NEWS
Reshaping the future at Arlington
Posted: Saturday, September 02, 2000
Chairman Richard Duchossois talks about merger with Churchill Downs and other plans
At age 78, Richard Duchossois is long past the age when most businessmen retire. Yet the chairman of Arlington International Racecourse, who recently signed a deal to merge Arlington with Churchill Downs Inc., is still planning for the future.
Richard L. Duchossois
Birthdate: October 7, 1921
birthplace: Chicago, Illinois
Residence: Barrington Hills, Illinois
Family: Judi McKeage (wife); two sons, (Craig, Bruce); two daughters (Dayle, Kimberly)
Education: Morgan Park Military Academy; Washington and Lee University
Businesses: President, Thrall Car Manufacturing Co.; Chamberlain Manufacturing Corp.; founder, chief executive officer, Duchossois Industries Inc.; Quad City Downs; Hill 'N Dale Farm
Racing position: Chairman, Arlington International Racecourse
Member of: Jockey Club (1987); former president, Illinois Thoroughbred Owners and Breeders Foundation
Awards: Purple Heart, Bronze Star; tank commander, major in army; honorary Doctor of Laws, Washington and Lee University (1991); American Jockey Club's Gold Medal (1986); Special Sovereign Award (1988); Lord Derby Award, Horserace Writers and Reporters Association of Great Britain; inducted into Horsemen's Benevolent and Protective Association Hall of Fame, Chicago Sports Hall of Fame (1989); Man of the Year, Jockeys' Guild; Special Eclipse Award (1989)
Best horses bred and/or raced: Dallas, Explosive Darling, Explosive Kate, Propos (Arg), Seattle Kat, Secretaridge, Southjet, Vernon Castle
Duchossois, who will remain as Arlington's chairman, can envision a day within the next few years when the suburban Chicago track hosts a Breeders' Cup championship day. He also can see Churchill-in which his family's Duchossois Industries Inc. will be the largest shareholder-possibly adding more racetracks to its powerful stable. And Duchossois, a longtime widower who remarried earlier this year, even has his eye on buying Hawthorne Race Course so that it also could serve as a training center when Arlington is running race meetings.
An energetic man who has endured two major heart bypass operations, Duchossois rose to the top of his late wife Beverly's family's business at age 30 and propelled it into a $1-billion-a-year conglomerate that makes railroad cars, howitzers, garage doors, and electronic components.
He did not see his first horse race until 1955, when he attended the match between Swaps and Nashua at Chicago's Washington Park. More than ten years later, his son Bruce's interest in horses led him to buy racehorses. He purchased Arlington in 1983.
After the track burned down in 1985, Duchossois said he wished someone else had owned it because he had been ready to retire and play golf. Instead, the fire "whetted my appetite for a challenge," and he rebuilt the track on a grand scale and became more active than ever in lobbying for tax reductions for Illinois racing and for Arlington in particular.
Riverboat casinos came into the area after he spent $200-million to rebuild the track, and believing he needed further tax breaks to compete-and not getting them-he shut Arlington down in 1997. He refused to reopen until he did get a tax relief bill-and permission for a riverboat casino to open in nearby Rosemont that would pump revenue into racing-passed in 1999. That measure now is being challenged in the courts.
While preparing for the Arlington Million Stakes (G1) on August 19, Duchossois held court at the track for racing officials from around the world. Between hosting a reception in the Turf Club and rushing out to his Hill 'N Dale Farm in Barrington, Illinois, to see "that the windows had been washed" for a party the night before the race, Duchossois took a few minutes to talk about racing with Michele MacDonald, Thoroughbred Times news editor.
Thoroughbred Times:this has been a landmark year for you and Arlington, with the reopening of the track, the first $2-million running of the Arlington Million and the first American race as part of the Emirates World Series Racing Championship, the pending merger with Churchill Downs, and your remarriage. What are your feelings about what you and Arlington have been through, where you stand today, and what the future holds?
Richard Duchossois: "We've been through a tremendous amount. We now in Illinois have racing reform, which allows us to be competitive, not necessarily with the riverboats, but to be competitive in our own field of endeavor, be competitive with other racetracks.
"Many things have brought that about, not only the legislation and racing reform but our ability now to work with other tracks through the consolidation that is going on within the industry. The whole industry is very rapidly changing. The electronic revolution has taken about four or five years, but we have seen this thing coming a long time ago. We knew, under the old rules and regulations, there was no way we could compete. We needed racing reform to do it. ...
"This is the third-largest media market in North America, and 80% of all pari-mutuel wagering today is through simulcasting. So how do you develop your product to have the finest racing and then be able to distribute that product? That's only done through consolidation within the industry. We're part of that consolidation.
