Gulfstream Park’s Future: “It’s Become A National Issue”

[Wandering Eyes]

A week and a half before Saturday's Pegasus World Cup, Gulfstream Park's glitziest event of the year, former The Stronach Group (TSG) executive Keith Brackpool stood before an assembled group of industry stakeholders and warned them the event might not go ahead in 2029, even if a bill to decouple Thoroughbred horse racing from casino licenses passes the state legislature.

“We have said, this passes, this bill passes, that we will commit to racing here at Gulfstream at least through 2028,” Brackpool told the crowd, according to a recording of the meeting obtained by the TDN. The legislation was needed to help attract investors for redevelopment opportunities at the property, he said, like a new casino and hotel.

If the bill doesn't pass, however, “then there's no guarantee of when we will continue to race,” Brackpool said.

It was an ultimatum that has reverberated around the sport, raising once again serious questions about the company's long-term strategy for its real-estate holdings.

“I was caught off guard about it, but at the same time not shocked,” said trainer Todd Pletcher, who has long maintained a string in Florida. “What everyone's looking for is some clarity and some assurances about having a reliable future for South Florida racing.”

Perhaps more pointedly, this inflection point in Gulfstream Park's future highlights broader practical and philosophical questions about the future of racing in Florida and California.

As industry coffers in these states flatline or shrink and real estate holdings only become more valuable, what is the commercial tipping point at facilities like Gulfstream Park? Do racetrack owners have any ethical obligations towards the sport as they seek to offload their real estate portfolios? And what role should private racetrack ownership play if the sport is to thrive well into the future?

“My process was, racetracks should really be owned by the stakeholders,” said Frank Stronach, who purchased Gulfstream Park in 1999, in an interview with the TDN earlier in the week.

No Decoupling? What Then?

The law as it stands right now requires Gulfstream Park to run live racing to operate its casino, a guaranteed slice of which goes for purses. TSG is required to run at least 40 days of racing. They currently run around 200 days. HB 105, filed on Jan. 6, would decouple the requirement for racing from the casino license. As written, the bill goes into effect July 1 if successful in the next session.

If the bill passes, TSG has promised to continue paying for an undetermined amount of time the current annual slice of casino revenues (around $6.2 million) into purses. The additional monies that TSG offered (for workers' comp and aftercare support) would increase the amount to $7.5 million annually. The workers' comp situation is an especially prickly one for Florida's trainers.

According to two sources who discussed the situation on background, the insurance carrier for dozens of trainers at Gulfstream Park last year refused to continue coverage if that included exercise riders. Last September, Gulfstream Park picked up coverage of the track's exercise riders under a general liability policy, according to these two sources.

Over a week ago, the TDN asked for an interview with either Belinda Stronach or Brackpool about the company's short and long-term business plans. In lieu of such an interview, TDN sent TSG a set of detailed questions. The company declined the interviews and did not respond to any of the questions.

Aidan Butler | Benoit

Instead, a spokesperson directed the TDN towards an interview that 1/ST Racing's CEO Aidan Butler conducted with Nick Luck. In it, Butler argued the fallout from last week's meeting has been twisted by the media, and that the company “has never said we want to stop racing.”

The ultimatum that Brackpool issued last week, however, mirrors what he outlined in a letter dated Jan. 2 to the Florida Thoroughbred Breeders' and Owners' Association (FTBOA), obtained by the TDN.

“If this Bill passes and is signed into law, we commit to continuing racing at Gulfstream Park through at least 2028,” Brackpool writes in the letter. “However, if the Bill does not pass, we cannot make any assurances about the future of racing at Gulfstream Park.”

According to Butler, the 2028 date was asserted to reassure the state's breeders of the company's intentions. The issuance of that date, however, will have only disincentivized breeding in the state, said Lonny Powell, CEO and vice president of the FTBOA, which has long opposed decoupling.

What was also missing from both Brackpool and Butler's public statements are the kind of detailed specifics about the company's short and long-term objectives that many industry stakeholders are desperate for as they attempt to plot futures for their stables, broodmare bands, stallions, families and staff.

