Q&A: How long can Santa Anita Park survive? ‘If things don’t get better...shorter window’
Santa Anita is a horse racing track in desperate search of a solution. If it is to survive it needs a magic potion that doesn’t even have to approximate its glory days of a few decades ago. How about just 10 or 15 years ago?
Santa Anita is not the safety pariah it was in 2019, when 37 horses died. It has been a leader in safety reforms and has greatly reduced the number of fatalities. Last year, the attention was focused on Churchill Downs and Saratoga and Santa Anita wasn’t part of the discussion.
But now the major problem the track faces is not the mortality of the horses but its own. In a letter to the California Horse Racing Board, it claimed losses of $31 million over the last five years. In the letter it more than hinted that if it didn’t get a giant share of Northern California simulcast revenue it would have to consider closing or selling the track. The board voted unanimously to give racing dates to Northern California but its license is anything but a sure thing.
Aidan Butler, chief executive officer of 1/ST Racing and Gaming, which owns Santa Anita, is at the forefront of the effort to save Santa Anita. He spoke exclusively to The Times in a question-and-answer format about how he sees the track’s future and chances for survival. The answers were edited for brevity and clarity.
You’ve had six cancellations (with three rescheduled) because of weather. Would that have happened in 2019 before the new weather rules were put in place?
It wouldn’t have happened in 2019 and it wouldn’t have happened at pretty much any other race track in the country. There is a very specific set of rules that were put in place to make sure the dirt track is always in optimal shape, which is the way we always run. Despite the disruption, it’s proven to work and made racing safer.
The California Horse Racing Board meets this week to decide if racing will continue in Northern California, or if that business will be sent to SoCal.
Have the safety measures that were put in place in 2019 made Santa Anita a less profitable track?
There is no question when you rate-limit runners, yes, fewer runners means less money bet. You really can’t worry about that because the only way you can run is the safe way. Would you want to run a little less safely for more money? The answer is absolutely not. It’s Cali[fornia] and Cali has a shortage of horses but it never comes into the conversation to cut corners and we only do what’s best for the horse population. Safety and doing it the right way should win the day.
You recently had purse cuts of about 12% from last year. Will there be any more this meeting?
Hopefully not. The purse cuts were in line with what we expected to do. The purse account is carried by the TOC (Thoroughbred Owners of California) and at any time of the year it can go from overpayment (the track pays the purse shortfall) to underpayment. You always want to be in an underpayment situation so you can throw some money in there. The purse cuts are purely to keep from throwing good money after bad because it’s an interest-free loan we give to the owners. We prop it up to keep it going but you also can’t get into a black hole.
Is it a great system? I don’t think it was ever contemplated that it would be a problem because it was always thought racing would be the best game in town. So, we’ve got to be smart. We have to make decisions that aren’t going to put us in situations we can’t get out of.
Did you get any blowback from stakeholders after announcing the California Crown, where you are cutting purses on one hand and having a $1 million series on the other?
There are a lot of criticisms not just of us but racing in general. People say we never spend any money marketing. It’s completely unfounded if you saw our marketing budget. We spend money on the food and beverage, we spend money on the facilities, we spend money on making it a place you would want to come to. The criticism of California Crown really wasn’t fair because we jacked the purses and put in the extra money ourselves. We have an event called the Pegasus [at Gulfstream Park] and it is a really, really great day. It’s where you can showcase the best of what you’ve got and you are marketing yourself and attracting new fans and making yourself relevant. And it’s working very well.
The problem with Florida is it’s a very small venue and can’t hold many people. When you look at what we have here, with a million-square-foot building that can hold 50-60,000 people without breaking a sweat … it’s a much needed event for Cali. The TOC understands we need to change things and do things big and bold. We need to do things that set us up for the future and attracting new fans by offering experiences and entertainment along with world-class racing. Everybody understood the intent of it and nobody was being ridiculous about it.
1/ST Racing made a not-so-veiled threat to consider selling or closing Santa Anita if the board authorizes racing in Northern California this year.
Does 1/ST Racing regret the letter sent to the California Horse Racing Board in which there was an implied threat you would consider closing or selling the track if the CHRB gave Northern California racing dates?
Personally, no, but I understood the intent of the letter. I can’t remember the times I went before the CHRB where I said ‘Please, don’t take dates away from Golden Gate, don’t take away the overlap dates.’ The place wasn’t doing great and it can’t keep going this way. If I said it once I said it 20 times, please stop attacking Golden Gate. Then the hammer drops and it is no longer financially viable [and we’re closing it]. If you look forward five, 10, 15 years the only way you can make it is to change financial models.
The letter laid out the actual state of affairs. If you read it for what it is, it was not a threat. We just spent $8 million to put in a Tapeta (synthetic) track. If someone says, ‘They are just trying to get out of the business,’ they are imbeciles because look at what we’ve been doing and the amount of money we are putting into the track to try and make it good. The letter was received poorly and I understand it was upsetting but sometimes you have to be transparent. If nothing else, people have been forewarned. People said closing Golden Gate was a surprise but that’s just not the case. If nothing else people know Santa Anita needs love, it needs support, it needs everyone to pull together.
The CHRB asked for everyone to work together. Are you in any active discussions with the Northern California group?
Not currently because they are truly building out their plan. I think they still have little bit of work to do on it. We’re not currently talking but if they need to chat they certainly know where we are. We are here to listen.
Can you make it without the Northern California simulcast money?
If you look at any jurisdiction that is doing well they have some form of subsidy. Kentucky is doing better than it’s ever done. Their numbers are absolutely crazy, horses everywhere, their breeding is thriving. So, we are going to need some help. We are going to need an influx of horses and there are different strategies to that. We are going to need a consolidation of the state, which is what we were really trying to do. We carry a lot of water being the year-around track. When Hollywood Park went away, Santa Anita took the dates. It stepped up and has been trying to create a product for horsemen year-around. We tried to do it in the north but it didn’t work out because, well, life is life. The one strategy that could really work out is to allow Santa Anita to generate money from the wagers they already have or things such as HHR (historical horse racing, essentially a slot machine). If we carry on as is, it’s not a pretty sight.
Is there a plan to get supplemental gaming income?
There are lots of discussions going on and there has been for a while. There is a renewed vigor in what the possibilities are here. We’ve been a stunning gaming property and have been for decades. It seems like that would be a way of generating extra revenue, which would be good for taxpayers. It would also be good for the billions of dollars that are in the ecosystem that agriculture brings to California. Look at New York, Kentucky, Florida, it’s working for them because they have a form of revenue streams from gaming.
How long do you have to turn Santa Anita around?
There is really no predetermined timeline but if things don’t get better it’s a lot shorter window. If things start to get better and we can start to execute some strategies that will really pay dividends, then it’s a lot longer.
In what world does it make sense to lose $31 million over five years sitting on valuable property and to continue with that business?
The company is a horse racing and wagering company and you have to look at our total ecosystem which includes wagering, co-production and content. It’s a big operation but it’s all reliant on the output of the track. If it’s just the racetrack, then the conversation is a very short one. There are a lot bigger decisions to be made here than Santa Anita. It’s the impact of everything we do. Luckily for us we have some really good businesses that carry the water for us.
Santa Anita as a standalone is really underperforming. If we didn’t have the total ecosystem we would be in real trouble. There is a lot more reliance on Santa Anita than just Santa Anita. There is Amtote, Xpressbet, 1/ST Bet, production, content sales. But, if Santa Anita keeps underperforming then decisions will have to be made.
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