The Gallop Out

Here's a rough summary that I typed as I listened to the June 22, 2010 California Horse Racing Board meeting as they discussed the hot topics of Oak Tree and Magna:

MID PLANS ~11:39 a.m.

Frank Stronach - Certain statements at the previous CHRB meeting were incorrect and inappropriate. I never threatened to close SA. I love horse racing, etc. SA & GG will remain racing entities. Misconception and slandering we’ve had to endure. “If you don’t know you’ve got a problem, you’ve really got a problem.” “Free enterprise - that’s why everybody wants to come to America.”

Discussed plan with CARF yesterday to make fairs viable again.

Looking at competitors - lotteries went up as racing went down. “We cannot ignore the public...we have to cater to the public.” Make jackpot bets available. “Laws are made by people, and changed by people.”

[That’s your specific plans? - Keith Brackpool (?) ]

Stronach - We won’t solve everything here today.” We need to consult everybody (owners, breeders, etc.), racing will quickly disappear.

[Do you have any specific plans to change SA or GG? - Brackpool]

Stronach - “We have to sit down and come to a consensus.” [getting combatative] It seems you get great pleasure out of laughing at other people here.

[Brackpool - We have to exist within the laws until the laws are changed.”]

Stronach - I have some ideas, I brought forward some ideas, but we have to sit down.

[David Israel - Is it not true that SA and GG were profitable?]

Stronach - Luckily I am the controlling shareholder...but I must do what makes sense.

[Israel - How do you reconcile free enterprise with the bankruptcy laws that allowed MEC to become MID?]

[Israel - Your Gulfstream and Palm Meadows investments never came back.]

Stronach - Palm Meadows was supposed to be an example. Here at SA it’s a shame the way people live.

[Israel - You said you’d spend $18 million to improve SA. How are you not responsible for improving that?]

Stronach - We asked for help to build new dorms, but no one (CHRB, et al) wanted to support us. We applied the money at Gulfstream.

[Israel - Do you want govt. involved or not? Now I’m really confused.]

[Bo Derek - What did you want the CHRB to do?]

Stronach - You understand free enterprise or you don’t.

[How did that answer her question? Derek - It didn’t. Brackpool - In a letter to Arcadia you wrote that you had no intention of improving barns. Nowhere in statement did it ask for CHRB or anybody else to help.]

Stronach - The COO wrote that letter. I came out here and fulfilled the promise to horsemen with the barns.

[So you’re saying that you did improve the barns?]

Stronach - In 2007 we spent money on the new track. You should say you want to sit down and come up with plan to improve racing.

[Jesse Choper - Horses are leaving for higher purses. When you say everyone should sit down together...the chairman created a committee. We need legislative support. It’s a very difficult task. We’ve tried new things, but they were rejected by legislature. Realistically, is there anything this board can do to make a dent?]

Stronach - Free enterprise, but then there are realities like laws. It’ll take time. We as an industry must come together.

[Brackpool - Choper made articulate statement. We’ve always believed legislative change is necessary. There are certain things this board can do, and there are certain things this board can’t do. I think you and I think the same, but is there an idea we can get behind to make a bill.]

Stronach - I said before...unless we sit down, and SA and GG will remain racing entities....

[Brackpool - At present you don’t have a specific idea, but you think we all need to sit down and discuss. .... And those ideas are?]

Stronach - Jackpot payout bet. Quadruple quadfecta. And open to get as many customers as we can.

[Derek - I’m very concerned for CA racing. I’m very concerned that you drove away Breeders’ Cup.]

Stronach - That’s a completely wrong statement.

[Brackpool - BC said the uncertain situation did it.]

Stronach - Oak Tree lease didn’t make sense. We didn’t drive BC away. We wanted it.

[Israel - The synthetic mandate was done very badly. I’d like to see slots at tracks.I don’t see a racetrack as a store. To me it’s a public trust. The track is like a sports league, the owners/trainers are the teams. The leagues all operate as not for profits. The teams in league work together. Sometime’s you’ve got to do what’s good for the whole.]

Stronach - You’re not asking a question, you’re making a statement. Everybody had a chance to buy SA, nobody came forward, nobody came close.

[John Harris - You’ve always spoke of deregulation, but it’s a lot more complicated in racing because of the state legislature. I agree we need to work together, but we need concrete things to work on. I don’t think deregulation will get us anywhere.]

Stronach - That’s your opinion. We need a long run concept. The fairgrounds are important, we’d love to work together with them.

[Brackpool - You delivered a manifesto about dereg in June 2007. Have you ever introduced legislation? If not, why not?]

Stronach - Tracks need owners. It’s deteriorating. I think with owners, breeders, fairgrounds we can come up with something.

[Jerry Moss - I know how much you love racing. I also know you’re close to our governor. We all know there are laws we have to deal with. Will take a long time. Don’t you believe having BC at SA for five years is beneficial to CA industry?]

Stronach - But you won’t give us the dates to run the BC.

[Moss - You didn’t request dates.]

