Report: Two New Non-Racing Bidders Revealed for Arlington

Two additional bidders in the controversial Arlington International Racecourse sale have been revealed, and neither explicitly mentions the continuation of Thoroughbred racing as a component of their proposed development.

Eric Peterson of suburban Chicago's Daily Herald broke the story over the holiday weekend.

Of the four now-known bids submitted to seller Churchill Downs, Inc. (CDI), only one–submitted by the track's former president, Roy Arnold–calls for the track's grandstand and track to remain in place alongside a new 60-acre entertainment district and 300 units of housing.

Before this past weekend, the only other disclosed bid came from the Chicago Bears football team, which wants to raze the racetrack in favor of a new stadium.

According to the Herald, the two latest proposals are from Chicago-based Glenstar Properties and Schaumburg-based UrbanStreet Group LLC.

Glenstar's pitch is unconventional, the story stated, because it doesn't entail buying the land outright.

“Instead, the company would be track owner Churchill Downs' partner in a plan to sell off individual parcels for a mixed-use development with an 80- to 100-acre open recreational space as a major component of the 326-acre site,” Peterson reported.

“The more traditional way redevelopment happens is for someone to buy the property and assume all the risks,” Peterson wrote. “But under the Glenstar proposal, Churchill Downs would be part of the process and share in the risks to reap a higher reward.”

UrbanStreet representatives could not be reached for comment on the specifics of the firm's Arlington Park pitch. But Peterson wrote that the firm's approach in a redevelopment project of similar scope was to buy the entire site “and act as master developer as a variety of office, residential, retail and entertainment interests materialized.”

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Presque Isle Files Suit Against Pennsylvania HBPA To Block Arbitration Over ADW Revenue Dispute

An ongoing legal dispute between Presque Isle Downs and the Pennsylvania Horsemen's Benevolent and Protective Association saw a new development last week when PID filed a lawsuit seeking to prevent the PAHBPA's “unsupported allegations” from going to arbitration, reports the Thoroughbred Daily News.

The dispute centers around revenue-sharing of advanced deposit wagering dollars, which is laid out in a Live Racing Agreement between the PAHBPA and PID. PAHBPA has two complaints: first, that PID's parent company Churchill Downs, Inc. is breaching the Live Racing Agreement by promoting its own ADW to on-track patrons, then not treating those wagers with the same return to the purse account as on-track wagers; and second, that the source market fee (from ADW bets made by in-state residents) agreed to by PID with CDI is too low compared to industry standards.

“PAHBPA's asserted allegations of breach are nothing more than a money grab without legal merit,” the PID's latest complaint contends. “Rather than raising questions as to PID's compliance with the terms of the Live Racing Agreement, PAHBPA's asserted allegations are an attempt to renegotiate through arbitration a long standing contractual provision, that with the benefit of hindsight and changed circumstances, they now disfavor. In essence, PAHBPA alleges that the source market fee received by PID from the collateral agreement is too low.”

Read more at the Thoroughbred Daily News.

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Presque Isle Takes HBPA to Court to Keep ADW ‘Money Grab’ from Arbitration

Federal court documents filed June 24 show that Presque Isle Downs and Casino (PID) and the Pennsylvania Horsemen's Benevolent and Protective Association (PAHBPA) have been locked in an ongoing dispute over the revenue sharing of advance-deposit wagers (ADW).

The disagreement centers on allegations by the PAHBPA that over the past several years, PID–whose corporate parent is Churchill Downs, Inc., (CDI)–has been steering on-track patrons to make bets through ADW platforms like TwinSpires that are controlled by another CDI-owned entity, the Churchill Downs Technology Initiatives Company (CDTIC).

Allegedly, PID is not treating those on-property bets that come through CDTIC platforms as “on-track wagers” that would provide greater revenue for purses.

Additionally, the PAHBPA is arguing that the source market fee (derived from ADW bets made by in-state residents) that PID agreed to with CDTIC is too low in comparison to industry standards.

Because of this, according to court documents, the PAHBPA is seeking “in excess of $75,000 beyond the contractually negotiated and agreed on percentage of revenue sharing as to source market fees.”

On Feb. 3, 2020, the PAHBPA's attorney, Jan Budman II, sent a “demand for arbitration” letter to PID in an attempt to settle the matter.

