CHRB BEYOND FRUSTRATED WITH MI DEVELOPMENTS

by | 11.17.2010 | 12:47am

By Ray Paulick

The golden rule in the business world usually dictates that “he who has the gold makes the rules.” That's not the way it usually is in the horse racing world, and certainly not in California.

Frank Stronach and his MI Developments real estate company, owner of Santa Anita Park, Golden Gate Fields, and the Xpress Bet advance-deposit wagering (thanks to U.S. bankruptcy court), may have the most gold in the Golden State horse racing business. But state government makes the rules and the California Horse Racing Board is required to enforce them.

That was never more evident than at Thursday's monthly meeting of the CHRB at Del Mar, when four executives with MI Developments were sliced, diced and grilled—sometimes painfully–by CHRB chairman Keith Brackpool and other members of the regulatory panel.

Stronach wasn't there, nor was MI Developments CEO Dennis Mills, both of whom appeared at the CHRB's June meeting when they were asked to present their vision for the company's ownership of the two tracks and ADW outfit. They were requested to do so because, as the “new” owners of Santa Anita, Golden Gate and Xpressbet, the CHRB had to consider whether to grant them a license and waive the regulation prohibiting one entity from owning more than one pari-mutuel license in the state. Magna Entertainment had previously been granted licenses and a waiver of the regulation, but when that company filed for bankruptcy and MI Developments was granted ownership, it was back to square one. Notably, too, the CHRB has a different makeup than it had when the previous waiver was granted.

The first time the CHRB granted a waiver was nearly 25 years ago when Marje Everett, owner of Hollywood Park, bought Los Alamitos. Then, as now, the CHRB had to be convinced it was in the best interests of racing for one entity to hold two or more pari-mutuel licenses, which Everett's lawyer, Neil Papiano, managed to do.

Brackpool, though he possesses a sometimes wicked sense of humor, is a no-nonsense guy when it comes to his responsibilities as CHRB chairman. It was evident months ago that the licensing of MI Developments was not going to be a rubber-stamp process, though that message seems to have been lost on the company's executives. Stronach and Mills failed their assignments last month when they delivered nothing more than a vague request for free enterprise and the promise of a jackpot wager called the “quadruple quadfecta.” At that meeting, Brackpool implored Stronach and Mills to come up with something more specific by July.

Instead of Stronach and Mills, a quartet of what appeared to be sacrificial lambs (pictured, left to right–Golden Gates' Robert Hartman, Santa Anita's George Haines, and corporate attorneys Frank Demarco and Scott Daruty) was sent to testify before the CHRB. They telegraphed their appearance by informing Brackpool in advance they wouldn't have a specific plan because, in part, MI Developments wanted assurances that any “trade secrets” in their plan wouldn't be disclosed publicly. Brackpool seemed skeptical of that rationale.

“We'll cut right to the chase,” Brackpool said when the CHRB's agenda turned to the question of the licensing of MI Developments. “We asked for a comprehensive report and there is no comprehensive report.”

Haines said Stronach made his intentions clear during the June meeting.

“He stated his intentions,” Brackpool responded. “I don't know that he made them clear.”

“It's beyond frustrating at this point that this is the third meeting in a row that we're having this dog ate my homework discussion,” Brackpool said. “This has to be resolved. I don't know that I can make this any clearer.”

Commissioner Bo Derek asked if a business plan even exists.

“There is no black box, no magic bullet,” Daruty admitted.

Brackpool reminded the group how “things went wrong” under Magna Entertainment's ownership. “In the future, we want to make sure that doesn't happen. I want to know what MID is going to do differently … whether it's appropriate to grant a waiver.”

“It's hard for us to say, 'Here's the plan,'” said Daruty. “A lot of this depends on cooperation from the industry.”

“That seems to be the only plan that's been presented,” said vice chairman David Israel. “'Go away and let us do what we want.'”

Brackpool accused the quartet of trying to “leverage” approval of a multi-license waiver for MI Developments in exchange for a signed lease for 2010 with the Oak Tree Racing Association. “Don't play poker with me,” Brackpool warned them.

Demarco said he was directed by the MI Developments headquarters in Canada not to sign the Oak Tree lease until the multiple license issue was resolved with the CHRB.

Derek, who made no attempt to hide her disgust with the MI Developments team, said, “I'm sorry Oak Tree agreed to go back to Santa Anita,” a reference to the June meeting when Stronach agreed to lease the track to the non-profit association for one more year.

The board ultimately voted to extend all of the existing licenses formerly owned by Magna Entertainment until Dec. 26—Santa Anita's traditional opening day—contingent upon MI Developments submitting a “comprehensive plan setting forth its business practices and procedures” by Sept. 1. That extension would only apply, the board voted, if the Oak Tree lease was signed by Friday afternoon.

OTHERS FEEL BRACKPOOL-ISMS

The Magna Four weren't the only ones who felt the sting of chairman Brackpool's wit.

“We're rapidly approaching the position of don't push it,” he told one witness who testified in favor of including complaints from farms and equine clinics in financial responsibility hearings of licensees.

“It's obvious this agenda item is clear as mud,” he said during another part of the meeting in a swipe at the CHRB's staff.

“This was a case of executive director (Kirk) Breed giving his impression of counselor (Robert) Miller,” Brackpool said after Breed tried to interrupt a legal issue.

When Jeff Platt of the Horseplayers Association of North America testified on a matter relating to a takeout increase at Los Alamitos, Platt made the mistake of bringing his laptop computer and coffee mug to the witness table. “Mr. Platt has brought his coffee to the table, thinking he's going to be here for a long time,” said Brackpool, who sets strict time limits on witnesses and public comments.  “I've never seen that before.”

During that same discussion, horseplayer Barry Meadow addressed the board and tried to use several analogies to explain why an increase in takeout was a bad idea. Brackpool cut him off, saying, “I'm only going to permit you two analogies per comment.”

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