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HRU Feedback (2017-07-16)

July 16, 2017

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Bob Burgess: Harness racing forced to leave the Toronto market

Reading (the June 23) edition of Harness Racing Update (HRU) from Dave Briggs was a very disturbing experience for me. HRU featured the sad death of the iconic Herve Filion, the premature retirements of Jamie Martin and Dr. Ted Clarke and HRU’s usual daily review containing the whole gamut of the seemingly unsolvable problems now faced by harness racing.

Unfortunately, almost everything we have always cherished about harness racing in Ontario seems to be gradually slipping away! And frankly very few of us seem to care! Collectively, we seem to be doing NOTHING to stop a steady deterioration in the quality of our racing product and in its importance and place in Ontario’s entertainment and wagering worlds. The energy and the excitement and the crowds and nostalgia for the past are gone.

In my opinion, our standardbred horsemen should immediately RETAKE CONTROL of our destiny in Ontario and start to make our own decisions for our own benefit. Currently, we are allowing most important and life-changing decisions for standardbred racing and breeding in Ontario to be made by others. Management at WEG is calling all the shots.

Many of these current decision makers at WEG and in Government are well-intentioned. Unfortunately, they have little background knowledge or understanding of our unique standardbred history in Ontario racing. However Mr. E. P. Taylor understood our standardbred history when many years ago he carefully acquired almost all of Ontario’s charters for harness racing on behalf of his Ontario Jockey Club.

Today, Standardbred Racing should not be forced to leave its large financial investment at Woodbine and to leave its important Toronto customer market just because WEG’s Thoroughbred Division has peremptorily decided that it must operate three separate race courses at Woodbine. This thoroughbred bounty includes two turf courses!

It is absolutely not equitable that we are going to be reduced to zero tracks in Toronto so that they can operate three! In addition, WEG’s Thoroughbred Division still enjoys the luxury of superb backstretch stabling facilities while WEG has already abandoned our standardbred backstretch and dormitories.

In order to regain control of our destiny, I believe Ontario’s standardbred horsemen need to acquire a proper understanding of TWO VERY IMPORTANT FINANCIAL MATTERS. Knowledge of these two financial matters is critical to understanding where we have been and where, in my opinion, we should be going with the Standardbred Division of WEG.

1) Standardbred Racing‘s large financial investment in the Woodbine Property

At the time of their sale of Greenwood Raceway in 1994 – Greenwood was standardbred racing’s “Toronto track” – the Board of Trustees of the Ontario Jockey Club confirmed and guaranteed that their Standardbred Racing Division WOULD NEVER BE WITHOUT A STANDARDBRED PRESENCE lN METROPOLITAN TORONTO!

This decision was made extremely clear to “the standardbred trustees” who were racing standardbred horses at Greenwood Raceway at that time. lt was also made clear when all of the OJC Trustees voted unanimously to approve the sale of Greenwood Raceway to developers AND TO MOVE STANDARDBRED RAClNG TO WOODBlNE!

Very expensive renovations were then retrofitted for Woodbine to accommodate harness racing. Woodbine’s main track was converted to accommodate winter standardbred racing. Ultimately, the gorgeous new standardbred paddock was constructed at a very significant cost.

Now WEG apparently wants to demolish ALL of these standardbred facilities at Woodbine (perhaps including the large decorative panels now in Woodbine’s lobby honouring standardbred stakes winners at Woodbine for the past 17 years) and wants to spend many additional millions of dollars in a flawed attempt to winterize Mohawk. The extreme winter weather and the renowned prevailing fog at Mohawk and global warming will challenge the very feasibility of this false concept of winter racing at Mohawk. The Mohawk weather problem was properly understood by the Board of Trustees in 1994. The weather has not changed. Accordingly, it would be extremely foolhardy by WEG not to preserve our state of the art paddock at Woodbine at this time.

As a resident near Mohawk for the last 45 years I therefore anticipate standardbred racing being reduced through weather cancellations to racing one or two days a week for two or three months if WEG proceeds with winter racing at Mohawk. Standardbred horsemen will then be unable to survive the resultant and unnecessary loss of purse revenues.

To proceed to demolish our nine million dollar standardbred paddock at Woodbine prematurely is therefore wasteful to the extreme for WEG, particularly when neither of WEG’s Racing Divisions is currently prospering and the hopes for viable winter racing at Mohawk are highly unlikely to be achieved.

A history lesson is therefore needed to clarify the situation. Through the remarkable foresight and benevolence of Mr. E. P. Taylor, both today‘s thoroughbred horsemen and today’s standardbred horsemen will be able to share EQUALLY in the benefits of ownership of both the Woodbine and Mohawk real estate properties and facilities. Both sets of horsemen therefore are being protected in perpetuity by the farsighted actions of Mr. Taylor. Why? Because today WEG has NO SHAREHOLDERS. Standardbred horse people should take great pride in their continuing investments in both the Woodbine and Mohawk properties.

