In the two weeks since MI Developments assumed the assets of its bankrupt subsidiary Magna Entertainment Corp., including Santa Anita Park and Golden Gate Fields, the California Horse Racing Board could only watch as company representatives blamed excessive regulation for the state's racing woes and abrogated a lease with the Oak Tree Racing Association that had existed since 1969.
On May 20, board members shot back.
A capacity crowd of more than 100 was on hand at the Golden Gate Fields turf club for the CHRB meeting, which featured board chairman Keith Brackpool and representatives of MID, led by company chief executive officer Dennis Mills. For openers, Mills announced that George Haines, the longtime Santa Anita general manager, is taking over as president of MID's California racing operations, replacing Ron Charles, who resigned.
After that, the board made it clear it had heard enough from its newest track owner.
"All we are seeing in the press reports is your bemoaning all the regulations that exist in California," Brackpool said. "When you took over these assets (Santa Anita, Golden Gate, and account wagering provider XpressBet.com) two weeks ago, were the laws in California any different? Now all we hear is regulations need to change, how California racing is broken and you need to fix it.
"When you purchased those assets, you fully believed you had acquired good assets. Are we really to believe that MID has an interest in continuing in horse racing, or is it more interested in the real estate?"
Mills assured the board that MID's interest was with racing, but said: "We are not going to take over these assets to maintain the status quo."
He pointed to regulatory changes in Florida that helped the company's Gulfstream Park operation enjoy its most successful meet in six years in 2010. Mills said the company "needs a little more time" to develop specific ideas to help out California's struggling racing industry.
"We have only had these (properties) for 15 days," he said.
Mills provided a four-page "open letter" to the CHRB and racing interests in the state that said "the industry is still operating largely under antiquated legislation and regulation." The letter, signed by Mills, called for "a clean slate" to provide "comprehensive solutions."
It pointed out that in the sale process that was part of the MEC bankruptcy, only one entity expressed interest in buying Santa Anita for racing purposes. All the others wanted it solely for the real estate. The letter offered some "hopes" and "wishes" that MID had for industry action in California.
MID chairman Frank Stronach is expected to approach the board with better-defined plans at the CHRB's next meeting June 24 at Hollywood Park, Mills said.
Board vice chairman David Israel noted that state laws governing racing prohibit a single entity from operating more than one business operation, a law the CHRB waived when MEC purchased Golden Gate Fields several years ago. "Therefore, it is illegal for MI Developments to own Santa Anita, Golden Gate, and XpressBet," he said.
The board, though, later approved a license application to allow Pacific Racing Association to complete its current meet at Golden Gate through June 13 under MID's stewardship. It also extended its simulcast wagering agreement to PRA and the Los Angeles Turf Club, which operates Santa Anita, until the July 22 CHRB meeting at Del Mar.
According to the motion from Brackpool, MID will be required "to submit detailed reasons and plans as to why the board should allocate any future race dates to the PRA and LATC" for consideration at the July 22 meeting.
Israel addressed termination last week of Oak Tree's lease with Santa Anita, a move widely perceived as an attempt to grab the fall racing dates from the not-for-profit racing association that successfully hosted the Breeders' Cup World Championships the past two years.
"For us, citizenship is an issue," Israel said. "Clearly, by abrogating your lease with Oak Tree, you have put that operation in jeopardy. You have put the $60 million generated by the Breeders' Cup when it is held at Oak Tree in jeopardy. These are jobs and income that are important. All of this is in jeopardy because of your actions.
"I've learned a lot of things over the years, and one of them is, 'If it ain't broke, don't fix it.' There are a lot of things about California racing that need fixing, but Oak Tree isn't one of them."
Sherwood Chillingworth, executive vice president of Oak Tree, said that, after getting his board's approval, he thought he had negotiated a new lease that would have increased what it pays to lease Santa Anita over the current $2.5 million a year. But later, he was told by Mills MID wanted to take the assets from any future Breeders' Cups as well.
That, Chillingworth said, was unacceptable because Oak Tree needed that revenue to offset the approximately $1 million per year it had been losing recently in non-Breeders' Cup years.
As MID's first public step after acquiring Santa Anita, the decision to terminate Oak Tree's lease "raised the levels of concerns we have" about the transfer of ownership, Brackpool noted. He said Stronach visited the CHRB a few years ago to "tell us his feelings" about regulations and his plans for the future.
"None of the things he talked about ever happened," Brackpool said. "I wonder what happened to the Shops at Santa Anita."
Mills said MID would resume negotiations with Oak Tree on terms for a new lease agreement. He said a meeting is set June 4.
"We're not strong-arming anyone," Mills said. "That's not our approach."
Several people at the meeting spoke on behalf of Oak Tree, whose charitable donations to racing industry programs have long been hailed in California and around the nation.
The board, in a unanimous vote (commissioner Jesse Choper was absent) later approved a motion to allow Oak Tree to transfer its 2010 dates (Sept. 29-Oct. 31) to another venue if an acceptable deal with Santa Anita cannot be worked out.
"We have been at Santa Anita for 41 years, and we would like to maintain that tradition," Chillingworth said.
Brackpool wasn't done with MID. He told Mills there is a legislative process for addressing California racing law and that is the way MID should go if it wants changes. Public pronouncements about how MID is going to fix California racing's issues won't solve the problems, he said. Brackpool also noted that the governor is strongly supportive of the racing industry.
Brackpool said MID talks "as if those in California racing are ostriches with our heads stuck in the sand for the past 50 years thinking everything is great. We know there are problems."
One thing Stronach has criticized has been the board's control over the number of racing dates allocated. Mills said he hoped the board would examine additional dates for Santa Anita in the future.
But Brackpool said the number of dates is not the real problem. "For years, Santa Anita has been very successful racing the same number of dates that it has today," he said. "It's not dates. What has changed is the economics of the sport."
Instead of threats over what may occur if Santa Anita doesn't get more dates, commissioner Jerry Moss called for more assurances from MID so "we know what's going to happen to the Great Race Place. I think you'll find the board will be more receptive."
Brackpool said that until MID has a clear set of proposals, it should, in essence, pipe down. "You are like a bull carrying around your own china shop," he said. "Your first 15 days (of ownership) have been an unmitigated disaster for our sport."