Fee impasse threatening signal distribution (UPDATE: Deal in place)

[Kasept]

Impasse over simulcast fees for Stronach tracks
By Matt Hegarty

http://www.drf.com/news/impasse-over...tronach-tracks

Major simulcast sites in Ohio, Pennsylvania, Texas, and several other states on Monday dropped the signals from tracks controlled by one of the U.S.’s largest racing companies due to an impasse over the terms of a new contract, officials for both sides of the talks have confirmed.

The impasse is pitting Monarch Content Management, which controls the simulcast rights to Santa Anita Park, Gulfstream Park, Tampa Bay Downs, and a handful of other major racing signals, against the MidAtlantic Cooperative, a collective of Thoroughbred and Standardbred racetracks that banded together more than a decade ago to increase their leverage in simulcast negotiations. Monarch Content Management is owned by the Stronach Group, the private racetrack company.

The impasse has yet to have a significant impact due to the paucity of Monarch tracks that held live race cards Monday, the first day of the blackout. However, Laurel Park in Maryland and Tampa Bay Downs in Florida resume racing Wednesday, while Golden Gate Fields in Northern California resumes racing Thursday. More significantly, Gulfstream Park in south Florida begins its highly popular winter meet Saturday, and Santa Anita begins its winter meet Dec. 26.

Though they would not provide specifics, officials for both sides said the impasse revolves around the rate that Monarch is seeking for the signals. So-called content providers like Monarch, Churchill Downs Inc., and the New York Racing Association have been aggressively seeking higher rates for simulcast signals over the past several years, with some success.

Scott Daruty, the president of Monarch, said on Monday that Monarch was seeking changes to the structure of the contract that would charge some sites in the cooperative a higher rate than other sites. The cooperative currently represents 23 racetracks, including nearly all of the tracks in Pennsylvania, Ohio, and Texas, along with a smattering of harness tracks along the Eastern seaboard.

“Some of those sites [in the cooperative] don’t even run live racing anymore, and they’re still insisting that they all pay the same price,” said Daruty. “We’ve questioned whether that one-size-fits-all model should continue to apply.”

Daruty said Monarch offered to allow the sites to continue to offer wagering on the signals while the two sides talked through December, but that the cooperative declined.

“It’s unfortunate racing customers are going to pay the price,” Daruty said.

Phil O’Hara, the executive director of the MidAtlantic Cooperative, confirmed that Monarch offered to allow simulcasting to continue on an interim basis. He said Monarch had not yet responded to a proposal the cooperative sent Oct. 30, and that agreeing to the short-term extension was not in the cooperative’s best interests.

“We figure it’s better to discuss this with a long-term resolution as the goal,” O’Hara said. “We’ve been waiting since Oct. 30 to get a proposal back from them, and we figured that was enough time.”

Content providers like Monarch and Churchill have been pushing up simulcast rates at a time when the racing industry is struggling to maintain its betting figures. Handle on U.S. races has declined nearly 30 percent from the high-water mark in the mid-2000s, and a sharp decline in the foal crop has begun to put additional pressure on the live racing product. At the same time, the industry has shown no indication that it is creating new fans or stopping its loss of market share to competitors in the gambling and entertainment businesses.

Like Churchill, the Stronach Group owns and operates a national account-wagering company, XpressBet.com, giving the company an enormous amount of leverage over simulcast sites that do not take the company’s signals. If the impasse results in a local blackout, customers who do not face state-based restrictions on ADWs can open accounts with the online companies that offer the signals, which, in most cases, are owned by the companies that own the blacked-out tracks.

The MidAtlantic Cooperative said customers of its members wagered $1 billion last year. The Thoroughbred members include Parx Racing, Penn National, Atlantic City Race Course, Delaware Park, Charles Town, Colonial Downs, Suffolk Downs, Sam Houston, Retama Park, ThistleDown, Mahoning Valley, and Belterra Park, along with about a dozen harness tracks.

[Kasept]

Gulfstream simulcast in doubt as rights stalemate continues
By Matt Hegarty

http://www.drf.com/news/gulfstream-s...mate-continues

With Gulfstream set to start its winter meet tomorrow, a simulcasting cooperative and Gulfstream’s parent company remained locked in a stalemate Friday night over the rights to simulcast signals, threatening the availability of Gulfstream’s races on its opening weekend at sites in a handful of states.

Though Gulfstream’s parent company sent the cooperative a detailed proposal seeking to end the stalemate Friday, it was unlikely the proposal would lead to any immediate lifting of the blackout, according to officials for both sides. The proposal was sent by Monarch Capital Management Company, which controls the simulcast rights to tracks owned by the Stronach Group, to a group called the MidAtlantic Cooperative, which represents 23 racetracks, including most sites in Ohio, Texas, and Pennsylvania.

Scott Daruty, the president of Monarch, said the proposal delineated the rates Monarch believed should be paid for each site within the MidAtlantic Cooperative, a sharp departure from the group’s previous contract, which charged the cooperative’s members a flat rate. The prices varied depending on the amount of live racing conducted by a site, Daruty said, among other factors.

