Turf Club May Be Too Upscale for Area : Birmingham Race Track Struggles to Rein In Losses

It was going to be a gold mine for investors, a boon to the state and local economy, and the jewel in the crown of Birmingham’s efforts to restore its old “Magic City” title.

Those were the expectations when this one-time steel center opened the dazzling, $84-million Birmingham Turf Club--the first thoroughbred horse racing track in the heart of Dixie and, Birmingham residents loved to boast, something that Atlanta, their longtime rival to the east, did not have.

But in the four short months since then, dreams of wealth and glory have turned into a nightmare of red ink and civic embarrassment.

Huge crowds and high-stakes bets have yet to materialize. The 330-acre facility, with its seven-level, glass-and-steel grandstand and clubhouse for 20,000 spectators, is losing as much as $100,000 a day.

Neighboring Georgians, Tennesseans and Mississippians are not the only ones staying away. So are many local residents, especially blacks and blue-collar whites.

To avert bankruptcy, purses have been slashed, track employees laid off and salaries of top officials cut or suspended. New racing schedules, more exotic forms of wagering and “giveaway nights” also have been introduced to bolster attendance.

The Alabama Legislature has even reluctantly approved a bill permitting out-of-state investors to pump fresh money into the venture. Current law requires investors to be residents of the state for at least five years as a safeguard against infiltration by organized crime.

Turf Club stock has plummeted from a high of $20 a share on opening day in early March to around $6 a share, and odds against the track’s survival are high.

“I’d make us 4 or 5 to 1,” said Chick Lang Jr., the Turf Club’s marketing director. “We’re not a favorite, but we’re not a long-shot.”

What happened to the Birmingham Turf Club is a vivid reminder of the pitfalls some Southern communities face when they try to vault out of the shadows of the Sun Belt, attempting to shed their past economic base for the promise of an upscale future.

City Left Behind

There is no doubt that Birmingham wanted just that. Once a co-equal with Atlanta as an urban center in the South, Birmingham was left behind during the last three decades as its steel mills lost business and as it became the scene of bitter resistance to the civil rights revolution.

It has since become a regional center for medical education and research, and has attracted high-tech industry, and sparkling new office buildings. But Atlanta, once dubbed “the city too busy to hate,” had it all, and Birmingham was clearly second string. The Turf Club, embodying both sophistication and big local revenues, would be a ticket to the top.

The track’s problems began with its very name--the Birmingham Turf Club. It has repelled untold numbers of potential black patrons in this majority-black city and elsewhere in the region. To542338933such a title is the traditional white way of connoting: “Private: Whites Only.”

But working-class whites also have found little in common with the “champagne-and-mink” atmosphere of the track. As one caustic critic noted after an opening day visit: “The restaurant served food nobody could pronounce and all but drained the French wine country.”

Low Daily Attendance

As a result, the average daily attendance is about 5,950--well below the 8,300 originally predicted--and the average daily betting handle of around $406,000 is less than half of the projected $1.1 million.

That means the average bettor wages a total of about $68 a day at the horse track. By comparison, the average gambler spends $141 a day at VictoryLand greyhound racecourse near Montgomery, one of Alabama’s three dog tracks.

Barry Mason, chairman of business management and marketing at the University of Alabama, says the Turf Club represents a “classic case of not doing the kind of background work necessary to define the primary market.”

“From the beginning, the entire marketing strategy took an elitist, upscale approach, as reflected in such things as the promotional themes and pricing strategy,” he explained. “But there’s a very narrow market for such an approach in Birmingham, which is basically a blue-collar town, or in the surrounding region, which is largely rural and small town.”

Blacks Among Boosters

Oddly, blacks originally were among the racecourse’s biggest boosters. A black state legislator introduced the measure that authorized pari-mutuel gambling in the state, and it became law in 1984 with the overwhelming support of black voters.

Local white business leaders, however, formed the investment group that subsequently was chosen by the Birmingham Racing Commission to build and run the track. They also were among the biggest contributors to the drive for the millions of dollars needed to turn the dream into a reality.

“They weren’t talking to me by that time,” said state Rep. John Rogers of Birmingham, who introduced the pari-mutuel betting bill. “I offered them some suggestions, but they didn’t listen. One of the things I said was that they needed to make the track more of a home-based thing instead of depending on people coming from outside the state.

