JC / Railbird

Sharing the Risk

Following up on a question about the proposal made by the New England horsemen to Suffolk Downs on Wednesday and the potential risk of racing this year without purse guarantees, NEHBPA lawyer Frank Frisoli replied:

The proposal just advanced by the NEHBPA offers to fund purses for 2011 based upon the share of revenue generated for purses in accordance with the offer.  In this manner any reduction in revenue because of this dispute would be shared by both Suffolk and the NEHBPA…. It certainly appears the economy is recovering so that we can reasonably anticipate business to be at least as good as the prior year.  In any event if the revenue is shared as we propose (and as virtually every other venue shares it), and the risk of decreased revenue is likewise shared equitably.

Frisoli describes the offer, partly based on an increase in simulcasting revenue this winter (before signals were blocked), as “very generous.” I would say it’s very interesting, and reminiscent of aspects of Fred Pope’s recently published scheme for paying purses, in that horsemen would have a vested interest in increasing revenues for the purse account. The proposal relies, though, on a 50-50 simulcasting split, about which the NEHBPA is adamant.

Suffolk, which has not yet commented on the horsemen’s proposal, seems just as determined to split toward the lower end of the range allowed by state law (4-7.5% of gross simulcast handle, which equals 25-50% of available revenue). According to numbers provided by the NEHBPA and drawn from track financial documents, Suffolk has paid less each year since 2008, when the simulcasting split was 40.92% to purses, 59.08% to the track. In 2010, 34.49% went to purses, 65.51% to the track. “We have simply asked Suffolk to share the net profit from simulcasting in the same manner as it is shared in virtually every other racing jurisdiction in the United States,” said Frisoli.

Track management has previously pointed to the loss of more than $40 million over the past four years and declining revenues as evidence that a more equitable split isn’t feasible without expanded gaming in Massachusetts.

“The issues are quite simple. Suffolk Downs controls its expenses,” said Frisoli, citing the track’s investment in the Wonderland dog track and expenses related to work on gaming legislation, passage of which would benefit the horsemen as well as the track. “We are not quarreling with Suffolk’s right to choose how to spend its money. But we are contesting its claim that it was ‘forced’ by declining revenue or other economic factors to act as it did.”

The horsemen’s desire for an even split is understandable, I said to Frisoli, but considering the declines since 2007 in total handle (down more than a third) and revenue, the NEHBPA seems to be seeking more of less. “The NEHBPA continues to seek only an equitable share of whatever revenue exists,” he replied, “and will work with Suffolk Downs to increase revenue.”

The Laurel simulcasting signal to Suffolk was cut beginning today, bringing to six the number of blocked tracks. “It is a long-standing practice of the MTHA and its predecessor organization, since the enactment of the Interstate Horse Racing Act, to withdraw the simulcasting signal of Maryland races if there is a contract dispute between a racetrack and its horsemen’s organization,” said Maryland Thoroughbred Horsemen’s Association counsel Alan Foreman. “We don’t take sides. We don’t profess to know the details. It is automatic.” So, nothing personal, Massachusetts bettors! (Thanks to Thoroughbred Times correspondent John Scheinman in Maryland for the assist.)

Racing at Brockton if not at Suffolk? George Carney appears on the scene.


2 Comments

[…] manner as it is shared in virtually every other racing jurisdiction in the United States,” NEHBPA lawyer Frank Frisoli said last week, pointing to a split over the last three years that has ranged from 60-40 to 65-35 according to the […]

Posted by Jessica Chapel / Railbird v2 - Suffolk Responds on February 15, 2011 @ 3:13 pm

[…] But an equal split would mean less revenue for Suffolk, a tough sell to any business, and certainly so to a track that’s lost $40 million in four years. When I asked Frisoli about this, he replied, “Suffolk Downs controls its expenses.” […]

Posted by Jessica Chapel / Railbird v2 - 100 Days or No Days on February 16, 2011 @ 12:21 pm