The Breeders’ Cup Forum – Iavarone: ‘We’re Out of Luck’

by | 04.04.2013 | 7:37am

The Ruffian Equine Medical Center, located across the street from Belmont Park in Elmont, N.Y., has been empty since suddenly shutting down operations on March 1, 2011. Built by International Equine Acquisitions Holdings and opened in May 2009, the REMC was run by Dr. James Hunt and its surgeon was Dr. Patricia Hogan.

Michael Iavarone, the founder of IEAH, spoke about the hospital's closing and plans to offer it for sale at auction next month. He also touched on IEAH's current status as a racing stable and the 10-year suspension of Rick Dutrow, who trained Big Brown and most of the other successful IEAH runners.

(Note: Original version of this article erroneously said the Ruffian Equine Medical Center would be sold at “absolute” auction. An official with Higgenbotham Auctioneers contacted the Paulick Report and said the auction would not be absolute, meaning the seller may bid or set a minimum sale price.)

What's the status of the Ruffian Equine Medical Center?
The hospital has been closed about two years now. We are still carrying the costs of taxes, upkeep, you name it, doing whatever is needed to keep a shuttered building intact. We are still financing the cost, but there are no current operations going on inside.

We have tried to get someone to reopen it but have not been successful. It's going to be sold May 15. Higgenbotham Auctioneers is handling it. It's the only thing left for us to do. We hope someone in the industry will step up. The New York Racing Association should have bought it. They have significant cash flow at this point and it would be a big benefit to racing.

We spent $14 million to construct it, including the land, spent $2 million on equipment and $2 million in other costs for a total of $18 million. It was the right thing, the right place and the right time for what racing needs, and it's empty.

The hospital was never about us making money. It was a service to the industry and an asset we thought wouldn't appreciate but also wouldn't depreciate. To not see this thing work in light of what has happened in New York racing is unimaginable. There are problems with breakdown, and we think the hospital and its state-of-the-art equipment can help solve some of those problems.

Why did it fail?
When the building was first opened, when Patty Hogan was there doing surgeries, there was significant revenue, based on what we were told. Patty was going back and forth from New Jersey to Belmont, a long drive, and it took a toll on her. The money became secondary. It was just beating her up. She left, and the facility didn't have the brand name surgeon in there. Unfortunately without a big name surgeon, it didn't work financially.

It was a sizable facility with significant overhead and staff. When Patty left, a lot of the procedures she was doing didn't stay. More importantly, the entire practice was left to be run by Dr. (James) Hunt, who had a very substantial practice of his own at Belmont Park. He didn't have the time to run both.

Is there really a need for it?
Absolutely. That's what was most disappointing after it closed and why we were so desperate to get it open, not just for the money but for the horsemen. It can help solve the problem New York racing has faced with all these breakdowns. The hospital has all the diagnostic tools, like bone scans (nuclear scintigraphy) to help forecast injuries before they happen.

The last three years we've had problems with breakdowns. If you can forecast injuries, if you can find hairline fractures that don't show up in regular X rays, if you can pre-diagnose these things, we should be doing them. And the hospital is capable of doing all the drug tests. Many of the problems New York racing has right now can be solved, stat, across the street from the racetrack.

We linked up with a group in Florida, Palm Beach Equine Medical Centers, and they said they would come up and reopen the place, based on the state giving some assurances through legislation. We offered it to them rent free, and also to Rood & Riddle in Kentucky and Cornell University. We simply wanted them to come in and opening the place, to give it back to the horsemen to help solve some of these problems. The state never came through with the assurances Palm Beach Equine wanted, and for some reason Rood & Riddle and Cornell didn't move on our offer. Without the vets stepping up and reopening this for the horsemen, there is nothing we can do.

We just finished meeting with the New York Racing Association. We saw that 1% of VLT purse revenue would go to health and welfare and were hopeful NYRA would do something. They put a committee together and showed some interest, but came back and said there's nothing they could do.

So instead of sending horses to a hospital that can handle everything directly across from the racetrack, the horses have to be put on a van and shipped.  Many of them have to go to Kentucky.

What was IEAH's involvement in running the hospital?
We didn't have a say in the intricacies of the practice; we were basically a landlord. Under state law, you have to be a licensed veterinarian to participate in operating a practice, and that includes all the financial aspects, selection of vets, selection of surgeons, selection of staff, and the financial burden.

We couldn't get involved in paying employees, surgeons, vets, anything. They have to be employed by the practice. All we can basically do is collect rent. We pay for the cost of the building. If the practice is not providing enough revenue for the rent to be paid, we're out of luck.

What's the status of IEAH's racing stable?
We've taken $30 million out of our cash flow and it's put us in a position where operating is impossible. The hospital was $18 million, we made a big investment in I Want Revenge in 2009 that didn't work out, and spent $5.7 million on Stardom Bound, a calculated risk, and that backfired.

What do you think of the 10-year license suspension of your trainer, Rick Dutrow?
I don't know the merits of the case, and I'm on the outside looking in. But I think it underlines how desperate racing is for a national commission. It makes up the rules as it goes along. I can't see how to assess a lifetime ban, which is what this essentially is. Did they draw straws to come up with this? The punishment should meet the specific crime across the board. You can't have one foul be seven days, have someone else do the same thing and get 10 years. The laws need to be the laws. You can't make examples on individuals based on whether they dress nice or have a big mouth. That's not what America is built on. Everybody gets due process.

A racing license is something they can take away, but with that being said it seems to me they are trying to make an example out of an individual instead of trying to make a procedure that will clean up racing.

I hope he has his fair day in court. I think very much of Rick. He was a major part of what we've done and I hope things work out for him.

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