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Sunday, September 20, 1992 - Page updated at 12:00 AM

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Looking Beyond Longacres -- Fate Of Horse Racing In State In Jeopardy With Closure Of Track

RENTON - Tomorrow, 59 years after Joe Gottstein was criticized for locating it too far away, Longacres Park will close, presumably squeezed out of existence by the very progress its founder sought to isolate it against.

And without Longacres, its foundation, Washington state's $400 million horse-racing industry faces a daunting future. No plans have been solidified for a replacement track.

If one opens after a year or two with no live racing, it will have to win back fans who learned to gamble their money elsewhere. And it will face problems that have started to decay the industry nationally.

Since 1980, nearly 20 thoroughbred racetracks have either closed down or converted to other forms of racing because of dwindling attendance and other economic problems. Several others are on the endangered list. Some tracks that haven't closed have taken drastic measures - such as the introduction of video poker games at Louisiana Downs.

"This is a unique situation," said Lonny Powell, who as executive vice president of Emerald Racing Association has kept a bedside vigil at Longacres the past two years.

"Tracks usually go under because the people stop coming," Powell said.

On the contrary. Powell - having gained a national perspective working for racetrack magnate R.D. Hubbard as director of the University of Arizona's Racetrack Industry Program - has used Longacres as a grand laboratory to test ways of taking racing into the future.

One result has been younger fans and a fresher atmosphere.

Average daily attendance the past two years - more than 8,600 - was higher than any time in the previous eight years, though at least some of that might be attributed to a sentimental urgency over the looming closure.

Regardless of its popularity, many see the closing of Longacres as having been inevitable because it sits on land deemed too valuable for a racetrack.

A site that was once considered out in the boonies is, to The Boeing Co., prime real estate - close to Interstates 5 and 405, to Seattle-Tacoma International Airport, and to the company's corporate headquarters in Seattle and its plants in Renton, Kent and Tukwila.

When the Alhadeff family, the owners of Longacres, sold the land to Boeing two years ago, they said continued operation of the track was a losing proposition.

Costs were rising, millions of dollars in improvements were needed, and the track's share of the area's gambling dollar was shrinking rapidly.

Many horsemen reject the Alhadeffs' position, saying the track could have survived had the land been sold to racing interests.

They point to the past two boom seasons at the Renton oval: Net operating profits for the two seasons, which have been deposited into an industry fund, are expected to total $7.5 million.

ARTIFICIAL PROFITS?

But others say those profits have been artificially boosted.

The Emerald Racing Association, the nonprofit corporation that has operated the track for two years, has benefited from a 50 percent reduction in state taxes on parimutuel wagering.

Plus, Boeing has leased Longacres to Emerald for just $10 in 1991 and $150,000 in 1992 - far less than its fair market value - while absorbing costs such as property taxes.

"The idea of buying and operating Longacres is completely unrealistic," said John de Saint Phalle, whose Rainier Jockey Club failed to gain approval for a new track in Auburn earlier this year.

"Nobody can pay that much for the land alone, and afford to operate a racetrack."

GILDED TURF

Estimates place the value of the 212-acre parcel that Boeing purchased at at least $80 million and probably more than $100 million.

De Saint Phalle maintains that a track built for anything more than $50 million will not work (the track he proposed to build at that price was dismissed by the state horse-racing commission as being, among other things, too small).

Various sources generally support the $50 million figure.

One group, the Northwest Thoroughbred Racing Association, or NTRA, failed to get the financing needed to build a larger, $65 million track in Fife. That was after Hubbard, the lead investor and owner of Hollywood Park and other tracks, got out because he didn't think the numbers worked.

One major investor who abandoned the NTRA early, Ron Crockett, is trying to build a track by combining NTRA's ambition with de Saint Phalle's prudence.

His proposed project in Auburn, retains the size and scope of the NTRA's, yet meets the $50 million threshold by leasing, rather than buying, the land from a local contractor (Crockett has yet to gain the necessary permits).

A GOVERNMENT HAND?

Local politicians and horsemen also have discussed the possibility of persuading a government entity to purchase land, then either give or lease it to operators of a new track.

Keeping land costs down is considered critical to compensate for falling revenue; both the NTRA and the Rainier Jockey Club assumed that because of their relatively remote locations, their proposed tracks would initially do 20 percent less business than Longacres did in 1991.

And although Longacres' handle - total money wagered - set a track record last year with nearly $170 million, its growth has not kept pace with inflation over the past 10 years.