In addition to WEG irrationally destroying standardbred capital assets at Woodbine (that are worth perhaps $25 million dollars) the standardbred horsemen at Mohawk will be further penalized by having to operate with a 12-month racing season at a single racetrack location. Historical examples of reductions to twelve month, single location meets in New York City (Yonkers-Roosevelt) and in Montreal (Blue Bonnets-Parc Richelieu) were extremely unsuccessful. Both of these major metropolitan standardbred circuits went out of business as a consequence of trying to race all year in a single location. Why should we be forced to attempt to follow these precedents?

It seems as if both attendance and betting handle deteriorate if there are no season closings and openings. The racing product cannot help but go stale and uninteresting to the public in these circumstances. To date WEG has expressed no remorse for its blatant attempt to place its standardbred horsemen in this untenable situation.

2) Rumoured Changes In WEG’s Revenue Sharing Agreements

Because of WEG’s proposed permanent standardbred racing switch to Mohawk, apparently there are recurrent rumours now circulating within the Thoroughbred Racing Division of WEG concerning its desire for changes in the current formula for Simulcast Revenue Sharing with the Standardbred Racing Division.

If these rumours are true, the Thoroughbred Racing Division may suddenly try to increase its percentage over the 50 per cent agreed to by it under WEG’s Simulcast Revenue Sharing Agreement negotiated and entered into with both groups of horsemen in 1998.

(By way of explanation Basic Purses in both Racing Divisions are now dependent upon the Government subsidies for purses distributed by the Ontario Lottery Corp. However, these Government subsidies to purses fall far short of the contribution to purses originally earned by horsemen under the Slots at Racetracks Program that was cancelled by the Ontario Government in 2013. The additional money distributed to both Divisions under the Simulcast Revenue Sharing Agreement of 1998 in turn augments Basic Purses and is very important).

This current rumoured interest in amending the WEG Simulcast Revenue Sharing Agreement by the Thoroughbred Racing Division follows almost 20 years of complete peace and harmony between the Thoroughbred and Standardbred racing Divisions following our Board of Trustees meetings held at The York Club in Toronto, that I attended as a trustee in 1998.

These agreements reached in 1998 for a 50-50 split of simulcast wagering proceeds were only settled unanimously at that meeting after very major negotiations between the Divisions and took into consideration many important factors. These major negotiations involved both the “thoroughbred trustees” who owned thoroughbred horses and the “standardbred trustees” who owned standardbred horses. Clearly, the issue of where and when the actual races were run and physically took place at WEG and the issue of the 50/50 division of the simulcast monies at that time were unrelated issues. And they still are!

Any change in the simulcast revenue sharing agreement, in favour of the Thoroughbred racing Division, is no more negotiable now than it was in 1998 when it was originally settled between the Divisions. The physical location of the various simulcast tracks is not material to this consideration. Undoubtedly, focus on this topic has returned because of WEG’s frequently expressed intention to relegate standardbred racing to Milton (that it refers to as the fastest growing city in Ontario with 125,000 inhabitants) and away from Metropolitan Toronto with its potential 3,500,000 customers for thoroughbred racing!

No change is required here. If and when this fundamental issue is raised by WEG or its Thoroughbred Division we cannot bend as the issue of the Simulcast Revenue Sharing Agreement has been settled in perpetuity by WEG and must stay that way.

CONCLUSION

As outlined above in detail this is the most serious crisis ever faced by Standardbred Racing in Ontario. We have virtually lost control of our business. Surely it is the current responsibility of our horsemen’s groups, COSA and OHHA, to work together effectively on a daily basis to protect our horsemen and the standardbred industry as a whole. A United Front will be critical! Obviously, racing at the “B” tracks will also be profoundly affected by any and all proposed changes in policy by WEG.

Recently, both Bill O’Donnell of COSA and Brian Tropea of OHHA confirmed to me that they intend to make the changes necessary to achieve a united and strong front between COSA and OHHA. Hopefully this new cooperation will be extended to all of their future dealings with WEG, with other racetracks, and with all levels of Government. This good news is long overdue.

Please note that copies of this current Woodbine-Mohawk summary of affairs (expressing only my opinions) have been emailed to the principal interested parties, including the directors of COSA, the directors of OHHA, the directors of SBOA, James Lawson and other members of the senior executive of WEG, and the remaining “standardbred directors” of WEG, the Ontario directors and the senior executive members of Standardbred Canada and the senior executive staff of Ontario Racing.

l have also emailed additional copies of this current Woodbine-Mohawk summary of affairs to many interested standardbred owners, trainers and drivers.
Respectfully submitted,

— Robert B. Burgess Q.C.