“PID has breached and is currently breaching [sections of] the Live Racing Agreement as a result of patrons located at PID placing wagers through PID's 'racing vendor' and corporate affiliate CDTIC as opposed to in the racetrack enclosure at PID,” Budman wrote. “PID has perpetuated these breaches through messages and other marketing encouraging patrons to place wagers through PID's corporate affiliate CDTIC instead of in the racetrack enclosure, which, incidentally, also violates [the Pennsylvania Horse Racing Industry Reform Act].”

Although the two sides organized grievance committees to try and hash out a solution during 2020, now, more than 16 months after that demand letter was written, PID has filed a federal lawsuit that seeks to block the PAHBPA's “unsupported allegations” from going to arbitration.

According to PID's civil complaint initiated Thursday in United States District Court (Eastern District of Pennsylvania), PID also wants the PAHBPA to pay for the legal costs the racino is incurring to have the court assert in a declaratory judgment that “there is no claim(s) to submit to arbitration under the narrow arbitration clause agreed to by the parties in the Live Racing Agreement.”

“PAHBPA's asserted allegations of breach are nothing more than a money grab without legal merit,” the complaint contends. “Rather than raising questions as to PID's compliance with the terms of the Live Racing Agreement, PAHBPA's asserted allegations are an attempt to renegotiate through arbitration a long standing contractual provision, that with the benefit of hindsight and changed circumstances, they now disfavor. In essence, PAHBPA alleges that the source market fee received by PID from the collateral agreement is too low.”

The complaint continues: “PAHBPA's asserted allegations take issue with PID's collateral agreement, but the Horsemen never negotiated into the Live Racing Agreement any consent or veto rights concerning the source market fee flowing to PID from the collateral agreement. Further, the Live Racing Agreement does not set a required rate or amount for source market fees that PID must receive from a vendor….

“[P]rior to the collateral agreement, PAHBPA received no money whatsoever from a source market fee under the Live Racing Agreement. In contrast, what PAHBPA did negotiate into the Live Racing Agreement was that if PID received a source market fee from a vendor, then PAHBPA would get a fixed percentage of that source market fee. PID has paid to PAHBPA that contractually negotiated percentage of the source market fee it receives from the collateral agreement.”

It's important to note that the original version of the live racing contract between the two parties was inked 12 years prior to CDI's 2019 purchase of PID, although that document has since been amended seven times, most recently on May 1, 2021.

A TDN email to Budman seeking comment on the lawsuit on behalf of the PAHBPA did not yield a reply prior to deadline for this story.

However, in his 2020 demand letter that PID included in its court filing as an exhibit, Budman wrote that PID was not dealing in good faith with specific regard to the track and its ADW provider both being controlled by the same corporate parent.

Budman wrote that PID “attempted to exploit the language of the Live Racing Agreement by agreeing with its own corporate affiliate CDTIC to terms in the Vendor Agreement that would deprive PAHBPA benefits under the Live Racing Agreement. The payment terms under the Vendor Agreement are clearly not commercially reasonable and were not the result of good faith or arms' length negotiations…”

“[I]nstead, the Vendor Agreement is a self-serving intercompany transaction between closely related entities that was clearly designed to enrich CDI (the common parent of PID and CDTIC) at the expense of PAHBPA and its members.”

In its lawsuit, PID countered that “PID does not own the majority of CDTIC. CDTIC is a separate legal entity from PID.”

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This Side Up: The One Thing to Envy Most at Ascot

It is as true to say that Americans and Europeans are united by an ocean as divided by one. And while horsemen are often considered insular, their transatlantic engagement–fluctuating but perennial–means that they always have things to learn from one another.

In recent times, contrary to European prejudice, it is the Americans who have been more willing to leave their comfort zone. Whereas not even Coolmore have lately been rolling the dice on the dirt at the Breeders' Cup, American raiders have increasingly enriched the pageant of Royal Ascot. And while doing so won't generally involve a formal switch of surface, just tell that to Tepin (Bernstein) after she won over a straight mile of mud.

But while they say that travel broadens the mind, both camps must remain wary of hasty judgements in what remain relatively fleeting encounters.

When they see Wesley Ward's runners blazing away in front, for instance, the locals don't simply perceive differences in the education of horses. Instead they feel vindicated in a vexing misapprehension that Americans breed for one-dimensional speed.

