Under The Stronach Group’s ownership, Gulfstream no longer content to go silent in the summer
06/29/2014 7:00 PM
06/27/2014 10:03 PM
Back in the days when the yearly thoroughbred racing calendar in South Florida involved three tracks, Gulfstream Park closed up shop in the summer.
Horses shipped north.
Windows were shuttered.
Weeds sprouted and blanketed the mile oval.
Gulfstream became a ghost town.
But under the ownership of The Stronach Group — whose guiding force is its 81-year-old founder, Frank Stronach — Gulfstream Park Racing & Casino is no longer content to go silent in the summer.
If its agreement with Calder Casino & Race Course receives state approval, which could occur at any time, Gulfstream will have a virtual, year-round monopoly on thoroughbred racing in South Florida and the Stronach empire’s slice of the national wagering pie is likely to expand beyond its present 25 percent share of the $11 billion market.
Calder, which is owned by Churchill Downs Inc., would lease its racing operations to Gulfstream and operate 40 days in year in October and November. Gulfstream, in Hallandale Beach, would run the rest of the year. The agreement is for six years. An undetermined number of jobs would be lost at Calder, but some employees there would continue working.
“We’re not in it for charity,” said Tim Ritvo, the Stronach Group’s chief operating officer. “We’re racing to make money, and we think we do a good job of it.”
Horse racing is battling sagging interest nationally in the face of increased gambling options, namely in the form of new casinos. ButStronach, who built his fortune in the auto parts business, is defying the trend by pumping money into the sport, both as a track operator and a prominent thoroughbred breeder and owner.
His first race track venture was the Magna Entertainment Corp., a publicly held arm of his Magna International. Following the bankruptcy of MEC a few years ago, Stronach held on to a handful of the tracks, including Gulfstream, and placed them under the The Stronach Group, a private firm.
In addition to Gulfstream, the company also owns Santa Anita outside Los Angeles and Pimlico Race Course in Maryland, along with several other tracks. Its other holdings include HRTV, a racing cable network, and Xpressbet, an online horse wagering system.
Stronach is clearly betting on the sport’s survival.
“We have different thoughts [about the racing industry],” Ritvo said. “We think the game is still alive. We think if you invest in it, there’s a big enough market down here to keep us healthy and viable.”
But Stronach isn’t taking a traditional approach to foster revenue growth.
It was his idea to incorporate a shopping complex — The Village at Gulfstream Park — with a new and modern race track, thinking it would attract fans of all ages. While Gulfstream, like most tracks, has a casino, it depends on racing for most of its revenue.
“We have a casino that doesn’t really produce like most casinos down here in Florida,” Ritvo said. “We’re not a casino company.”
In Gulfstream and Santa Anita, the Stronach Group has two of the sport’s marquee tracks. And the name recognition attached to both is what attracts bettors nationally to the product. Given that more than 90 percent of all money wagered on thoroughbred racing in the U.S. is done off-track, Ritvo said, that name recognition is important in driving up business.
For example, while Gulfstream and Calder have been going head-to-head during the less-lucrative summer months with a relatively similar product in terms of horse quality, Gulfstream has dominated less-fashionable Calder in terms of the money being wagered on its races.
Gulfstream has also more than held its own against other tracks around the nation during what is, for it, its less profitable summer season. Ritvo said that on Memorial Day, traditionally one of the biggest racing days of the year at most race tracks, Gulfstream out-handled Monmouth Park in New Jersey, Arlington Park in Illinois, and Churchill Downs in Kentucky.
Ray Paulick, a racing industry observer as publisher of The Paulick Report, said the national perception of Stronach has changed with time.
“I would say how they are viewed in the industry has really evolved over the last 10 years or so,” Paulick said of Stronach’s racing empire. “I would say for the first part of his career as a race track, when it was a publicly held company, it was erratic. There was management turnover on a regular basis. He was looked upon by a lot of people as a little bit bull-headed, somebody who wanted to prove he could do things his way.”
But that perception has changed within the past few years, Paulick said.
“It’s completely flipped around,” Paulick said. “He cares about horse racing, and when you start looking around, you say Stronach is really the only guy who is investing in horse racing.”
Stronach’s interests go beyond racing. His land holdings are immense. According to a 2012 Ocala Star-Banner article, Stronach was the largest private land-owner in Marion County with 29,000 acres. Stronach, who sold his controlling interest in Magna International in 2010 for $1 billion, has also created his own vertically integrated cattle and beef company — Adena Meats.
“He’s building his own restaurants and branding his own beef,” Ritvo said. “The guy never stops.”
Paulick said that Stronach’s interest and fascination with racing is so great that he shares a concerns with others around the country about the future of his tracks once he is gone.
“I would say everybody is concerned about it, about what happens to the Stronach tracks,” Paulick said. “I would say, at this stage, Frank is making decisions that are great for racing, that if someone else were to look at the decisions might say isn’t great for ownership.”
But Ritvo said Stronach is in the process of creating a trust that would keep his tracks operating after his death as long as they remain profitable.
“Frank’s thing is to make sure racing continues in perpetuity at Gulfstream, Santa Anita and Maryland when he’s gone,” Ritvo said.
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