THE FEDERAL PAYCHECK PROTECTION PROGRAM WAS POPULAR WITH HORSE-RACING BUSINESSES AND NON-PROFITS

In response to the Covid-19 pandemic of 2020, the U. S. Congress passed the Paycheck Protection Program (PPP) and President Donald Trump signed it into law.  Relief loans to businesses and nonprofit organizations via banks could be used for payroll costs, interest on mortgages, rent, and utilities.  The loans are forgivable if jobs are retained.

As of June 30, 2020, 5,461 lenders had provided $521.5 billion in loans to 4,885,388 million businesses and non-profits, accounting for 51,125,937 jobs retained.

Companies, partnerships, and non-profits in the American racing industry have been active participants in PPP.  The program was used by a cross section of businesses, including, for example, racetracks, farms, horse transporters, veterinarians, and trainers, among others. 

To illustrate, following is a small but representative sampling of racing-related businesses and a few non-profits that have received PPP loans of at least $150,000.

American Ruidoso Downs LLC, $1-2 million loan approved, 115 jobs retained
Bob Baffert Racing, $350 thousand-$1 million, 79 jobs
Blood-Horse LLC, $350 thousand-$1 million, 40 jobs
Bluegrass Thoroughbred Services, $150-350 thousand, 13 jobs
California Thoroughbred Horsemen’s Foundation Inc. $150-350 thousand, 19 jobs
Chad C. Brown, $1-2 million, 183 jobs
Claiborne Farm, $1-2 million, 87 jobs
Colebrook Racing Stable LLC, $150-350 thousand, 18 jobs
Del Mar Thoroughbred Club, $2-5 million, 322 jobs
Denali Stud, $350 thousand-$1 million, 60 jobs
Ellis Entertainment Company, $350 thousand-$1 million, 64 jobs
Emerald Downs Racing, $1-2 million, 207 jobs
Eurton Thoroughbred Racing, $150-350 thousand, 30 jobs
Fasig-Tipton Company, $1-2 million, 58 jobs.
Hill ‘N’ Dale Kentucky Inc., $350 thousand-$1 million, 63 jobs
Kentucky Derby Museum, $350 thousand-$1 million, 101 jobs
Kentucky Downs LLC, $1-2 million, 254 jobs
KRM Wagering LLC, $350 thousand-$1 million, 200 jobs
Machmer Hall Thoroughbreds LLC, $150-350 thousand, 20 jobs
Millennium Thoroughbreds LLC, $150-350 thousand, 24 jobs
Mott Thoroughbred Stables, $350 thousand-$1 million
National Museum of Racing, $150-350 thousand, 20 jobs
North Metro Harness Initiative, $350 thousand-$1 million, 21 jobs
Ocala Breeders Sales Company $1-2 million, 194 jobs
R. Brisset Thoroughbred Stable LLC, $150-350 thousand, 25 jobs
Ralph Nicks Thoroughbreds, $150-350 thousand, 26 jobs
Richard Mandella Inc., $150-350 thousand, no report on jobs retained
Rood, Riddle & Partners PSC, $2-5 million, 374 jobs
Rood & Riddle Veterinary Pharmacy LLC, $150-350 thousand, 20 jobs
Sallee Horse Vans, Inc. $1-2 million, 81 jobs
Stone Farm LLC, $150-350 thousand, 21 jobs
Tampa Bay Downs, $2-5 million, 461 jobs
The Lexington Trots Breeders Association, $350 thousand-$1 million, 99 jobs
The New York Racing Association, $5-10 million, 453 jobs
Thoroughbred Daily News LLC, $350 thousand-$1 million, 22 jobs
Thoroughbred Racing Protective Bureau Inc., $150-350 thousand, 11 jobs
Thoroughbred Retirement Foundation Inc., $150-350 thousand, 13 jobs
Todd A. Pletcher Racing Stables, $1-2 million, 139 jobs
The Jockey Club Information Systems, Inc., $350 thousand-$1 million, 28 jobs
Three Chimneys Farm, $350 thousand-$1 million, 60 jobs
Tommy Town Thoroughbreds LLC, $150-$350 thousand, no report on jobs retained
West Point Thoroughbreds, $150-350 thousand, 10 jobs
Winchell Thoroughbreds LLC, $150-350 thousand, no report on jobs retained

Of 4,885,388 PPP loans, 72.8% of them were over $150,000, 56.6% exceeded $350,000, 34.8% were over $1 million, and 6.5% exceeded $5 million. The New York Racing Association was the recipient of the largest loan going to an equine-type business.

(Click here for a searchable database of PPP loan recipients of at least $150,000.)

Copyright © 2020 Horse Racing Business

BOOK REVIEW OF “THE GREATEST GAMBLING STORY EVER TOLD”

The title of Mark Paul’s book The Greatest Gambling Story Ever Told is hyperbole but Mr. Paul’s book is nonetheless a captivating true narrative of two highly risky gambles.  The first gamble was betting in the 1988 Kentucky Derby futures pool that the filly Winning Colors would run in and win the race and the second gamble was that the bet could be collected on even if she did.

