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by | 11.17.2010 | 12:47am

By Ray Paulick

Dennis Mills is vice chairman and CEO of MI Developments, the Frank Stronach-controlled real estate company that assumed ownership of many of the racetracks formerly owned by another Stronach company, Magna Entertainment, after that entity filed for bankruptcy.


Mills jumped from the frying pan into the oven when one of his first moves overseeing the racetracks was to void the Oak Tree Racing Association's long-term lease of Santa Anita Park, a move authorized by U.S. bankruptcy court but widely criticized. That decision led to the California Horse Racing Board asking Mills and Stronach to appear at the board's June meeting, where they were given an opportunity to present their vision for the future of racing at Santa Anita Park and Golden Gate Fields in Northern California. At that meeting, Stronach reversed field, allowing Oak Tree to lease the Arcadia, Calif., track for its 2010 fall meeting.


Mills, a longtime politician in Canada (he was a member of Parliament from 1988-2004, and a cabinet adviser there), ran for a seat on the Breeders' Cup board of members and trustees last month. As part of his campaign, which did not succeed in his election, Mills set up a website (www.racingfuture.com <http://www.racingfuture.com/> ) that, among other things, sought ideas from the public on how racing can move forward and included an “idea contest” where the proposal judged the best idea wins expense-free, half-ownership of a North Light foal bred by Mills. The contest entry deadline is Aug. 1, 2010.


Mills spoke with the Paulick Report about the present and future of horse racing and its many challenges.

You recently ran for a seat on the Breeders' Cup board of members and trustees. What was the most important thing you learned despite not winning the election?

When Mike Rogers and Frank asked me to put my name forward I knew it would be tough sledding because I am unknown in the industry. However, because MID has a sizable investment in the racing industry I thought it would be a good thing to try and see if we could make some yards.


What I discovered essentially, after seeing the voters list, is that even though there are 60 pages of voters, one quarter of the first page representing eight breeders control about 90% of the votes. The concentration of voter power in the hands of about eight people was certainly a discovery for me. When I saw how many voters there were, that was the inspiration for putting up a website to see if we could reach out to the single vote breeder. If you didn't have half the support of the top eight breeders, you had no shot, unless you could reach out to the other, larger population of breeders. Not saying that's a bad thing, but the exercise of making it a more populist election is something that needs to be reviewed.

 

The second thing is, and let's make no mistake, I was perceived as the Frank Stronach candidate, and we've gone through a real patch in the last 18 months that has been uphill. I was under no illusion, and knew there were going to be very strong headwinds that weren't looking upon us with a very favorable light.


I really do believe in the brand Breeders' Cup. I think Greg Avioli and his marketing team have done a fantastic job. They've got a great foundation.

Part of what came out of your run for office was www.racingfuture.com, an attempt to find other great ideas like John Gaines' creation of the Breeders' Cup. What kind of response have you had?

I actually went on the stat counter today. We've had about 28,000 people visit the site from all over the world, though the concentration is in North America. What has impressed me is we've received about 300 proposals in terms of how to make the business better. About 80% are about the same and not really different—you know, the same old same old–but probably 40 to 50 efforts that once we boil it down will be quite productive.


We intend by the end of the month to publish the top 50 ideas. They range from making it more family friendly to tapping into the more sophisticated audience. What excites me is the keenness and desire to pull the sport out of the doldrums. The one thing I keep saying to myself, and to my colleague, Dave Williams, who is helping me with the site, is that we are inside our own sector. We have to get outside of our own bath water. We have to find out the best way to reach out to people instead of becoming so focused on just our own crowd. We've got to figure out a way to get out to the masses. That's the only way this is going to work.

 
Coming from the Canadian Parliament into MI Developments and eventually the horse racing industry, what has been the biggest change for you professionally?

In elected office you'd have eight or nine newspapers in front of you each morning and you'd see what your customers–the voters—want you to do. They are in your face. In the racing business, when you look at the sports pages, and it doesn't matter what state I'm in, we're virtually nowhere in terms of support and coverage. I find myself now slipping into the same habit of people in the industry. You get up in the morning. I used to read the Toronto Star, the Globe and Mail, etc. Now I either got onto the Paulick Report, or Blood-Horse or Thoroughbred Times websites, so we're all talking to each other. We need to find a way to talk to the other 95% who don't know we exist.


In politics, you work for the voter. You work for your customer.

If you don't have a voter base you don't get elected. We don't have a customer base.

But casinos don't exactly have daily newspaper coverage, and those businesses know how to keep track of their customers, don't they?

The people who operate the casinos are very aggressive in reaching out to people, making their product accessible. There's a casino north of Toronto and every day there are busloads going up there. And their ability to track their patron is masterful. When Ken Dunn was on his first month on the job at Gulfstream he told me we had a database of patrons: it started out with just 2,000 people and over the years it grew to 20,000. We should be tracking our customers much better. The casinos do a far better job of reaching out to their core customer, not to mention the fact they are much more aggressive in marketing by bringing in groups and entertainment. They are much better than we are.

 

On the lottery side, you can't go into a 7-11 or any kind of store in America without bumping into a lottery machine. Distribution for their product is huge. Distribution for Gulfstream Park's simulcast signal might be 1,500 outlets across North America. A lottery is in 150,000 outlets. We've got to do a much better job of distribution. Compression technology can help. Take a state like California, which is really floundering. If we can work with the California Authority of Racing Fairs, use their distribution capacity and put up thousands of off-track betting kiosks, then all of a sudden, the horse owners win, the state wins, everybody wins. Because of the new compression technology, everyone exists.

 

Rather than having distribution through satellite you have distribution through Internet, putting the signal through real time. We need to forget satellite technology. To encode it and have all this stuff in the OTBs where it costs $100,000 to put up a shop, it just doesn't work. The whole pricing model has to be reviewed. Until we have a pricing alternative, we're stuck. Now there are alternatives that will produce a high-definition product in a very low-cost way that will enhance our ability to compete with casinos and lottery in distribution. We've been investigating this and are ready to roll out in Portland, using these kiosks in about 25 locations, to make sure the bumps are ironed out. We'd want to go wherever we can. And by the way, this is not just an idea for the MID properties but for the whole industry.

Next week: Mills discusses the concept of free enterprise, and developments in California, Maryland and Florida

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