Slots Splits Slow Calder Contract Talks

Slots Splits Slow Calder Contract Talks
Photo: Leslie Martin
Calder Race Course

by Jim Freer

As Calder Race Course prepares to open its 2008 meet April 21, the question of how to divide any future slot-machine revenue is holding up contract talks between the Miami Gardens, Fla., track and the Florida Horsemen’s Benevolent and Protection Association.

Officials of Calder and parent Churchill Downs Inc. met with officers of the Florida HBPA April 9, just hours after CDI announced that C. Kenneth Dunn was stepping down as the company’s senior vice president of Florida operations. The two parties did not reach an agreement.

Florida HPBA executive director Kent Stirling said he believes there was progress, and he expects another meeting will be held “within the next few days.”

The meeting “was one of what may be several with the horsemen,” said Calder director of communications Michele Blanco. Calder is “not at liberty to discuss the details during the process,” she said.

The first meeting on a Calder 2008 purse contract came 12 days after the Florida HBPA, Calder, and Gulfstream Park agreed to a revised split of revenue on simulcasts between the two south Florida Thoroughbred tracks. In an agreement that began April 5 and extends through May 31, 2009, the track taking the host signal and other imported signals from the host track will designate 25% of its split for purses at its next meet.

Under a system that began last September, no revenue at the guest track was set aside for purses.

Stirling said the new agreement provides some financial relief for horsemen to help compensate for this season’s decline in on-track handle at Gulfstream. An undetermined amount of that decline is from patrons at Calder who previously bet at Gulfstream.

Dunn participated in the April 9 meeting but was not available for comment afterward because he was leaving for a previously scheduled vacation. CDI executive vice president Steve Sexton and Calder treasurer and general manager Michael Abes also attended the meeting.

The biggest issue in the talks is slot machines, which Miami-Dade County voters approved for Calder in a Jan. 29 ballot issue. Calder and CDI are emphasizing that Calder will have not a casino license and slot machines until 2009 at the earliest. Thus, they do not see the urgency for a slots contract this year.

On April 8, the day before CDI announced his departure, Dunn told The Blood-Horse that CDI does not want to sign an agreement with Florida HBPA on slots revenues until after it determines “where and how to put in slot machines” at Calder. The Florida HBPA’s 2007 contract with Calder included a provision that the contract would be null and void if Calder obtained approval for slot machines.

“Because that provision was such an important part of the last contract, we feel it should follow to get a (slots) agreement this year,” Stirling said. “I would think that knowing what (CDI’s) agreement is with the horsemen would be an important part of their planning for a casino.”

The 2005 state law on slot machines permits a Thoroughbred track to obtain and renew a casino license only if it has a written contract with the Florida HPBA and the Florida Thoroughbred Breeders’ and Owners’ Association,  giving them a combined designated percentage of net slots revenue. The agreement Gulfstream signed with Florida HBPA and FTBOA in 2006 gives the groups 8.25% of the first $200 million in net slots revenue, and 13.9% of revenue above that amount.

Calder previously has said it would consider percentages similar to Gulfstream’s agreement, Stirling said.

On April 8, Dunn said CDI and Calder do not want to reach a slots agreement or determine plans for a casino until the Florida legislature decides whether to cut the state tax rate on slot machines at pari-mutuel facilities in Broward County, where Gulfstream is located, and in Miami-Dade.

The Florida Senate has passed a bill that would reduce that rate from 50% to 35% if a facility’s slots revenue reaches pre-determined amounts. But several leaders of the Florida House have said they will not consider the bill during the session that ends May 2.

Stirling would not discuss details of issues on purses and other non-slots aspects of contract talks.

Not having a contract less than two weeks before the start of a South Florida race meet is “very rare,” Stirling said.

“I hope it doesn’t come to that,” he said when asked if some Florida HBPA members might not enter Calder races without a contract. “It is up to the individual horsemen,” he said.

For several weeks there had been reports the Florida HBPA might not agree to a continuation of cross-track simulcasts without a change in the revenue splits. Starting last September, the host track received two-thirds of the takeout and provided half of that money for purses and breeders’ awards. The guest track took all of the remaining one-third. Assuming a 21-cent blended takeout rate, horsemen were receiving about seven cents on cross –track simulcast revenue compared with about 10 cents on bets at the host track.

Data on handle does not indicate how many bettors at the guest track and at two other South Florida pari-mutuel facilities taking the signals for the first time would otherwise attend races at Gulfstream or Calder. But several reports indicate what Stirling calls a “cannibalization” with the number of new bettors not being  enough to make up for revenue horsemen are losing at the host track.

For the first 35 days of Calder’s 2007 Tropical meet, the Florida HBPA estimated that purses and breeders’ awards “lost about $115,000 in total revenue.” Officials at Calder and Gulfstream have cited South Florida’s housing slump and related economic problems as a main reason for declines in handle.

In early March, Gulfstream president and general manager Bill Murphy said the track’s all-sources handle was down about 5%, and on-track handle, the horsemen’s biggest concern, was down about 30% compared with last year.

Dunn, whose duties included being Calder’s president, will serve as an adviser to Calder through Aug. 1, 2008.

“Ken has been easy to work with,” Stirling said. “He is one of the few people in racing who thinks outside the box.”

He noted the Summit of Speed day of sprint stakes, which Calder began in 2000.

“I told Ken there was not enough interest in sprints to make that work,” Stirling said. “He was right, and I was wrong.”

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