16 February 2009

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

Great resource again this year thanks on Equidaily. The lifetime past performance charts of all the Kentucky Derby contenders. For free! 94 pages, yikes.


Anonymous said...

Question about the Sunday handle: Is it lower than Mon & Tues because fewer tracks, OTB's etc carry the FE Signal, or is the Signal pretty well everywhere all 3 days and people just ignore it more when the 'A' tracks are running?

Anonymous said...

Sunday's handle is less because of competition. Most ADW's have Fort Erie on their roster, but at tracks and OTBs they probably get no exposure except at Woodbine.

Anonymous said...

Can you tell me with this deal of a non-refundable downpayment towards the purchase of the Fort Erie track, should it be accepted, who will be running the 2009 racing operations?. Or more to the point who will absorb any loss if such is accrued in 2009?

I too thought of twilight racing, if lights could not be put in for this season. As we know for a couple of months it is light until fairly late.
I too have other ideas to attract public, and families to the races, but as yourself will wait until a deal is reached.

With all due respect to the various parties, having insular "horsemen","ambassadors of horseracing" running the operations without consideration given to the 21st century is a recipe for failure.

I guess we will have to wait and see.

Anonymous said...

I don't have any further details, so I can only speculate. Fort Erie would need a licensed operator, and the licensing process for track ownership takes a long time (at least 4 months to investigate all parties involved). So Nordic would probably still have to stay on as owner in 2009, and probably their team would still be managing the place.

Yes, horsemen equals disaster if they are to make decisions regarding growing the business. What they need are actual bettors making the decisions. I'm serious.

Anonymous said...

Why would anyone make the journey from Buffalo to Fort Erie to bet on a football game? People can sit at home watch their big screen TVs and it is an almost certainty that if they are inclined to bet on football they have a bookmaker or a friend where they can get a bet down.
Windsor Casino takes NFL football but they have limits and I think you have to play parlays. I asked a bunch of degenerate gamblers if anyone had ever bet football at the Windsor Casino and not one had. There used to be a lot of horseplayers that went to Windsor Raceway from the Detroit area but I know of no one anymore. If Northville or Hazel Park doesn't have the trots running they'll drive up to Sports Creek which is about 100 miles round trip. Crossing the border is viewed as a big time hassle.

Anonymous said...

Do you really think this will happen? I agree with many of the other commenters in questioning the wisdom of this. Many things in racing are uncertain but one thing which is, is typically the lack of brains in committees.

Anonymous said...

I hope you are incorrect in your speculation that Nordic would stay as the owner for 2009 along with their team. Hopefully, if a deal is done, they can make a provision for the managing of the place. Otherwise, it will just be the same old, same old.
In growing the business I think they should have representation for all the various aspects of horseracing. Expertise in- Tech,advertising/marketing,business,horsemen and horseplayers to assure a profitable organization and protecting all parties involved as it advances with the times. Being run as a club with little accountability for failure/success no longer works for any track.

Anonymous said...

Anon 12:13-you are so right when you say that nothing will change if the present management remains. Their favourite saying is 'if it doesn't cost anything, go ahead" when presented with ideas on how to get families out on race days.

Does anyone remember years ago before the slots came in how the track would host a Prince of Wales weekend? They had an equine art display in the upper grandstand and a country fair on the lawns. It was great and really attracted families. I miss those days. $1.00 hot dogs and soft drinks just doesn't cut it these days.

With the economy in the state it is, the track needs to make a day at the races a time where people can come, spend the whole day and enjoy themselves with the whole family!

Anonymous said...

Agreed the event of horseracing must be recaputured.
However, I fear with the latest update the 2009 season has the potential of operating under Nordic as in previous years. The fact that 6mths(August 2009)is required "to review with the Province of Ontario the formation of a not-for-profit corporation" for a seasonal industry, with 2.25M non-refundable deposit in the wings on an issue that has been outstanding for years !
I'm afraid we will find ourselves Deja vu all over again.
Where is the 2.25M non-refundable deposit coming from- who is putting that money up, is the govn't underwriting that deposit??

Anonymous said...

Where does the money go from the casino when racing is over for the year? They have 6 months of no racing November till May!!! I'm afraid that everyone involved in this new non for profit are the same people that have been their for years!!
It will not change a thing which is a real shame.

Anonymous said...

RG, I think the Buffalo crowd is a betting crowd. I also think that if there was a legit sports book at Fort Erie, it might draw more people from the Niagara region to the track as well. And I expect big screens all over the place.

Anon3:23, I assume 1.5 million would be coming from the left over amount of the feasibility study for the 300 million dollar project that never happened.

Anon 7:36, 10% goes to the owner and 10% goes to the horsemen's account and is used towards purses. It doesn't matter if there is live racing or not during November to May, the horsemen get their cut.

Anonymous said...

Nordic is in business for profit - just like any other enterprise. Having said that, I believe they, Nordic, over the past few years have looked at various proposals and dismissed them - Why? - because the numbers were not there. Ask yourself as a business owner; would I sink cash into a rudderless ship(?).
However, as a fan and handicapper, (with a sincere desire to see FE succeed) I cannot understand, why Nordic did not install the lights when they spent a small fortune on the re-surfacing just a few short years ago. I'm sure they were aware PresQ Downs was imminent back then - notwithstanding the fact that most people work for a living - Night Time racing would have been a huge Canadian/American draw (to go along with FE as an ADW - excellent!!). Now the Horse people want to buy in - what madness. To be honest, we'd be better off with Nordic.

Anonymous said...

Nordic did the track makeover because they were forced to. They would have lost their license if they didn't. And back then, they were still profitable.
About the lights, Nordic has only done what they had to do, never looking to expand their horse racing customer base.
In fact, they look at the horse racing side as a necessary evil. And always have.

On the other hand, you are probably right. Horsemen only look after horsemen, and collectively they are not the brightest business people or marketers.

They look at gamblers as necessary evil, which is no way to run a business.