Fort Erie Will Race For At Least Three More Years

Great news out of Fort Erie. The show will go on.

Here is how it will happen in a nutshell:

Nordic Gaming (the current owner of Fort Erie Racetrack) has agreed to lease out the track for $100,000 the first year, and $650,000 a year for the two subsequent years each.

Nordic Gaming is responsible for all severance packages and any incurred liabilities prior to January 1st, 2010.

The government of Ontario has stepped up to the plate, and will give the consortium $5.6 million per year for three years, in lieu of the 10% the track was receiving for their share of slots revenues (which has been around $4 million per year recently). The Town of Fort Erie is also adding $500,000 per year.

A new management team is to be implemented (approved by Nordic Gaming) as of July 1st, 2010.

EDIT: I must have heard something that wasn't said. All approvals will be made by the Consortia, not Nordic Gaming.

Quarter horse racing will be added. The extent of this has not been determined yet, but monies to fund these races will come from OHRIA's suplus. This is a potential new revenue source for Fort Erie, as they get to keep their share of monies bet on these races.

The plan right now is to run 8 thoroughbred races per day (and perhaps one or two quarter horse races), three days a week, for 78 days per year. This represents a drop of one race per day. The budget stands at around $100,000 a day in purse money, which means around $7.8 million will go to thoroughbred purses.

Essentially, the horsemen will get around $4 million from wagering and $4 million from their share of the slots (as long as slots revenues hold). This covers the purse structure.

The Consortia will have an extra $2,000,000 the first year to cover operating expenses (which means that they know that the losses that Nordic claim are really $2 million a year or less in actual operating expense losses). In year two and three, the Consortia has an extra $1,500,000 per year.

The bottom line, is there will be racing, and horsemen and fans need to thank people like Jim Thibert of the EDTC, Sue Leslie of the HBPA, Herb McGirr and Daryl Wells from Nordic, MPP Kim Craitor, and especially the Honourable Dwight Duncan, the Minister of Finance, who recognized the need to keep Fort Erie alive (he is the one who changed the deal on slots that made this happen), oh and cub reporter Perry Lefko, for keeping the story alive in Toronto.

Going forward, there are quite a few initiatives that can be done to increase betting at Fort Erie.
Lets see what happens.

Ontario HBPA and Fort Erie EDTC To Buy Fort Erie?

From The HBPA Site
February 13, 2009

The H.B.P.A. of Ontario, the Town of Fort Erie, and the EDTC will be offering a non-refundable down payment for the purchase of Fort Erie racetrack from Nordic Gaming.

A brief outline of the offer is as follows:

The above named parties will make a non-refundable deposit for the purchase of Fort Erie Racetrack in the amount of $2,250,000.

In exchange, Nordic Gaming must agree to run 78 days of live horse racing in 2009 commencing the first Saturday in May. They must also allow the parties involved till August of 2009 to review with the Province of Ontario the formation of a not-for-profit corporation. This will allow all concerned to perform due diligence to secure a permanent solution for Fort Erie.

Several prior meetings with Nordic Gaming made them aware this offer could be forthcoming. We were awaiting approval from the Province to use EDTC funds.

This information is for horsemen's use only, please do not make it public as there is a long way to go yet.

We anticipate a timely response from Nordic Gaming. More details will follow.

Sue Leslie, President
HBPA of Ontario
**************************************************
No offense to Sue Leslie, but the HBPA site doesn't require a password to view, so this is now public information. And besides, Jen's Thoroughblog and there is an article in The Thoroughbred Times by Perry Lefko on the subject.

Obviously, this isn't a done deal yet. Nordic still has to say yes, and the government has to approve using the use of the left over $1.5 million that the EDTC has in its coffers, from the $2 million handed over to them last year to do a feasibility study on that $300 million expansion project (that made no sense from the get go).

The $2.25 million falls around a million short of what Nordic states they need to break even. Though there is very good reason to believe that Nordic doesn't lose as much as they state they are losing.

Also, there is no mention of an actual price on Fort Erie. I highly doubt the $35 million first offered, will ever happen. The business appears to lose money, slots numbers are still on a slow decline, and with a Buffalo casino around the corner, they could take another hit. And the land isn't worth $100,000 an acre. Not even close. Realistically, a fair price for the track is somewhere in the $7-$15 million area, and that is only if the people buying the track are confident that they can grow the business, and at least make it break even.

I do commend James Thibert for his creativity, and initiating a deal in the first place (though his buying price was ridiculous), and a lot of praise must go out to Sue Leslie for persevering on this issue. However, even if this deal does happen, I really don't like the idea of the horsemen running the track, especially if this tracks viability and future is still dependent on the track making money.

I'll give a couple of examples. Horsemen believe that the higher the track takeout, the more money they get for purses. This is totally wrong, as I've explained many times on this blog. Worse, they think a takeout reduction means less money. And again, that is completely wrong as well.

Secondly, they think that the more race dates they have, the better off they are. Again, this is wrong. The purses need to be enough so that owners don't have to win three races in a year just to break even. Minimum purses need to be $10,000, and racing dates need to be set with that in mind.



What can Fort Erie do to get to break even?

They tried Friday racing and a 3 o clock post time a while back, and neither worked out. But things have changed since then. For a track like Fort Erie to get handle, they need to race when there is little thoroughbred competition.

Management does know that from 4:40-5:30 PM on Monday and Tuesday that their biggest handle happens. Outside of putting up lights (which wouldn't be a bad idea if they can get it to happen without disturbing the harness people too much), they should start the first race those two days at 1:30 or even 2:00 and run until 6:00 or 6:30.

On Sundays, handle sucks big time, but they need Sundays to attract new business and to allow for owners to come to the track on the weekend to watch their horses. There is way too much competition from A tracks on Sunday though. They should start racing at 12:15 or 12:30 so they can get the bettor's first dollars.

Many players go to the track with a certain bankroll, and they tend to bet heavier to begin with (and many don't last passed the third or fourth race). The same is true of bettor's betting through the internet. You want the weekend players to possibly handicap Fort Erie because it is the first race to go off, and to get their day started betting Fort Erie.


Also, Fort Erie could easily set up their own ADW (internet betting hub). I know how they can do it with no set up cost. Instead of sharing with Woodbine's HPI, they can directly market to their home market (400,000 residents in the Niagara region). There is very little, if any, marketing to get players to open up online accounts that goes on in the Niagara region today. I think if Fort Erie gets an ADW they can increase profits by at least $500,000 a year.

They also can draw in Americans with sports betting. Parimutuel sports betting would work, as long as the takeout is equal to the commission charged by bookies. Lots of Americans may venture over the border to play the Bills and Sabres.

I have quite a few more ideas as well. But I'll wait for the deal to happen and my phone to ring before I give out any more advice:)


Nordic's owner is looking to acquire a 5% ownership interest in Israel's biggest bank. And his company just had a major gas discovery. I'm sure, that he wouldn't mind getting rid of Fort Erie. Now if his ego would just get out of the way, he could put a realistic price tag on it.



Epilogue on Track Ratings by HANA



Committee Transcripts: Standing Committee on Government Agencies - February 10, 2009 - Agency review: Ontario Racing Commission



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