the organization. They have faith in the fact that the CTT will make sure they are paid and the program will be managed honestly and efficiently. If they see turmoil and a new group being responsible for the program, they could well decide not to offer coverage. That would cost individual trainers thousands or tens of thousands each month out of their respective pockets.
WHY COULD DECERTIFICATION LEAD TO ME BEING PERSONALLY LIABLE FOR THE PENSION BENEFITS OF MY EMPLOYEES?
When the CTT Backstretch Pension Plan was created, it was allowed to become part of a federal insurance plan that did not require that each employer be individually liable for the benefits due to his/her employees. The rules have since been interpreted to provide that a plan may not obtain federal insurance unless each individual employer is liable for his/her employees’ benefits. Currently, the CTT Plan remains federally insured even though federal administrators have again raised the question of its eligibility. If the CTT were to be disbanded, the regulators could declare the plan ineligible to continue with the individual liability exception that we now enjoy. The Plan would then become uninsured.
By way of information, the Plan under current CTT management has seen its value INCREASE 42% over the past ten years. That increase in value has taken place in spite of the fact that the leading stock market index has actually DECREASED 9.4% in that same period. The current value is approximately $34 million. Approximately 760 people are currently collecting monthly benefitsand there are over 2,400 combined trainers and their employees who are registered to one day collect benefits from the Plan. The success of the CTT Pension fund is due to the dedication of a volunteer management committee that includes three professional money managers. Should a battle break out over decertification of the CTT, those volunteers are unlikely to want to continue to be involved.
WHY WOULD A DECERTIFICATION PROCESS ELIMINATE THE POSSIBILITY OF A HORSEMEN’S NON-PROFIT GROUP OWNING SANTA ANITA?
The people putting together this non-profit group have advised that any turmoil within the industry at this time would make such a project impossible to finance. The investment bankers are not going to put up funds for a project when the industry is involved in a battle over horsemen’s representation.
WHY WOULD THE THREAT OF A NEW TRAINERS GROUP END ANY POSSIBILITY OF CURRENT CTT-TOC UNIFICATION?
One of the major concerns of the TOC in dealing with trainers has always been that certain dissidents would take seats on its Board. The TOC even fashioned rules to prevent that. A takeover movement by the newly formed group would again fuel those fears and cause a breakdown of current talks.
WHY WOULD THE ELIMINATION OF THE CTT AS THE TRAINERS’ REPRESENTATIVE LEAD TO A LOSS OF THE CTT’S DIRECTORS SEAT ON THE RMTC?
The RMTC is the source of almost all new medication rules and penalties in California. The CTT was one of the original members of the RMTC and is on the board of directors of that organization. If a new organization were to become the representative of the California trainers, that seat could be lost. The TOC also holds a seat on that Board and the RMTC Board may feel that no other state has duel seats and, therefore, the TOC is sufficient representation.
THERE ARE SIMPLER, FASTER, AND LESS DEVICIVE WAYS OF MAKING YOUR VOICE HEARD AND CREATING POSITIVE CHANGE IN THE HORSE RACING INDUSTRY.
The CTT is a democratic organization owned equally by YOU and each licensed trainer in California. It has a nine person Board of Directors who are all trainers, with three directors being replaced each year by an election in which each trainer is allowed to vote.
Three directors’ seats will be up for election in less than nine months. Another three directors were elected just 3 months ago, with two of them likely to be appointed by the newly formed group to its board. By electing three new directors of your choice, you can change the make-up and direction of the CTT Board.
Given that option, ask yourself, why would I choose to use a process that requires obtaining signatures from about 1/3 of the membership, approval by the CHRB, followed by a vote of all trainers, and the time and expense of creating and funding a new organization? Why would I choose to risk the resultant damages that are described above? Why would I choose to take sides in such an angry battle that is likely to create acrimony at my workplace for years to come?
Do not support that new organization called the CHC. Do not sign any petition to decertify the CTT. You do have other more effective and less destructive options. To promote change in the industry, become active, call (626-447-2145), email to comments@caltrainers.org, or visit a CTT office and voice your concerns. Volunteer to join or create CTT committees of your choosing.
