THE PROBLEMS AT Hollywood Park : Despite a Three-Horse Parlay, Track Has Trouble Finishing in the Money

A 22-1 longshot won the second race at Hollywood Park, and a member of the track’s board of directors smiled, even though he didn’t own the horse and hadn’t bet on him.

Longshots winning the Pick Six races--the second through the seventh--make it difficult for bettors to pick all six winners. When no one hits the Pick Six, half of the betting pool carries over to the next day, and the carry-over seems to be the best way Hollywood Park can draw large crowds this season.

But despite a few sizable carry-overs, it has not been a season for large crowds. Daily attendance, which hit a peak in 1980 when Hollywood Park’s average of 31,000 was the highest in the country, has slipped to below 23,000, the lowest since the track’s first years of operation before World War II.

The fans who do come are betting heavily--more than $220 a person per day--but their action has still not been enough to offset a drop of about 7% from last year’s track-record levels at the windows.

Hollywood Park’s dismal season comes on the heels of a similarly slow meeting at Santa Anita, where attendance was down about 11% and betting was off close to 4%.

Both tracks point to competition from the new state lottery as a reason for the declines. Santa Anita officials are hoping that this year was only a temporary setback. In the three previous years, Santa Anita enjoyed good seasons, with an average daily attendance of 32,900 and an average daily handle of $5.9 million breaking track records in 1985.

Hollywood Park’s pattern over the last five years has not been so bright. Attendance since 1982 has dropped 16%--a loss of more than 4,000 fans a day--and betting has risen less than 1%. This at a time when the track has spent about $100 million on:

--The acquisition of Los Alamitos Race Course.

--Capital improvements at Hollywood Park.

--The rights to run harness-racing meetings that were previously held by other state licensees.

Besides its thoroughbred and harness interests, Hollywood Park is now also in the quarter-horse business, conducting meetings at Los Alamitos and, starting July 25, a 10-week season at the Inglewood track.

Harness racing has been a tough sell in Southern California for years, and the first of two meetings at Los Alamitos this year did not do well, averaging about 4,300 fans and $750,000 in betting a night. The current quarter-horse meeting at Los Alamitos reportedly is off about 20% in both attendance and handle.

Running thoroughbreds in the afternoon in Inglewood and quarter horses in the evening at Los Alamitos, Hollywood Park also had competition for nine weeks from Fairplex Park, a new harness facility at the Los Angeles County Fairgrounds in Pomona.

“How many racing days do we have in California now?” asked Howard Weiss, president of the American Quarter Horse Assn., in a recent interview. “It’s crazy. Now we’re running head to head. This is like a guy going out and seeing how dull the razor is by slashing his wrist to see if he’s going to bleed on the first cut or the second.”

The slashes at Hollywood Park are evident in the track’s annual report to shareholders for 1985. Pretax losses were listed at $4.5 million, compared to a loss of $1.1 million for 1984 and a profit of $1.2 million in 1983.

A dividend of $1.60, the same as the two previous years, was still paid in 1985, but earnings were off 65 cents a share. The annual report lists Hollywood Park Realty’s real estate loans as $93.7 million.

According to the Wall Street Journal, Hollywood Park’s net loss for the first quarter this year was $4.1 million, compared to $1.4 million last year. The first quarter, of course, doesn’t reflect the thoroughbred meeting and includes most of the lackluster harness meeting at Los Alamitos.

“It’s sad,” said Jim Stewart, who left as Hollywood Park’s general manager in 1972. “On Memorial Day this year, the track had a crowd of 38,000. I remember Memorial Days when we’d regularly draw 65,000. It’s a tragedy. When I was there, we’d be running 10% ahead of Santa Anita, but I’d be told that that wasn’t good enough. Look at the difference between the two tracks now.”

In a message this year to the shareholders, Marje Everett, chairman of the board of Hollywood Park, and Hal W. Brown Jr., chairman of the track’s Realty Enterprises Inc., said:

” . . . A substantial part of the difference in the (lower) earnings per share is accounted for by the interest paid on our investment to purchase the operating assets of Los Alamitos Race Course, as well as an increase in operating expenses for 1985 over those in 1984 and the fact that the new Pavilion of the Stars did not reach its anticipated attendance levels.”

The pavilion, the major part of a $30-million improvement program, was completed in time for Hollywood Park to hold the first Breeders’ Cup day in 1984, when seven nationally televised races were run for $10 million in purses.

A crowd of 64,000 attended, but on average racing days the facility has not been as popular, and Hollywood Park has been dissatisfied with the construction of the building, refusing to pay some of the companies that were responsible for it.

Turner Construction Co., the general contractor for the Hollywood Park expansion, is suing the track for a payment of $2 million. A spokesman for Howard Needles Tammen & Bergendoff, the architect for the project, said that his company has gone to court to obtain payment “of between $250,000 and $500,000” from the track.

Kettering & Krussman, Inc., a subcontractor for some of the work on the pavilion, was paid in full, a balance of about $400,000, from total charges of $2.2 million, by Hollywood Park several months ago.

“We whole-heartedly threatened to file involuntary-bankruptcy proceedings against the track if they didn’t pay,” said James McGee, an attorney for Kettering & Krussman. “Hollywood Park thought we were serious, and I think that had something to do with them anteing up.”

At the time several liens were filed by unpaid contractors about a year ago, Vernon O. Underwood, then board chairman at Hollywood Park, said that the company didn’t have money problems. John Forsythe, the actor who joined the board last year, says the same thing now.

