Finaltrax
By ELIZABETH HAYES AND JASON BOOTH
Staff Reporters
News that Santa Anita Park race track is once again up for sale has rekindled an old question can L.A. support two horse racing facilities?
Popular speculation is that after years of declining attendance at both the venerable Santa Anita in Arcadia, and the flashier Hollywood Park in Inglewood, it is only a matter of time until one of the facilities is shuttered.
The consensus among racing industry insiders, however, is that there remains room in this town for two tracks at least, for now.
There are encouraged in that belief by three factors.
? Los Angeles is big enough and the two sites far enough apart to attract distinctly different crowds.
? Gambling on horse racing, both on site and at off-site locations, remains strong, making it likely that the tracks will continue to make money.
? Even if the tracks limited profit potential, they still have the ability to attract visitors to adjoining facilities such as shopping malls, casinos and hotels.
“I don’t think one track can survive without the other. To run at one place would get stale,” said Martin Panza, racing secretary for the Hollywood Park Operating Co., which recently made a bid to buy Santa Anita. “There’s almost two completely different markets attending Santa Anita and Hollywood Park.”
Racing sources say the demise of one track would not affect the other, since the two draw from different ends of the region.
“If one or the other was gone, imagine getting from the Westside to Arcadia,” said Rick Baedeker, senior vice president of marketing for the National Thoroughbred Racing Association, formed last year to help market the sport.
To broaden their audience, both tracks have launched aggressive marketing campaigns and expect to benefit from the association’s efforts.
There is little doubt, however, that attendance at both Santa Anita and Hollywood Park has stagnated or declined in recent years.
Total on track attendance at Santa Anita totaled 1.38 million, down from 1.66 million in 1994. Hollywood Park fared little better. Attendance at that track totaled 1.03 million, down from 1.19 million in 1994.
“Its because Los Angeles has so many other forms of entertainment and sports,” said David Carter, sports marketing consultant and USC business professor. “And racing plays to an older, shrinking demographic.”
Despite a decline in on-site attendance at both Santa Anita and Hollywood Park, betting on the races held at those facilities has climbed dramatically in recent years.
Total bets on races at Hollywood Park in 1997 totaled $909 million, up sharply from $784 million in 1994. Santa Anita has seen similar rise, from $986 million in 1994 to $1.02 billion last year.
Most of that growth has come from out of state, through the live satellite transmission of local races to casinos in Las Vegas, Atlantic City and Louisiana, as well as other race courses.
Such growth has been vital, as the tracks get a roughly 4 percent cut of those bets. As a result, despite the sharp drop of in attendance, income levels have not fallen as steeply.
In 1997, racing at Hollywood Park generated $68.8 million in revenue, compared $78.7 million in 1994. Expenses over the period have remained constant at around $30 million.
Santa Anita in 1996, the last full year of operation before the track was bought by Massachusetts-based Meditrust, had revenues of $68.6 million, up from $67.8 million in 1994. Expenses were steady at around $48.7 million.
“Both tracks make money every day they are open,” said said Dick Gonzalez at the California Horse Racing Board in Sacramento.
Meditrust, a health-care real estate investment trust, merged with Santa Anita Cos. last November in a deal valued at around $383 million. But now Meditrust is poised to sell the track. A group of investors led by Meditrust chairman William Baker (and former Santa Anita chairman), together with Bradley Wayne Hughes, president of Glendale-based Public Storage Inc., is said to be a leading contender for the track.
A Meditrust spokesman and Santa Anita officials declined to comment.
Hollywood Park also made a bid for Santa Anita, but it was rejected. They gave no indication whether they would make a second offer. It likely attempted to acquire Santa Anita because both tracks help attract visitors to adjacent shopping malls and casinos, said Anthony Gerstein, an analyst at Bear Stearns in New York.
“There is an allure of having a track there, there are a drawing card,” he said. “A play for Santa Anita by Hollywood Park would be a clever one. If they succeed in getting it, Hollywood Park would have a lock on racing in Los Angeles.”
He doubted that Hollywood Park chairman R.D. Hubbard has any intention of shutting down Santa Anita because “racing is his passion.” More likely, Hollywood Park would continue to run races at both, while reducing management costs and effectively doubling the amount of money it makes on betting.
Looking ahead, the key to the future of both race tracks is attracting a younger audience.
