07/05/2016 8:07AM

Gisser: Northfield, horsemen stand firm in contract dispute

Derick Giwner
Horsemen at Northfield Park and management are involved in a 15-month contract dispute.

With millions of dollars streaming into Ohio harness racing thanks to video lottery terminals at “racinos,” you would think everything would be flowers and unicorns in the Buckeye State these days. But in Northeast Ohio, they are not. 

In a June 15 memo, Northfield Park management announced plans to close the backstretch on August 1st, to cancel a planned purse increase and actually reduce purses on that date (despite currently being underpaid by $8.4 million), and implementation of “other cost reduction changes and operational measures as they become necessary.”

The reason? A 15 month impasse with horsemen over structuring of payments in regard to Northfield being able to export its signal (simulcast) to other locations, as well as a number of other horsemen-related issues.

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Northfield Park General Manager Brent Reitz provided the following statement on behalf of Northfield’s Management, “There is no one who has given the harness horsemen in Ohio more money and more racing opportunities over the years than Northfield Park. In fact, in just the past 30 months we have deposited over $42 million from VLT’s into the horsemen’s accounts, and we are up 24% year to date on-track and 7% year to date on our export signal over 2015. The horsemen want to break from 20 years of past precedent by holding our export signal hostage in order to renegotiate a 10 year deal struck in 2014. This we refuse to do. We hope the OHHA and its board choose not to risk 20 years of hard work, cooperation and success.”

Renee Mancino, the Executive Director of the Ohio Harness Horsemen’s Association, told me the initial dispute included differences over how purse increases should be configured and how conditions for horsemen were written. Also up for discussion were the Ohio entry preference rule and the idea of paying drivers a flat-rate for drives. While there were discussions, little of consequence was resolved.

The bigger issue became the horsemen’s approvals for Northfield to send out its signal to other tracks. The OHHA claimed it needed verifiable numbers that Northfield considered proprietary, despite the fact that all the other tracks in Ohio provided the information.

“Doing business in just one jurisdiction, they just don’t understand the industry standards. All the other permit holders provided the information we requested,” explained Mancino. “We have a responsibility to verify the numbers, especially as the purse pool balance has consistently increased. Northfield allowed us access to the numbers on their property, with no notes or pictures or copies to be taken off the property. We are talking an 18 or 20 page document. I don’t make all the decisions. I have a Board of Directors. We believe in a trust and verify, but so far Northfield has not given us anything to verify.”

The racing industry showed a glaring lack of preparedness for simulcasting when it first began, pricing its product at a far lower rate (to incoming locations) than it should have. That falls squarely on the backs of some of the biggest names in racing, especially on the Thoroughbred side, but once the super discount model was hatched, it was very tough to raise prices. That basic mistake by the industry is at the heart of every simulcast dispute. The exporting track gets 3-5% of money wagered, and there just is not enough to share reasonable amounts. While that is at the heart of this issue, that faux pas is another story for another day.

The Milsteins, Northfield’s owners, have always been tough bargainers. Current Northfield Chairman Brock Milstein learned well from his father Carl, who in his day made Jeff Gural look like a softie. Carl got what Carl wanted, and Northfield’s management team has always followed that philosophy, often taking things right up to the edge, and once in a while beyond. This has been assured whether via Carl himself or his managers over the years, including Tom Aldrich, who was equal parts charmer and bulldog, depending on what the situation called for, and now Reitz. In fact, the language in this memo makes me believe that Aldrich, who was kicked upstairs to Vice Chairman a couple years back, had a strong hand in its crafting.

During much of that time, Ohio racing was withering on the vine and the horsemen usually capitulated, or agreed to long-term contracts that did not always take into account potential for escalating income and new opportunities. That is not the case today. Today the horsemen control a large chunk of that slot money themselves.

Despite dealing from a position of (apparent) greater strength than in the past and the lack of cooperation from Northfield, the OHHA has continued to grant short-term approvals for the track to simulcast, first on a monthly, then on a meet-by-meet status. On June 20, five-days after the Northfield memo was issued, they granted approval to the track to simulcast through the end of the year, something the track wanted from the get-go, but Northfield, as of this writing, has not backed off its threat to close the backstretch and take other actions. In fact, in my conversation with GM Reitz, no mention was made of the approval being granted or of disaster being averted, nor would anyone from Northfield provide more information than the statement published above.

Finally, Mancino said, “If Northfield stops sending out a simulcast signal, that is their choice, not ours. They have our approvals. Closing the backstretch on such short notice would be retaliatory and disastrous to the horsemen, the horses and to the Village of Northfield, which would lose a large chunk of income tax.”

In the past Northfield has always won these battles. They dealt from a position of strength. And even today, they provide more racing opportunity than the other three Ohio tracks combined. But there stance is weakened in the current age, when horsemen have more money in their pockets and may be better able to wait out an impasse.

I have no idea who is eventually going to win this battle. Actually, yes I do. Nobody! No matter what the outcome, even a legitimate negotiated settlement after 16 months or so, the animosity will remain. Northfield looks petty and cheap. The horsemen look greedy. And that is a black mark on Ohio racing.  Now go cash. Hopefully on Northfield’s simulcast signal. See you next month.