Long Term Funding Proposal Doesn’t Work for Kawartha Downs

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It sounded like good news for the grassroots horseracing industry when the Ministry of Finance announced approval of a long-term funding agreement to provide stability to the struggling industry last month.  Included in the proposal was $4 million in purse enhancements, a $6 million pool for capital improvements and a $5 million pool for transitional funding for racetracks such as Kawartha Downs that are losing their slot operations.  Not quite so.

The 300 page legal document delivered to potential member organizations on Friday April 13th required unanimous approval by all 15 track owners by May 1st or the deal was off the table.  The agreement establishes a new not-for-profit corporation is to include all industry members, from racetrack operators and industry associations representing horse owners and breeders and manage the entire industry on their behalf.  It will establish an Annual Business Plan, manage all payments from OLG and allocate costs to each track.  This effectively hands over the control of the industry to the new entity’s Board of Directors, which has already been appointed by the government for up to a three year period.  On the 11 member board was a single representative of small tracks like Kawartha Downs.

Kawartha Downs General Manager Orazio Valente has waded through the legal document and interpreted its impact a little differently than the press releases.  He determined that for the track he operates as a Receiver representing creditors, there was only three years of guaranteed revenue.  There is also no room for revenue growth, as the funding is stable for the entire nineteen years of the agreement.  He believed signing the agreement would result in a slow death for most grassroots racetracks.

On Saturday, members of the Ontario Harness Horse Association (OHHA) who race at Kawartha Downs met at the Golden Wheel restaurant to learn more about the agreement, hear how their host racetrack was responding to the proposal and establish their own position on it.

OHHA General Manager Brian Tropea explained his view of the deal, seeing an agenda of centralizing horse racing in Ontario into the hands of Woodbine Entertainment Group, which has significant influence on the newly appointed board. The lack of transparency in financial matters in the industry over the past five years has left him frustrated and suspicious.  He does not want to see control handed over to a new central governing body over which small tracks like Kawartha Downs has no influence and that limits revenue for the next 19 years.

Valente was also invited to discuss the position of Kawartha Downs, and he does not mince words.  He acknowledged that he is not an industry expert.  He is, however, an expert at fixing failing businesses, and he knows one when he sees one.

Valente concurred that there is a profound lack of transparency in financial information in the industry.  Despite numerous requests, the allocation of the transitional pool of funds was only released on April 30th, prompting new outcries from those left out of the distribution.  Valente sees the proposal as a zero-sum game.  Because total funding is static, the only way for racetracks to increase their revenue is if some of them close down, reducing the number of tracks that share the pot.

At the end of the meeting, OHHA members agreed with a motion to support Kawartha Downs in its rejection of the proposal as presented.  Negotiations cannot proceed beyond May 7th due to the upcoming election, and most in the audience, including Cavan Monaghan Mayor McFadden, preferred to take their chances with a new government in June.  They have been encouraged by immediate responses to their queries from current opposition representatives, including Conservative leader Doug Ford who answered calls personally and provided his cell phone number.

If no new agreement is reached, Kawartha Downs will continue to operate under its current agreement for another season.  So far at least one other racetrack has confirmed they will not sign, with rumours swirling about several others.  Valente has not dismissed the chance that the province will find a way to sweeten the deal to beat the May 7th deadline, suggesting it will be an interesting week for the horse racing industry. KG

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