Only weeks before the scheduled opening of its Thoroughbred meet, Colonial Downs still hasn't secured a loan to fund purses for its summer meet. It appears, though, that track owner Jeffrey Jacobs and some horsemen are prepared to provide the funds in the interim.
In any event, horsemen's representatives said the terms of the condition book will be met. The meet begins July 3.
The Virginia Racing Commission was told Wednesday the short-term financing measure has been stalled by a breakdown in communications at Virginia National Bank. The bank's position on collateral for the loan reportedly has changed since the initial application was filed.
Meanwhile, Jacobs and several Virginia horseman have offered to provide loans should the arrangement with the bank not be finalized. Representatives of the Maryland-Virginia Racing Task Force said after the meeting Wednesday they remain committed to running 25 days with daily average purses of $200,000.
The Virginia Horsemen's Benevolent and Protective Association needs a loan of about $1.5 million to cover purses. Off-track betting revenues generated through the end of the year would cover it. The loan became necessary when Colonial Downs switched from fall racing to summer racing. Sufficient revenue accrued in the purse account by the time the fall meet began each year.
John Mooney, president of the Maryland-Virginia Racing Circuit reported that the first horses arrived at the New Kent County track Wednesday, with training scheduled to begin Thursday morning. All 700 stalls at Colonial Downs have been allocated.
Mooney said the preparation for the meet has been better than in recent years, in part because of a stronger labor force. He said that despite a $1,000 starter bonus Delaware Park has offered during the Colonial Downs meet, track officials are confident they'll have full fields.
"We've turned down a few (for stalls)," Mooney said. "Some are on the waiting list. Overall, we have horses that are ready and willing to run."
In other business, plans to privatize Colonial Downs, and how those plans may affect horse racing in Virginia, were on the table during the commission meeting. In the end, the situation remained up in the air.
James Weinberg, an attorney who represents Colonial Downs, and Ian Stewart, the racetrack's chief financial officer, told the commission shares in the company would be bought back by Gameco Inc. at $1.10 per share. Shareholders would have to vote to either accept the offer, reject it, or have a Virginia court set the purchase price.
Weinberg said Colonial Downs, which has struggled since it opened in 1997, would save about $150,000 per year in accounting, audit, and legal functions associated with the Securities Exchange Commission and NASDAQ. Full disclosure of the transaction would be made through an SEC-regulated process, he said.
The privatization plan requires racing commission approval. Under the new ownership structure, Gameco would be 50% owned by Jacobs, chairman of Colonial Downs, and 50% owned by the Richard E. Jacobs Revocable Trust. Jacobs has indicated he is willing invest $1 million in working capital for the remainder of 2001, and another $1 million in 2002.
The question of investment in the track by Jacobs beyond 2002 lingers should the commission fail to approve the restructuring plan. Commissioners asked how the privatization plan fits into a long-term plan for growth.
In response, Stewart said that "investment without reward is charity, and that (for the Virginia racing industry to rely on) the charity of one person is a weak leg to stand on."