04/17/2013 2:46PM

Woodbine facing a year of transition in 2013

Email
Michael Burns
Woodbine will open its 2013 Thoroughbred meeting on Saturday.

ETOBICOKE, Ontario – Woodbine Entertainment Group, heading into Saturday’s opening day of the 2013 Thoroughbred meeting, is facing challenges like none it has ever faced before.

With the slots-at-racetracks program having expired March 31, Woodbine must deal with the loss of some $60 million in annual revenue, based on its 10 percent share of the proceeds from 3,000 machines here. The horsemen also received 10 percent, for purses.

But Nick Eaves, chairman and chief executive officer of Woodbine Entertainmnt Group, is managing to remain upbeat after months of negotiations with the Ontario Lottery and Gaming Corporation, which managed the slots-at-racetracks program; the provincial government, which is helping racetracks cope with the loss of slots revenue with “transitional funding” agreements; and the city of Toronto, which is exploring the prospect of launching a new casino within the downtown core while keeping open the prospect of casino expansion at Woodbine.

“Obviously, it’s been a very disruptive 12 months,” Eaves said. “To have the live Thoroughbred meet to be able to focus on again is a relief, even though we’ve had to make significant change to adapt to the new reality.”

The slots area remains open, but Woodbine’s only financial benefit now is based on a lease agreement with the Ontario Lottery and Gaming Corporation, the terms of which are not public.

“The combined revenue between our lease with the OLG and the transitional arrangements we have entered into with the ministry of agriculture is much less than the revenue [that] was coming from the racetrack slots program,” Eaves said.

Eaves said the amount of transitional funding Woodbine will receive falls under a confidentiality agreement with the province.

Woodbine has been forced to take an aggressive approach in dealing with the shortfall.

The Thoroughbred meeting, originally scheduled for 167 days last year but reduced to 156 with the elimination of Thursdays late in the season, has been slashed to 133 days. The Standardbred season, between Woodbine and Mohawk Raceway, has been reduced from 216 to 183 days.

The number of employees has been cut sharply. Woodbine has eliminated 25 percent of its salaried positions, amounting to some 110 jobs, and numerous hourly roles have been scaled down or discontinued.

“Bet Night Live,” which appeared on The Score and catered to neophyte horseplayers, has been canceled, as has Woodbine’s regular full-card Sunday coverage on the same television network.

“It’s one of the areas that we had no choice but to make change,” Eaves said. “In terms of the cost associated with producing that programming, we just couldn’t do it any longer, given the reduction in revenue.

“We have maintained our network presence on the CBC, which will include the [Woodbine] Oaks and Plate Trial on June 9 and the Queen’s Plate on July 7, and we’re still working on a limited number of feature stakes races that we would get on The Score.”

The physical operation of the racetrack also has been tightened up, with the second floor along with its food and beverage service closed and the simulcast operation being shifted to the third floor on dark days.

Despite those economies, Eaves acknowledged that Woodbine’s revenue will be a far cry from the glory days fueled by the slots revenue.

One bright note is that Woodbine’s available overnight purse distribution for the Thoroughbreds is projected to remain at $508,000. Standardbred purses will decline by some 25 percent.

As recommended by the transitional funding panel, purses will be supported by the horsemen receiving 100 percent of wagering commissions, which formerly were shared with the racetrack.

“Frankly, I don’t think there’s another track that can actually honor that commitment and have a purse scale that’s acceptable,” Eaves said.

“We’re projecting sufficient parimutuel revenues being generated to meet those purse obligations.

“We’re hopeful, ultimately, that we’re going to be able to generate field size and customer-generated parimutuel pools on our Thoroughbred fields to be increasing our wagering.”

To that end, Woodbine recently announced that it would be dropping its win takeout on live Thorougbred racing by 2 percent to 14.95 percent, the lowest in North America.

“We think that’s going to position us well,” Eaves said. “That’s great value on our largest pool. I think it’s a real advantage for customers who currently bet Woodbine win pools, and we think it’s also a compelling proposition for North American customers who are currently betting other tracks.”

Meanwhile, Woodbine continues to be an option for a Toronto-area casino, for which it would receive hosting fees, and was accorded very favorable notices in a recent city staff report presented to the executive committee of the Toronto City Council on Monday.

Toronto Mayor Rob Ford is adamant in his pursuit of a downtown casino, but Eaves stressed that it is not an either/or situation. Woodbine and the city are in different gaming zones, which can host casinos based upon a plan announced by the Ontario Lottery and Gaming Corporation last year.

“Woodbine would be a logical place to expand,” said Eaves, citing the staff report that suggested Woodbine could accommodate as many as 4,500 slot machines and 150 table games.

“The report recommends that the existing operations at Woodbine be expanded, ultimately to accommodate becoming become a full-integrated entertainment complex, which is the city’s view of how they want to see gaming.

“We support that. The whole Woodbine property development vision has always been about taking all of the foundation, the racing and gaming business, and building upon that with other uses that can drive those core businesses.

“A hotel has always been a part of it, a live performance venue has always been a part of it, a district with a retail and entertainment division has always been a part of it.

“The Woodbine site is zoned and planned to do exactly that.”

Woodbine had entered into an agreement with The Cordish Cos., a Baltimore-based group, to develop the property in such a manner back in the summer of 2005.

The project, which was to be known as Woodbine Live!, faced numerous setbacks and officially was abandoned this year.