At a meeting of the California Horse Racing Board earlier this year, however, Everett indicated that slumping business combined with large investments have combined to make things tight. Answering a complaint to the racing board by horsemen about barn repairs at the track, Everett said:

“We have to get our debts in order with the bank. We’ve been selling excess land in order to find funds to do things.”

In 1985, Hollywood Park sold 48 acres of land on the 300-acre Los Alamitos site for $27.3 million. The 48 acres surround the Orange County track itself and are scheduled to be developed for a hotel, a restaurant and commercial office buildings.

Marjorie L. Everett, 65, has been in racing for more than 40 years, having started with Arlington Park and Washington Park near Chicago, tracks that her late father, Ben Lindheimer, operated.

Everett is the largest shareholder in Hollywood Park, owning slightly less than 10% of the stock. Also the track’s chief executive officer, she has survived at least one stockholder upheaval in the past and, despite the tough times, doesn’t appear to be facing one now.

One of Everett’s biggest supporters among the investors has been Louis Wolfson, who with his wife, Patrice, bred and raced Affirmed, the Triple Crown champion in 1978. Wolfson is the next largest shareholder at Hollywood with slightly less than 5% of the stock.

“The $93-million debt doesn’t bother me, because it could be handled easily enough by selling off land and property,” Wolfson said from his Long Island, N.Y., home. “Business being off at the track does bother me, because it’s part of the national trend that will mean real problems for the industry if it continues.

“Hollywood Park’s done better lately, after a poor start. I think Santa Anita had better racing cards. That’s why their business wasn’t off as much as Hollywood’s is.”

Wolfson is most concerned about the steadily deteriorating relationship between Everett and Santa Anita officials, a cold war that he says will harm both tracks in the end.

Once a behind-the-scenes squabble, the Hollywood Park-Santa Anita feud has grown to where the tracks agree about hardly anything, and they don’t mind going public with their differences and criticisms. In a March issue of The Blood-Horse, a trade publication, Santa Anita Vice President Alan Balch said that Hollywood Park had made “some questionable management decisions,” citing the building of the pavilion and the lengthening of the race track from a mile to 1 1/8 miles.

“Hollywood Park and Santa Anita need each other,” Wolfson said. “Right now, the state takeout (of each betting dollar) is more than 7%, which is one of the highest takeouts in the nation. That needs to be lowered, but the tracks have to stick together if it’s going to happen. There’s no reason to let personalities get in the way when publicly owned companies are at stake. If it would help, I’d like to try to get them working together again.”

If Wolfson succeeds, it will be where others have failed. Frank (Jimmy) Kilroe, who used to head the racing department at Hollywood Park, is now a vice president at Santa Anita.

“I tried for five years to bring the two tracks together,” Kilroe said. “Then I gave up.”

Forsythe, a horse owner and breeder, besides being a small shareholder in Hollywood Park, admits that the track has problems, but prefers to emphasize positive developments.

“The hiring of Tommy Trotter (as director of racing) and Don Robbins (as general manager) are big boosts to this organization,” Forsythe said. “I love Marje Everett, and Lord knows, her whole life has been devoted to horse racing. But it takes more than one person to run an organization, and I’m extremely pleased that we have the talents of Trotter and Robbins on our team.”

The role of Robbins, who at 38 left a prosperous law practice to join Hollywood earlier this month, will be closely watched. Previous general managers were along for the ride, usually rubber-stamping Everett’s wishes.

Robbins’ father, Jack, is a prominent veterinarian whose patients include John Henry, two-time Horse of the Year. Robbins also has two brothers in racing, Jay, a trainer, and Tom, the racing secretary at Santa Anita. Don Robbins is a partner in the firm that includes Neil Papiano, Hollywood Park’s general counsel and frequently a track spokesman.

“It was a natural evolution that Don would take this job,” Papiano said. “He loves racing and most of his family has been in racing for a long time.”

One of Robbins’ first jobs will be answering a letter that he received this week from the local division of the Horsemen’s Benevolent and Protective Assn., the owner-trainer group that says it is not getting its fair share at the current meeting.

The horsemen contend that whereas betting is off about 7%, purses are down almost 18%. This, the horsemen say, had led to a deficit of about $1.25 million in purses.

Robbins could not be reached for comment on the letter and Papiano said he knew nothing about it.

Forsythe, who is also a member of the HBPA, said that the horsemen were assured that none of the extra purse money for the $400,000 Silver Screen Handicap July 5 will be used from their funds. The Silver Screen, originally scheduled as a $100,000 race, was increased in value to get Snow Chief, winner of the Preakness Stakes and the Jersey Derby, to run.

Snow Chief may be something besides a Pick Six carry-over that will draw a big crowd, although Trotter will have to hustle the backstretch to find some horses to run against him.

Hollywood’s season will end July 21, and another big crowd is anticipated the day before, when the $500,000 Hollywood Gold Cup will be run, accompanied by a $1-million giveaway--it will pay $50,000 a year for 20 years--connected to the outcome of the race.

This promotion is structured different from a million-dollar handicapping contest that was offered last year. Rodolfo Sahagun, an unemployed tomato farmer from Carlsbad, picked all the winners on a nine-race card and apparently won the million, but it was discovered later that he might have violated contest rules by submitting multiple entries. Hollywood Park, one of its insurance companies and Sahagun’s attorney have been unable to reach a settlement.

This week, George Martinez, the attorney for Sahagun, said that his client would settle for less than $1 million. “But it would have to be a sum well beyond just $50,000 a year,” he said.

In the greater scheme of things, Rodolfo Sahagun is one of Hollywood Park’s lesser problems.