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Racetracks Go to the Whip

The industry has a lot riding on a rebound for horse racing. Track operators' efforts and buzz from the movie 'Seabiscuit' are promising, but odds are long.

August 10, 2003|James F. Peltz | Times Staff Writer

Lisa Sanders was drawn back into the horse-racing world of Seabiscuit when she read Laura Hillenbrand's bestseller in her Modesto book group. She loved it so much she rushed out to see the movie.

Then she picked up the phone, called her daughter in San Diego and insisted they go to a track to see the real thing. "I've got to see the horses racing," she recalls saying.

Which is how Sanders came to be at Del Mar Friday afternoon.

The book and the movie "are the main reason I'm here," said Sanders, 62, looking festive in a floppy pink hat and sunglasses.

Sanders had been to the races years before. The Seabiscuit craze brought her back. The horse racing industry is hoping that there are a lot more people like Sanders out there -- and that they won't fade away when the Seabiscuit fad does.

For The Record
Los Angeles Times Friday August 15, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 42 words Type of Material: Correction
Seabiscuit -- A caption that ran with an article about the horse-racing industry in Sunday's Business section incorrectly gave the impression that the racehorse Seabiscuit ran in the 1940 Santa Anita Derby. In fact, Seabiscuit ran in the 1940 Santa Anita Handicap.
For The Record
Los Angeles Times Sunday August 17, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 44 words Type of Material: Correction
Seabiscuit -- A caption that ran with an article about the horse-racing industry in the Business section Aug. 10 incorrectly gave the impression that the racehorse Seabiscuit ran in the 1940 Santa Anita Derby. In fact, Seabiscuit ran in the 1940 Santa Anita Handicap.

When the legendary horse ruled the paddock in the 1930s, horse racing was a national passion. The end of Prohibition, a bevy of new tracks such as Santa Anita in Arcadia and a country aching for escape from the Depression made it truly the king of sports, "far and away America's most heavily attended," Hillenbrand wrote in her book.

Seven decades later, track owners are betting that another confluence of events -- notably the movie "Seabiscuit" and this spring's widely followed bid by Funny Cide to win the Triple Crown -- will again give racing a badly needed lift.

The odds remain long. Live attendance and wagering are sliding at many racetracks nationwide. Operators are struggling to boost revenues and earnings.

There's no mystery about what the industry needs: "to bring new people to our racetracks," Jim McAlpine, chief executive of Santa Anita's owner, Magna Entertainment Corp., told analysts this month.

Even if "Seabiscuit" does that, industry insiders and analysts don't believe it will be enough.

"It's not going to turn around overnight because 'Seabiscuit' provides a little boost to attendance," said Ryan Worst, an analyst at investment firm C.L. King & Associates in New York. Horse racing "needs more ideas and more marketing to consistently stay in front of people -- so when people think of how they're going to entertain themselves on a Saturday afternoon, horse racing comes to mind."

A Lot of Betting Choices

Indeed, consumers today have myriad betting and entertainment choices compared with the 1930s, when horses provided one of the few avenues for wagering. Racetracks these days compete with state lotteries, Las Vegas, Atlantic City and Native American casinos, not to mention all of the other sporting and leisure venues now available.

Simulcasting -- whereby horse bettors can wager on televised races held around the country -- and other off-track betting vehicles such as the Internet have helped offset the slump in live track attendance. But total wagering is still growing only in the low single digits.

U.S. race betting rose 3.5% last year to $15.1 billion, and it edged up 2.5% in this year's second quarter, according to market research firm Equibase Co. Of the bets laid in 2002, $13 billion -- or 87% -- were made off-track. As for live, at-the-track wagering, it fell last year to $2 billion, down from $2.1 billion in 2001 and $2.9 billion in 1996.

The 320-acre Santa Anita complex -- where a life-size bronze of Seabiscuit, who raced there 11 times, stands in the walking ring -- is a showcase for the industry's problems.

Average daily attendance totaled 8,842 at this year's spring meet, the lowest since the track opened in 1934. (Santa Anita has racing in the fall at the Oak Tree meet.) The track's "handle," or total amount bet, slipped to $1.41 billion last year from $1.43 billion in 2001.

And in the first half of this year, Santa Anita's on-track wagering "was down about 10%," McAlpine told the analysts. Off-track betting filled much of the gap, but the track's total handle still dropped about 2.5% from a year earlier, he said.

The track's owner, Magna Entertainment, is 59% controlled by Magna International Inc., a major Canadian auto-parts supplier headed by Frank Stronach, an avid racing enthusiast and thoroughbred owner. Magna Entertainment, which also owns several other tracks such as Bay Meadows near San Francisco, lost $14.4 million last year on revenue of $549.2 million.

The company this month posted sharply lower second-quarter profit and its stock has been sliding for several months; after reaching $7 a share last November, it closed Friday at $4.04 a share, up 24 cents, on Nasdaq.

But Stronach reportedly is looking at adding to Magna Entertainment's stable with a possible bid for Belmont Park, home of the final leg of the Triple Crown, and two other New York tracks, Saratoga and Aqueduct. Stronach is eyeing an offer for the license held by the New York Racing Assn., which runs the tracks, Associated Press reported last week. That license might become available in 2005, if not sooner.

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