Secret Plan to Buy Out Hollypark : Horse racing: Live events would have ceased under proposal discussed by Santa Anita officials and Gamel, records show.

Santa Anita, as recently as early 1990, entered into secret discussions with a board member of Hollywood Park that would have led to the elimination of racing at the Inglewood track and the transference of most of those dates to Santa Anita.

Santa Anita went so far as to commission a major study that included a map of Hollywood Park property to be sold and the redistribution of racing dates.

Information about the plan was obtained by The Times through court documents and depositions filed in conjunction with the Hollywood Park takeover attempt by R.D. Hubbard, owner of race tracks in New Mexico and Kansas. Hubbard was not involved in any of the secret meetings with Santa Anita.

The unsuccessful proposal, interchangeably called “merger,” “acquisition” and “takeover” in depositions of top Santa Anita officials, was called the “Century City Project.” Code words were used whereby Santa Anita was called “King” and Hollywood Park “Queen” in official correspondence about the plan.

An executive summary of the plan, prepared in January of 1990 by Merrill Lynch, listed as its major objectives:

“King will acquire Queen in a transaction structured to optimize the dividend payout level to King’s present stockholders. Live racing will be discontinued at Queen, with Queen’s racing dates to be transferred principally to King. The pavilion at Queen will be used exclusively as a year-round simulcast facility. The end of live racing at Queen will free up approximately 200 acres of land at Queen, which will be developed by King over the next ten years in a mixture of commercial, retail and residential projects.”

Santa Anita officials soured on the idea when Marje Everett, chief executive officer of Hollywood Park, objected strenuously to the plan. She learned about it at a meeting she thought was held to discuss the use of Santa Anita announcer Trevor Denman at both tracks.

Wednesday, Everett related her memory of that meeting. “I was sitting there, and all of a sudden, it was apparent to me that they were going to try and devour us,” she said. “I thought about what that would mean to our stockholders, and I quickly became totally shocked and totally disillusioned.”

Subsequent discussions also broke down.

The Hollywood Park board tabled the proposal Feb. 12, but Santa Anita officials continued to discuss the proposal with Thomas Gamel, a board member of the Hollywood Park Operating Company, until he resigned last week.

Cliff Goodrich, chief operating officer of Santa Anita, characterized the proposal as nothing more than good business.

“If something were to happen to live racing at Hollywood Park, for whatever reason, we have to be in a position to act on the future,” Goodrich said Wednesday.

“Internally, we have to be ready to deal with the future and there are things we would have to do. Prior to the Los Alamitos sale (in November of 1989) Hollywood Park was in some financial trouble.

“The fact that it reached the Merrill Lynch stage shows that we were serious about it, but it never really got beyond Round One.”

In the depositions, Gamel admits that he was not requested by the Hollywood Park board to enter into discussions with Santa Anita. He said he was acting with the “permission” of Marvin Davis, a wealthy businessman and at that time a member of the Hollywood Park board.

Davis denies that he gave Gamel any permission.

Goodrich said Santa Anita did not contact Davis to discern if what Gamel said was correct. “We had no reason to believe what we’re told was anything but the truth,” he said.

Gamel did not return phone calls from The Times.

Gamel’s meetings seem to contrast with an agreement he made on Oct. 11, 1989, with the Hollywood Park board that he would not “engage in any efforts to acquire the Company or its assets or assist any others in acquiring the assets of the Company by tender offer or otherwise.”

According to a Feb. 14 memo from Gamel to Davis, Gamel met Feb. 13 with four members of the Santa Anita board to further discuss Santa Anita’s acquisition of Hollywood Park. The Feb. 13 meeting was one day after the proposal had been tabled. Goodrich said in depositions that he had no knowledge of anyone at Santa Anita contacting anyone at Hollywood Park about the meeting.

A second meeting was held on March 7 between Gamel and senior executives of Santa Anita. At the meeting, Gamel made it clear he was not representing Hollywood Park, but Marvin Davis. That was stressed in a deposition taken from Goodrich Dec. 17.

On April 5, in a confidential memo from Robert Strub, chief executive officer of Santa Anita, to the Santa Anita board of directors, he outlined a counterproposal that he made orally “to the C.C. (Century City) director.” Strub identifies Gamel as the director.

The proposal included:

--A five-year lease of the simulcast facility for $4.5 million a year.

--A five-year lease on the ground under the simulcast facility and 35 to 40 acres of parking for $3 million a year.

--A five-year no-cost lease for 50 acres of stable area and both racing strips.

--A five-year option to purchase the simulcast facility for $45 million.

