Patlex to Help Challenge Racing Form on Own Turf
When Patlex Corp. in Chatsworth hired former astronaut Frank Borman as chairman last summer, his main task was to decide how Patlex should spend the millions of dollars it earns in royalties on laser equipment.
Last week, Borman announced his first move: He bet $900,000 on the horses.
More precisely, Patlex invested the money in ESRAC Publishing, a privately held New York firm that next month will start a daily horse-racing newspaper called FIGS Form. In return for its money, Patlex gets 15% of ESRAC’s stock. If FIGS Form reaches certain performance goals, Patlex will lend the company up to $2.1 million more and raise its stake in ESRAC to 27.5%.
On the surface, Borman’s move would seem like a 30-to-1 long shot. FIGS Form, which promises fancy racing graphics and statistics generated by “the latest state-of-the-art computer technology,” will have the daunting task of trying to compete with the Daily Racing Form, a 95-year-old publication that is the bible of horse racing.
Daily Racing Form
ESRAC’s chairman, Robert Sinn, acknowledged that FIGS Form is “entering a market that has been completely dominated by the Daily Racing Form for the past 50-60 years.” But “we feel we have a far, far superior product.”
Borman, in a telephone interview from his home in Las Cruces, N.M., maintained that the investment is not a long shot. He said one of FIGS Form’s attractions is that it is entering a market that only has one player--but room for more.
“I’m not aware of any market in the country that doesn’t have at least two players,” said Borman, who formerly headed Eastern Airlines. “A good product in a vast market should be able to win.”
Patlex gets 64% of the licensing income from patents held by laser pioneer Gordon Gould. Patlex helped Gould finance a decades-long battle to secure the patents, which Gould did in 1987-88. And with the patents in hand, Gould has increasingly been able to force laser manufacturers to pay him (and Patlex) royalties for using his technology.
Collecting Royalties
Patlex also made lasers, but recently spun off its manufacturing operations into a new company called Geotek. The surviving Patlex continues collecting royalties--which totaled about $8 million last year--and investing the money.
Borman said that although he’s “not an aficionado or heavy bettor” at horse racing, FIGS Form “presents the information in a much more usable form” than the Daily Racing Form. “It’s an attractive format with a very readable presentation.”
Sinn said FIGS Form won’t so much as snare readers from the Daily Racing Form as co-exist with it. FIGS Form hopes to have an average daily circulation of about 50,000 within a year, compared with the current 150,000-200,000 average for the Daily Racing Form, Sinn said.
Rupert Murdoch Group
The Daily Racing Form, owned by publisher Rupert Murdoch’s News Corp., has annual sales of about $200 million, Sinn said. A News Corp. spokesman in New York said the $200 million figure is incorrect, but declined to elaborate. The spokesman also said Daily Racing Form officials declined comment about FIGS Form because they were unfamiliar with the proposed publication.
FIGS Form is scheduled to debut in the New York market and should reach California “hopefully in June,” Sinn said.
And how soon might Patlex see its investment in the winner’s circle? Borman would not predict exactly when Patlex would get a return on its investment, but “we’re not looking upon this as a long-delay pay-back,” he said.
