06/21/2005 11:00PM

Big bid for Hollywood Park


INGLEWOOD, Calif. - Churchill Downs Inc., which has been negotiating for months to sell Hollywood Park, is close to a deal with Stockbridge Capital Partners, the owner of Bay Meadows racetrack in northern California, according to a published report.

The report, in the Los Angeles Business Journal, said that Stockbridge has bid $275 million for the 240-acre property.

On Wednesday, Hollywood Park president Rick Baedeker declined to comment on the possibility, but one insider suggested that an agreement could be reached within a week.

Churchill Downs, which owns seven racetracks, including its flagship track in Louisville, Ky., bought Hollywood Park in 1999 for approximately $140 million. According to the report in the Business Journal, Stockbridge made a late bid that was 10 percent higher than the previous top offer, catching other buyers - mostly large homebuilders - off guard. Stockbridge, a private equity firm, is the owner of Bay Meadows Land Company.

The potential sale of Hollywood Park comes at a time when Churchill Downs is exploring the possibility of bidding on the franchise to operate the New York Racing Association's three racetracks - Aqueduct, Belmont, and Saratoga. NYRA's franchise expires at the end of 2007, and a request for proposals to operate the tracks will likely be released by the state by the end of the year. The request is expected to ask for a large upfront cash payment from companies seeking to acquire the franchise, which would include the operating rights to a slot-machine casino at Aqueduct that is expected to generate $1 billion a year in revenue.

A sale of Hollywood Park would result in development of the property and the likely cessation of racing in a few years. According to the report in the Business Journal, Stockbridge would continue racing, with Churchill Downs managing the property, while seeking entitlements for the property.

The area around Hollywood Park is already the site of some new real estate development. Land to the north of the barn area has been sold for a housing development, and a plot south of the barn area is the site of a large shopping center.

The absence of racing at Hollywood Park would set off a battle over racing dates in Southern California. Del Mar, the Oak Tree Racing Association, which races at Santa Anita, and Santa Anita itself are all likely to ask the California Horse Racing Board to expand their meetings.

Mike Pegram, the prominent owner-breeder, has proposed a $40 million expansion of Los Alamitos Race Course in Orange County that would include the construction of a one-mile dirt track, a turf course, and renovations of the backstretch and grandstands. Under Pegram's proposal, Los Alamitos would essentially replace Hollywood Park on the calendar, offering Thoroughbred racing in the afternoons and Quarter Horse racing in the evenings.