In the winter of 1988, D. Wayne Lukas was prepping the massive 3-year-old Winning Colors for the Kentucky Derby or Kentucky Oaks on behalf of her owner Eugene Klein, who also owned the San Diego Chargers of the National Football League.  Mark Paul and two acquaintances of his from California are convinced that Winning Colors has a solid chance to win the Derby.  They want to bet on her in a futures pool, taking on the risk that Lukas and Klein will opt instead to run her in the Kentucky Oaks for 3-year-old fillies, in which case their futures wagers will be worthless. 

Paul and his friends decide to bypass the Las Vegas casino futures pool and instead bet at the allegedly drug-gang-owned Agua Caliente Racetrack in Tijuana, Mexico, where they can get much higher odds.  This decision is treacherous because they may not be able to collect if Winning Colors wins the Derby…or if they do collect, they could be robbed and possibly killed in Mexico.  Another obstacle is how to get winnings of over $200,000 back into the United States without notice from U. S. border guards. 

Mark Paul, a commercial real estate broker nicknamed “Miami,” and his two accomplices are Damon Runyon-like characters, similar to so many racetrackers.  Paul has raced motorcycles, sailed a motorcycle through the Panama Canal, and was incarcerated in a Mexican jail for six days at age fifteen.  His buddies Dino and a rotund Big Bernie are expert horse-racing handicappers, who spend much of their days-off from work at Santa Anita and other West Coast tracks.

While the vagaries of betting on Winning Colors to win the Kentucky Derby—and collecting at a racetrack run by a suspected drug cartel—is the theme of the book, Paul also delves into the personal lives of himself and Dino and Big Bernie, notably Paul’s sometimes rocky relations with his girlfriend.  This provides a human subplot to a story ostensibly about gambling.

The 147 pages of Paul’s paperback fly by if you enjoy tales of risk-taking adventurers and horse racing.

Copyright © 2020 Horse Racing Business

WHY A 2020 KENTUCKY DERBY WITH SPECTATORS IS ILL-ADVISED

Greg Cote of the Miami Herald just published an article titled “Is MLB Walking into a Mess it will Regret,” which discussed whether the 2020 season should be played at all. He asked a troubling question: “Should it be happening…in the midst of a pandemic that has taken more than 120,000 lives and is showing a worrisome uptick in cases?”

The very same question looms large about the 2020 Kentucky Derby, at least a Derby with fans in attendance trackside.

Consider pertinent facts pertaining to Churchill Downs, Inc.’s decision to hold a scaled-down 2020 Kentucky Derby complete with spectators.

First, the coronavirus is spiking in 29 states as people venture out and try to resume some semblance of their lives before the coronavirus.  On Meet the Press this past Sunday, Health and Human Service Secretary Alex Azar warned the country that increased outbreaks in southern and southwestern states are likely to spiral out of control without immediate intervention.

He cautioned: “The window is closing.  We have to act, and people as individuals have to act responsibly. We need to social-distance. We need to wear our face-coverings if we’re in settings where we can’t social-distance, particularly in these hot zones.”

A 2020 Kentucky Derby with spectators is not acting responsibly because crowds spread Covid-19.

Second, all public events with ties to the Kentucky Derby, such as the parade and Derby-eve charitable fundraising events, have been cancelled over Covid-19 concerns.

Third, the World Championship Horse Show at the Kentucky State Fair, held the week prior to the Derby, will not be able to have spectators by edict of Kentucky governor Andy Beshear.  (The fairgrounds is located less than four miles from Churchill Downs.) Why a horse show that draws perhaps 5,000 fans on its closing night in a 19,000-seat arena is deemed unsafe for spectators but the Derby with a much larger crowd is not is inexplicable. 

Fourth, the most optimistic projection for a Covid-19 vaccine is early 2021.

Fifth, while the Kentucky Derby 2020 is about two months away, the pandemic is likely to be worse in September than it is now. The World Health Organization said on June 29 that “the worst is yet to come.”

Given the forgoing facts, as of July 2020, there is no sound reason to believe the Derby can be held safely with spectators.  Even with reduced attendance, the Derby will be a contagion enabler, particularly in light of the party-like atmosphere and booze that encourage social proximity rather than social distancing.  

Moreover, from a business standpoint, Churchill Downs is inviting lawsuits from attendees and employees who later claim they contracted Covid-19 as a result of track management’s negligence. (On Monday, the union representing Las Vegas hospitality workers filed a lawsuit against casino operators for allegedly failing to protect employees from Covid-19.)

The board of directors and upper management of Churchill Downs have shown themselves to be skilled executives who have richly rewarded long-term shareholders. With the obvious health and financial risks of a Derby with spectators, they surely may soon reconsider and prudently decide to run a spectator-free Derby after all…following the lead of states that have reversed course and once again closed restaurants and other facilities as cases of Covid-19 have increased dramatically.

In the words of Dr. Anne Schuchat of the Center for Disease Control about the pandemic: “This is really the beginning. I think there was a lot of wishful thinking around the country that, hey its summer, everything is going to be fine…We are not over this and we are not even beginning to be over this.”

Copyright © 2020 Horse Racing Business