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CALIFORNIA THOROUGHBRED TRAINERS
Return on investment?
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PRINGTIME and racing . . . the season of hope and expectation and new beginnings. But in California, it’s still a very cold and miserable winter of discontent. Forty years ago, four of California’s five major tracks were operated by competing public companies: Santa Anita and Hollywood Park in the south, and Bay Meadows and Golden Gate Fields in the north. Del Mar Thoroughbred Club, the forerunner of today’s lessee of the track at the San Diego County Fairgrounds, operated the traditional seven-week resort meeting there. Additionally, though not a major track, Los Alamitos was founded on the Vessels quarter horse farm, and was family operated. By the early 1970s, following expansion of the overlapping north and south Thoroughbred calendars, Harness and Quarter Horse meetings occupied the night calendars in both ends of the state. In 1969, Oak Tree Racing Association had conducted its first Thoroughbred meeting at Santa Anita, a tiny four-week affair in the fall. Looking all that way back and even to the 1930s, separate ownership and operation of race meetings was the model prescribed by the California Legislature. Within this statutory framework, strong competition and rivalries abounded; the market and the sport were flourishing beneficiaries. By the early 1980s, Santa Anita’s two meetings dominated national racing business in terms of daily average attendance and handle, with Saratoga, Hollywood Park, Oaklawn, and Del Mar following. California breeding of Thoroughbreds (and other breeds), along with its ancillary farming and agriculture, grew apace. After all, the California Legislature had legalized pari-mutuel betting in the state only in order to stimulate agriculture and horse breeding, with proceeds from racing also supporting a system of agricultural districts which operated fairs throughout the state, many of which
10 AMERICA.TRAINERMAGAZINE.com ISSUE 28
By Alan F. Balch CTT Executive Director
“Instead of involving professional horsemen, months of private meetings among a few owners and connected stakeholders have passed, with little reliable information available and even less objective expertise at hand” themselves included race meetings and horse shows. Not everything was peaceful and harmonious. It couldn’t be within such an elaborate and politically governed structure. But the incentives were all in the proper directions, and the regulatory authorities were far, far better informed, experienced, and sophisticated than they would be in later decades, when the fundamental structure of separate and independent operations eroded and the underlying rationale for it became clouded and largely forgotten. Thinking back to those days, I am struck by how much time and effort back then we spent understanding the term “return on investment.” Any public company – and I was an officer of the organization that operated Santa Anita – struggles with issues of earnings-per-share-this-quarter vs. long-range performance; we were no different. Since its founding in 1934, fortunes had been made on Santa Anita stock. Retirees depended on our handsome dividends. Yet the Strub family, our leaders, had always been future and
investment oriented, not to mention firmly committed to racing as a sport and enterprise. Many horsemen were outraged when about 110 acres of Santa Anita’s original 440 were developed for a shopping center on the perimeter of the track property in the early ’70s. The Strubs patiently explained that the project was to ensure the future of racing, to provide year-round income from the property, and that what threatened racing was not the intelligent development of property unessential to the racing program, but instead lack of a proper return on the overall Santa Anita investment in the property! In those years, the debate in Southern California racing was which track would have to be developed first: Santa Anita or Hollywood Park? It seems laughable now, in a sad way, but much of the rivalry between the two was based on comparative stock prices, real estate values, and management acumen. Each organization, however, was irrevocably and fundamentally committed to the future of racing, and relentlessly invested in it. Now, that negative “race” has apparently been “won” by Hollywood Park, which is expected to close forever after its fall 2013 meeting, following its most recent owner’s similar closing of Bay Meadows for development a few years ago. The resultant turmoil is disheartening and even frightening, especially for the professional horsemen whose very lives depend on racing, most of whom are long-time Californians. With a very few exceptions, owners come and they go – they don’t depend on racing for their quality of life. An owner can transfer his interest to any number of sporting or recreational pursuits, but for a professional horseman, racing is his expertise, his passion, and his livelihood. The leadership and planning vacuum California racing now faces conjures images of a widening sinkhole. Instead of involving professional horsemen in serious and objective consideration of what’s to come, months of private meetings among a few owners and connected (some would say conflicted) stakeholders have passed, with little reliable information available and even less objective expertise at hand. The California Legislature’s prohibition against simultaneous financial interests in more than one track and racing enterprise in the state has been largely ignored. Contrary to the law and without careful consideration of the consequences of exemptions to it, one private entity now controls Santa Anita, Golden Gate Fields, a major training center near Del Mar, and a critical gaming and television enterprise. Financial returns on
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