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Grounds for Distinction

The New Orleans Fair Grounds Race Course is chomping at the bit to become the premier winter horse track in the country.

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Ever since Churchill Downs took over the Fair Grounds Race Course from the Krantz family in October 2004, the publicly traded, Kentucky-based company has worked to improve the quality of horseracing at the third-oldest thoroughbred track in the country. Churchill's local investment, which was heralded by local and national horseracing enthusiasts, seemed to sour in 2005 when Hurricane Katrina tore the roof off the grandstand and clubhouse. For the 2005-06 season, for the first time in 91 years, there was no winter racing in New Orleans; Churchill did manage to host an abbreviated, 37-day season at Louisiana Downs in Bossier. A year later, however, the Fair Grounds bounced back to reclaim the lead as Louisiana's premier thoroughbred track. Churchill reopened the Fair Grounds' 135th season with an opening-day crowd of 8,732 (a record for the new clubhouse, built in 1997) and culminated in March with Louisiana Derby Day " the richest day in Louisiana racing history in terms of stakes purses ($2.1 million) and the total amount wagered ($12.4 million). Included in that $12.4 million was $901,941 in bets placed on-track for Fair Grounds races.

That was just one day at the track.

Although the Fair Grounds is the top track in the state, there are three others " Louisiana Downs, Delta Downs and Evangeline Downs " that are enjoying their own rebound. Thanks to renewed interest in horseracing and a new source of revenue from slots and video poker, thoroughbred racing once again is a major economic driver in Louisiana.

According to Sidney Schmitt, chief auditor for the Louisiana Racing Commission, the 2007 fiscal year brought in a total 'handle" " the amount wagered in state and out of state " of more than $1.13 billion. Of that total, $357.6 million was bet in Louisiana. 'The Fair Grounds is generally about 50 percent of the wagering in the state," Schmitt says.

Schmitt adds that 2007's $1.13 billion handle covers only monies wagered on horseracing. The four tracks and off-track betting (OTB) facilities also host slot machine and video gaming parlors. The Fair Grounds opened its temporary slot facility just two months ago; for now, it features up to 250 slot machines. The permanent slots building will open next November and will hold up to 700 machines.

By law, a significant portion of the slots and video poker profits at Louisiana tracks goes back into purses for races restricted to Louisiana-bred horses, which makes Louisiana thoroughbred racing one of the best bets in the equine industry.

How much of an impact on purses have slots and video poker had?

Consider this very recent example:

Last Friday (Nov. 16), the third race at Delta Downs in Vinton, La., was a 'maiden claiming" race featuring all Louisiana-bred horses. ('Maidens" are horses that have never won a race). The claiming price was $10,000, which means any of those horses could have been bought before the race by a licensed trainer on behalf of prospective owners for $10,000. The slots-enhanced purse for that 'La.-bred" race was $18,000. Because the winning horse earns 60 percent of the purse, the winner's owner collected gross winnings of $10,800 " more than was likely paid for the horse in the first place.

By contrast, the 10th race on that same card was another $10,000 'maiden claiming" race, but it was not restricted to Louisiana-bred horses and therefore did not qualify for the slots and video poker enhancements. The purse for that race was only $8,500.

During the 2007 fiscal year, even without the Fair Grounds having slots, the gaming devices at Louisiana's other tracks and OTB offices produced more than $300 million in wagers.

In addition to the enhancements that gaming devices generate for purses, more than 22 percent of the machines' total take is divided among the state, local nonprofits (including City Park and the Greater New Orleans Sports Foundation) and the city.

Fair Grounds President Randy Soth projects that this season's Louisiana Derby Day on-track crowd will wager $1 million for the day's races. Soth attributes much of this success to the tradition of horseracing in New Orleans, the packaging of special events at the track, a significant improvement in the overall quality of racing at the Fair Grounds " including top-name trainers stabling and racing there " and improved facilities.

Soth already places the Fair Grounds 'head and head for the lead right now" with Gulfstream Park in Florida as the top winter horse track in the country. 'What I'm trying to do in the next three years " or less " is to make the Fair Grounds the premier racing product and racecourse in the United States," he says.

Although he's an industry executive, Soth describes himself as a 'traditionalist" when it comes to horseracing; he's a horseman who loves the pomp and pageantry of race day. Soth bought his first horse in graduate school after a serious car accident left him with a small settlement for his injuries. 'After my wife and family, horseracing has been the second true love of my life," he says.