Many industry observers foresee a future of smaller tracks with shorter racing seasons, built on cheaper land farther from the cities.

Western Washington's next track, if one is built, could be among the first of the new wave.

Breeders, naturally, are opposed to shorter seasons because they would reduce the need for horses.

Roz Bowen, a local owner, breeder and trainer, says, "We're healthy the way we are."

But what about the future, as problems felt nationally close in? Even before the recession, horse racing's underlying weaknesses were exposed.

OVERSATURATED MARKETS

Long seasons, tracks too close together and the emergence of off-track betting combined to oversaturate markets.

People were offered new, legal ways to gamble such as state lotteries, and more entertainment options than ever before. Attendance began to fall.

Those factors, combined with spiraling maintenance, real-estate and production (breeding) costs, have put the squeeze on a once-booming industry, and those dependent on it.

Ralph Vacca, general manager of Washington Thoroughbred Breeders Association, estimates the state's foal crop in 1993 will be about half of what it was in 1988.

The national average sale price of a thoroughbred yearling in 1991 of $26,233 was down more than a third since 1984.

Added to this is that the horse-racing industry is "still being treated as a monopoly," said Robert Clay, president of Kentucky-based Thoroughbred Owners and Breeders Association. "But the fact is, we're no longer a monopoly."

Indeed, horse racing's share of the national (legal) gaming dollar has plunged from a leading share of 35 percent in 1974 to 22 percent in 1982 to less than 9 percent today.

And those figures don't account for Native American gaming interests - such as the casinos on the Lummi and Tulalip reservations - which are not obligated to report figures to regulatory agencies.

Nor do they take into account the $40 billion or more bet illegally on sports every year, according to a recent U.S. Justice Department estimate.

Following suit, horse racing in Washington state has taken large hits from other forms of legalized gambling like the state lottery.

The nation's 34 state lotteries pose the biggest gaming challenge to horse racing.

But their impact may pale compared with that of the rise in casino gambling, spurred by the Indian Gaming Act of 1988.

Native-American casinos handled an estimated $5.4 billion in 1991, according to an annual national gaming study.

It is widely assumed that the growth of casino gambling, both on and off Native American land, has just begun.

With the horse-racing industry needing a boost from somewhere to survive in this changing world, satellite wagering appears to be carving a permanent role for itself, though not without controversy.

Approved by the Legislature in 1988, satellite wagering has allowed Longacres, Spokane's Playfair Race Course and Yakima Meadows to transmit its racing cards to one another and to satellite sites across the state, limited to one per county.

The source track enjoys the benefit of an increased handle, while the satellite sites make money from negotiated fees, admissions and concessions.

Nationally, satellite wagering and other forms of off-track wagering account for about 40 percent of total handle and is only scratching the surface, according to Kentucky-based Association of Racing Commissioners International.

Satellite wagering enables tracks to give customers the same number of races despite a decline in the number of available horses.

A SATELLITE CHALLENGE

Racing's challenge will be to take full advantage of satellite wagering without overusing it.

In focus-group studies in Everett, for example, Emerald Racing found that although the satellite site there provided more convenience for bettors, it also helped discourage racing fans from making the trek to Longacres.

One way to get those fans there is to offer them more than a betting parlor does - more than simply racing and betting.

The sentiment emerging now, in fact, at least among the most forward-thinking, is that the Western Washington track of the future will have to loosen its traditional tether to parimutuel wagering.

"You are going to have strong horse-racing fans who are going to remain horse-racing fans, no matter what," Crockett said.

"But that won't be enough. What you have to create in the next track is an event that's more enticing to families, younger people and the more casual fan," he said.

This would not require as fundamental a change as some might think.

Longacres operators have for years marketed the track as a family experience. Crockett and others advocate continuing that.

They also want to reduce the reliance on betting dollars by making more from admission, parking, concessions and other amenities.

Powell of Emerald Racing, on loan from R.D. Hubbard the past two years, is soon obligated to return to his parent company.

Yet Powell, the son of a former Longacres jockey who cut his teeth on the industry here, yearns to be back some day.

As dark as things now appear, he is optimistic there will be something to which he can return.

"I'm bullish on racing," Powell said, referring to the local and national scene. "I'm positive racing will survive.

"However, I'm also confident there will be fewer racetracks, fewer racing days and tough times of changes ahead."

Copyright (c) 1992 Seattle Times Company, All Rights Reserved.

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