Hopes are High for an End to Head-to-Head Racing in South Florida

by Jim Freer
 
Thursday, May 15, ’14  –  Gulfstream Park, Calder Casino & Race Course and the Florida Horsemen’s Benevolent and  Protective Association are coming  down  the stretch in negotiating an agreement that would end the head-to-head weekend racing that the two tracks began last July.  
Officials of Gulfstream and officials of the horsemen’s group are providing  few details, but  are cautiously optimistic that a deal can be approved this month.  If that happens, the two South Florida tracks might  be able to halt their same-day racing as soon as this July.
 
Calder and its parent company Churchill Downs Inc.  (CDI) have declined to comment on the negotiations.
 
The major unresolved issue involves the often contentious  relationship between  tracks’ slot machines and their racing.
 
Calder, in Miami Gardens, over  the course of each year puts 12 percent of its net slot machine revenues into purses for its races. The agreement would reduce that payment to 10 percent of slot revenues, and the amount likely would fall from about $9 million to $7.5 million.
 
Calder’s slots revenues have been about $75 million in each  of Florida’s last two fiscal years, ending June 30, according to the Florida Division of Pari-Mutuel Wagering.   That has led to payments of about $9 million per year for Calder race purses.
 
If those revenues stay in the $75 million range, the money for slot machines would fall to about $7.5 million at the  10 percent rate.
 
The slots revenues-to-race purses ratio would remain 10 percent at  Gulfstream.
 
The Florida HBPA, which has the annual purse contracts with each track, has indicated it will accept the plan.  But in return for less slots money from Calder, it is seeking some unspecified changes in its  agreements  with Gulfstream.
 
Requests by the Florida HBPA are being directed toward Gulfstream, which under the agreement would take over Calder’s racing operations through  a lease arrangement.  Calder, eight miles west of Gulfstream, would have racing approximately two months each  year and Gulfstream would have the remainder–with no overlap.
 
That would achieve the goal of the Florida HBPA, and almost everyone else in racing, of halting the head-to-head competition that began last July and is scheduled to continue through June 2015.
 
Gulfstream has confirmed  that  the deal, which it presented to the  horsemen April 28, has this basic framework:
* Gulfstream and  its parent Stronach Group would  lease  part of   Calder’s operations from Churchill Downs Inc. (CDI).   
 
*CDI would retain  ownership of Calder, including its casino.
 
* Calder would have racing  40 days,  probably in the fall, and  Gulfstream would race unopposed during the other weeks.
 
The agreement would be for six years. After approval by the tracks  and horsemen, it would require approval by the Florida DPMW.
 
Since last  summer, Calder has rejected  several offers under which  Gulfstream would have either bought or leased Calder.
 
In a statement issued May 9, Florida HBPA  president Phil Combest said: “I have to believe we’re closer to an agreement than we’ve ever been.”
 
At Florida pari-mutuels, net slot machine revenues are the money that players put into machines minus payouts to players and promotional credits.
 
Calder has 1,170 Las Vegas-style slot machines in its casino that  is  adjacent to its racing  building,  Gulfstream, in Hallandale Beach,  has 875 of those machines in the two  casino rooms in its racing building.
 
Gulfstream is  on pace to generate about $49 million in net  slots  revenues during the current fiscal year, which will end this June 39.  That is similar to fiscal 2012-2013  when that total was $48.7 million.
 
Over the course of 150 race days, approximately Calder’s current annual schedule, the $1.5 million decrease would amount  to about $10,000 less in money for purses each day.  In recent weeks, Calder has  been  racing Fridays through  Sundays, with  eight races per day and average daily purses of about $110,000.
 
Of  the remaining $7.5 million, it is likely  that some money would be put into purses at Gulfstream  as well  as into the 40 race days at Calder.
 
The catalyst for head-to-head racing year-round was Gulfstream’s decision  to keep its winter  racing and add weekends from April through November.  Calder declined to  give up any of its traditional  weekend dates.
 
One result has been  a huge Gulfstream lead in handle–on-track and other sources such as simulcasts and on-line betting.
 
Over the May 9-11 weekend, Gulfstream had 25 races and Calder had 24 races over the three days.  Gulfstream’s  average daily all-sources  handle of $4.0 million  was 5.3 times greater than  Calder’s  $753,000 average, according  to Equibase Co. charts.

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