by Tom LaMarra and Esther Marr
Keeneland has offered buyouts to some of its employees in the wake of a financial crunch brought about by a number of factors.
The Lexington racetrack and auction company didn’t say how many employees are affected, but according to industry reports, the number is more than 30 out of the 170 currently on the payroll. The maintenance and security departments--the largest areas of the company--are said to be the hardest hit.
“The buyouts have been offered as part of an initiative we’re doing to cut some costs and be more efficient with our business,” said Jay Blanton, a spokesman for Keeneland. “We’re not immune from the economic recession that has impacted our business and virtually every other business across the globe when it started in 2008.”
Blanton said the racetrack would re-evaluate its financial situation following the upcoming September and November sales to see if more cost-cutting measures are needed.
According to sources, the employees have been offered buyouts based on a formula of years worked and age. Many are said to be near retirement age. Employees have until Aug. 31 to make decisions.
“This is one piece (of our cost-cutting initiative),” said Blanton. “We’ve also asked departments across the company to undertake belt-tightening moves while ensuring the provision of high quality of service.”
Pari-mutuel revenue is down, but more importantly for Keeneland, so is auction revenue. Last year’s horse sales' receipts totaled less than $400 million; a few years back receipts topped $800 million.
Throughout North America, total auction receipts have gone from $1.2 billion in 2006 to about $650 million in 2009. From 2008 to 2009, total pari-mutuel handle in the industry dropped by close to $3 billion.
Keeneland also has experienced a substantive drop in cash reserves because of various projects undertaken over the past several years, including on-site renovations, development of a master plan for expansion, an investment in the Polytrack company Martin Collins, and various industry initiatives.
Earlier this year Keeneland announced a $1-million reduction in stakes purses for its 2010 fall meet. The company has a tradition of paying more to purses than it derives from pari-mutuel revenue.
For the most part, Keeneland is run by president and chief executive officer Nick Nicholson, and three trustees. There also is a larger board, made up mainly of consignors and breeders; a few members of the larger board are said to have been taken aback by the most recent purse cuts.
“Cutting costs and making budget reductions are one piece of the puzzle, but we’ll also be investing in the business; we’ll be making strategic investments such as our new owners’ initiative, where we’re trying to entice new owners into the business,” Blanton said.
“We’ll probably also look at some investments if we think they’ll produce revenue, and continue to invest in our facilities and make improvements that will generate dollars. So it will be a combination of cutting costs and making strategic investments that we think will generate long-term profits.”