Without Change, California Racing in 'Serious Peril'

by Jack Shinar

Despite a workers' compensation crisis, California trainers continued to enter horses for weekend programs in the state. But officials are concerned about the ramifications if the situation isn't resolved soon.

On July 1, some 600 additional trainers who are with the California State Fund will have to renew their current policies. Significant increases are expected again due to a continuing spiral of higher rates for high-risk coverage.

"If a change in the system isn't in place by July 1, racing in California could be in serious peril," said Charlie Dougherty Jr., deputy director of the California Thoroughbred Trainers.

If not, Dougherty predicted many trainers and owners would be forced to relocate their operations or leave the business. Ed Halpern, executive director of the CTT, agreed.

"In many cases, you are talking about trainers and owners who are barely scraping by or are losing money," Halpern said. "You can't expect them to continue to lose more money. A lot of trainers have expressed an interest in getting out. Whether they will or not, remains to be seen."

Dougherty noted that at Golden Gate Fields in Northern California, several Washington and Canadian-based trainers who have been competing in California are arranging to leave.

"They've transferred their stock to other trainers or are heading back to Emerald Downs in Seattle or Hastings Park in Canada with their horses a month early, Dougherty said. "Unfortunately the light went on (for the racing industry in California) too late for them."

Those trainers could return next winter, depending on how the insurance problem is resolved. Dougherty said a number of private insurance firms have expressed interest in filling the void of Legion Insurance, whose policies expire at midnight March 1. Competition could mean a significant decrease in workers' compensation rates.

"We've had insurance agents coming out of the blue all of a sudden," he said.

Or as the Jim Ghidella, Northern California representative for the Thoroughbred Owners of California, said recently: "We've got a $9-million carrot that nobody seems to want."

Fears the rate hike facing California trainers could adversely affect field size didn't materialize when entries were drawn March 1. Sixty-three horses were entered for Friday's eight-race card at Golden Gate Fields, two less than the number that passed the entry box for Thursday.

At Santa Anita Park, 84 horses were named for Friday's eight-race program, well above its weekday average. There were 121 horses entered for Saturday's 10 races at Santa Anita, when the Santa Anita Handicap headlines the day.

"Trainers are dealing with it," Dougherty said. "But the system is broken and it has to change. I think everyone -- trainers, owners, track management, and the jockeys -- now recognize that."

There are 324 trainers in the state that will lose their private workers' compensation insurance as a result of Legion's decision to not renew their policies, which total nearly $9 million in premiums. The first big hurdle for those trainers is to provide the state insurance fund with a hefty minimum base deposit.

The cost, depending on the size of individual stables, varies from $2,450 for a minimum one-horse operation, Dougherty said, to as much as $15,000 for the larger barns.

A portion of those costs will be returned to trainers when Legion refunds their base deposits to their former policy holders, Ghidella said. That process could take a couple of months.

Trainers formerly with Legion will also be required to pay from 25% to 50% more than they had been for workers' compensation insurance. The base rate is $43.30 per $100 of payroll, Dougherty said, which covers stable employees such as grooms, barn managers, and exercise assistants.

He said the jockey base rate for coverage is $93.97 per ride. By state law, jockeys are considered employees of the barns they are riding for rather than independent contractors, who would be required to obtain there own coverage.

"Trainers will try to pass on as much of the additional cost as possible," Dougherty said. "(Jockey) costs will be applied directly to owners."