If you think you might have signed a petition to decertify the CTT and you wish to withdraw your signature, please complete the below and return to the nearest CTT office. You may also fax to the CTT at (626) 446-0270.
I hereby withdraw my name from any petition to decertify the CTT.
__________________________________ _______________
Signature Date
__________________________________
Print Name
WARNING
Tags: california horse racing, California Horse Racing Board, california thoroughbred trainers, ctt, Paulick Report, racing medication and testing consortium, Ray Paulick, thoroughbred owners of california, toc
Posted in California, Industry Organizations | 27 Comments »
Tuesday, October 13th, 2009
By Ray Paulick
The California racing and breeding industry appears to have the stability of a bowl of Jello. Two tracks, Santa Anita Park and Golden Gate Fields, are owned by bankrupt Magna Entertainment and their future is cloudy. Hollywood Park is in the hands of a land developer that already bulldozed Bay Meadows and has similar plans for the Inglewood facility, though when he gets the money to develop the property is anyone’s guess. Del Mar is run by a non-profit association whose contract will soon expire. Training centers are being shut down, farms are closing and the foal crop is sinking. The former head of the California Horse Racing Board pleaded guilty to a crime most often committed by juvenile delinquents. The Thoroughbred Owners of California has been without an executive director for the last several months. And now the state’s Thoroughbred trainers are forming a circle, pulling out their weapons and getting ready to fire.
In a word, it’s a mess.
It’s been more than 15 years since the late Ed Friendly—the Emmy-winning television producer of such shows as “Laugh In” and “Little House on the Prairie”–led a revolt that ejected the Horsemen’s Benevolent and Protective Association from its traditional role representing the state’s owners and trainers and created the Thoroughbred Owners of California. TOC would be responsible for negotiating purse and simulcast contracts with racetracks and represent owners in front of the CHRB and state lawmakers. At the same time, a new group called California Thoroughbred Trainers was formed and certified, and their role was to deal with track management and the CHRB on issues related to backstretch conditions, track safety and benevolence.
Owners in other states have tried similar maneuvers but failed, in part because they lacked a leader with the tenacity and commitment of Ed Friendly and also because they didn’t have a focal point to rally around. For Friendly and his fellow owners, that focal point was a trainer-led boycott of Friday night racing at Hollywood Park in 1992. The trainers didn’t want to race at night, and Friendly said it wasn’t up to them to decide when to race his and his fellow owners’ horses. Friendly persevered and won the fight, getting legislation passed that created TOC and neutered the HBPA.
The two groups have pretty much stuck to the script since then, with TOC representing owners not only in California but on national organizations like the National Thoroughbred Racing Association. CTT has focused mainly on backstretch issues. How well has the arrangement worked? It depends on who you ask.
A group of prominent trainers have become increasingly unhappy with the situation and with the representation they were getting from the CTT. When an general election was held in June for three of the CTT’s board seats, trainer Jim Cassidy, who had served as president for the previous year, was voted off the board. The following month, when the newly seated board met (John Shirreffs, Clifford Sise and Ed Moger were elected in June, joining incumbents Dan Hendricks, Jack Carava, Bill Anton, Gloria Haley and Tim Bellasis), their first order of business was to appoint a replacement for Eoin Harty, who had resigned from the board with one year left on his term. Harty said he was spending an increasing amount of time out of state.
The board voted to replace Harty with Cassidy, who had the fourth-highest number of votes for the three board positions in the June election. After being put back on the board, Cassidy was then re-elected president on the second ballot (three individuals nominated on the first ballot each received three votes, and one of the candidates withdrew his name from consideration prior to the second ballot).
That sequence of events didn’t sit well with the trainers who voted to keep Cassidy off the board in June. Much like the Friday night boycotts motivated owners to form the TOC, the appointment of Cassidy and his subsequent reelection as president galvanized CTT’s critics. They formed an ad hoc group called California Horsemen for Change, and began laying the groundwork in an effort to replace CTT as the organization representing trainers. Members of the California Horsemen for Change and others met with the CTT last Friday (click here for a press release from the California Horsemen for Change), and urged the CTT’s board to vote for a new election to fill all nine board seats. The CTT board agreed, by a 5-4 vote according to a source, but additional changes in the bylaws will be required before they can wipe the slate clean and elect a new board of directors. According to a published report, one CTT member has challenged the legality of the board’s decision to hold a new election.
