MAN WITH A MISSION : Hollywood Park Hires Executive to Tackle Company’s Debt Woes
It has been said more than once that the only solution to Hollywood Park’s financial woes was divine intervention. Well, heavenly help never came, so management did the next best thing, hiring a missionary.
G. Michael Finnigan, who once served a three-year stint with the Mormon Church in the South Pacific, has signed on as executive vice president and chief financial officer of the race track operating company and its sister realty company.
His calling? To preach the gospel of fiscal sanity and help turn the debt-ridden track into a moneymaker once again.
Changing water into wine might be easier. As recently as 1984, the Hollywood Park companies showed a net income of more than $9 million. In 1988, that figure had tumbled to a net loss of $10 million, caused in large part to the servicing of more than $100 million in debt.
“We were floundering in the financial area of management,” said Marje Everett, Hollywood Park chairman of the board and chief operating officer. “We desperately needed a strong specialist.”
Finnigan, 40, joined Hollywood from Gannett Outdoor Group, the billboard subsidiary of the multibillion dollar Gannett Co. He left his post there as senior vice president of finance and administration on a high note, with first quarter 1989 earnings up 27%.
Finnigan said recently that the Hollywood job intrigued him because of the challenge.
“It sounded to me that there was a clearly recognized need for stronger financial management for the company,” Finnigan said. “It sounded like a constructive, interesting environment for me to be in.”
Also eye-opening. Finnigan never has bet on the ponies, nor could he tell you the difference between a daily double and a D-bit if his life depended on it. Fortunately, his job doesn’t.
“I never saw a live horse race until opening day,” Finnigan said.
“I’m sure that it’s always an advantage to know an industry to be more effective in it,” he continued. “Whether that holds more so in horse racing, I don’t know. But I believe, particularly in the financial area, there are many transferable skills from industry to industry.”
There are many racing industry observers who agree.
“For what he has to do, it doesn’t matter if he knows a thing about racing,” said one analyst. “It was people who knew about racing who got them into trouble in the first place.”
Finnigan’s first priority is to stop the bleeding.
“The problem is the debt load, which has grown to a level where the racing operations can’t carry it,” Finnigan said. “One of the obvious ways to fix it is to sell Los Alamitos.”
But the sale of the 300-acre Los Alamitos Racetrack property in Cypress has been bogged down for more than a year because of disenchanted buyers and rezoning nightmares. Currently, there is an offer on the table from horse owners R. D. Hubbard and Edward Allred and SDC Development of Newport Beach, reportedly in the $65-million range.
Hollywood Park management said it is also are considering “better offers.”
Everett said recently: “I’ve been optimistic before, but I really think we’re in the homestretch now,” regarding the sale of Los Alamitos.
Some industry analysts think, however, that Hollywood Park is selling the wrong horse.
“It’s the track at Hollywood they ought to sell,” said one financial expert familiar with the racing industry. “No one wants to go there anymore. They ought to shift their racing to Los Alamitos and develop the Hollywood Park property.”
That is a variation on a theme proposed by Thomas Gamel, who owns 5.6% of Hollywood Park’s stock. After securing Hollywood Park’s list of stockholders last week, Gamel is poised to launch a proxy fight for control of the company, or perhaps even make a bid to purchase the track outright.
A Denver horse owner and manufacturer of truck trailers, Gamel wants to see current management replaced, Los Alamitos sold, and has recommended that live racing at Hollywood be abandoned and the Hollywood dates be run at other tracks. Gamel has proposed retaining the Cary Grant Pavilion for off-track betting and the race track and barns as a training center.
Everett recoils at the idea of shutting down Hollywood Park. She recently sent a five-page letter to company shareholders, rebutting most of Gamel’s suggestions point-by-point. Finnigan also dismisses the thought of closing the track as a restructuring alternative.
“Hollywood Park, as a race track, makes money,” he said. “The problem with this group of companies has not been whether or not Hollywood Park is making money as a racing operation.
“In addition, the company is fortunate to have very valuable real-estate assets,” said Finnigan, referring not only to the race-track land but also to choice properties in the burgeoning corridor between Century City and LAX.
“If Los Alamitos is sold, there’s excess acreage here at Hollywood Park that could be developed,” he added. “To that degree, I think diversification is not just an alternative, it’s something the company will surely do.”
Finnigan replaced Craig Jones, who was temporarily retitled vice president of financial services before resigning earlier this month to take a position with the San Fernando Valley firm of Electro Rent as vice president and treasurer.
During his brief tenure as Hollywood CFO, Jones had a reputation as a top-flight number cruncher. But the relative clout of a chief financial officer in the days before Finnigan was dramatically illustrated by the roster of the Hollywood Operating Company’s department heads printed in the track’s 1988 press guide. Jones was listed below the administrative office manager and Everett’s executive secretary.
Finnigan’s advice will be hard to ignore. Equipped with a multiyear contract reportedly topping $1 million, he has the backing of Dan Lufkin, the influential new Hollywood Park director, and Hal Brown, Hollywood Realty’s chief executive officer. Finnigan answers directly to Everett and the board, ranking right alongside Donald Robbins, executive vice president and general manager.
Everett, who was recuperating at home last week from injuries suffered in a car accident, went out of her way to defuse any rumors of a power struggle between Finnigan and the widely respected Robbins.
“Both Don and Mike are decent, low-key fellows,” Everett said. “I do not see any problems of compatibility.”
Nevertheless, Finnigan is eager to become more involved with the day-to-day running of the race track.
“Unless you love and know the operations of a business, you really can’t help it very much from a financial point of view,” Finnigan said. “But clearly, at the moment I’m running just as fast as I can just to learn about the racing industry.”
Finnigan was born in the tiny Canadian mining town of Porcupine, Ontario. Hockey, not horse racing, was his game, although he likes to unwind by shooting hoops once in a while.
Finnigan interrupted college to do missionary work in Tahiti from 1967-70.
“It was not a very hard decision to make,” he said. “For a boy from cold and remote Porcupine, the South Pacific sounded quite wonderful.”
Finnigan and his wife, Karen, named their first child Mahana, the Tahitian word for sunshine. In addition to Mahana, 16, they have three sons: Sean, 15, Nathan, 14, and Bradley, 12.
The Finnigans are settling into a house in Rolling Hills Estates. Undoubtedly, Finnigan says, the kids will demand riding horses.
“I heard something the other day about buying horses, though,” he said. “Someone said, ‘I don’t like to invest in something that eats while I sleep.’ That has a certain sense to it.”
For now, it will be Finnigan’s job to make people want to invest in Hollywood Park again. Shareholders have been restless since last year, when dividends were suspended, and only the most speculative players feel the share price of $27 is worth the gamble, according to industry analysts.
Hollywood Park’s performance so far in 1989 is open to broad interpretation. Through June 11, the average daily betting at the track was up 1.26%. Off-track, at the nine simulcast sites, betting had increased by 13.4% over 1988 figures. Attendance was down by 11.24% on-track and up by 5.8% off-track.
However, the income realized by Hollywood Park differs widely when comparing on- and off-track. Hollywood’s share of the on-track betting is about 5%, compared to 2.625% of the off-track handle. And Hollywood Park gets nothing at all from the admissions, concessions and parking of off-track customers.
Finnigan remains confident, though.
“It will be a healthy, strong company again,” he said. “This financial cloud that has been over the company for the last couple of years will get fixed, and we’ll get on with building the business instead of being challenged by too much debt. You can count on it happening.”