As they say in England: “Give a dog a bad name and hang him.”    The paradox is that speed, nowadays, is actually the obsession of Europe's commercial breeders–and American programs are increasingly tapping into that. Yet while doing so is yielding big results, both at Ascot and in a weaker turf program at home, it arguably risks exposing the speed-carrying American Thoroughbred to precisely those deficiencies that have diluted the Classic gene pool in Europe.

But that, by now, is doubtless a wearily familiar complaint. So perhaps a more pertinent reflection on Ascot week, this year, relates to the setting itself. For the grandstand, majestic even when not yet revitalized by full capacity, actually owes something to a less obvious cross-pollination.

When the Ascot team looked around the world for inspiration, one of the places that made the deepest impression was Arlington Park. Here, they felt, was a facility that maximized respect for both participants pivotal to the sustainability of our sport: the racehorse, and the fan.

Make no mistake, Arlington was long viewed–both in its reconstruction and operation–as one of America's exemplary contributions to the global turf. In staging the first seven-figure race in 1981, with the express hope of nourishing overseas competition, Arlington pioneered a path for the Breeders' Cup and, indeed, for the Royal Ascot of the modern era. And these formative experiences, for the international sport, were replicated on a more intimate scale. As one of many Europeans to have first fallen in love with the American turf in Chicago, I'm delighted that our host in those halcyon days, Richard L. Duchossois, is being suitably honored in his 100th year by the renaming of the Million (its purse instructively deflated) as the Mister D. S. And I'm devastated that this global flagship for prioritizing public engagement with the sport should now stand on the brink of wilful scuttling.

We know that a serious offer has been tabled for the track's redemption. But we also know, now, that the Bears are really in the game. And, regardless, even the highest offer would not necessarily suffice to prevent the sellers from stifling competition to their nearby casino or any other investments they may plan for this neighborhood.

It's silly to call this greed. Churchills Downs Inc. Is no more (nor less) heartless than any other big corporation whose one and only purpose is to make money for its stockholders. Despite custody of the iconic twin spires, their only interest in sporting heritage will be in its commercialization.

I'm often assured by people who would know that CDI has people of the right caliber to ensure the prosperity of such racetracks as do fit into their plans. But with so many jewels of the American turf at the mercy of the ruthless functioning of capitalism, whether at CDI or elsewhere, then the real challenge to emulate Britain is not in breeding grass sprinters. It's whether racetrack ownership can somehow become stewardship.

The Queen and her heirs aren't going to be selling Ascot for condos and malls any time soon. Epsom and Newmarket, similarly, are owned by Jockey Club Racecourses. Obviously the model isn't invulnerable, as the past travails of NYRA demonstrate. In principle, however, putting all profits back into the business should always create a product that will commercially outperform the soulless gaming factories.

For while corporate analysts renounce racetracks as “legacy business”, with dinosaur demographics, the example of Ascot might suggest a couple of alternative thoughts. One is that conserving and investing in something that can't be measured on the balance sheet–heritage–can actually help to make a racetrack viable; that “legacy” can itself be “business”. The other is that if private track operators won't buy into that theory, then can horsemen devise a way to prove it themselves?

Not easy. But was it easy to overcome vested interests for the modern industry's game-changing communal achievement, the Breeders' Cup? When the stakes are this high, we have a duty to future generations at least to be able to say that we tried. And it's not as though our community is lacking people of adequate resource, whether in finance or brains. Obviously Ascot's ownership is a fortuitous historical boon, but a Jockey Club subsidiary had to buy Epsom, for instance, from rival bidders on the open market in 1994.

CDI wouldn't be in the game at all, remember, if they didn't think that money can be made by racetracks in the right setting and market. So if you can imagine a scenario of constant reinvestment, without a nickel payable in dividends, then who knows? Perhaps that might even relieve the sport of an undignified dependency on gambling addicts.

In the quality of the racing experience, Ascot and Arlington both deliver magnificently. But that secures only one of their contrasting business models against predation.

As it stands, horsemen and fans are sick to their stomachs at the idea of Arlington going the way of Hollywood Park and Calder. We can only hope that somehow the political equations might yet tilt CDI towards the rescue bid. But we know one thing for sure. However things play out at Arlington, this won't be the last time a storied racetrack is put up for sale. With so few players in the game, it's hard to be confident that any of them won't just pick up the ball and go home. We need to find a way to persuade them at least to sell us the ball first.

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