Soth says he has been impressed with how connected the Fair Grounds is to the New Orleans community at large, noting that most people are aware of where the track is even if only because that's where Jazz Fest is held. The large and enthusiastic crowd that turned out for Opening Day last Thanksgiving " when Fair Grounds' racing returned home " cemented Soth's impressions. The track means much more than tax revenue to New Orleans.

'Forget the payroll taxes and the taxes we pay on the pari-mutuels," Soth says. 'There's just a constant integration with our employees and the horsemen that are stabled here for approximately six months. It permeates not only the immediate community but also New Orleans itself."

That integration between the track's local employees and those who work at the track temporarily for the trainers and owners in the backstretch stables area makes it difficult to measure accurately the Fair Grounds' true economic impact. But consider this: Soth says the Fair Grounds employs more than 700 people during the season between the track staff, OTB workers and slot employees. He adds that each trainer who stables horses at the track for the season, which runs from Thanksgiving Day (Nov. 22) till March 23, also brings his own staff to train and care for that trainer's horses.

In addition, many horses are stabled at horse farms across Lake Pontchartrain in and around Folsom, Louisiana's thoroughbred capital. Each farm has its own staff as well. Several cottage industries likewise surround the sport, including veterinarians, businesses that manufacture horse bedding, feed suppliers " even equine acupuncturists.

Most people involved in Louisiana horseracing and breeding will live in the New Orleans area at least part of the year, spending money on housing, food, entertainment and more, thereby creating a major economic ripple effect. Dr. Tim Ryan, chancellor at the University of New Orleans and the last economist to study the Fair Grounds' impact (in 2000), says it all begins and ends with the track. 'When I did the latest study, I was looking primarily at the horseracing industry," Ryan says. 'Those numbers are relatively large because it's not what goes on at the track, but what goes on behind the scenes."

Ryan seems to be contradicting himself, but he's not. The horseracing industry is unique in that the production end of the business is far larger, in terms of dollars, than the 'retail" end. As Ryan explains, horseracing is still 'The Sport of Kings" " or, as he says, 'the sport of really rich people." Betting on the races, even when it is more than $1 billion a year, doesn't approach the money spent breeding, raising and getting a horse ready to race. 'The racetrack industry is amazing in that, in general, wealthy people participate in this industry by getting pennies back on the dollar."

Ryan notes that the real money goes into farms that breed and train horses. Wealthy people purchase or breed horses hoping, for instance, that one of them will win the Kentucky Derby, making millions in purses and stud fees. It has happened for Louisiana-bred horses, but only rarely. In 1924, Black Gold, a Louisiana-bred horse, won the Kentucky Derby; it happened again in 1996 when Grindstone, another Louisiana-bred 3-year-old, won the Derby. Despite the long, long odds, horse people are willing to take that chance.

And it all starts with the tracks " the very places that give owners such a small return on their investment.

'That industry (horse breeding and raising) would not exist in the state of Louisiana if we didn't have racetracks," says Ryan, 'because, for the most part, when you look around the country, the states that train and breed horses are those states that race horses."

Louisiana ranks as the fourth-highest state in terms of breeding foals. Last year, there were about 3,000 bred here. Kentucky, Florida, and California, in that order, are the first, second and third breeding states. It's no coincidence that these states are also home to some of the most successful racetracks: Churchill Downs in Kentucky, Gulfstream Park in Florida and Santa Anita Park in California.

Ryan says Louisiana recognizes the need to support the breeding industry as well as the tracks, and lawmakers show their support by allowing other forms of gambling, specifically slots and video gaming, at the tracks. Additionally, a small percentage of the statewide gross pari-mutuel, about $1.2 million in 2006, goes toward the breeders' fund, which rewards Louisiana-bred winners. If a Louisiana-bred thoroughbred places first, second or third at any track in the world, that horse is eligible to receive a breeders' fund award.

The Louisiana Thoroughbred Breeders Association (LTBA) administers the breeders' fund. The majority of the fund, according to LTBA Executive Director Tom Early, comes from slots and other gaming devices located at the racetracks and OTB parlors.

In 2006, Early says, the breeders' fund awarded some $8 million in enhancements. 'So for instance, a Louisiana-bred horse might be running for $15,000," Early says, 'and the nonLouisiana-bred is running for $10,000."

