At least two prominent Southern California-based trainers are ready to move east over the state workers' compensation insurance crisis.
Clifford Sise, who has one of the biggest operations in the southern half of the state, said he plans to move about half of his 55-horse string to Philadelphia by the end of the current Santa Anita meeting April 20. He said he is maintaining his California operation for owners who are willing to pay the insurance costs.
Christopher Paasch, reached by phone in Kentucky, said he will make a final announcement in the next couple of weeks, but indicated he was probably relocating his 30 head, and that he's not alone.
"I know of three very large barns who are going to announce in March that they are leaving," said Paasch, while declining to name them.
A workers' compensation insurance plan promising lower rates for the state's backstretches was introduced in early December with industry giant American International Group handling the policies backed by a $5 million security deposit from the California tracks.
An insurance industry official who helped broker the plan said the initial enrollments that ended in early January were encouraging. John Patrick Unick, vice president for national sales for Maroevich, O'Shea and Coghlan of San Francisco, said a little more than half of the state's 500 eligible trainers deserted the higher-priced State Fund for AIG, with annualized premiums for the new contracts totaling $6.2 million.
Prior to reaching the agreement, several trainers had quit the business, relocated or retired, a trend state racing officials hoped the new deal would end.
But Sise and Paasch feel the new rates would not make a significant difference.
"No, not all," Paasch responded, adding that in Kentucky he would pay about one-tenth of the $7,000 per month or more he currently spends on workers' compensation insurance for his 13-employee operation.
He said California racing would be in deep trouble from a competitive standpoint if, as he expects, New York and Kentucky tracks shortly acquire slot machines and see huge purse hikes as a result.
"I love California," said Paasch, who came to the state after getting his trainers' license in New York in 1999. "I think California is a wonderful place to train horses. But if they are running maidens in Kentucky for $80,000 to $100,000 ... would I like to stay in California and enter races that hardly ever go (for lack of entries)? I'm going to spend $100,000 a year for insurance. It's not a hard question to answer."
Sise said he is paying $26 per $100 of salary for his 35-employee operation with the State Fund. While he might get a slightly better rate than that through AIG, he'd also have to come up with $15,000 to $20,000 for a security deposit.
"We'd have been better off with our own self-insurance plan," he said of the states' horsemen. "All we did is to get another company (AIG) to prolong our misery. If they get a lot of claims, they'll be gone in a year. Then I'd be looking at going back to State Fund and paying another deposit. I can't be bouncing back and forth. I don't have that kind of money."
Sise said most of the larger stables would stay with State Fund because the rates are comparable to AIG.
Unick disputed that. He listed Bob Baffert, Bobby Frankel, Jerry Hollendorfer, Jeff Bonde, John Sadler, John Shirreffs, Bill Spawr and Richard Mandella as major players switching to AIG.
"These statements are broker driven," he said. "The brokers who have a 5 percent commission on those premiums with State Fund, but would only get 3 percent if their clients were with AIG. It is absolutely laughable that anyone would stay with State Fund over the program at AIG."
At the same time, Unick acknowledged the heavy burden horsemen are feeling.
"It's a matter of economics," he said. "And this is definitely knocking the economics of racing here out of balance."