Canterbury Park - But For How Long?

As I left Canterbury Park for probably the last time in the 2008 racing season and watched the spires fade away in my rear view mirror, I was concerned. I see new shopping areas and housing tracts and I worry about the fate of Canterbury. As I have said in the past, there are few racetracks in America that do it better than Canterbury. In many venues if it wasn't for the trainers, owners and grooms they'd be nobody watching the races. Canterbury is pretty much alone in mid-level racing in America where the crowd noise swells as the horses enter the stretch and the fans really get into the racing action. Management has done a great job in marketing to the masses with Buck Nights on Thursdays and Family Days on Sundays. Even with all those pluses taken into consideration, I look at what is now prime real estate (well, maybe not as prime as it was before the current downturn, but you get my point) and I wonder how long the track can hold out as a racetrack. As the economy recovers, at some point won't the value of the land be more than the value of the racetrack to the shareholders of Canterbury Park Holding Corp (ECH)?

As the meet winds down it gets me thinking about the possibility of racing disappearing in Minnesota. I read about the demise of Bay Meadows, the cutback in dates and purses in Maryland, the struggles in Ohio and the closing of Woodlands in Kansas and I wonder if the day will come that we will be seeing Canterbury shudder up for the last time. Running Aces Harness Park cut into attendance and handle this year no doubt. Sure it's harness racing and it's different, but does the casual fan really care? Especially if now they can drive ten minutes instead of almost an hour to see horses race. I know, all the Thoroughbred folks are screeching now, but there are people out there who want to place a bet or two, watch horses race and enjoy the day and as long as it's close and convenient, why not?

Running Aces has had a horrible start. When parent company Southwest Casinos (SWCC.OB) announced earnings on August 15 they announced a quarterly loss with most of that attributable to Running Aces opening. While it was a fun place to visit, I don't know if has the broader appeal to make a go of racing. My own personal, unsubstantiated belief is that they opened the track to get the card room in a roll of the dice (so to speak) to get slot machines in the future, eventually to be a slot house masquerading as a race track (a post for another time). Preliminary indications show that the addition of another racetrack has not grown the market but rather split an already existing piece of the pie. And a small pie at that.

Of bigger concern this season was probably the smoking ban. You can play cards at Canterbury but you can't smoke while you're doing it. However you CAN smoke and play cards on Tribal land down the street at Mystic Lake Casino. That probably impacted card club revenue to a greater degree. Though only mentioning simulcasting, I think the below can easily be applied to the card room as well (from Canterbury's 10Q - August 14, 2008):

Pari-mutuel revenues decreased $667,685, or 9.0%, in the six-month period ended June 30, 2008 compared to the same period in 2007, and decreased $431,727, or 9.1%, for the three-month period ended June 30, 2008 compared to the same period in 2007. Total handle wagered on simulcast races for the first half of 2008 was down $2.3 million, or 5.5%, compared to the same period last year. The decrease in pari-mutuel revenues is partially due to a smoking ban that became effective October 1, 2007. The Company believes that those simulcast customers who smoke and no longer visit our facilities are unlawfully wagering on the Internet.


The 10Q went on to mention the opening of Running Aces and how the addition of an additional simulcast outlet resulted in decreased simulcast wagering at Canterbury. I'm sure for many of you the words "illegally wagering on the Internet" are flashing big and bright. Again, that really is a post for another time given the size of the topic. I will add, though, that the competing self interests of the various ADWs with their exclusive agreements will most certainly combine in one way: to aide in killing racing off. Signals should be open and tracks need to get their fair share of the handle and ADWs should compete on other aspects of their business, not by shutting out horsemen.

All these things worry me as an owner. Lower attendance and lower card club betting means stagnant or even lower purses next year. My training costs (thanks to higher feed costs mainly) are going up and stagnant purses will not make a tough business any easier. Slots may be one answer. I shudder to think what the powers that be at Canterbury could do with their marketing acumen and the windfall of slot money. I'd even be willing to wager that Canterbury would be one track that could get it right and actually be a racetrack with slots rather than slots with noise going on outside.

I know I've digressed a bit, but the bottom line is the bottom line. Without solid purses to compete for, I would need to move on. My trainers and I need to run the horses where we can get a return. I have shareholders in a sense - all the partners that have trusted in me to try and give them every opportunity to make some money in a very tough game -and I need to do right by them. They know that you have to be in it for the love of the sport, the action and fun, but there needs to be a bottom line. For tracks like Canterbury, I wonder when the bottom line is going to dictate that they become housing tracts or strip malls to maximize their return to their shareholders as well.