It is 1972. The details of Watergate are slowly sweeping across the nation, M*A*S*H has just premiered on CBS, the Godfather is a cultural sensation, and if you throw a stone in any direction, you’re likely to hit an object bought directly from a Sears catalogue. In fact, at the time, Sears Roebuck and Co. was enjoying a unique dominance in their field. That year, they contributed a staggering 1% of the American GDP, their sales topped that of the tobacco industry, and the catalogue was not just a convenient method of advertising and purchase, but an integral part of the American vocabulary. But the signs of atrophy were beginning to show, and their unique history, which reflects so deeply the trajectory of the racing business, as if it were our contorted face in the mirror, urges racing to change course before it is too late.
The two enterprises have similar beginnings. Sears started out around 1886, and was officially incorporated as Sears Roebuck and Co. in 1893, while the Jockey Club was formed only a year later in 1894. They each survived, and somehow even thrived, during the Great Depression. And in the mid-60s, one in every five Americans was a regular customer at Sears, while racing enjoyed a similar zenith as one of the three most popular sports in the nation. But, in the case of Sears, as Donald Katz recorded in his brilliant 1987 profile of the company The Big Store: Inside the Crisis and Revolution at Sears, their success would soon defeat them.
The book is a lens into a deeply dysfunctional company that had devolved into regional factions and took competition for granted. In fact, when asked who their biggest competition was, many executives simply said “nobody.” They couldn’t imagine a world in which Sears would play second fiddle to anyone, let alone declare bankruptcy, watching their names expunged from the malls they once dominated. Their descent was slow and then swift. They slogged in futility as their company was shoved into irrelevance by new players like Walmart, Nordstrom, and eventually Amazon. Their lesson is a simple one, learned by eons of struggling species and uttered by the lips of everyone from Charles Darwin to Brad Pitt’s portrayal of legendary A’s Manager Billy Beane: “adapt or die.”
Thoroughbred racing has not merely been slow to adapt, but in many cases, has been utterly entrenched in even the weakest aspects of its traditions. How are we going to change course, to guide our sport back to the eminence it once had, if our attitude can be summed up, as a senior race track executive who will go unnamed once said, as “if you don’t like it, don’t come”? With this air of negativity, arrogance, and disdain from those who should be welcoming new customers and new methods, and while researching the attitudes that have precipitated the decline in our sport, it’s always refreshing to speak to someone whose clear-eyed and vibrant passion leads to a discussion of the promising changes the sport needs to make. I am, of course, talking about Roy Arnold. Roy was the CEO of Arlington Park from 2006-2011, and as many of you know, was a top bidder to buy the track when Churchill Downs put it up for sale. That sale unfortunately went against him, with Churchill Downs favoring the Chicago Bears, but he remains a stalwart champion of the sport and its necessity for reform.
One of the main issues that came up during our talk was the need for new thinking when it comes to land use. This is one of the many issues that, throughout a series of future op-eds, we will continue to examine and offer solutions to remedy these problems. During our conversation, I found myself continually drawn to the state of Santa Anita, one of the jewels of the California racing industry. My hope is that its current status, as well as the solutions provided, can point to the broader changes that need to be made throughout the racing world.
What took me down this path is when Roy stated, “An enterprise that is solely dependent on track operations for cash flow is starting from a disadvantaged position.” He continued to say that “racetracks need to be part of diversified entertainment developments; tracks need to be viewed by the industry as ‘brand experience centers.’” He couldn’t be more right.
Right now, Santa Anita is relying on limited sources of income. How far in the red would they really be if Stronach didn’t own 1stbet.com and Amtote? Back in 2017, even Tim Ritvo, Stronach’s former COO, agreed with this premise, saying, “I can tell you that the facility is underperforming based on the property value.” After all, we’re talking about 300 acres that experts have estimated has a value between $700 million and $900 million.
The problem is, that we are wasting so much space on services that do not need to be on the property, specifically the barn area, which spans the prime real estate of Baldwin Avenue in Arcadia. In our modern climate, with the fate of racing hanging by a slender thread, there is no excuse for us to be wasting this premier land. Especially since, in most jurisdictions, we are not racing six or even five days like we used to, and yet horses need care 24 hours a day, 365 days a year. From the barn area, the employee parking lot, and the land that follows to the top of the turf course, the estimated size for the area is probably close to a hundred acres alone. That land is ripe for the development of apartments, condos, restaurants, and shops, all things that can generate a secondary income to subsidize the track, and to make racing more economically viable.
Of course, there will always be the detractors. Naturally, they will point to the failed Caruso deal in 2011, when he was forced to pull out of developing an 825,000 square foot retail mall at Santa Anita. Many people claim that it was because of its historical landmark status that the deal ultimately fell through, but their claims are misguided. Not only did Magna file for bankruptcy during that time, which would have restructured the deal with new terms, but Caruso’s former VP of real estate states, “A struggling economy probably was a significant reason why Caruso cut the project.” This was, after all, in the shadow of the Great Recession. Former City Manager Don Penman confirms that the historical landmark status had nothing to do with the failure of the deal, and in fact, states that “there is immense pressure from the state of California to build more housing.” Jason Kruckeberg, the current assistant City Manager, agrees. “Our hope has always been that some of that 300 acres can be used as mixed-use that could help the track.” It doesn’t sound like the historical landmark designation is very much in the way. It seems our own obstinacy has become our major hurdle.
Naturally, the question of a new barn area then comes into play, but there are many solutions that do not take much creativity to adopt. We could house the horses at San Luis Rey, which Stronach already owns, and could be expanded for more stables, but the logistics of a commute between San Diego and Arcadia seems to blunt that proposal. Pomona County Fairgrounds, however, seems to be a more than viable solution. Many of the barns there are still intact, and more can assuredly be built. The old parking lot could easily be renovated for a 7/8th mile track, while the facility would generate revenue for a county that desperately needs it.
This also provides for a new aspect of the racetrack experience. At the track itself, we could build a much smaller receiving barn for the week’s runners. After all, they are the lifeblood of the sport. As Roy put it, this would be “a showcase for the true stars of the show, the thoroughbred horses. What does the public expect to see at the racetrack? Meet their expectations, give them a slice of a high-end Kentucky farm.” These barns, he adds, “can be built to a much higher standard, which supports racing integrity goals.” Each barn would effectively become “a controlled access area, which let’s be frank, it’s not at present.”
This is exactly what Eddie Gregson proposed to do in Sonora, Mexico in the late 80s. At the time, the racing world laughed at him, just as any forward thinker in the ranks of Sears would have been laughed at. But that ridicule now rings as nothing but vacant egotism. Gregson was ahead of his time. Now, it is time that we caught up to our pioneers.
With this new space available at Santa Anita, we would be able to develop a major hub of stores and housing that would bring a wealth of new income to the track. In turn, this would facilitate a dynamic ecosystem through which the track could attract new customers and build an entertainment apparatus to further stimulate that growth. And this goes not just for Santa Anita, but every racetrack in the country. We need to think about divorcing the barn area from the racetrack itself so that we can better monetize the valuable land. In doing so, we can build the culture around the racetrack so that it becomes the star at the center of a vibrant system, not a marooned relic of the past.
We do not have the luxury of time, and our competition is on all sides. Tapping the premier resources at our disposal, while preserving the essential components of the track like the grandstand, seems not only to be a viable solution but a vital catalyst to the sport’s longevity. It is long past time to let go of the pridefulness that has blinded us from the urgency of our current state. We need to act now, or else we will become the Sears of the sporting world.
Sincerely,
Kyle Ferraro