Interestingly, the trainer said to be behind this new organization is Darrell Vienna, one of the leaders of the Friday night boycott at Hollywood Park in 1992 that led to the HBPA being ousted and the trainers losing much of their clout. According to a source, Vienna, who is one of a number of trainers unhappy with the CHRB’s synthetic surface mandate at California racetracks, spoke up against the synthetic tracks at a CTT meeting earlier this year where the CHRB’s equine medical director, Dr. Rick Arthur, presented statistics comparing equine fatalities on dirt versus synthetics. Vienna “got into it” with Arthur, the source said, demanding to see the data of the study. At that point, Gloria Haley, a CTT board member from Northern California, was said to have reprimanded Vienna, reminding him that he was “guest” at the meeting. The comment apparently infuriated Vienna.
“When we had the vote three months ago I asked Vienna personally to run for the board,” Cassidy told the Paulick Report. “He refused. He said ‘I’m not getting involved.’” It looks as though he’s changed his mind.
Vienna didn’t answer questions when contacted by the Paulick Report, instead deferring them to Chris Knight, a recent law school graduate and son of trainers Chay and Mary Knight who has been brought on as interim executive director of the California Horsemen for Change. Knight downplayed any discord between any individuals within the two organizations or anger with the recent election, instead saying the “CTT and California trainers in general are dissatisfied with California racing. We’ve capitalized on the momentum and will be holding a new general election, having everyone involved.”
Knight said there are a number of critical issues, including:
- the pending closing of Fairplex Park to stabling and training due to revenue shortfalls;
- the poor economic state of the racetracks and the uncertainty over the future of Hollywood Park, Santa Anita Park, Golden Gate Fields and Del Mar;
- questions about the safety of the synthetic tracks;
- a desire to be more closely engaged with TOC (according to sources, there have been recent talks between CTT and TOC to bring the groups closer together).
Cassidy said the individuals within the two groups share common ground in many areas, including a desire for higher purses and greater stability in track ownership. “A lot of them have their own agendas including a change in surfaces, and I understand all that,” he said. ”I tell them we work on what we can. I’m at so many of these meetings that my head spins. I hate to see what’s happening, because people are desperate and angry, but those are the times we are in right now. I feel like the Lone Ranger.
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Tags: california horsemen for change, california thoroughbred trainers, chris knight, ctt, darrell vienna, ed friendly, eoin harty, gloria haley, hbpa, hollywood park boycott, horsemen's benevolent and protective association, jim cassidy, Paulick Report, Ray Paulick, rick arthur, thoroughbred owners of california, toc
Posted in California, Industry Organizations, Synthetic surfaces | 20 Comments »
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 »
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
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.
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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, January 7th, 2009
By Ray Paulick
Are betting exchanges a possible solution to the problems facing the U.S. Thoroughbred industry, which in 2008 saw its annual pari-mutuel handle fall for the fourth time in six years, dropping over 7% to a 10-year low? The Thoroughbred Owners of California thinks they may be, having recently signed a letter of agreement with betting exchange giant Betfair to have the UK-based company promote California racing abroad while TOC helps BetFair obtain statutory and regulatory approval to operate a betting exchange in California.
Betfair, which has been trying for several years to gain access to the U.S. market, is also believed to be a leading candidate to buy TVG, whose parent company, Macrovision, announced its intention to sell TVG last year. Though there are no confirmed suitors, others rumored to be potential buyers of the racing network and Advance Deposit Wagering platform include Churchill Downs Inc.; Marc Nathanson, a cable TV industry billionaire and father of TVG president David Nathanson; and an industry consortium that could include Keeneland, the New York Racing Association, former Hollywood Park chairman R.D. Hubbard, and Los Alamitos racetrack owner Edward Allred.