WEG response to Burgess:

Standardbred Racing Community

Update on Initiatives and Response to RG Burgess QC

As the Chairman of the Woodbine Entertainment Group (“WEG”) Board of Directors, Chief Executive Officer, Committee Chairman of the Standardbred Racing Committee and full membership of that Committee, we are responding to the letter of R G Burgess, QC in respect of Standardbred racing at WEG.

As an initial matter, we don’t make decisions of any type which turn on preferring or advantaging Standardbred or Thoroughbred racing against each other. Our decisions are made with reference to the best interests of WEG which we interpret as allowing the company to meet its core mandate of supporting horseracing and ensuring that we have the strongest possible racing programs and businesses for both breeds. It is that simple and there is no division in our Board (which as an aside, as currently constituted owns more and has a greater financial interest in racing Standardbreds than Thoroughbreds) or management on that issue. Our Board also benefits from the business experience of a diverse group of directors who aren’t currently owners of racing horses but who have outstanding credentials in finance, marketing, government relations and business growth.

Our decision on moving to year round Standardbred operations at Mohawk was made after two years of careful consideration and with a very significant financial and management resources commitment to Mohawk being a world class Standardbred operation. In addition, but of great significance, we believe that our commitment to Mohawk greatly enhances the prospects for the best possible expansion of gaming, introduction of other entertainment offerings at Mohawk and exciting development of the full Mohawk Park site. The site will be branded Woodbine at Mohawk Park in May 2018 to capture the value of the Woodbine brand internationally, which is where we expect the most wagering growth in the future.

WEG already has the largest annual handle on Standardbred racing; our objective is to further improve those results. WEG already has the most comprehensive and financially accessible stakes program in Standardbred racing; our objective is to maintain and further enhance it.

We have demonstrated through the Pepsi North America Cup and our other signature racing events that Mohawk is an outstanding venue for great crowds, great wagering and great entertainment. It will be that much better with an expanded dining room and the addition of

VIP suites and other modern amenities. In fact, following the recent running, the NA Cup a prominent US Standardbred owner, who is also a member of the Hambletonian Society stated that “I believe the performance of the WEG team sets a high standard that ought to be the goal of any racetrack that intends to host a major event in the future”. This level of customer and horsemen satisfaction has not been possible at Woodbine for Standardbred racing due to the inherent difficulties of running the races at a facility that was not built to operate as a Standardbred facility. With the greatest respect to Mr Burgess, most of his concerns are simply outdated or not factual. Except for big events and weekends with good weather, large live attendance is a difficult objective. By a huge margin, most wagering is done remotely, more than 85% of handle on average is bet off-track. No one disputes that the on-track experience for Standardbred racing is better at Mohawk. The death of racing in Montréal and the New York City suburbs had nothing to do with alternating venues. Woodbine Thoroughbreds operate without alternating venues and we have grown the handle significantly each year. The decision to move to Mohawk is to improve and invest more in our Standardbred business; the opportunity to construct a second turf course at Woodbine is a byproduct of the first decision. Addressing one of Mr. Burgess’s chief criticisms there is no debate that winter racing in Ontario has its challenges. However, the majority of our winter cancellations are caused by transportation issues (not racetrack weather) and at Mohawk we fully expect both less cancellations and more flexibility in adjusting races and schedules in the event of cancellation. There is no doubt that the Milton area is the heart of the Standardbred industry in the Province – it is where our horsemen live and work.

The other history cited by Mr Burgess refers to a different era when racing had a monopoly on legal gaming and our purses were derived exclusively from wagering revenues. Following the cancellation of the Slots at Racetracks program by the Province, WEG stepped up and committed our resources to Standardbred racing in Ontario by helping create and operate the Standardbred Alliance since 2014. This Alliance includes all three levels of tracks (grassroots, signature and premier) and has greatly benefitted the smaller member tracks in Ontario by creating efficiencies in racetrack operating costs. WEG incurs significant operational and other costs each year to support the members of the Alliance on matters such as:

• Horse Racing support including purse payment administration, race dates scheduling, TCO2 testing and race date applications

• Pari-mutuel wagering support including tote fees, decoder rentals, track settlements, import and export contracting

