Thursday, June 14, 2012

A Deal Approved, a Future to Write and Some Sour Grapes

The Minnesota Racing Commission approved, by a 5-3 vote, the marketing arrangement between the Shakopee Mdewakanton Sioux Community and Canterbury Park yesterday in a specially called session. 

The afternoon started with Canterbury President and CEO Randy Sampson outlining the deal and providing some history for the panel.  Most importantly, Sampson related that for 15 years Canterbury has struggled for racino in the state legislature.  This past year there was a budget shortfall that was filled by borrowing from our children, a Vikings stadium that needed to be funded, a governor that was in favor of expanded gaming, a new party controlling the legislature and overwhelming public support for a racino and, at the end of the day, the legislation could not even be brought up for a vote.  Sampson was told flat out by several influential lawmakers, “It does not have the votes.”

House Speaker Kurt Zellers and Governor Mark Dayton told Sampson that the best way to get anything favorable done was to go to their neighbors and fiercest opponents in the racino struggle, the SMSC operators of Mystic Lake and Little Six Casinos in neighboring Prior Lake, and try and work something out.  Initial negotiations produced the Horse Racing Purse Enhancement Act.  Further discussions centered on the Native Americans running the racinos at the tracks, which Running Aces rejected.  Ultimately what came out of these discussions was the marketing arrangement that provided $75 million directly to the purse account at Canterbury.

What needs to be understood which I don’t think is by many casual fans, is that there have always been two very different views on how any expanded gaming money was to be utilized by the racetracks.

Canterbury Park was reopened after a three year hiatus by a public company, Canterbury Park Holding Company (CPHC).  The main shareholders of that company, the Schenian and Sampson families, are owners and breeders of racehorses.  Running Aces Harness Park was opened in 2008 by Southwest Casinos, a now bankrupt casino operator.  From the very beginning it was apparent that they were betting on the come that racino legislation would be enabled.  Just the way that the construction was done and the card club floor was laid out it was apparent that this property was built to be more than just a racetrack.

As the past four years have shown, there was a decided difference between the intentions of the ownership groups at the two racetracks for any alternative gaming revenues.  Canterbury Park was intent on working with the horsemen’s groups to provide as much of that money for purses as was possible.  Running Aces intention, after the bankruptcy of Southwest Casinos and the takeover by a private equity firm, was to retain as much of the money for management as possible while providing comparatively little for horsemen.  This fundamental difference simmered under the surface of any racino discussions and always remained a bone of contention.  Ultimately this was proven out by the rejection by Running Aces of having the Tribes operate the racinos with money being funneled into purse accounts.

Once the decision was made that having Tribal operators run the racinos was a non-starter for Running Aces, the politicians advised Canterbury to talk to the SMSC and see what could be worked out.  Whether or not they gave the same advice to the harness track is unknown.

Following Sampson, Running Aces spokesman John Derus stepped to the microphone to outline his objections to the deal.  He said that the money was outrageously high since it cost only $77 million to build Canterbury in 1984; that now Canterbury was an adversary in their pursuit of a racino; that it just wasn’t fair.

Fairness was a theme that ran through the testimony of politicians that supported Running Aces and the employees that testified at the hearing.  Oh, and the single harness horseman that spoke against the agreement – I couldn’t tell you if there were any others there.

“They got theirs so where is ours?” could have been the testimony.  It wasn’t fair that the Commission side with Canterbury.  It wasn’t fair that they were getting all this money and we aren’t.  It’s just not fair.

The fact is that Running Aces would never approve an agreement like the one Canterbury did because there is nothing in it for track management. ALL of the $75 million of the SMSC/Canterbury agreement goes to purses.  An additional $8 million goes to joint marketing efforts.  ZERO goes to track management.  CPHC will have to make money the old fashioned way: they will earn it by making a go of the racing product now that they will have a quality product to sell.

Jeff Hilger, President of the Equine Development Coalition of Minnesota, testified that he would work on a similar deal for Running Aces with everything he had in him.  The reality is: they don’t want that deal.  They want the money.  They want racino and they want the majority of the money that doesn’t go to the state in their pocket, not their horsemen.

State Senator Pat Garofolo tweeted during the meeting: “Racino is dead.  Anyone says otherwise is trying 2 sell you something. I chief authored it last session and even I won’t vote 4 it now.”

In the face of these realities, Canterbury Park cut a marketing deal that literally saves thoroughbred racing in Minnesota.  Running Aces racing secretary said that patience is still needed for racino, that it took 25-years where he came from in Ohio.  Thoroughbred racing in Minnesota had a maximum shelf life of two years without this agreement. Dick Day, lobbyist for Racino Now, said that they were “this” close to passing, maybe it’d take another five years, but it would happen.  I guess to a paid lobbyist what’s another five years?  To those that make their living out at Canterbury that would have been four years too late.

HBPA President Tom Metzen put it best when he said, “This agreement isn’t any different than the University of Minnesota accepting money from the Tribes to build a plaza outside of the football stadium.  If Coke-Cola wanted to give us $77 million to sponsor racing for the next 10-years we wouldn’t even be talking about this, but applauding it.”

Running Aces is free to pursue racino legislation unencumbered by the restrictions on their potential profit by Canterbury Park.  They are certainly free to cut a deal with another Native American Band similar to Canterbury’s with the SMSC.  They can do what they want to do now and best of luck to them, I guess.  I wish the best for their horsemen, who seemed to be in short supply yesterday which speaks more than any testimony that could have been given.

As I tweeted yesterday (@tlgrevelis), now it’s time for the heavy lifting to begin at Canterbury.  The story has really only just begun.  The playing field is level. The marketing dollars are there.  Now it’s up to the track and horsemen to write the success story.

1 comment:

Jeremey Day said...

Excellent story Ted, I hope thats not true about RA but if it is then they dont deserve any money, one thing i can tell you is there were HARNESS OWNERS AND TRAINERS there yesterday. Im in favor of the HARNESS people getting money for purses not for management. Jday