Betfair, a privately held company, was founded in June of 2000, using a technologically advanced platform permitting individuals to go online and bet against one another on a wide range of events, including horse racing, sports, politics and even reality television shows. By taking commissions of 2%-5% from winning bets, the company offers extremely low takeout and has built enormous volume: it claims to have over one million customers from 140 countries, with 100,000 or more active players in a given week. (UPDATE: Betfair said in October 2008 that it signed up its two millionth customer; see comments section, below) Its wagering platform handles over five million bets per day. In 2007, Betfair had 42 million English pounds in earnings before interest, depreciation, taxes and amortization on revenue of 240 million pounds. According to its annual report (which can be seen here), Betfair has 110 million pounds cash on hand.
CONCERNS ABOUT BETFAIR
The problem many see with Betfair is that the company pays a small percentage for the rights to races on which it handles wagers. In England, for example, it pays a bit over 10% of gross profits on racing wagers. In some cases, however, it pays no fees at all, as is currently the case with racing from the U.S. Betfair currently accepts bets on American racing, but only from customers outside of the U.S., and it does not have rights to any video signals. Betfair is acutely aware of concerns from racing interests in the U.S. who believe betting exchanges would cannibalize pari-mutuel betting and decrease revenue to tracks and purses. It addresses some of those fears in this pamphlet, which was designed to appease the racing industry in the United Kingdom.
Another concern raised about Betfair centers on wagers it accepts that a specific horse will lose, prompting worries about race-fixing. But Betfair has cooperated in several investigations involving horse racing and sports betting, giving authorities access to detailed betting information as part of its memorandum of understanding.
Drew Couto, the president of TOC, said the letter of agreement with BetFair was signed last month. He believes wagering will continue to suffer unless the industry distances itself from Albert Einstein’s definition of insanity: doing the same thing time after time and expecting a different result. “That really describes our industry’s approach to this sport and business over the last decade,” Couto said.
“Going forward,” he added, “we have to face two very important realities. “First, we have allowed the sport to basically disappear. It’s no longer a sport, but simply a justification to gamble and wager, and as a wagering proposition we know it’s not the most attractive. We have to go back and make it a sport. We have to give the sport some structure to have it make sense for the fans, make some very serious fundamental changes to focus on the sporting aspect of racing. We have left it largely to the tracks to be the stewards of the sport, and they only care about the financial side.
“Second,” Couto said, “we have to adopt new ways our fans can participate. New wagers, betting exchanges. We have to embrace these new ways of playing as ancillary to the way we currently operate, so it’s new and fresh. That includes tournament-style wagering that was approved by the RCI (Association of Racing Commissioners International) last summer. If we don’t begin to do things differently and find new ways to operate, we are bound to be the definitive example of what Einstein said.”
CAN RACING DEVELOP ITS OWN BETTING EXCHANGE?
Chris Scherf, executive vice president of the Thoroughbred Racing Associations of North America, a racetrack trade organization, for years has advocated that North American tracks consider developing their own betting exchange. He sees the trend in downward handle as a serious crisis.
“We’ve got to look into pricing (the takeout charge on pari-mutuel bets), the product that’s being provided and the convenience factor for wagering,” Scherf said. “We need to make the same kind of concerted effort on handle that is currently being made to improve the safety and welfare issues. Track by track, you can get swamped in a million problems, but this has to be at the top of the pile. We are losing bettors. What do we have to do to change that aspect of the business, the part that provides us revenue? Of course, the entire debacle of cutting off signals in the last year (due to contractual disagreements between tracks and horsemen over ADW splits) was extremely detrimental to any kind of sustained gambling business.
“The problem,” Scherf said, “is we’ve got tracks and horsemen both saying they need more money in this economy. But the first thing we need is an engaged gambling public, and they should be at the top of the list.”
Scherf said he is “somewhere in between fear and welcoming” Betfair into the industry. “We had no master plan for how ADW would fit in and now we are trying to retrofit it, which is causing a lot of angst and problems. We need to spend more time developing a strategy (for exchange betting), though it’s difficult to do that when you have a wide disparity throughout the industry in resources and markets.”
