By Dan Johnson
Prairie Meadows will pay $15 million per year in purses and $20 million annually to its landlord, Polk County, under separate deals worked out by the racetrack.
Both agreements will begin in 2003. The purse contract is for three years, and the lease agreement with the county is for five years. The purse contract was unanimously approved March 27 by the Racing Association of Central Iowa, which operates Prairie Meadows.
RACI also approved the parameters of a lease agreement with Polk County, though some details have yet to be worked out. While track and county negotiating teams have agreed on the financial details, they still have to determine how much of the $20 million per year will be guaranteed.
"I think that's going to be key in negotiations," Polk County supervisor Gene Phillips said. "I think the dollars may be set. Now it's how do we handle it if there's a bump in the road."
RACI's resolution calls for the county to receive $12 million in rent and $8 million in after-expenses profits. "Based on the revenue projections that Prairie Meadows is now showing, the county should be very comfortable and confident that they're going to receive the $20 million," Prairie Meadows attorney Tom Flynn said. "It's just impossible for guarantees to be given, but there's no reason to believe that they will not receive $20 million."
Prairie Meadows officials say they expect the deal to be finalized quickly. "I think we're over most of the main hurdles," RACI chairman Jim Rasmussen said.
A Polk County referendum in November will decide whether Prairie Meadows can retain its slot-machine operation. Thus, all sides want to get the agreements settled with less bickering than in their tumultuous 1997 negotiations.
More than ever, Polk County is depending on its share of Prairie Meadows' profits. The county has several projects it wants to fund with gambling income, including construction of the $212-million Iowa Events Center. Prairie Meadows also has $2 million per year earmarked for charity. That means $37 million will be needed to cover the track's yearly payouts to charity, the county, and purses.
Six months ago, Prairie Meadows warned that rising state taxes and expenses would cut its profits. It estimated the $50 million in profits that were divided among the county, horse owners, and charity last year could shrink to $27 million by 2004.
An upturn in business has given hope that betting has improved. Prairie Meadows general manager Bob Farinella said that if the Altoona track's income grows by 2.5% per year, the track should be able to cover its obligations.
The purse money is guaranteed. The $15-million allotment is a $5-million drop from the $20 million that will go to Thoroughbred and Quarter Horse purses this year. Prairie Meadows will also reduce its 98-day racing season to 75 days. Nevertheless, breeders said the certainty of the contract was good news.
"We've heard everything from $5 million to $15 million for purses," said Jeff Capps of Special K Stables in Runnels, Iowa. "The reality is that at $14 million or $15 million, if they shorten up the days, we're basically running for the same purse per race. It's still good. I don't think you'll pull in a lot of the high-level stables, but it keeps the mom-and-pop operations afloat. That's the key to this business, and most people don't realize that."
That purse money -- $100 million from 1995 through 2002 -- helped Iowa make the biggest percentage jump in Thoroughbred breeding in the mid-1990s. Iowa went from having 274 mares bred in 1994 to 903 in 1998. This year, as talk increased of cutting back the purse subsidies, business for some breeding farms has dropped.
"There's no question that there have been a lot of people shaking in their boots," said Lance Bader, who manages Bader Farms in Long Grove, Iowa. "My foaling numbers are going to be down a little bit. The interest in the Iowa-bred program slowed a little bit. I would expect to see the Iowa-bred numbers down a little bit. There's a lot of apprehension out there."
Bader said breeders sent mares to breed to his stallion Sharkey. However, only have 25 of those mares remain at his farm to foal Iowa-breds, versus 35 last year. "I'm getting some people from Minnesota, but they'll foal in Minnesota," Bader said. "They're just here for Sharkey."
Likewise, Capps said that Special K delivered 25 foals this year versus 42 in 2001. He said many mares that were bred last year to Special K stallions Dignitas, Commemorate, and Temujin were sent elsewhere to foal. Capps said the real damage to Special K's business came because of the uncertainty surrounding the future.
"I had a heck of a time selling horses this winter, because of the uncertainty," Capps said. "It was really tough, because people didn't know what would happen. The reality is what we have is a nice facility and a nice track. We're a regional market, but we don't have the population like Chicago. We can still have a nice track and raise nice horses. If they dropped us down to $5 million or $7 million, you'd see a lot of people go out of business."
Wade Feuring, who manages the Rockin River Ranch in Winterset, Iowa, said that his farm's business remained strong. He expects 200 to 250 mares to the farm's four stallions, with about half to stay in the state to produce Iowa-breds.
"We can't complain," Feuring said. "We'd like to see the purse money stay the way it is, but if they have to cut it, we'll just have to deal with it. It's not ideal, but it's still a better program than what a lot of states have."
Still to be determined is Prairie Meadows' racing format for 2003. The track currently has a 53-day Thoroughbred meet followed by a 45-day mixed meet. Thoroughbred interests like that setup. Quarter Horse owners favor one longer mixed meet, which Prairie Meadows had through 1996.