05/13/2010 11:00PM

TrackNet partnership to dissolve


TrackNet, the partnership formed three years ago by Churchill Downs and Magna Entertainment Corp. to push up signal prices for their tracks, will be dissolved, the two companies said late Friday.

The break-up is taking place against two critical backdrops. Magna Entertainment was dissolved late in April as part of a bankruptcy reorganization and all of its remaining assets, including the half-interest in TrackNet, were transferred to MI Developments, its parent company and largest creditor. In addition, federal antitrust officials are currently reviewing an agreement Churchill reached late last year to merge with Youbet.com, the second-largest account-wagering company in the United States and the owner of one of three large U.S. bet-processing companies.

In a news release, officials for Churchill and MI Developments said that TrackNet had achieved the goals the companies set out to reach when the company was formed. Those goals included fostering "an open and competitive business environment" in which signals were widely available on competing account-wagering platforms and ensuring that "content creators are compensated."

"We are proud of the TrackNet Media team's record and feel it has accomplished all that can be expected of it," said Bob Evans, Churchill's chief executive, in the release.

Liz Harris, a spokesperson for Churchill, said that the decision to dissolve the partnership "had nothing to do" with the review by anti-trust regulators into the Youbet merger.

"We both felt that we had accomplished what we set out to do," Harris said.

Dennis Mills, the chief executive officer of MI Developments, said that the decision to dissolve the company was "mutual." Without commenting specifically on whether anti-trust regulators or industry organizations had raised concerns about the partnership, Mills said that TrackNet was surrounded by "some edginess" that led the companies to make the decision.

"Rather than create more tension in the industry, we both came to the conclusion that it was in our mutual interest, and the mutual interest of the racing industry, to take that piece off the table," Mills said.

According to the release, Churchill and MI Developments will remain partners in HorseRacing TV, a national horse racing broadcasting channel that is the main competitor to the more widely distributed Television Games Network. Though many account-wagering operators have reached deals to share wagering content, the two television networks continue to retain exclusive broadcasting rights for many tracks.

The release said that all existing contracts between TrackNet and individual tracks will remain valid until they expire. The contracts were all reached between the individual tracks represented by TrackNet, the release said.

During TrackNet's existence, Churchill and MI Developments moved aggressively to strike agreements that pushed up the rate that simulcast sites paid for their signals. The tactics sometimes resulted in extended blackouts, but those blackouts have become fewer and farther between in the past year.

"The partnership made a lot of sense and brought about a lot of improvements," Mills said. "But there were some people who didn't agree with it."

Although Churchill and Youbet have both said they expect their merger agreement to close by mid-summer, the two companies recently announced that an extension date in the agreement was triggered because the deal has not yet closed. The deal will make Churchill Downs the largest account-wagering operator in the United States and will include the bet-processing company United Tote.

MI Developments also operates an account-wagering platform, XpressBet, and owns the bet-processing company AmTote.