Perhaps the most important unanswered question is this one: If the decoupling legislation doesn't pass, what then?

Though Butler promised on the podcast the track wouldn't close “immediately,” Brackpool repeatedly emphasized at the horsemen's meeting the company's unilateral ability to discontinue racing.

“If this bill does not work, then we're not giving any obligation as to when we have to continue to run,” said Brackpool in the meeting. “Where we are at this stage is there is no obligation that we have to continue to race.”

At the same time, when asked about the company's financial footing in the state, Brackpool said in the meeting that “Florida is pretty break-even in this stage.”

Which begs the question: If the company is sincere about continuing racing at Gulfstream Park, what does it see as a viable business model?

Casino Revenues

According to the Paulick Report, Gulfstream Park casino's net revenues in the last fiscal year were $59.7 million from 523 slot machines. This is less than half the slot revenues generated by rival casinos (though with far fewer machines).

In the meeting, Brackpool admitted that the current casino “makes no sense” operationally. “It's on two floors. Casinos are never on two floors,” he said. Furthermore, “you can't find it,” he added. Some 20 years ago, TSG tore down the old Gulfstream Park and rebuilt it anew, including the current casino.

At the same time, Brackpool downplayed the potential purse revenues generated by any new casino, especially if iGaming becomes a reality in the state.

“The deal that exists between this organization and horsemen has a 2% of gross daily revenue, over $65 million,” said Brackpool, about the casino's slot revenues. Even if there was a “giant casino constructed here” making $100 million, he added, “that would add $2 million maximum to the purses. And we've already offered almost that amount.”

In background conversations with current and former TSG executives, they point out how the vertically integrated company's gambling assets-like ADW company Xpressbet and tote company AmTote-are profitable ventures.

Currently, ADW revenues are publicly unknown in Florida, with question marks hanging over how much flows back into the industry, said Powell. In addition, Powell said, “the breeders get no slice of the ADW revenues.”

Then there's Computer Assisted Wagering (CAW) platform Elite Turf Club, another of the jewels in the company's gambling crown.

Last year, the TDN obtained data showing wagering behavior among several of Elite Turf Club's biggest players. In 2023, just eight CAW teams wagered over $2 billion on U.S. racing through Elite Turf Club alone, according to the data.

CAW platforms typically retain between 0.5% and 1.25% as a commission from the amount their players wager. According to the data, therefore, Elite Turf Club's possible slice from just those eight CAW teams that wagered on U.S. racing alone that year could be as much as $25 million.

While gambling appears to be a big revenue driver for the company, current and former TSG executives in their background conversations point out that deferred maintenance at the company's remaining tracks would require huge investments to get them up to par.

What is the financial tipping point, therefore, when an investment become a black hole?

Frank Stronach

Frank Stronach accepts Special Award of Merit at 2018 Eclipse Awards at Gulfstream Park | Horsephotos

After Belinda Stronach succeeded her father at the helm of TSG's racing operations, Frank and his wife, Elfriede, sued their daughter alleging mismanagement of assets and trust funds. They also sued their grandchildren, Nicole and Frank Walker, and TSG executive Alon Ossip. The suit was settled in 2020.

Frank, who in recent years has had several sexual assault allegations made against him, told the TDN he originally purchased the racetracks not as a long-game real-estate move but rather to eventually transition control of the facilities to the industry.

When asked if his daughter was now looking to cash in on the company's valuable real estate holdings, Frank said he needed to speak with her for clarity on the situation. “I hope not,” he said. “I hope it's bad advice. I hope we can do the right thing.”

Frank emphasized how much he invested in the sport over the years, propelled by his love of the game. Does his daughter also love horse racing? Frank hesitated. “I'm not sure,” he said.

“It's getting better,” Frank said, about his relationship with his daughter. “She was influenced by some people that were not that great,” he added.

When asked if Brackpool was one of those people, Frank claimed he doesn't know him “well enough” to answer.

