Open Letter to Arizona Horsemen: “Horse Racing in Our State is Not Dead”

In an open letter from AZHBPA President Lloyd Yother to Arizona horsemen released on Monday, he vowed to “fight like hell” to ensure racing in the state is not dead.

Yother's letter is in response to Turf Paradise officials announcing last week that the track won't open as usual in November as the sale of the property is imminent.

“I have had a few days to evaluate Turf Paradise and Arizona Downs' announced decisions to not hold race meets in 2023 or 2024,” Yother wrote. “However, I am here to make sure everyone in Arizona is well aware that horse racing in our state is not dead, and I plan to fight like hell to make sure of that!

Yother highlighted that the decision to close Turf Paradise not only affects the horsemen, but also the entire equine industry within Arizona.

“The horsemen and horsewomen throughout Arizona will especially be negatively impacted, but also all who earn their living through the equine industry here in our great state,” Yother wrote. “Owners, trainers, grooms, hot-walkers, our breeding farms and staff, veterinarians, farriers, feed and tack stores, hay straw and alfalfa producers will experience a substantial negative economic impact.”

Yother also gave a glimpse of hope and indicated there were ongoing discussions with some as-of-yet unnamed organizations in an effort to keep racing going in The Grand Canyon State.

“While some discussions cannot be made public yet, I can tell you there are several entities interested in negotiating with Arizona horsemen to establish a race meet at an existing track or even possibly building a new facility,” he said. “There are still many avenues to consider that will save Arizona horse racing. There are even options that include the possibility of running a late race meet in 2023 or possibly early in 2024. If these don't pan out, our board will continue to exhaust every means available to bring horse racing back to Arizona in the very near future.”

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Multiple Moving Parts in Monarch, AZ Simulcasting Morass

For over two years, the simulcasting signal from 1/ST-operated racetracks, along with several others around the country, has been missing in Arizona–the residual fall-out from a long-simmering dispute between the owners of Arizona Downs and the arm of The Stronach Group (TSG) tasked with distributing the company's signal.

In both California and Arizona, stakeholders argue that this simulcasting blackout has hit both the bettors and the industry–by how much appears open to debate.

A recent analysis by the Arizona Horseman's Benevolent & Protective Association (AZHBPA) of the projected lost revenue to California purses between 2020 and 2021 pinned the number at more than $1,1 million, and another nearly $900,000 in lost track commissions.

The estimated loss to Turf Paradise alone between the years 2021 and 2022 amounts to more than $1 million, said Vince Francia, general manager of Turf Paradise. For Arizona Downs, however, the impact has been “negligible,” say track operators.

Scott Daruty, president of TSG's Monarch Content Management, also downplays the impact of the hamstrung signal to Monarch's bottom-line, saying that the resulting lost fees is only a fraction of Monarch's total business. He also disputes the AZHBPA's projected losses to the California purse account.

Monarch's umbrella extends over several California tracks–including Santa Anita Park, Del Mar, Golden Gate Fields and Sonoma County Fair–as well as Turf Paradise, Lone Star Park, Gulfstream Park, Laurel Park, Pimlico, Rosecroft Raceway, Monmouth Park, and Meadowlands.

Against the backdrop of this ongoing dispute, there are indications that 1/ST is eyeing potential inroads into the Arizona marketplace.

Within recent months, representatives of 1/ST have visited Turf Paradise with the intention of possibly purchasing the facility, said Francia. AZHBPA executive director, Leroy Gessman, said that 1/ST recently did the same at Arizona Downs.

According to two sources familiar with the situation, 1/ST has made a thus far unsuccessful bid to purchase Arizona Downs.

Daruty declined to comment whether 1/ST has indeed made any formal bid to purchase Arizona Downs but called the Arizona marketplace “one that appears to have potential.”

 

 “At that point, you're negotiating with a terrorist, right?”

The genesis of this rather convoluted simulcasting dispute goes back years.

In summary, when Arizona Downs reopened for live racing in 2019, Monarch sent its signal to the track itself but not to the track's network of Off-Track Betting parlors (OTB), and at a higher rate than its Arizonan neighbor, Turf Paradise.

In contrast, Monarch distributed its signal to Turf Paradise and its network of some 60 OTB's.

When asked about the contracting disparities between both Arizonan tracks, Daruty said at the time that Arizona Downs had been “consistently delinquent in its payments to our racetracks.”

In an effort to resolve industry stakeholder disgruntlement, the state passed in 2019 a law requiring all simulcast providers that send their races into Arizona to offer the products uniformly among all tracks and all their OTBs.