“It’s pretty much the way we price to everyone else in the country, which is pricing each site on an individual basis depending on the business they do,” Daruty said.

Phil O’Hara, the executive director of the cooperative, said he received the Monarch proposal Friday afternoon and was attempting to convene the group’s board Friday night for a detailed discussion of the proposal. However, he would not comment on whether he believed a deal could be reached by the start of Gulfstream’s Saturday card, which features the Claiming Crown event.

Signals from the Monarch tracks, which include Laurel, Tampa Bay, Golden Gate, and Turf Paradise, began to be cut off at the cooperative sites last weekend. A previous contract between the two parties expired Nov. 30.

Monarch has offered to allow the cooperative’s sites to continue to offer wagering on the company’s signals while the negotiations took place, but the cooperative has declined.

[Kasept]

Monarch has offered to allow the cooperative’s sites to continue to offer wagering on the company’s signals while the negotiations took place, but the cooperative has declined.

Why would the Co-op NOT allow its' patrons to bet the signals while negotiations continue?

[Kasept]

Among other positive items this fall in racing, Charlie Hayward explains why the negotiations to raise the signal fees are important.. and fair: https://www.thoroughbredracing.com/c...an-racing-fall

Good news item #3: Simulcast impasse between Stronach Group and Mid-Atlantic Cooperative

At first glance, one might not consider the trouble between Stronach’s Monarch Content Management and the collection of small Thoroughbred and Standardbred tracks that make up the Mid-Atlantic Cooperative to be good news. But it is good news, and it is important for the future of quality Thoroughbred racing in the U.S. As I wrote in an earlier commentary, higher-quality, net-exporting racetracks have long been shortchanged in commission when they sell their signal to simulcast locations.

Monarch represents Stronach tracks Gulfstream Park, Santa Anita, Pimlico, Golden Gate, Laurel, Pimlico and some other major tracks such as Tampa Bay Downs. The Mid-Atlanic Cooperative generally represents smaller tracks and negotiates a set fee for all of their member tracks. However, at least two Mid-Atlantic member tracks, Colonial Downs and Suffolk Downs no longer conduct Thoroughbred racing and at least five of their member tracks operate slot machine gaming businesses at their racetracks. The fact that these smaller tracks make more money on a Gulfstream Park simulcast race than Gulfstream Park and its horse owners is not in the best interest of the future of Thoroughbred racing. I congratulate Scott Daruty, the president of Monarch, for forcing this issue and not caving to the short term cash flow benefit.

An anonymous commenter posted the following beneath a Dec. 1 Daily Racing Form article addressing the situation written by Matt Hegarty:

“30 years ago the pittance that the simulcast sites paid to the tracks (content) was considered found money.

Now the content provider gets 3-5% depending on the track while the simulcast site gets 15-17%, the blended takeout being 20%. Why shouldn’t it be 10-10%. In fact if a site doesn’t provide live racing why not 15-5% to the content side. The fact is the larger tracks have been subsidizing the smaller tracks by this split of the simulcast money.

Bottom line is Stronach is right….”

Anonymous, whoever you are, you have it absolutely correct.

[jnunan4759]

As you said Steve, why can't they keep going on the previous deal and keep the signals and pools open and work on a new deal. They could maybe set some deadlines and all, but shutting down the betting just screws everybody. It's like a strike where everybody loses.

They've done great work on making the medication rules uniform, now why can't they tackle the ADW issue and then takeout. To have those issues uniform would be fantastic.

The industry must take the initiative. The more government control, the less favorable things are. It's proven fact.

As you can see with the NTRA (a big failure), it comes down to people agreeing. Not a big organization or government. It's a bunch of people saying OK.

[jms62]

Originally Posted by Kasept

Why would the Co-op NOT allow its' patrons to bet the signals while negotiations continue?

Seems to be a tactic to pressure Stronach by eliminating those revenue streams ahead of a big handle day. Seems like scorched earth to me.

[Kasept]

Originally Posted by jms62

Seems to be a tactic to pressure Stronach by eliminating those revenue streams ahead of a big handle day. Seems like scorched earth to me.

Yeah.. That makes sense. They failed miserably though given GP handle was up quite a bit (10+%) versus last year. I think that number shows they have momentum into the season from the successful 'Gulfstream West' moniker concept. Separately, on track they were up 36%.

[casp0555]

Finally got around to reading my home e-mail, received this from Sam Houston

To All SHRP Simulcast Customers:

Sam Houston Race Park is one of 23 members of the Mid Atlantic Cooperative. The Cooperative negotiates simulcast contracts on behalf of its member tracks.

Monarch Content Management Company is another cooperative that negotiates simulcast contracts on behalf of its member tracks. The Monarch tracks include: Tampa Bay, Golden Gate, Gulfstream Park, Laurel Park, Los Alamitos Thoroughbred, Meadowlands, Portland Meadows, Santa Anita, and Turf Paradise.