"The future is going to be limited by our imagination and our ability and willingness to take risks. We think the sky is the limit if we do it in a businesslike basis, but we must stay ahead of the curve; we must know what is happening in the way of the electronic revolution that has come about. If we once let ourselves start slipping, we'll get behind the curve. And once we're behind the curve, we probably will never catch up."
TT: Arlington was closed for two years while you were trying to get the legislation passed. Looking back, was that the best move? Do you have any regrets?
Duchossois: "If we had not closed, we wouldn't be open today. It was something that had to be done. ...
"We don't look back. We can't go back and redo things that already have been done. If we keep looking back long enough, we're going to run into a wall in front of us because we're not going to see it. So, we're looking at the future, which is unlimited."
TT: What is your expectation on the Rosemont casino litigation, and if the casino opens, what do you think its impact will be on racing in Illinois?
Duchossois: "We think it will have a positive impact. Obviously, the casino is going to draw more money away, but the casino (through its revenues for racing) will have a positive impact not just for Arlington but for our entire industry.
"Many people have said 'That's an Arlington law.' It's not an Arlington law. We're going to participate in a very small portion of that. The entire Thoroughbred and Standardbred industries are going to benefit.
"I have no crystal ball, but most of these things (in litigation) do work out. We're optimistic. I don't know when (the casino will open), but I believe it will happen."
TT: Some have criticized you and alleged that negotiations occurred between you and Tom Meeker of Churchill Downs beginning in 1998. They have charged that part of the reason you lobbied so hard for the legislation was so that you could get a better price in the deal with Churchill Downs. When did you begin negotiations with Churchill Downs and how did they unfold?
Duchossois: "It was one legislator (who was outspoken in criticism), who was running for reelection this fall, who was completely off base, didn't understand what the overall situation was, and he was wrong. It's an election year; everyone needs an issue.
"We began negotiations, I believe, it was probably October (1999), somewhere through there, after the bill had been passed-long after the bill had been passed. We hadn't even been in discussions on a merger when we were talking about the legislation.
"But Tom Meeker and I, several years ago, we would talk and exchange ideas about where the industry is going, what is happening, how can the industry be made stronger, who's going to be doing what.
"This sort of evolved. We never really spoke about one buying the other, but we said 'How can the two of us work together? How can we make a stronger industry because it's best to be good in a strong industry, because if we're strong in a weak industry, we won't survive.' It sort of evolved into a thing, with a number of idea exchanges. It was in October, I guess, when we said 'Why don't we just sign a confidentiality agreement and explore it.' And that's what we did."
TT: Did you ever have any discussions with anyone else, such as Magna Entertainment Corp. and its chairman, Frank Stronach? Were there any other serious suitors for Arlington?
Duchossois: "Oh, sure. You go to trade association meetings and you're always talking about where the industry is going. ... If you don't know what's happening in your industry, you're going to be left behind. But did we have negotiations? No, we didn't have negotiations (with other groups).
"We've talked with a number of people. In 1994, Jerry Carroll (former owner of Turfway Park) and I signed a little pact that we were going to start doing something, and then we decided it wasn't worth doing. We decided (instead) to build an automobile racetrack, which we did (in northern Kentucky)."
TT: You bought Arlington for about $20-million in 1983 and you had some minority partners. You bought out those minority partners after the 1985 fire; you rebuilt the facility with your family's funds for an estimated $175-million-to-$200-million in 1989, which you said then could have bought "many yachts." Now you have a deal with Churchill that could net your Duchossois Industries up to about $100-million. How much money and your own energy have you gained or lost on Arlington through the years, and was it all worth it?
Duchossois: "The reason we bought Arlington in the first place-I'm not a horseman-but Gulf and Western (parent of Madison Square Garden Corp., the previous owner) was trying to sell it. There was a group that was going to buy it, strip it down, and make a development out of it. That would have destroyed all major Midwest racing. So I bought it. ...
"Then it burned down. No one wanted to rebuild. My feeling was that if we were going to make Illinois a major racing factor, the only way we were going to do that is rebuild. We spent most of the (fire) insurance money on putting that Arlington Million together 23 days after the fire.
"Then the next year, we had a very abbreviated meet, and that about shot the rest of the insurance money because we hadn't been able to accumulate anything toward purses, so we just had to pay them out of our pocket. But we did get world notoriety in the racing industry. And we did get the international aspect of the racing industry. And we did then become a world-renowned track.
