NEWS
More than sum of its parts
Posted: Saturday, July 08, 2000
Merger of Arlington International into Churchill Downs offers potential for improvement
When the smoke clears later this summer and Richard Duchossois's political enemies in Illinois have had their say, Churchill Downs Inc. almost certainly will own Arlington International Racecourse.
For those who decry the continuing consolidation of the racing industry, in which Churchill, Frank Stronach-led Magna Entertainment Corp., and the New York Racing Association own all of the nation's major tracks except Del Mar, completion of the merger will not be a happy day.
From the fans' standpoint, though, consolidation offers benefits with relatively few drawbacks. Those three organizations are committed to live racing and to presenting a strong full-card simulcasting product.
With their emphasis on sending out a strong live product nationally and ultimately internationally, they will be well insulated from disappointment when the awareness dawns that telephone-account wagering will be only a modest benefit to racing revenues.
(Based on observing the sport for two decades and covering phone betting in Pennsylvania, this writer has concluded that horse racing is a social sport, a betting activity that people attend with friends or associates, and the amounts wagered from fans' homes very likely will be minimal.)
Churchill's arrival in suburban Chicago also promises to revive a major-league racing circuit that was on the verge of going down to the minors even when Arlington was in operation-albeit crippled by penurious purses-in 1997. The Illinois Legislature fixed the inequities in the full-card simulcasting legislation that had adversely affected purses, and Arlington reopened on Mother's Day.
But the track's small fields this year indicate that purse money has not fixed everything. Many horsemen who had once shipped out of Churchill for Arlington after Memorial Day are now staying until the Louisville meet ends.
Some longtime Arlington horsemen found that they could not go to Chicago except for major stakes races. Carl Nafzger, for instance, has Midwest clients, but as Kentucky purses improved and better horses were placed in his barn, he found that his stable fit better at Saratoga Race Course than at Arlington.
The merger thus promises the potential revival of the Midwest circuit without a soft spot in the summer months. Trainers would be able to move from their winter bases, either Gulfstream Park or Fair Grounds, to Keeneland Race Course in April, proceed to Churchill, and then make the trek to Arlington for the summer before heading back to Kentucky in the fall.
Churchill, with its focus on both field size and the revenue generated from full-card simulcasting, will undoubtedly count heads to make sure that trainers assigned stalls are filling races.
Arlington, for its part, brings something to the dance. While many of Arlington's problems were self-inflicted, Dick Duchossois knew how to build a racetrack and operate it in a first-class manner. It cost him a lot of money-the best estimate is $200-million-and the place is expensively appointed. But Duchossois wanted to provide a first-class racing experience, and he did.
The payoff of his investment certainly was not in dollars and cents. The track's accumulated deficit, which Churchill will convert into tax credits, is estimated at $75-million. Churchill, a publicly traded company, will not stand for that kind of financial bleeding for long, but the quality of the experience should not be sacrificed.
To be sure, Memorial Day was a holiday, but Arlington was not offering a major stakes race, and there were no giveaways. Nonetheless, the parking lots were packed by the first race, and streaming into the track were young couples on dates, young marrieds pushing strollers-young people of all kinds to complement the older families and the regular bettors. They arrived for the experience at one of America's most beautiful tracks.
With the right setting, young people will attend the races, and in time racing may become one of their entertainment staples. Getting a young crowd to the track is expensive, but it can be done.
If Churchill Downs Inc. can improve the quality of racing throughout the Midwest while maintaining Arlington's standards for customer service, then the merger can yield more than the sum of the parts.
Perhaps the point is that, if you take care of your customers, they will flock to your business. It is a lesson that racing has taken a long time to learn.