The two have a long legal and professional history together, however. And as the Florida industry tries to forge a new path forward, several stakeholders have asked exactly who they're dealing with.

Brackpool's Return

Brackpool may be small in stature, but he wields an outsized political footprint in California.

The British immigrant, who was chair of the California Horse Racing Board (CHRB) between 2010 and 2013, can boast former Los Angeles mayor Antonio Villaraigosa and former speaker of the California state assembly Fabian Nunez as either friends or business associates. Brackpool also boasts a checkered legal and professional history.

In 1983, Brackpool pleaded guilty to criminal charges in London, including dealing in securities without a license. His involvement with the Cadiz water scheme has also garnered negative scrutiny and criticism over the years.

The scheme is to take water from beneath land in the Mojave Desert owned by Cadiz Inc.-a company co-founded by Brackpool-and pump it to Southern California. The project has been decades in the pipeline, reportedly kept alive over the years in part with the help of sizeable political donations. Respected LA Times business journalist Michael Hiltzik, one of the scheme's harshest critics, has described it as “California's most farcical water project.”

After leaving the CHRB, Brackpool joined TSG in a leadership role, but left the company in 2018, suing its founder, Frank, for $40 million claiming breach of agreement to provide him with an equity stake and profit sharing. In 2020, Brackpool and TSG announced they had resolved the lawsuit amicably, the terms of which weren't publicly disclosed.

Neither Brackpool nor TSG directly responded to questions about why he was chosen to lead the negotiations surrounding the future of Gulfstream Park. Nor did they respond to questions about any potential compensation package he might receive in the event of a redevelopment deal from the sale of any of the company's real estate holdings.

As the industry seeks solutions, however, what are some of the other key obstacles it faces?

The Issues

To justify the company's redevelopment plans for the property, Brackpool has highlighted tough finances without supplemental purse revenue relief. The Seminole Tribe has annexed sports wagering. Any future of iGambling is also unlikely to benefit horse racing in any tangible way.

Breeding-wise, Florida's share of the national foal crop has dropped to less than 6%, down from over 12% in 2002. At the same time, Florida plays a tremendously important role in the industry with major farms, training centers and sales companies based in the state. It still stands third in the nation for most mares bred in a year.

If a new model is to be found in Florida to help shore up the breeding industry, what about alternate racing venues?

Beyond Tampa Bay Downs, Hialeah Park has been mooted as a possible option. TSG-owned training center Palm Meadows is another. Both would require massive capital investments to get them primetime ready.

In discussing these possibilities with stakeholders, a common refrain was this: How many times can the industry get burned by the same corporate entities? Golden Gate fields frequently came up.

After the initial announcement of the track's closure by the LA Times, it took nearly two weeks for Butler and former TSG executive Craig Fravel to outline the company's business strategy for concerned industry stakeholders. This included a near $32 million investment package into its Southern California properties.

So far, the majority of these promises haven't been met. One (a swimming pool) apparently never will be built, and others (like long-needed barn improvements) have been delayed indefinitely.

“Corporate-owned racetracks specifically negotiate and bully local horsemen's groups. They bully them for stall space. They bully them for workman's comp. They bully them for race dates. And the local horsemen's groups are always extremely weak,” said Craig Bernick, president and COO of Florida's Glen Hill Farm.

If Florida horse racing is to survive well into the future, therefore, bold decision-making needs to be taken now by the industry to assume control of its own product, Bernick said.

“The sport is going to need to make significant major investments in facilities and in racetracks that the industry can figure out how to control,” said Bernick.

At the meeting, Brackpool suggested a working group be formed to discuss the path forward (though others interviewed suggested this should have been done years ago).

Belmont Stakes-winning trainer Jena Antonucci, who has maintained a string in Florida for at least 10 years, said it's incumbent for major industry players to come to the table in a way that all stakeholders know the facts, their options and individual groups' motivations. “I think the horses deserve a transparency so that the industry can work towards smart solutions,” she said.

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