"Then, the other racetracks didn't want Arlington to rebuild because we would be competitive with them. We did get legislation to allow Arlington to rebuild, but I did tell the governor at that time, Governor (James R.) Thompson, that I'd only rebuild if we could build a world-class facility, something that Illinois could be proud of. We built it on that basis. Then we opened in 1989.
"The amount of money that I spent is nobody's business but my family's and mine. Everyone has made guesses. I constantly hear $200-million. I keep telling the press 'Please don't use any numbers because you don't have any correct numbers.' ...
"Now, when we went to negotiate with Churchill Downs, not being a public company, we weren't trying to squeeze for the last dollar. We saw the future in racing, and, if we are successful, their stock will go way up. If we fail, it will go down. But that's my risk. I don't have anyone else to blame for it. We don't ever like to lose, and we believe in this consolidation. We're going to be the largest shareholder in Churchill Downs, so it behooves us to put everything we have into it to make it successful, so that's what we're going to do."
TT: Has the business at Arlington been profitable? Has it all been worth it?
Duchossois: "First, let me say that, in dollars and cents, we're a family company, and we don't put out any financial information, so I'm not going to tell you about dollars-and-cents profitability.
"Has it been worth it? It's been a tremendous challenge, and you sort of live on challenges. We've been able to contribute a very substantial amount toward the industry. It's been a major positive economic factor for the surrounding community.
"The Illinois breeding business, when we shut down, basically went away. It's now coming back full force, wide-open throttle. Is that worthwhile? Is there satisfaction in that? Yes. Is this costing us a lot of money out of our pockets? No, but it's certainly giving us the opportunity to contribute something.
"Life has been pretty good to me. I started out with 38 men in a scrap yard. We have an awful lot of people now. We're international now, not just in horse racing but in our other operations, and we're a fairly large company.
"Would we do it again? Sure. In the bat of an eye."
TT: Arlington is an incredible facility. Some have questioned the expense involved, however, in items such as the marble floors and wood paneling. Looking back, would you have built the same kind of facility, or would you have done anything differently?
Duchossois: "When we were building this, there wasn't dog racing in Wisconsin, there weren't slot machines up there, there weren't riverboats in Illinois, and we wanted to have something that all of Illinois and the Midwest would be proud of.
"If we were going to do it over again, I would do the same quality of work, only I'd make it a little smaller. We can handle large crowds now, but you only get large crowds on Mother's Day, Million day, and maybe one or two other days that we stretch our capacity. We could use a physical facility maybe only 70% of what we have now. ...
"We designed for creature comforts more so than for the utility of a racetrack. Our boxes are bigger than anyone else's boxes, our seats are little bit wider than most anyone else's. We built for comfort and for pleasure.
"Would we do that again? Absolutely. Is it economically the best way to do it? If you squeezed the last penny out, you wouldn't do it that way."
TT: What do you anticipate that your role will be with Churchill Downs and in the future with Arlington? How active do you intend to be?
Duchossois: "The philosophy that the management of Churchill has is absolutely parallel with the management we have and our philosophy. It's as if we read the same book at different times-we're absolutely identical.
"Are we going to step in and try to tell them how to run their show? No, absolutely not. We're going to have our percentage of seats on the board, the executive committee, the finance committee, the compensation committee, and all the committees. But we are very much in agreement with what they're doing, and we hope we will be able to have some input that could help everyone, but I think every member of the board wants to do the same thing.
"I'll be chairman of the board at Arlington; our management team will all stay here. The philosophy and management of Arlington won't change.
"I'm not planning on directing anything (with Churchill). They have a very strong management team. Where we can contribute, we would contribute. If we see something that is very objectionable, would we let our thoughts be known? Sure. But we have no intention whatsoever of moving in and taking over management. They are doing an excellent job. I'd be stupid to think I'd do a better job."
TT: You reportedly have tried to acquire Hawthorne Race Course in Cicero, Illinois. Are you still interested in buying that racetrack?
Duchossois: "The reason we wanted Hawthorne racetrack is that we would like to have a training facility here in Chicago that would benefit all of the horsemen. There has to be a place for the trainers to put their two-year-olds and the horses that have to be laid up and the horses that aren't running.
"We would hope that someday the only horses stabled here (at Arlington) are the horses that are ready to run, and those that are just getting ready to run would be located nearby but at another track.
"We only can make money, and the people can only wager, on the horses that are in a race, so if you don't have all your stalls filled up with horses that are ready to race, it's costing you a lot of money. I don't know if anything will ever come of the Hawthorne conversations."
TT: Would Hawthorne be a target for your family's business or for Churchill Downs?
Duchossois: "We started talking with Hawthorne long before we started talking to Churchill. I don't know; it could go any way. As it looks right now, it's going no place."
