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Sunday, December 11, 2011

Cal Expo - What Happened and Looking for The White Knight

Perhaps the biggest sign of problems with harness racing at Cal Expo can be found in the local media. A search of Yahoo and Google news pages show that none of the local media published the story that the Cal Expo board has decided to exercise their option to get out of running the harness meet there. This despite the fact a press release was sent to the local media on Friday. If you are not involved in harness racing, you wouldn't even know California harness horsemen's racing existence is at risk.

The first thing which needs to be stated is the Cal Expo board realizes the significance of their decision. They want harness racing to thrive in California, realizing the standardbred industry has been a resilient group. However, there comes a point where you need to cut the cord; especially when you are a state agency as is the Cal Expo board. However, as a fair board, the California Fair Board is under the jurisdiction of The Department of Food & Agriculture's (CDFA) Division of Fairs & Expositions (F&E) whose mandate is to provide fiscal and policy oversight to the Network of California Fairs and ensuring compliance with laws and regulations, and the best use of available funding and other services. Losing money is not the best use of available funding.

So where did things go wrong?

Prior to the Cal Expo board taking over management of the harness meet, the harness meet at Cal Expo was
operated by the Sacramento Harness Association which was unable to secure the additional financing it need to continue as a continuing operation. As a result, rather than toss the standardbreds out, Cal Expo took over the running of the meet.

After having a conversation with David Elliot, the Assistant General Manager at Cal Expo, I learned more about the state of California racing. When Cal Expo took over the harness meet early in March 2008, they started off with roughly $1 million in debt, including $480K in equipment such as tractors, harrows, and water trucks. In 2008 and 2009, Cal Expo was able to recoup most or all of the debt left from the prior operator as they were able to make a profit

At one point, the purse account ran a deficit of $750K, but with cutting purses and other steps, they were able to get the purse account deficit to zero. However, with the economic downturn continuing, Cal Expo has been operating at a deficit for 2010 and 2011 and the purse account shortage is currently around $50K. Cal Expo needs to figure out a way to get that shortage addressed; cutting purses any further would really be a hardship.

Right now, Cal Expo is willing to continue to operate a harness meet through August 23, 2012 but past that date, they are not willing to be a racetrack operator as they are no longer able to afford to subsidize the harness meet. They would be willing to resume their role of being a landlord, leasing the facility to a racing entity. However, if a new operator came in to take over the harness meet and wished to relocate the meet elsewhere, they would not stand in their way. However, if they were to continue to race at a fair track, the only track other than Cal Expo with lights is Pomona; other tracks would have to undergo a capital investment in lighting for night racing. Are they willing to invest in a huge capital investment for harness racing?

Cal Expo does want harness racing to survive in California as they are aware the industry does provide many jobs. Unfortunately, the economic downturn has continued and in 2010 and this year, they have been operating at a deficit which they are unable to continue supporting. This is why the Cal Expo Board is very sensitive to the needs and employment of the horsemen and employees that have been so loyal to the California harness racing industry. They have directed staff to reach out and open conversations/discussions with anyone that may be interested in operating the harness racing meet at Cal Expo.

Some may want to know how Cal Expo does with racing overall. During the State Fair, Cal Expo runs a small thoroughbred meet which draws between 2-2,500 people. The on-track handle average is about $200,000 with an all source handle of $1.8 million. As for the standardbred meet, the average attendance is about 150 people with an on-track handle of roughly $38,000 and an all-source handle of roughly $680,000. For most tracks, $680,000 would be a great handle, but being the vast majority is simulcast wagering from other tracks, the commission does not support the costs of running the track.

It must be understood that harness racing in California starts with a handicap. Both harness and quarter horse racing in California are restricted to importing only races of their own breed and are restricted to taking in only eight races from around the country each racing card, with the exception of the Breeders Crown in which case the standardbreds may take the whole card (California code 19596.1.). As a result, Cal Expo is not allowed to bring in the more lucrative thoroughbred races and are extremely limited in the number of harness races they may bring in as they can't even bring in the whole card from the Meadowlands. However, a California resident with an ADW account is allowed to bet on an unlimited number of races and customers at thoroughbred tracks are allowed to bet on many more imported thoroughbred races when compared to the eight standardbred races Cal Expo is allowed to bring in.

A fall meet at Cal Expo is tentatively scheduled for August 24, but unless someone comes in to take over the harness meet, June 16, 2012 may be the last harness race in California.

For the standardbred industry, unless the law changes (not likely), a new operator will be working at a disadvantage. Slots are out of the question. I understand race cards of $2,500 claimers are not everyone's cup of tea, but when you see how things are going there, is there any surprise the card is full of $2,500 claimers? However, despite the success of the Strategic Wagering Program, one needs to ask why there has been no national program to market racing nationally. Let's not kid ourselves, while the handle at Cal Expo may not be that great, the industry can't afford to lose California.

The question is if there is a white knight to once again save harness racing in California. The industry has been very resilient in the past, but with the continuing economic downturn, who knows if there is someone or a group willing to step forward. It would be hard to fathom there would be no more harness racing in the state where some of the greatest standardbreds raced, contesting the American Pacing and Trotting Championships at Hollywood Park.


gerald605 said...

Cal Expo cant lose harness racing!

Pacingguy said...

I agree California can't lose harness racing. It would be a long term disaster for harness racing on a national scene.