• Marketing support services and a robust players rewards program

Members of the Standardbred Alliance and WEG, pool pari-mutuel wagering revenues and share the proceeds amongst the member tracks to ensure each member track is sustainable. WEG provides open and transparent reporting of all wagering activities and purse distributions to each member of the Alliance, Ontario Racing, OLG, AGCO and the Horsemen’s association on a predetermined reporting basis and on request. We have voluntarily contributed nearly $8 million in Horse Improvement Plan proceeds since the inception of the Alliance to ensure breeder incentives are retained at levels that make a difference to the Standardbred breeding sector in the Province. This is over and above the $25 million annually, which comes directly from the wagering on WEG races. Additionally, WEG funds and guarantees minimum purse levels for live racing participants at each of the Standardbred Alliance tracks. WEG has funded in excess of $30 million to Alliance members since its formation in April 2014. WEG is committed to continuing this funding and guarantee and has no intention of reducing it. With increasing competition from entertainment options across Ontario and globally, we have continued to grow the handle and in some instances break wagering records on our biggest events. Recently the Pepsi North America Cup handled $4.1 million, one of our top results for a Standardbred card and The Queen’s Plate set another record at $13.5 million (up over $2 million from 2016). The majority of this growth has come via digital channels and is driven by international wagering which is where many of the new opportunities are. To continue our commitment to the on-track experience and develop a new generation of fans, WEG has diversified its executive team. An outcome is we have made excellent progress with delivering our strategic pillar that mandates becoming a Guest Centric organization. Our work in customer segmentation paired with our internally aligned priority to deliver a thrilling experience for all guests continues to be a catalyst for growth in attracting new fans to horseracing. The synergy created amongst our internationally trained culinary team, on-trend events team, superior guest experience team and our dynamic marketing and sales teams are defining an everyday and special event on-site experience that is well positioned to dramatically grow our fan base. We have also invested in a Standardbred Concierge program to ensure that the owner experience is second to none. Our success is tied to driving attendance and creating winning experiences at our racetracks for all fans, horse people and stakeholders. You will notice that our decisions are made principally with reference to our customers and business, which is wagering and entertainment based. Attracting new fans to Standardbred racing at the Woodbine facility has proven very difficult over the years – and unfortunately we have even turned off a few fans. This is not so of Mohawk. We are very excited to invest in the property and make it a centerpiece for Standardbred racing.

Of course our plans also include the optimal use of our land assets and profitable development of our properties to benefit our core business of racing. Perhaps the most important indication of our commitment to a successful long-term future for both breeds is our work on long-term gaming funding at both Mohawk and Woodbine. At Mohawk in particular, we secured a long-term agreement with the OLG to maintain gaming at Mohawk (to our knowledge the only Standardbred track in the province to have this certainty). This will provide stability and self-sufficiency. It will insulate us from potential changes in government funding policy and other pressures on government funding. This has required a huge investment of our management resources but places us in a very fortunate position as other jurisdictions face regular reviews and incursions on financing. Additionally, we announced a $10 million investment into the facility to ensure we could fulfill our promise to ensure that Mohawk becomes the world-class venue we envision. Our horse people are critical stakeholders. Our consultations with and feedback from horse people indicated that they favour our decision. Further our dialogue with them remains on-going. WEG recently commenced detailed work on a long-term development master plan for the Mohawk property centred around Standardbred racing. The first group that our Master Plan consultants met with were members of the Board of COSA. WEG has no intention to change the revenue split to disadvantage Standardbred racing. WEG is committed to the growth and prosperity of the racetracks in the Standardbred Alliance and providing ongoing support for the Standardbred breeders in the Province. This commitment will remain in place as will WEG’s goal to maintain and consolidate Woodbine at Mohawk Park as the number one Standardbred racetrack in North America. In conclusion, we are convinced that the move to Woodbine at Mohawk Park will be an enormous success. We are committing the financial and executive resources to support that. It will be a fantastic facility. As outlined above, our business is strong and our Standardbred business is treated very well, as it should be. We look forward to doing even better. We invite questions from and dialogue with our horse people and other stakeholders.

Sincerely,

H. B. Clay Horner, James J. Lawson, John D. Fielding, Douglas Millard
Chairman, CEO, Board of Directors, Board of Directors

Questioning Big M condition

I’ve owned harness horses for nearly 40 years and I’ve bet on horses for almost 50 years. Why do we see condition races like the second race at The Meadowlands Saturday night (July 8)?

Here is the condition: “N/W $11,500 (Mares $12,750) in Last 5 Starts AE: N/W 5 (Mares 6) Ext PM Races or $90,000 Lifetime AE: 3 Year Olds”. The race was obviously written to give Walner a tightener and an easy win, even though there were two other pretty nice 3-year old trotters in the race. The racing secretary could just as easily added some money to the (paltry) purse and called it a ‘3-Year Old Open Trot’ or he could have just sent a check for $6,500 to the owners of Walner.

I don’t blame Linda Toscano — you take what you can get — but that condition just cheats other owners and trainers who have horses that fit the primary condition. The race wasn’t unbettable it just reduced the Pick-3 to a Pick-2 and the trifecta became a perfecta, but it did cheat owners of horses who fit the primary condition and that is just wrong.

— Dave Miller / Ocala, FL

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