Santa Anita has been particularly aggressive about database marketing, said Craig Dado, vice president of marketing. The track uses the free memberships in the Thoroughbred Club to better track customers’ tastes and habits, so it can target its direct mail marketing accordingly. It then finds other people who fit the profile of the current customers but who have never visited the track and sends free passes. Once there, the newcomers are offered a tour, box seats and a handicapping helper, Dado said.
Hollywood Park has put an emphasis on getting a younger crowd. The centerpiece of that campaign are Friday night races for which the entrance fee is one dollar for customers under 30 years of age.
The track also offers one-dollar beers, along with live rock and roll music.
“They have to go to a broader base, get younger people and they have to make racing understandable,” John Van de Kamp, president of the Thoroughbred Owners of California. said. “We’d like to see (Santa Anita) remain open and get to a new level.”
That level, ideally, would be 10,000-15,000 every day and 30,000-35,000 on weekends, he said. Currently, Santa Anita sees a daily on-track attendance of a little over 12,000, while Hollywood Park’s attracts an average of just over 10,000 daily.
But Santa Anita’s attendance has been picking up increasing 3 percent for the shorter, fall season so far this year and 1 percent for the winter-spring meeting, Dado said.
According to Keith Chamblin, vice president of marketing at Hollywood Park, the results of their campaign could take a few more years to bear fruit.
“It is a very competitive environment for the sports-gambling dollar,” he said. “There has been a general decline in on-track wagering and I think that trend will continue for a couple more years before we see a rejuvenation as younger people are introduced to the sport.”
Both tracks are also eyeing their surrounding real estate for increasing profits.
Meditrust’s plans for a $60 million, 500,000-square-foot retail center and multiplex theater on part of the lot are pending with the city of Arcadia. Hollywood Park is also pursuing plans for a retail complex.
Industry insiders point out that despite the lower attendance, horse racing is not a dying sport, at least elsewhere in the nation.
Several tracks around the country have actually bucked the trend and are enjoying increased attendance, including Kentucky’s renowned Churchill Downs, Monmouth Park in New Jersey and Gulf Stream Park in Florida, said Tom Merritt, spokesman for the National Thoroughbred Racing Assn.
“So many people think gloom and doom is going down everywhere. It’s not,” Merritt said.
Churchill Downs reduced the price of parking and concessions in order to compete with Riverboat gambling, Monmouth added family entertainment to attract vacationers on the Jersey shore and Gulf Stream set up a room where newcomers can learn the nuances of selecting winners and make play wagers, Merritt said.
“Fifteen years ago, too many tracks essentially just opened their gates. They were still living in an era of a protected monopoly and didn’t need to do much,” Merritt said. “Racing took awhile to realize it needs to be out there and compete and catch up and use the technology available to capitalize on the unique nature of the sports-entertainment it has.”
The state’s racing industry has been aided on two fronts this year. The association has begun a marketing and advertising campaign with the slogan “Go Baby Go.” And a new state law passed this year will mean a $40 million windfall for tracks; it will reduce the license fees, allowing bigger purses and to put more funding into developing their businesses.
The sport will also get more television exposure next year, with increased broadcasts by Fox Sports. It will mean more than double the network television hours devoted to thoroughbred racing in 1999, compared with 1997.
“What has happened in the horse racing business is we’ve probably hit bottom. The question is, how far back up we can pull it,” Van de Kamp said.
Not everyone is so sure.
“Probably, eventually, you could get a consensus you’ll see one major track in San Francisco instead of two and one major one in L.A. instead of two. I think that’s the eventual resolution,” said Ed Friendly, who is on the boards of the Thoroughbred Owners of California and the national association.
Having two tracks in one area is “terribly inefficient” uses of personnel and real estate, he said: “Look at how many acres are involved in each track and they’re used a third of the year and dormant the rest.”
Several tracks have shut down. The Atlantic City Race Course held its last meet this summer, a track in Omaha, Neb. closed three years ago because the land was too valuable for a track and the Detroit Race Course will close at the conclusion of this year’s meet, Merritt said.
Ultimately, said Baedeker, with the Thoroughbred Racing Association, “the marketplace will decide the future.”
Cut? Some industry insiders speculated that if Hollywood Park gains control of Santa Anita, they would attempt to establish an increased gambling presence on the sight. Their hopes might be strengthened if Proposition 5, which would allow increased gambling facilities on Native American-owned land, is passed Nov. 3.
“If 5 passes, it will put tremendous pressure to allow existing gambling operations to expand into other forms of gambling,” said Dick Gonzalez at the California Horse Racing Board in Sacramento.