Because the slots proceeds are track specific and the Fair Grounds' slots facility just opened, the local races have yet to see the slots enhancements " but will this year. Early notes that the Fair Grounds' purses are already large because they are generated by the Fair Grounds' on-track handle and by OTB simulcasts throughout the remainder of the year. And, as Early explains, for a Louisiana breeder, winning at the Fair Grounds is about more than money " it's a matter of pride.

'The Fair Grounds' meet in the state of Louisiana, for the breeders and the horsemen, is the premier meet," Early says. 'It's where everyone wants to be. The guys at the small tracks love to come over here and win a race. It's a feather in their cap to win in the big time."

Similarly, Soth says that Churchill has been doing its part to keep the Fair Grounds in the big time. In the past three years, Churchill has invested more than $6.5 million in the track's backstretch facilities, including a new dormitory for stable-area employees and improved stalls in the barn area. Soth says it's important to provide good accommodations for horses and workers as well as maintaining the grounds and track.

'It's quite an outlay on our part, and it's obviously the same with the owners and their involvement with buying and racing horses," Soth says.

Investing in better facilities may have lured some trainers to the Fair Grounds, but ultimately, it's the purses that matter most to trainers. To increase Fair Grounds' purses, Soth took a page from his experience at the Calder Race Course in Miami, where he packaged several high-paying stakes races in a single day to lure top trainers. Race fans responded, and the average for purses and daily handles increased.

When Soth moved to the Fair Grounds, he did the same, taking advantage of the Fair Grounds' quality 3-year-old colt and filly racing, and put together special events like Santa Sprint Saturday, which has four stakes races, and Road to the Derby kickoff day, which also hosts four stakes races.

For Soth and racing fans, all of these special event days lead to Louisiana Derby Day. 'That's the culmination of our 3-year-old series," Soth says.

Soth's strategy has paid off. For the 2006-2007 season, the Fair Grounds increased its handle by 5.9 percent, with a total of $359 million wagered on Fair Grounds' races here and across the country via simulcast wagering. Purses likewise increased dramatically, from an average of $267,784 per day in 2004-2005, the last complete season before Katrina, to $387,422 per day last year " a 44.7 percent jump.

Horsemen around the country have taken notice. Lenny Vangilder, spokesperson for the Fair Grounds, says that a number of top trainers " Bobby Frankel, whose horses have won five Breeders' Cups, has thirty stalls at the Fair Grounds; and Bill Mott, who trained two-time horse of the year, Cigar " are stabling their horses at the New Orleans racetrack. Other trainers, most notably, Todd Pletcher, who has won the past three Eclipse awards as trainer of the year, are sending horses for stake races.

It's this kind of excitement generated by horse owners, trainers and fans alike that will bring a quality of racing never before seen in New Orleans, Soth says. Trainers look for top winter tracks to get their top horses prepared for the ultimate 'Run of the Roses" at the Kentucky Derby.

'That's so critical," Soth says. 'That's when everyone starts cranking up their 2-year-olds turning to 3-year-olds, the hopefuls for the Kentucky Derby and the Triple Crown."

From now on, the road to Churchill Downs, Ky., just might mean a trip through New Orleans.

Hurricane Katrina ripped the roof off the grandstand, but the Fair Grounds reopened on Thanksgiving 2006 with a record opening -day crowd of 8,732. - CHERYL GERBER
  • Cheryl Gerber
  • Hurricane Katrina ripped the roof off the grandstand, but the Fair Grounds reopened on Thanksgiving 2006 with a record opening -day crowd of 8,732.
Stable boys groom a race horse at the Fair Grounds. - CHERYL GERBER
  • Cheryl Gerber
  • Stable boys groom a race horse at the Fair Grounds.
For the 2006-2007 season, the Fair Grounds increased its handle by 5.9 percent, with a total of $359 million wagered on Fair Grounds' races. Purses likewise increased dramatically, from an average of $267,784 per day in 2004-2005 to $387,422 per day last year  a 44.7 percent jump. - CHERYL GERBER
  • Cheryl Gerber
  • For the 2006-2007 season, the Fair Grounds increased its handle by 5.9 percent, with a total of $359 million wagered on Fair Grounds' races. Purses likewise increased dramatically, from an average of $267,784 per day in 2004-2005 to $387,422 per day last year a 44.7 percent jump.

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