The following January, the Arizona Racing Commission passed a motion requiring the three racetracks in the state–Turf Paradise, Arizona Downs and Rillito Park–to comply with that law.

The commission also sent a letter to Monarch to “stop sending any simulcast signals to Arizona permittees racetracks and/or their additional wagering facilities.”

To all intents and purposes and despite various legal maneuverings in the interim, that state of affairs has remained, and Monarch has not beamed its signal into Arizona since.

At the start of Santa Anita's most recent winter meet, Monarch approached the operators of Arizona Downs with an offer of all Monarch content to the entire Arizona marketplace, including to Arizona Downs' network of OTBs, said Daruty.

According to Daruty, the operators of Arizona Downs made several unilateral modifications to the contract which were unacceptable. They included reducing the fees paid to Monarch tracks below the previously contracted rate between them, and a requirement for Monarch to “pre-approve” new simulcast locations without the ability to conduct legal and regulatory due diligence, said Daruty.

“At that point, you're negotiating with a terrorist, right?” said Daruty, once again raising Arizona Downs' reported history of delinquent payments.

“We can't abandon our principles and abandon our reasoned business approach to distributing our signals,” Daruty added.

Detailing a back-and-forth process of negotiations, Tom Auther, an Arizona Downs owner and partner, said that Monarch initially offered Arizona Downs a contract with non co-mingled pools–what he described as an immediate non-starter–and then an offer charging the track overall as much as twice what Turf Paradise was paying.

Monarch subsequently declined Arizona Downs' counter-offer, which was to pay Monarch 20% more in fees than Turf Paradise, said Auther.

“Twenty percent's still a lot of money,” Auther said. “If we paid what they want us to pay, the horsemen would not approve it because there'd be no money left–only three percent left in horse purses.”

When asked about Arizona Downs' reported history of defaults, Auther said that they had offered Monarch to escrow an adequate amount of money to offset the anticipated costs. “They refused it,” said Auther.

In an effort to understand the impact from the nixed signal into Arizona on California's horsemen, the Arizona HBPA contracted the firm Global Racing Solutions–founded and operated by Pat Cummings–to run the numbers.

According to GRS' calculations, California horsemen lost $1,115,000 in purse contributions between 2020 and 2021, and California track operators missed more than $877,000 in commissions during that same period.

To put that into perspective, California's purse total in 2021 was some $118 million.

TDN reached out to Thoroughbred Owners of California (TOC), who declined to comment.

As for Monarch, when they last ran the numbers, “the host fees that the Monarch tracks received out of the state of Arizona were less than one percent of the total host fees received by the Monarch tracks,” Daruty said. “It just doesn't move the needle for us.”

Daruty also said that the AZHBPA's projected California purse loss numbers were over-estimated, though added that Monarch hadn't run their own calculations.

And what of the potential impacts on the Arizona tracks? Again, there are mixed-signals.

Between 2021 and 2022, Turf Paradise lost an estimated $1,011,317 due to the missing Monarch signal, the estimated loss to the purse account was $944,915, and the estimated loss to the Regulatory Wagering Assessment (RWA)–a wagering tax used to fund the state racing department–was $61,139, according to Francia's calculations.

Auther, however, shared handle numbers with the TDN–taken, he said, from the state commission's website–comparing the year 2021 with 2018, when Turf Paradise received the Monarch signal.

According to Author's numbers, Turf Paradise lost in 2021 more than $8 million in overall handle compared to 2018. Turf Paradise operated in 2021 with 13 fewer OTBs than in 2018, however, and those OTBs were closed for 1038 days more than in 2018, according to Auther's calculations.

Auther also estimated that the annual hit to Arizona Downs' business without Monarch has been negligible. “It exists,” said Auther, about the loss. Horseplayers, however, have simply adjusted their betting patterns to other available options, he said, adding that the loss of the Monarch product to Arizona Downs was one of quality rather than numbers.

More broadly, Arizona HBPA president Bob Hutton broached what he sees as some of the more deeply felt impacts to the state's racing industry.

“With the state of racing the way it is, when we're trying to get fans to the sport, why is this good?” said Hutton, critical of Monarch's part in the negotiations. “This is costing horsemen all over the country money, and why? I don't get it.”

Turf Paradise, it should be noted, has been for sale since at least 2020.

According to Francia, 1/ST representatives recently toured the track with a potential eye to purchase the facility. “They have not made an offer but they have looked at the track,” he said.

According to Gessman, representatives from 1/ST have similarly toured Arizona Downs, adding that he was present at the visit.

According to two sources who wished to remain anonymous, 1/ST made the owners of Arizona Downs an offer for the facility which was subsequently declined.

