The Woodlands, the Kansas City, Kan., racetrack that Hollywood Park has agreed to buy for $70 million, including debt, isn't worth anywhere near that much, according to evidence surfacing this week in a Kansas tax dispute.
The Woodlands is 60% owned by Hollywood Park Chairman R.D. Hubbard.
The dispute, concerning a 1990-91 tax valuation in Wyandotte County, Kan., is being heard in Topeka by the state Board of Tax Appeals. The county is trying to defend its valuation of $59.5 million for the track because it fears a loss of tax revenue. One local school district depends on the Woodlands for 40% of its budget.
But the Woodlands argues that the track's market value was only $22 million last year and that the advent of riverboat gambling in neighboring Missouri will push that number even lower. Hilton Hotels Corp., Promus Cos.--parent of Harrah's--and other gambling operators are preparing to open floating casinos on the Missouri River as early as next spring.
"They say it's worth only $22 million," Wyandotte County Commissioner Richard Kaminski said in a telephone interview this week. "To me, that's a fraud against the (Hollywood Park) stockholders."
R. Scott Beeler, the Woodlands' attorney, contends, however, that the track's valuation for tax purposes is naturally less than its sale price because the tax assessment doesn't include intangibles such as racing licenses.
"They (Woodlands officials) may say the sale price is irrelevant, but if it supported a lower valuation instead of a higher one, you can bet they'd mention it," said Linda Terrill, the county's attorney.
A national authority on business valuations hired by the county appraised the Woodlands at $47.4 million--too low to please the commissioners, but more than twice the track's estimate. The appraiser, Cliff Fisher of Daytona Beach, Fla., said that number included only the tax value. According to his analysis, the full value of the business, including licenses and personal property, is $51 million.
Because Hubbard's ownership position in the Woodlands raises conflict-of-interest questions, a committee of Hollywood Park directors has hired the investment banking firm of Oppenheimer & Co. to advise the board on whether the transaction is fair to stockholders.
