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Ex plan surest bet for Downs

$5-M subsidy cut may sink jockey club

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You can forgive the Manitoba Jockey Club for feeling a wee bit shocked and awed at the events of the last few days.

A proposal to have the Red River Exhibition take over Assiniboia Downs -- the facility owned and operated by the MJC -- came up rather suddenly on Jan. 30. The neighbouring RRE wants to take over the track with a promise that thoroughbred racing will continue. However, there was no formal discussion with the MJC before the story went public.

That's is not to say the whole proposal came out of thin air.

The MJC is caught between two large and inescapable problems: the declining economic viability of horse racing and the immediate prospect the province will cut financial support it has provided to keep the industry afloat.

In Manitoba, the MJC and the horse-racing industry receive $10 million in government subsidies and tax rebates. This includes $6.5 million from VLTs at the track, a rebate of taxes charged on winnings, supplements for race purses and direct subsidies to breeders. Without this support, horse racing in Manitoba would have died a long time ago.

The hard truth is that horse racing all over North America is fighting for its life. The total "handle" -- gambling parlance for the total amount of money wagered on horses -- has declined in Canada between seven and nine per cent annually. In New York state, the handle is now about 20 per cent of what it was in 1974. Although horse racing's premier events -- the Triple Crown races and the Breeders' Cup -- show strong growth, overall attendance is steadily evaporating.

Why such a decline? Online poker, Sport Select and destination casinos have overtaken horse racing as a preferred gaming option. Horse racing has also been ravaged by scandal, particularly rampant equine drug abuse.

As interest in horse racing wanes, so too has the will of government to support it. Many provinces have already eliminated support for horse racing. In Manitoba, the province is facing a significant budget deficit and, it has been learned through this story, was about to cut in half its support for horse racing.

Notwithstanding the manner in which the Red River Exhibition unleashed the news, the fellows at the MJC should have seen some trouble brewing. The fact the RRE did discuss this with the province but not with the MJC speaks volumes about what is undoubtedly a strained relationship between the two groups, and shows the MJC has lost whatever political leverage it once had.

Of course, horse racing as an industry has hit above its political weight for some years now. Successive provincial governments have poured increasing amounts of subsidies and rebates into the industry, despite the fact it has been in steady decline. That is not to say the MJC has not done some good; it's not hard to find people who think Assiniboia Downs is much better off now than it was in its previous lives. That having been said, there was a growing frustration by the province with the MJC's refusal to seek and develop new business to make the track busier and more profitable. In addition, harness racing had tried for years to get back into the Downs with no success.

The MJC appears for all intents and purposes to have been stuck in a rut with no plan for how to survive in the event the government cut support. There may have been long-term plans -- the MJC has suggested as much -- but it did not appear there was anything in place to soften the blow of a $5-million cut in support when the province tables a budget in a few weeks. On the other hand, the RRE is full speed ahead with an ambitious expansion plan to establish a year-round agricultural exhibition and convention centre.

That has given the RRE the look of an entity with a future.

The next step is unclear. As owner of the Downs, the MJC is under no obligation to transfer the facility to the RRE. However, as a non-profit, its options are limited. It's not clear the MJC could simply sell the land, and although it could borrow on the value of their asset, without a dynamic new business plan, it's hard to see that being a good idea. The MJC may not like the way it's been treated, but declining economic prospects and reduced government support make this very nearly a snooker. A $5-million cut in support will likely mean bankruptcy for the MJC at some point this year.

Some in the horse-racing community may not like the manner in which the news was delivered, but metaphorically speaking, this is a narrative they should understand well.

In the race to save horse racing, the province was essentially presented with two options. After handicapping both, it has gone all in and wagered on the Red River Exhibition, in large part because it's not clear the Manitoba Jockey Club will even make it to the gate.

Like all forms of gambling, there is no such thing as a sure thing. If you're a fan of the sport of kings, all you can do now is hope the province has found a true winner.

Republished from the Winnipeg Free Press print edition February 2, 2013 0

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