TT: How successful do you expect your auto-racing venture with Jerry Carroll (in Kentucky Speedway) to be, and can horse racing learn anything from NASCAR's strategies to improve attendance and interest in the sport?
Duchossois: "This is our first year. Just this week, the NASCAR people awarded us Busch racing dates for next year. We ... hope within a few years, we would be able to earn the right to have a Winston Cup. ... We have a magnificent track that is very, very successful.
"I've found that their problems in the automobile-racing industry are almost parallel with what we have in the Thoroughbred industry. The only difference between theirs and ours is the wagering aspect of it. Different people have different ideas, and everyone doesn't always work as close together as you want. You have a competition for sponsorship, which is a major problem."
TT: Arlington was a pioneer in rich, world racing events with the first Arlington Million in 1981. What is the future of major international racing events, and what role will Arlington play on that stage?
Duchossois: "I think you have two really major international events, the Emirates World Series Racing Championship and the Breeders' Cup. The Breeders' Cup is, right now, predominant, and it should be because it has more races on one day.
"Each of the races in the Emirates World Series is more or less a major race from a given country. Those races are going to become more and more international, and as they become more and more international, they are going to get more and more notoriety, and they will be formed into a series that will be able to sold to (television) networks.
"Bear in mind that day-by-day racing at the racetracks is not growing much. It is the events that are growing, and the growth of our sport is dependent on our ability to simulcast, put it on TVG (Television Games Network), or to get it on the regular networks. No one is going to watch it unless it is an event-and an exciting event. That's what we're trying to do.
"So, when you put the Emirates World Series, the Breeders' Cup, the Arlington Million, the Kentucky Derby (G1), and some of those major races (on television), people will start seeing the excitement, the thrill, and the fun that is racing, and we're reaching a whole new level.
"The National Thoroughbred Racing Association has done a magnificent job in pulling all these things together. One of the problems we have in the industry is there still are a lot of people that want to run the way they did in 1960, in 1970, maybe 1980, and they really don't understand, or refuse to look at, the future. ...
"The industry is changing its way of life. There is a new generation coming in-the electronic generation is here. ... The whole future of racing is changing, and if we keep looking at yesterday, which we'll never see again, and try to live in yesterday, we're going to die."
TT: Are you eager to see Arlington host the Breeders' Cup, and when do you think that might happen?
Duchossois: "We would love to host a Breeders' Cup. We have always stayed away from even asking because we didn't think that we were really ready. You need legislation, you need the racing dates, you need all these things before you even start talking to the Breeders' Cup about it. One of our major objectives is to be able to present our facility to the Breeders' Cup and hope that we can sell them that they should run a meet here.
"You'd have to ask (Breeders' Cup President) D. G. Van Clief Jr. (when the date would be). It would be within five years. ... In the Churchill group, both Hollywood Park and Churchill Downs have each had a number of (Breeders' Cup events) and have all the expertise to get them done. We wouldn't be starting from virgin territory; we'd have all the experts here to help. We would have a leg up on it."
TT: You have been a major breeder in Illinois with your Hill 'N Dale Farm, and you have been an accomplished owner. What is the extent of your current racing and breeding interests and what are your plans for the future on those fronts?
Duchossois: "Well, the last couple of years, when we were down, I didn't do much of anything. Now I am endeavoring to rebuild my stable. ... I am looking for good horses that are ready to run. At my age, I'm not really looking for weanlings and yearlings, but we are still breeding whatever we can.
"With the babies, we have somewhere between 75 and 100 (horses), I guess. We stand three stallions.
"The breeding in Illinois has all of a sudden this year taken a big sweep upward. Our purse structure is up."
TT: Your son Bruce once said you enjoyed racing more than anything in the world. What do you remember most about your participation in this sport and what do you think you've learned from your years in the business?
Duchossois: "What I have learned, you could write in volumes and volumes and volumes. Every day is interesting and full of new challenges. It's a challenging sport. ... You have your ups and downs, and you pretty soon learn where you are. I keep a picture here on my desk of where I first started.
"This is our first office, this part here is our first expansion when I was the chief engineer and bottle washer and all the rest of the things I keep this here so I never get cocky about what I've been doing. Like I said, when I got started, we had 38 men in a little scrap yard. Now we've got about 11,000 people worldwide.
"If I can satisfy the horsemen and if I can satisfy the people here and our employees, and if we can run the very best show we know how to run, that's enough satisfaction. I'm not looking for the recognition. I'm just looking to do a good job. People will tell me if we've done a good job because the customers will come, the horses will come, and then we'll know we're doing the right thing."