Strub concluded from his discussion with Gamel that the major stumbling blocks appeared to be a substantial up-front cash payment and some type of role for senior management of Hollywood Park.

The minutes of the April 11 meeting of the Santa Anita board of directors reflected this action: “It was the conclusion of a majority of the Directors that Chairman Strub should advise the C.C. director that The Companies are no longer interested in pursuing the project.”

In papers filed to the court, Hollywood Park believes that Gamel’s role in the negotiations is essential to its case to prove that Gamel, Hubbard and Harry Ornest, a board member and major stockholder, formed a group to overthrow the present adminstration of Hollywood Park, in violation of Securities and Exchange Commission rules for public companies.

Hubbard said Monday that he had enough proxy consents to seize control of the track. Everett’s group is seeking a preliminary injunction to stop Hubbard.

Santa Anita has had a longstanding relationship with Gamel. In February of 1986, Gamel held at least 100,000 shares of Santa Anita stock and was appointed to the board.

Gamel later bought 40,000 shares of Hollywood Park stock. He currently owns 5.6% of Hollywood Park stock. He was appointed to the board on Oct. 11, 1989, before resigning last week.

In late 1986, Gamel brought up the idea to Strub that Santa Anita should acquire Hollywood Park and move the racing dates to Santa Anita. Gamel said he “does not recall” if he told Strub he owned shares of Hollywood Park stock.

Santa Anita rejected the proposal as not being feasible. “He (Gamel) told me that he was going to approach Hollywood Park or Mrs. Everett or somebody at Hollywood Park and have some kind of relationship as far as buying them out or taking them over . . . “ Strub said in depositions.

“I said he couldn’t remain on our board and continue that, and he agreed that he would leave the board.”

Gamel resigned from the Santa Anita board Oct. 17, 1986, “because I determined that I was going to pursue the acquisition of Hollywood Park on my own.”

Later that year, Gamel joined with Hubbard and Donald Koll, an Irvine real estate investor, retaining Drexel Burnham Lambert to help plan and finance the private acquisition of Hollywood Park.

The Hollywood Park board rejected the proposal Nov. 26 and the group abandoned its plans because of the loss of year-end tax benefits.

In early 1987, Gamel again approached Santa Anita about acquiring Hollywood Park, but abandoned his plans because of a lack of capital.

On Feb. 28, 1989, Gamel sent a letter to Everett calling for her resignation and moving Hollywood Park’s racing dates to Santa Anita and Del Mar. According to handwritten notes by Strub, Gamel met Strub March 7 to discuss Gamel’s proposals to take over Hollywood Park.

“I know we turned it down,” Strub said of the proposal. “He wanted us to go public . . . And we decided when we had a board meeting after this, or when I’m not sure, but we turned it down.”

He then sent a similar letter to the Hollywood Park board of directors March 28.

Hubbard called Gamel upon learning of the letter. “I told him that I did not agree with some of his proposals,” Hubbard said in depositions. “Specifically, I sure didn’t agree with closing down Hollywood Park as live racing.”

Gamel sent shareholders a similar letter July 21 and Aug. 3 and sent a letter to thoroughbred horsemen July 21. Strub and senior executives met with Gamel again Aug. 3. Strub ordered an internal analysis and commissioned Merrill Lynch to conduct a study, code-named “Century City Project.”

Strub said that when Gamel was added to the Hollywood Park board Oct. 11, Gamel said: “ ‘I can no longer discuss anything to do with Hollywood Park because I am committed to go on the board and I’ve made certain representations. . . . Anything I talk to you about would have to be repeated to the board, provided it was something that the board should be interested in.’ ”

On Nov. 27, Strub addressed the issue in a six-page confidential memo to the Santa Anita executive committee: “The seed for this proposal was sown more than two years ago when Tom Gamel contacted me to discuss Santa Anita’s prospective interest in running some of Hollywood Park’s racing dates at Santa Anita Park. At the time, Tom was a dissident shareholder of Hollywood Park, having just suffered the disappointment of having all his cash offer to purchase all the outstanding shares of Hollywood Park turned down. . .

“The point we couldn’t resolve was, if Hollywood Park was a failing company . . . then why would Santa Anita pay for their racing dates when, if Hollywood Park did fail, those dates would most probably be assigned to Santa Anita by the state at no cost to Santa Anita?”

The memo concluded, however, that with Hollywood Park’s sale of Los Alamitos, the company had greatly reduced its debt load and the acquisition was much more attractive.

It was a stance that Santa Anita took through much of early 1990 until conversations between all parties stopped.