Slots last pull for North American racing

Jul 12, 2005 12:16 AM

It is interesting, especially in Las Vegas, that the fate of North American horse racing rests on slot machines.

Last week, in Inglewood, California, Tom Meeker, the boss man of Churchill Downs, and Terrence E. Faucher, who runs Bay Meadows, did everything but wear billboards saying, "The End is Near," as they announced that Churchill was selling Hollywood Park to the Bay Meadows Land Company.

Don’t let the $260 million price tag fool you. Hollywood Park sits on 240 acres of land, and the name Bay Meadows Land Company tells the real story. Bay Meadows is more interested in the acreage than in the horses romping over them. You can build a lot of houses, or offices, or retail stores, or all three, on 240 acres.

The way the deal for Hollywood is structured is like a big insurance policy for Churchill. The money is handy, of course, and shows Meeker’s smarts, since Churchill paid $140 million for the place just six years ago. But Churchill didn’t really let loose of the property. In case Arnold The Terminator decides to give slots to the pioneers who trudged west from Louisville in covered wagons, as well as California’s Indians, Churchill has the option to jump back on the bandwagon and repurchase a big hunk of Hollywood Park.

Bill Dwyre, writing in the Los Angeles Times, got it right. Discussing the doomsday statements of Meeker and Fancher, who made it clear that unless they got slots Hollywood Park would become a plaza instead of a playground with horses, Dwyre said the deal was like the movie Network.

"Two men who have spent a lifetime conducting business with quiet, understated dignity became Howard Beale”¦ they were mad as hell and they weren’t going to take it any more" Dwyre wrote.

He called their plea for help "gutsy, brilliant and also somewhat desperate." From Meeker’s point of view it also is something of a bluff. If it works he’ll be back in business with slots. If it doesn’t he still has the chips, $260 million of them.

While all this was going on in Inglewood, there also was some high stakes poker being played in British Columbia.

There, an aggressive and ambitious company called Great Canadian Gaming Corporation, already established with casinos, continued its eastward expansion as the new Magna of racing. In fact, it became the first outfit to buy a track from Magna, instead of the other way around.

In the last year Great Canadian has bought Hastings Park in Vancouver, the harness track Fraser Downs, a little track called Sandown Park, and Georgian Downs, another harness track in Ontario. It also bought casino interests in Atlantic Canada, once known as the Maritimes, in the Atlantic Ocean.

Last week it gave Magna $62.9 million for Flamboro Downs, a busy year-round harness track 45 miles from Toronto.

To understand this, you must realize that 16 of 17 tracks in Ontario have slot machines, operated by the Ontario Lottery Commission but feeding proprietors of the tracks and purses for their horses.

As to why Magna Entertainment would sell Flamboro, which it bought in the last two or three years, its president and CEO, W. Thomas Hodgson, who works for Frank Stronach, said the transaction "allows us to focus resources on a strategic goal of delivering prime racing content, developing our U.S. gaming potential, and expanding our signal delivery and wagering capability within North America and internationally."

I’m not sure I quite understand how or why selling Flamboro does that, but I suppose it means the track wasn’t performing quite as profitably as Magna had hoped.

In any case, Mr. Stronach and Mr. Hodgson sold it, and Great Canadian extended its reach into the heart of Ontario racing and wagering country.

Great Canadian is becoming something like the guy with the 800-pound gorilla who, when asked where his pet slept, said, "Anywhere he damn pleases."

Great Canadian’s racing interests are run by Chuck Keeling, from an old racing family. While the company may be interested in the slots, Keeling is interested in racing. In that regard, the deal is a bright spot in an otherwise bleak racing sky.