Both Auther and Daruty refused to comment on any possible offer that 1/ST has made for Arizona Downs.

Though calling the Arizona marketplace one with potential, Daruty added that “I think all the infighting and frankly some of the regulatory dysfunction has just left it in a place that's not healthy.”

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Turf Paradise Race Dates Approved, But Doubts Remain Over Meet

In a special meeting Monday morning, the Arizona Racing Commission formally approved the proposed 2021-2022 race dates for Turf Paradise–Nov. 5 through May 7–but hard practical questions remain over what participation at that meet could look like due to an ongoing standoff between the Arizona horsemen and Turf Paradise management.

As a result of welfare concerns springing from a 2020-2021 Turf Paradise race meet marred by a high number of equine fatalities, the Arizona Horsemen's Benevolent and Protective Association (AZHBPA) have stated they will not sign any race-meet contract until a list of track safety upgrades and other facility management-related requests have been satisfied.

Turf Paradise representatives argue that the Arizona HBPA's requests cannot be met in full, and that their efforts to get the facility up to code are sufficient to begin racing Nov. 5.

When asked whether the commission could step in to dictate track safety standards and protocols in the event the two parties fail to reach an agreement in time, commissioner Rory Goree demurred.

“We definitely want to stay out of the negotiation process,” Goree told TDN Monday after the meeting. “I don't want them living under fear that we might do something. I want to give them a chance to come together and do what they need to do.”

In a July 30 letter to Turf Paradise, the Arizona HBPA itemized 25 safety issues and broader management concerns, the primary one being track surface quality.

“Too many horses last year were euthanized or injured to the point they could no longer race,” the letter stated, before asking that Mick Peterson, director of the Racetrack Safety Program, be brought in to examine the surfaces.

During the whole of 2020 and thus far in 2021, 67 Thoroughbreds and Quarter Horses have suffered equine fatalities at Turf Paradise–18 during morning training, 31 during racing, and 18 due to other circumstances–according to results from a public record act request.

The other 24 demands in the letter include upgrades and repairs to the backstretch, grandstand and clubhouse, along with a different track veterinarian.

The HBPA takes issue with current Turf Paradise veterinarian, Dr. Verlin Jones. “HBPA will pay 50% as long as it is not Dr. Jones,” the letter states.

To help substantiate their requests, the Arizona HBPA have shared at the last monthly commission meeting Aug. 12 and on social media a variety of pictures of Turf Paradise in various states of disrepair.

In a further ratcheting up of tensions, subsequent to that last meeting–during which Turf Paradise owner, Jerry Simms, stated that the facility could operate a meet this fall “without a contract” with the horsemen–Turf Paradise management issued a proposed stall application, parts of which the Arizona HBPA have taken exception to.

The proposed agreement gives Turf Paradise “the right to end the meet at any time.”

This contradicts one of the HBPA's 25 requests–namely, that the meet be run in its entirety, “unless the commission rules it is not safe to run. We can use the same language as the last agreement.”

Another sticking point for the horsemen concerns new language in the proposed agreement which places the onus of safety and risk squarely onto the trainer's shoulders.

The agreement states: “Applicant agrees that neither Turf Paradise, nor its officers, directors, employees or agents shall be liable for any loss, damage, death or injury of any kind to Applicant or to Applicant's employees, agents, invitees, exercise riders, jockeys or any member of their respective families, property or animals, regardless of whether such injury, loss, death or damage is caused by a condition of the facilities at Turf Paradise and/or any negligent act or omission of Turf Paradise, its directors, officers, employees and agents from any other cause.

“Applicant hereto specifically and knowingly assumes all risks of such injury, loss, death or damage, fully and completely.”

Last week, Simms issued a letter responding to the HBPA's concerns about certain language in the stall application.

The reason Turf Paradise has demanded it retains the right to end the meet at any time is “because of the threat by the AZHBPA to end Turf's ability to simulcast races from other tracks Sept. 23. The line was added to protect the track from a very real threat that would have brought an end to racing,” Simms writes.

In that same letter, Simms also claims that the language concerning liability is taken verbatim from Canterbury Park's stall application.

“It's not a problem for Turf Paradise's trainers to agree to and sign a stall application with this language in Minnesota but it's somehow a violation of those same trainers' rights here in Arizona,” Simms writes.

According to Bob Hutton, AZHBPA president, he has asked to meet with the Arizona Department of Gaming's director, Ted Vogt, and Racing Division director, Rudy Casillas, prior to any sit-down negotiations with Turf Paradise.