Lonny Powell, an industry consultant based in Lexington, Ky., who previously served in executive positions with racetracks (including head of Santa Anita Park), the ADW company Youbet.com and as president of the Association of Racing Commissioners International, said BetFair has done a good job of “mainstreaming themselves” in recent years by sharing more of its profits with the racing industry in Europe.
“It’s here to stay,” Powell said of Betfair and exchange betting. “When I was in the ADW world, I wished they would just go away, but I don’t feel that way anymore. We’re like an ice cream store that only sells vanilla, but you can go over to Baskin Robbins and get 33 flavors. We need variety.”
Powell, who said he is optimistic the industry will find a solution to its present challenges, believes racing interests should look at developing their own betting exchange. “If the industry could somehow take this wagering crisis a little more seriously and rather than find ways to kill something, find ways to make it work, we can grow the gambling dollar,” he said. “A Betfair type of platform can be operated by U.S. racing interests. The economic model that Betfair offers is flawed, but we all agree our current model is flawed, too. I’ve got to believe a Betfair type of platform would work. Our product is stale, and our wagering levels are stale.”
INTEGRITY ISSUES REMAIN A CONCERN
The reason for declines in handle go beyond a limited product line, said Mike Maloney, a professional gambler in Kentucky who has become an outspoken advocate for horseplayers at industry conferences and who served as an ad hoc member of a Kentucky Horse Racing Commission Task Force. “We are at a very significant crossroads in racing,” Maloney said, “probably the biggest one in my lifetime. The financial crisis is magnifying our problems, but the problems have to be dealt with before racing can recover. The economy may improve, but racing’s problems will still be there.
“Our customer base is aging, and they’ve lost a lot of their faith in the integrity of racing,” he said. “As they age, they aren’t being replaced. The second problem is the takeout is too high. We can’t attract new players and are having a hard time holding on to existing ones. It’s exacerbated because the takeout keeps going up. With competition from other gambling opportunities, you can’t get away with that any more. It’s roughly 5% in other forms of gambling – sports, table games, trading options – but it’s 20% for us. New York just raised takeouts; trifectas are 26% now, and I just refuse to play it. Kentucky wants to raise takeout. What other business in this economic climate would consider racing prices?
“Third,” Maloney said, “racing integrity problems are real, and they are not exaggerated. If anything, they probably are underplayed. Trainers who use drugs to cheat; unsecured wagering pools with outdated technology; unregulated participants allowed access into those pools. People are just beginning to learn about some of the problems in these areas. In the last couple of years the light is being shined on them. These are serious problems that need to be dealt with. Big players realize they can’t trust the pools they are playing money into.”
Finally, Maloney said, the corporate mentality of many racetracks has hurt the game. “There is a disconnect with customers with some of these racetrack holding companies. They don’t really understand their business, and there’s too much short-term bottom line thinking; cutting costs, worrying about the next quarterly report, and too little thought about long-term improvement of the product.”
Maloney, who called betting exchanges a “two-edged sword” because of how they would cannibalize pari-mutuel betting, said the industry has had a wake-up call after being “rocked by betting and drug scandals and threatened” by the federal government. “This crossroad we’re at, what we do from here, will determine the fate of racing.”
(Do you have an opinion on how the industry reverses the trend in declining handle? We’re interested in your comments below and in your thoughts about betting exchanges, the subject of the Daily Paulick Poll, which can be found on the left-hand column of the Paulick Report home page.)
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Tags: advance deposit wagering, ADW, association of racing commissioners international, betfair, betting exchange, chris scherf, churchill downs, david nathanson, drew couto, edward allred, gambling, Hollywood Park, horse race gambling, Horse Racing, horseplayer, integrity in racing, Keeneland, lonny powell, los alamitos, marc nathanson, mike maloney, New York Racing Association, nyra, pari-mutuel wagering, Paulick Report, powell strategy & solutions, professional gambler, R.D. Hubbard, Ray Paulick, RCI, santa anita, Thoroughbred industry, thoroughbred owners of california, thoroughbred racing associations, toc, tra, tvg, youbet
Posted in Account Wagering, Betting Exchanges, Industry Organizations, Industry Reform, Regulatory Issues, Wagering | 37 Comments »
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