[Choper? - We said Oak Tree is important at last meeting.]

Stronach - We put in $130 million, Oak Tree put in $5 million last few years.

[Harris - You’ll be here the next few days?]

Stronach - I’m here tomorrow morning meeting with horsemen.

I’m very resentful when you trash my reputation.

[Brackpool - Who’s trashing your rep? It’s all on the transcript. Your July 1st deadline for a plan needs some details/specifics on your plan.]

Stronach - We do not want to dominate racing. We want to be part of it. ... We’ve got be sure the backstretch in included.

PUBLIC SPEAKERS

Terry Bingham (sp?) - native Californian, involved with Arabian racing. The middle eastern royal family is sponsoring races. We need the tracks to support this. But there’s no Arabian racing in CA. Here’s your idea to save racing. The betting from Arabian races will eventually support TB racing.

Mace Siegel - I think this is the greatest CHRB board ever. Fifteen years ago myself and others formed the TOC to stand up to CHRB. We thought tracks were the enemies, but that’s not why I’m here. I’m here to try to bring some reason. My point is that I once considered going to Canada. I had no business going somewhere where I didn’t know the laws. Here we have Stronach coming in, an immigrant, trying to dictate our laws. I think we need to definitely run Oak Tree at SA and then come to a solution afterwards.

Stronach - I think Mace is wrong when he says I try to dictate.

Michael Wellman - I’m heartbroken with the comments of Stronach. Clearly we must seek someone to control MID’s dates and get them out. Allow someone else with different ideas to take the chance.

Jerry Jamgotchian - Reality is that the man controls CA racing. I think whatever his plan is, it will eventually be adopted. It will become your [CHRB’s] plan. You made some bad plans. Israel made a Shapiro-esque statement about Arcadia using eminent domain to take over SA. This board opposed Bay Meadows slots...

[Moss - I think you’re wrong. I didn’t say that. Brackpool - [to Jamgotchian] Your time’s up.]

Jamgotchian - CHRB needs to listen to Stronach

John Buccalo from Barona Casino - I think we need Oak Tree at Santa Anita. We need to fill empty seats.

OAK TREE

Sherwood Chillingworth - Oak Tree was successful 41 years. Thought he had lease in April, would be final in June, lease negated in May. We’d rather be at SA, but probably going to Hollywood. Arcadia and SA employees will be hurt by this. We don’t understand the economics. Over last years, we’ve given them $50 million.

Dennis Mills - We couldn’t meet the June 4 deadline Oak Tree set.

Stronach - our board concluded that it doesn’t make economic sense.

[But does it make sense to have no meeting at all?]

Stronach - No it doesn’t, but we must get a uniform plan.

Brackpool - Mills, you couldn’t make the deadline of June 4 because you were traveling, but Stronach said a decision had been reached before that.

Brackpool - Harris asked you if it’s better for you to have no tenant in that time unless the board changes things.

Stronach - We’d prefer racing there, but in the long run, the present arrangement isn’t good for our plans. It’s up to you.

Brackpool - So you believe it’s better to have no racing there instead of having this year and then coming up with new terms? We need to sit down and need new framework for CA racing in long run.

Brackpool - You had a legal right to cancel the lease. We’re trying to clarify that you said you’ll have no tenant.

Brackpool - let’s hear Chillingsworth’s reaction.

Chillingworth - If Stronach’s saying he’ll have no tenant, I need a formal statement and written form.

Stronach - Legal department, I’d be happy to send you written statement.

Harris - I don’t understand the short term argument. Need new plan.

Stronach - But it’s your decision.

Brackpool - Don’t say it’s our decision. The dates belong to Oak Tree. I think you

should take a deep breath and reconsider short term plan.

Siegel - This argument is a case of non-communication.

Stronach - I would commit to have Oak Tree this year, but then we’d have it no more.

Siegel - This has become a silly argument, grown men going on emotion alone.

Brackpool - If Stronach says a one-year agreement is possible, is it possible for you Chillingworth?

Chillingworth - We’ve previously said we’d either have it all the way through our lease or not at all, but may reconsider.

Jamgotchian - Stronach just outsmarted the whole board. He’ll get $5 million this year and look like the good guy. I think it’s best to let him race with the dates the state gives him.

...

Moss to Stronach - What are your feelings about changing the racetrack?

Stronach - I’ve always said I don’t think synthetics will work. Majority of owners want change. I feel confident we have a surface. Stuff at his equestrian center surface in Austria, also in Spain. We’ll put in a test track very quickly. On Palm Meadows training track by December. Test it for a few months. Right after 2011 Santa Anita meeting. It is pipes, filter, silica sand.

...

Jack Robbins of Oak Tree - I hope the track works OK. [To Stronach] I can’t see you giving up the $3 million each year. ...We will have a one-year lease.

Chillingworth - This is for one year only. We want to thank the people from Hollywood and Del Mar.

Brackpool - Maybe this is a new opportunity to start working together. We have a short-term resolution.

CLOSED SESSION - 1:42 p.m.