It took centuries for the people of Iraq to experience the joys of voting in a democratic election. Thoroughbred breeders only had to wait 25 years.
For over two decades since its inception in 1982 as the brainchild of the late John Gaines, Breeders' Cup Ltd. had been run under the cloak of darkness, or as Canadian breeder Frank Stronach said, as a “club.” There was an unwieldy, self-perpetuating board numbering 48 individuals and numerous committees dominated by members of the Jockey Club. For most of its 25 years, however, the Breeders' Cup was controlled by a small executive committee headed by Will Farish, the vice chairman of the Jockey Club, and later by G. Watts Humphrey Jr., a partner in many of Farish's breeding ventures at Lane's End Farm and a Jockey Club insider. Meetings of the large board were seen by some board members as nothing more than a good opportunity to catch up on industry gossip, doze and rubber stamp decisions of the executive committee.
Control fell into the hands of the Jockey Club hierarchy at the outset of the Breeders' Cup when then-powerful Claiborne Farm at first resisted the idea of nominating its stallions to the program, a move that would have prevented it from leaving the starting gate. Gaines, who was never a member of the Jockey Club and often referred sarcastically to its poo-bahs as the “self-appointed guardians of the Turf,” agreed to remove himself from any management role in order to end the acrimony with Claiborne. The farm's president, Seth Hancock, had very close ties to the Jockey Club's ruling family, the late Ogden Phipps and son Dinny.
A decision by Farish and Humphrey to reach into the rich coffers of the Breeders' Cup (estimated conservatively then at $40 million) and provide financial assistance to the fledgling National Thoroughbred Racing Association through a joint operating agreement in 2001 rankled many breeders, who had built the program from scratch with annual foal nominations of $500 and annual stallion nominations equal to a horse's stud fee. Those breeders had grave concerns over how their money was being spent. Breeders' Cup purses were being outpaced by a growing number of international races, and under Farish's leadership (and Breeders' Cup executives Ted Bassett and D.G. Van Clief Jr., both Jockey Club members) the original seven race program that began in 1984 was unchanged until the addition in 1999 of the Filly & Mare Turf.
Many breeders did not see or understand the merit of propping up the NTRA, an organization formed in 1998 after Dinny Phipps derailed another initiative pushed by Gaines, the owner-driven National Thoroughbred Association, morphing that into a hybrid vehicle driven by a combination of owners, breeders and racetrack executives who could never agree to do anything significant enough to help the industry.
But I digress.
Stronach was among those who began to stir the nest in 2001 making pointed comments at a public forum about both the NTRA and Breeders' Cup and its boards of directors. By then, his Magna Entertainment owned a number of racetracks, and he threatened to pull them out of the NTRA unless he was satisfied the organizations would make some reforms in governance. Van Clief, then vice chairman of NTRA and president of the Breeders' Cup was quoted in a Jan. 14, 2001, article at ThoroughbredTimes.com as saying that the Breeders' Cup was reviewing its methodology for electing directors and hopeful of resolving the issue in “the next few days.”
Those “few days,” however, stretched into weeks, then months, then years. Stronach was otherwise appeased, and his tracks remained NTRA members.
In 2005, when the Breeders' Cup board rubber-stamped a committee recommendation to increase stallion nomination fees for stallions with 50 or more foals, there was more stirring. John Sikura, owner of Hill 'n' Dale Farm, wrote a letter published in The Blood-Horse that was extremely critical of the move. “The focus of the Breeders' Cup should be on cost containment and fixing their business model so that 20 years after inception, we do not have to alter an agreed revenue sharing formula to fill revenue gaps and create their profitability,” wrote Sikura, who called the change a “luxury tax” on stallions producing more than 50 foals. Sikura agreed that the Breeders' Cup needed its purses to keep pace with competing races, then added, “At the very least, the Breeders' Cup must pledge 100% of these additional revenues to purses and realize it is our money they are spending, not theirs.”
The Breeders' Cup was not strapped for cash. At the time, it had accumulated over $40 million from nominations and revenue from its annual championship day of racing.
Sikura's letter was a lightning rod for the growing discontent many breeders were feeling over the use of Breeders' Cup funds in NTRA operations. “That letter really got people fired up,” a current Breeders' Cup board member told me recently. “People weren't so much upset about the decision to increase the fees, but how it was made and where the money was going.”
Many people believed the administrative budget for operating the Breeders' Cup and NTRA had become bloated. “The overhead model was strewn with numerous employees with outrageously high salaries and no financial accountability to the breeders who funded the organization,” said one current board member.
The stallion fee increase came in the wake of a simmering dispute between the ruling members of the Breeders' Cup/NTRA boards and a group of owners and breeders organized under the banner of the Thoroughbred Owners and Breeders Association who were proposing a race series called the Thoroughbred Championship Tour. Among the big names pushing the TCT series was its chairman, owner-breeder Robert McNair, the owner of the National Football League's Houston Texans. The series concept was created by Thoroughbred Daily News publisher Barry Weisbord, who a decade earlier had started the American Championship Racing Series, which gained traction on the racing landscape but ultimately failed because of industry squabbling.
TCT backers felt the Breeders' Cup/NTRA boards were not doing enough to support their proposed series, which never got off the ground and suspended its operations in July 2005. Those backers joined the growing chorus of voices seeking reforms at the Breeders' Cup, where the people John Gaines called the “self-appointed guardians of the Turf” finally realized that change was inevitable and necessary. The old board altered the corporate bylaws in November 2005, creating a new operating board of 13 members, who would be selected by a larger group of “members and trustees.” Those members and trustees would be elected by Breeders' Cup foal and stallion nominators under a formula that assigns one vote for each $500 in nominations to the program. (For example, someone who owns a stallion with a stud fee of $10,000 would get 20 votes.”
Finally, 25 years after the Breeders' Cup was created, the people who funded the program would have the chance to have a say in how it is run. The struggle for control of the Breeders' Cup was reopened.
Editor's note: The original version of this article incorrectly stated that the National Thoroughbred Association was created by John Gaines. The NTA was solely created in 1993 by advertising executive Fred Pope. Gaines joined Pope in helping push the initiative three years later.
TOMORROW: Part 2. Power-seekers, politicking, deal-making, and clashing egos.
By Ray Paulick
Copyright ©2008, The Paulick Report
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