“They didn’t sell it to the people in Birmingham. They just assumed the interest in dog racing would carry over to the horse track. But dogs are different from horses.”

Instead of the 30% black attendance that was expected at the Turf Club, the proportion is only about 12%, he said.

Believe Rosy Projections

Critics say that the investors were blinded to such considerations by their ambition to build a track that would make Atlanta pea green with envy and by the rosy projections that the Turf Club’s marketers produced.

“Judy Thompson, the chairman of the board of the Turf Club, said that not for one minute did she think the projections could be wrong,” said Chet Fussman, the racing writer for the Birmingham Post-Herald. “That was one of the big, big problems.”

Thompson, the 40-year-old daughter of a millionaire Birmingham businessman, is one of the biggest single investors in the track. She and her brother Michael reportedly put $2.5 million of their own money into the land and another $3 million into Turf Club stock, giving them a controlling 30% interest.

Most of the money for the track came from $64 million in loans and from about 3,500 individuals who invested an average of about $5,000 each. The city of Birmingham also provided financial help in building roads.

Opening a Success

Opening day March 3 seemed to vindicate Thompson, who used to wear a button reading: “Only those who attempt the absurd can achieve the impossible.” A capacity crowd of 20,000 jammed the grandstand and clubhouse--an imposing buff-and-sandstone-colored structure with peacock blue trim that rises from the wooded countryside 10 miles east of Birmingham--and created monumental delays at the 288 betting windows.

Turf Club officials beamed as they paraded down the front stretch in horse-drawn carriages during the inaugural ceremonies. The Alabama Symphony Orchestra played “The Impossible Dream,” and four-time Kentucky Derby winner Bill Shoemaker rode in the opening race.

But almost overnight the bubble burst. The big crowds and feverish betting of opening day quickly vanished.

Steps were immediately taken to improve the financial picture. Thompson relinquished her salary; board members gave up their directors’ fees; the Turf Club’s president, Austin Brown, took a pay cut. Daily purses--cash awards to the top horses in each race--were cut from $95,000 to $75,000 and most recently to $50,000. More than 10% of the 800 track employees were laid off.

More exotic forms of betting, such as quinellas and exactas--which involve higher risks but bigger payoffs and are considered more appealing to the blue-collar crowd--were introduced. General admission tickets were cut to $2 from $2.50, and the $1 parking fee was dropped.

Schedules Revised

Billboards went up in black neighborhoods that left out the track’s name but simply described the racecourse as “your track.” “Giveaway nights” also were established. The latest grand prize was a Toyota 4X4 pickup truck. Racing schedules have been revised and revised again in an effort to better accommodate local residents and out-of-state visitors.

Besides the bill to permit out-of-state investors to purchase stock, measures also were introduced in the Legislature to authorize Sunday racing and to temporarily abate the track’s taxes. The latter two are still under consideration but are given little hope of winning approval.

The track’s losses have dropped to between $10,000 and $15,000 a day, said marketing director Lang, and the average daily attendance and daily betting handle are showing a slight improvement.

“I think it’s a real nice place,” said a Birmingham resident as she watched the races recently from an outdoor patio restaurant at the track that specializes in traditional Southern barbecue pork sandwiches. “I only wish I could win more money.”

But the track reportedly still needs $8 million to $10 million to forestall bankruptcy. Officials hope they can attract the money from out-of-state investors if, as expected, Gov. Guy Hunt signs the measure authorizing such investments into law.

Affects Other States

The Turf Club’s problems have had a chilling effect on Tennessee, which in May became the 39th state to legalize pari-mutuel gambling, and on Georgia, which is studying a proposal to authorize betting on horses.

“Birmingham is hurting the industry fierce,” said Jerry L. Carroll, a Nashville real estate developer who is involved in bringing a track to that Tennessee city.

The track’s troubles also have wounded the pride of Birmingham, which was dubbed the “Magic City” during a time of explosive population growth and economic development at the turn of the century and has been striving to recapture the spirit that prompted the nickname.

The opening of the Turf Club was to signal a whole new era. “For once, we have something Atlanta doesn’t have,” wrote Paul Finebaum, a columnist for the Post-Herald.

Instead, as a native Atlantan quipped: “Yeh, they’ve got something we don’t have--and don’t want.”