With no slots in sight, Hollypark sold

Jul 12, 2005 4:06 AM

The pari-mutuel industry’s two biggest track operators announced the sale of one of their holdings last week but the divestures were for completely different reasons.

Churchill Downs Inc. (CHDN) announced a deal to sell Hollywood Park because the state of California "has forsaken racing and its needs." Buying the track for $260 million is Bay Meadows Land Company whose president Terry Fancher agreed to continue horse racing at the southern California track for the next three years.

The sale of Hollywood Park had been rumored for the past several months with the potential for the 238-acre site being sold to a developer for an estimated $300 million. Churchill Downs acquired the property in 1999 for $140 million.

"In Bay Meadows," said Churchill CEO Tom Meeker, "we selected a buyer who not only recognized the value of Hollywood Park, but also is committed to continuing racing there and motivated to improve the California racing environment."

But, after three years, the new owner’s outlook could change drastically. Fancher said his commitment to racing was being made both at Hollywood and at Bay Meadows in northern California to give the California legislature "to step forward to do something to help racing."

Churchill Downs has hoped to have the lawmakers approve racetrack slots but the political influence of the Indian casino operators in the state has thwarted all moves in that direction. But, without slots, Hollywood’s future, beyond the guaranteed three years of racing, appears dim.

Oddly, that was not a factor in the sale by Magna Entertainment Corp. (MECA) of Flamboro Downs, a trotting track in Ontario, Canada, that already operates slot machines.

Magna officials said the $73 million sale to Great Canadian Gaming Corp., a casino company that operates several racetracks, was being made to improve the company’s balance sheet.

In its most recent quarter, the company reported a net loss of $4.1 million. At that time, they said the company would continue with its plan to reduce operating costs, sell some assets and seek partnerships in an effort to restructure its balance sheet.

"Flamboro is a great track with excellent people," said Tom Hodgson, Magna CEO. "But, it’s divestiture allows MECA to focus resources on a strategic goal of delivering prime racing content (in its simulcast signal delivery), developing our U.S. gaming potential, and expanding our signal delivery and wagering capability within North America and internationally."