The contract between Mid Atlantic and Monarch has expired. Attempts at negotiating a renewal have so far been unsuccessful. Monarch is demanding rate increases in excess of 20% and other conditions that Mid Atlantic, on behalf of its 23 member racetracks, cannot accept.

The result of this impasse means that starting on Monday December 1st, Sam Houston Race Park and all other members of the Mid Atlantic Cooperative will be unable to simulcast the Monarch tracks.

The Mid Atlantic Cooperative remains committed to working with Monarch to arrive at an agreement that benefits all parties involved.

We apologize for the inconvenience this creates for our valued SHRP simulcast customers. A reasonably priced arrangement is necessary so we can continue to provide you with current levels of service for the long term.

Thank you for your continued support and understanding. We will keep you updated on this matter.

Sincerely,
Dwight Berube
Vice President
Sam Houston Race Park

Not much left after that except for NYRA

[Scav]

Originally Posted by Kasept

Yeah.. That makes sense. They failed miserably though given GP handle was up quite a bit (10+%) versus last year. I think that number shows they have momentum into the season from the successful 'Gulfstream West' moniker concept. Separately, on track they were up 36%.

For all the negative stuff said about Stronach, sure seems like he and the people he has working for him have a clue about how to move the racing industry forward.

[Cannon Shell]

Originally Posted by Kasept

Yeah.. That makes sense. They failed miserably though given GP handle was up quite a bit (10+%) versus last year. I think that number shows they have momentum into the season from the successful 'Gulfstream West' moniker concept. Separately, on track they were up 36%.

I can take credit for at least .0003% of this increase

[asudevil]

We could have serious issues here in NV:

http://www.reviewjournal.com/sports/...-horse-players

[Kasept]

There has been no progress whatsoever in the Monarch-Midatlantic negotiations. Assuming the situation continues into next week, Scott Daruty will visit ATR on 1/5 or 1/6 to provide an update and context to Monarch's side of the impasse.

[declansharbor]

Originally Posted by Kasept

There has been no progress whatsoever in the Monarch-Midatlantic negotiations. Assuming the situation continues into next week, Scott Daruty will visit ATR on 1/5 or 1/6 to provide an update and context to Monarch's side of the impasse.

Turf Clubs here in Philly are (even more) depressing as of late. The form is so thin you can fit in an envelope lol...Something needs to happen, and soon.

The part that irks me is that Midatlantic refused to import the signal that Monarch offered to continue until things were worked out. I'd love to meet the person responsible for that 'brainiac' decision. It's like Midatlantic tried calling Monarch's bluff, all while holding 'rags in the hole' themselves.

[jnunan4759]

I was also at one of the Turf Clubs of Parx this Friday and Saturday just to get out of the house and hang with some friends in the same boat. They were happy AQU was open, but it's not everybody's favorite winter betting venue.

My estimates and those I got from others was business was off 60% to 75%.

One thing people forget is that that waitresses/waiters. bartenders and mutuel clerks all suffer in this. Ticket-takers don't get tipped with nobody playing and hitting nice tickets, bartenders and wait staff don't get tipped from customers who aren't there. They all took a hit 2 weeks before Christmas.

I'd like to see what exactly we're talking about here. Both sides are secretive about percentages and arrangements. I kinda feel that this is my $2 and I should really know where it's all going. One of the obstacles is that it is basically unregulated by the state jurisdictions beyond what is going on in that jurisdiction. For example, in PA, the racing commission controls where it's state-based (Parx, Penn Nat) handle goes and it's public record. Simulcasting is different. This Mid-Atlantic Coalition and Monarch are not racing entities and come under no jurisdiction of state racing commissions.

Maybe they should.

I'm going to think up some questions and post them later this week. Not that I think any of the 2 groups involved in this really have any stake in what the betting public think. They are paid by the tracks and, most likely receive no difference in income related to handle. They seem to be buying and selling groups. No sales or performance commission as such. I don't know.

If anybody can get this settled, it's Steve.

[blackthroatedwind]

Originally Posted by jnunan4759

If anybody can get this settled, it's Steve.

That's not entirely fair. Santa is free for a little while now as well.

[jnunan4759]

Not here in PA around Philly, we're totally blacked out of Santa Anita, Laurel, Gulfstream, Tampa Bay, Golden Gate and others.

[jnunan4759]

Well what is fair ? We don't know because neither of these groups will say what they offered and counter-offered. For 95% of the country, it doesn't matter because life goes on as always.

The public gets jammed in this. Maybe I'm naive, but in this age I think that if you are offering a racing product, I should be able to wager on it. I would think you'd want me to wager on it.

[Kasept]

Originally Posted by blackthroatedwind

That's not entirely fair. Santa is free for a little while now as well.

We're both on vacation..

[saratogadew]

Originally Posted by blackthroatedwind

That's not entirely fair. Santa is free for a little while now as well.

pretty funny a.s.

[asudevil]

Looks like NV has a NYRA signal for now.

http://www.reviewjournal.com/sports/...ooks-stay-open