CHRB Vice-Chair: 1/ST Racing 'Doing Things That Are Detrimental to California Racing'

Although the recently reported purse cuts for the upcoming meets at Golden Gate Fields (25%) and Santa Anita Park (5%) were not on Thursday's official agenda for the monthly California Horse Racing Board (CHRB) meeting, the commission's vice-chairman, Oscar Gonzales, made it clear that the owner of both tracks, 1/ST Racing and Gaming, was going to face some tough questioning on the topic when the CHRB next convenes in January.

TDN's Dan Ross had reported Dec. 9 that Golden Gate is overpaid to the horsemen's account by some $3.1 million as the Northern California track is set to start what is expected to be the final race meet there (Dec. 26-June 9). 1/ST Racing disclosed back in July that it would be ceasing racing at the lone remaining non-fairs track in that region of the state.

In that same article last week, Bill Nader, the president and chief executive officer of Thoroughbred Owners of California (TOC), confirmed that Santa Anita's overnight purses are also scheduled to be lowered for the winter/spring meet that starts Dec. 26, with $2 million sliced from the track's stakes schedule.

Gonzales particularly took umbrage on Dec. 14 with the Golden Gate reduction, noting that he has received “a lot of phone calls” about “this drastic purse cut here in Northern California that I would describe as being very unexpected.”

“And that's really thrown a lot of the Northern California horsemen, [and] us commissioners, off guard,” Gonzales continued. “I had thought that there was a deal that [1/ST Racing had] put on the table, which was to extend racing [instead of closing at the end of 2023]. Then it appears as if this unexpected development, which is not a normal meet, but rather a [condition book that includes a] very drastic cut to the Northern California horsemen.”

Beyond the cuts themselves, Gonzales said he had issues with how horsemen found out about them.

“Process is everything,” Gonzales said. “And I just think that blatant disregard in terms of how it was communicated, if it wasn't for what appears to be a couple of news stories that were written, Northern California horsemen were just notified by the condition book. That's not how you do business. And I just feel that we have to remain vigilant when management comes before us, because I believe they are doing things that are detrimental to California racing.

“We have Arizona that's getting ready to reopen with higher purses,” Gonzales said, referring to Turf Paradise, which is slated to start racing Jan. 29 after a nine-month closure, and appears to be luring California stables out of state. “Meanwhile, we're cutting them. I just don't think that there's anybody paying very close attention about how we make sure we're retaining quality horses and quality horsemen.

“So I am concerned to say the least, and I cannot wait until we have representatives of that particular racetrack here before us, because I have a lot of questions for them,” Gonzales said.

Reached via phone after the CHRB meeting, Craig Fravel, the chief executive officer at 1/ST Racing, declined an opportunity to respond to Gonzales's comments.

But Fravel did want to make a statement about the Golden Gate purse cuts.

“I think it's just useful to point out that for the last year and a half, we have been in discussions with the TOC relating to reducing purses so that the actual purse liability is met from purses generated,” Fravel told TDN. “And they have been resistant to those purse cuts, so we have advanced sums well in advance of the actual purse liability to horsemen in Northern California. And I don't think it's unreasonable at all for us to try to recuperate them in accordance with what the actual statutory obligations are.”

At the CHRB meeting, when Gonzales asked the board's executive director, Scott Chaney, what power the board had to intervene, Chaney said the commission has few options beyond its obvious cudgel of compliance, which is control over the track's licensure.

“It's an interesting question. The purse structure is something that is decided on between the TOC owners' group [and] the particular racetrack,” Chaney said, explaining that purse agreements are basically predictions about handle revenue that can sometimes result in under- or over-payments.

When they occur, usually the tracks and horsemen agree to rectify the imbalance one way or another at the next scheduled race meet for that particular venue.

“So an overpayment or underpayment can be corrected over time,” Chaney said. But in this instance, because of the wrinkle with 1/ST Racing slated to shutter Golden Gate, “there's not another meet that Golden Gate's going to have to correct it. So I think in many ways this in uncharted territory,” he added.

“When Hollywood Park closed [10 years ago this month] it was a little bit different,” Chaney explained. Even though Hollywood was also shutting down after having overpaid the purse account, “Los Alamitos Race Course assumed a large part of that overpayment in exchange to take some of their racing dates. We don't have that same situation in Northern California. So needless to say, it's pretty difficult.”

Chaney added that “with respect to the CHRB's role, it's somewhat limited.”

Chaney pointed out that “TOC obviously has to develop their position. I think it's fair to say Northern California TOC members and Southern California TOC members probably view the purse cut differently. And so my understanding, at least, is that the TOC is not opposing the purse cut. So I think there's an internal dispute within the horsemen's group.

“The second piece is [that] part of the race meet agreement allows the tracks unilaterally to cut purses up to 25%. Beyond that, obviously there would have to be negotiation,” Chaney said.

“So I don't see a statutory, regulatory or legal role in settling this dispute,” Chaney said. “I would definitely say can use our 'influence' [with] both race-date allocation and licensure-granting. They are levers that the CHRB always has to kind of exact more fairness, if you will.”

During the meeting's public commentary section, the Pleasanton, California-based horse owner and breeder George Schmitt went into detail about the alleged dissension within TOC that Chaney had alluded to.

“The only group that are in the [TOC] bylaws that can negotiate for Northern California is [the TOC's] Northern California racing commission,” Schmitt said. “That committee voted unanimously not to accept the 25% reduction in purses. They were overruled by the management of the TOC.

“It is likely that there will be lawsuits filed unless they fix the problems that they have,” Schmitt continued. “A number of us in the north, at this point in time, believe that to take care of horse racing in the north, we need to establish a Northern California owners' organization [so as not to be] simply overridden by people in Southern California who could care less about what happens in the north.”