“I want to make sure that if we have something in writing with Turf Paradise that they're going to regulate them,” Hutton said, of the department of gaming.

TDN reached out to the department for a response but did not hear back before deadline.

Those attempting to bring together both sides are staking out a position from the fence.

“Obviously it is a facility that needs to have some money put into it,” said Goree, of Turf Paradise. “We can't keep coming back every year making a big to-do–it needs to come up with a long-term plan for our survival.”

At the same time, Goree takes issue with a one-sided levelling of blame, using his experience in greyhound racing as a point of comparison.

“The kennels always blame the track, and the track blame the kennels. There's blame between both of them,” said Goree. “The kennels sometimes would be running dogs they shouldn't have been running. They were running dogs that should have been in adoption.”

And using the fate of greyhound industry in places like Florida–the state last year voted to successfully ban the sport–Goree warned that the very public and acrimonious nature of these negotiations weigh heavily on an industry already under intense public scrutiny for its equine safety record.

“People who want to end racing see this and they will use it,” he said. “Public perception is going to kill us.”

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Turf Paradise To Re-Open Turf Course Jan. 25

The grass course at Turf Paradise, which management closed after conducting only three races over it the first two days of the meet Jan. 4 and 5, is now scheduled for a Jan. 25 reopening after having restoration work performed on its root system.

Turf Paradise general manager Vincent Francia detailed the maintenance work and plans for the reopening of the seven-furlong infield course during the Jan. 14 Arizona Racing Commission meeting.

“What happened with the turf course was nobody’s fault,” Francia claimed. “When we closed on March 14 [in the midst of the COVID-19 outbreak], we suspended all activity. And that suspension included not taking care of the turf course during the summer…

“So when we started racing [on] it at the early part of the meet, the jockeys found it safe, but they were really just digging it up, and we could see that if we continued to run on it we were going to damage it and it’s not going to be able to continue,” Francia said.

“So we have been off of it. Last Saturday, the turf course was infused with liquid iron. And what that does, that’s like a human booster shot,” Francia explained. “That liquid goes right to the roots, and that was followed with a nitrate fertilizer. I was on the course Tuesday. I can already see the difference through Wednesday. We’re scheduled to go back on the turf Jan. 25, and hopefully this corrective action will take us through the rest of the meet,” which ends May 1.

Leroy Gessmann, who serves as both the Arizona Horsemen’s Benevolent and Protective Association (AZHBPA) executive director and the National HBPA president, told commissioners that “we’re all anxious to get back on it, but we all understand the importance of getting a good root system on the turf course in order to run on it.”

Turf Paradise is flush with about 1,400 horses on its backstretch, an uptick from previous meets largely because of the influx of outfits from northern California and New Mexico, where racing has been recently curtailed because of restrictions related to the pandemic.

“We’re in the ninth day of the 84-day session,” Francia said. “We’ve been up every day in our handle, which is very encouraging, and this is without the turf course being in operation, which is very popular with the horseplayers.

“Handle-wise, we’re doing really wonderful,” Francia continued. “The on-track attendance every day is where we want it. It’s about 60 people a day. We can manage that, make sure everybody’s safe. They’re all wearing masks [but we try to] keep them socially distant.”

Francia told commissioners that since the backstretch opened in late November, 22 coronavirus positives have been reported among licensees who have been tested. He added that most of those positives were reported among off-track betting (OTB) mutuel tellers, one of whom died from COVID-19 complications.

Francia said there have been three coronavirus positives among backstretch personnel, and that all three were quarantined, subsequently tested negative, and are now back at work.

Without naming the licensees, Francia added that, “We did have a rider test positive [Jan. 13] who never entered the [jockeys’] room. He is quarantined. His jockey agent is quarantined. And the two other riders [who employ that agent] have been contact-traced and alerted.”

Francia said that, “I think one of the obvious things we can conclude there is our horsemen are outside. And being outside in fresh air is an advantage, and that helps with the prevention of this virus spreading. When we look at our OTB teller situation, [they are] not outside. They are in confined quarters, a restaurant or a bar, and there’s people going in and out.”

Added Gessmann: “Having hardly any breakouts [on the backside] has been fabulous. I would have never thought we’d get [this far into the meet] and only have two or three positives of horsemen back there.”

Gessmann also lauded Turf Paradise for the Jan. 11 reopening of the four-furlong dirt training track in the southwest corner of the backside, which will help ease congestion during morning training.

“The reports I’m getting back from exercise riders is it’s in good shape,” Gessmann said. “After sitting for 10 months with no use, it is worked up and getting conditioned. It’s been a big help to get that open.”

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