Fair Grounds Corporation

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Fair Grounds Corporation

1751 Gentilly Boulevard
New Orleans, Louisiana 70119
Telephone: (504) 944-5515
Toll Free: 1-800-262-7983
Fax: (504) 944-2511
Web site: http://www.fgno.com

Public Company
Employees: 805
Sales: $41.7 million (2000)
Stock Exchanges: OTC
Ticker Symbol: FGRD
NAIC: 711212 Race Tracks; 71329 Other Gambling Industries

The Fair Grounds Corporation owns and operates the Fair Grounds Race Course in New Orleans, Louisiana. In addition to Thoroughbred horse racing, the company provides off-track betting and video poker gaming both at the track site and in nearby parishes. Besides offering off-track betting at the Fair Grounds, through an affiliate, Finish Line Management Corporation, it also operates five Finish Line off-track betting venues in adjacent parishes. These also offer video poker in addition to parimutuel wagering, as well as food and beverage services. Each year, the Fair Grounds conducts a racing meet or season that normally runs from Thanksgiving to the last Monday in March. Altogether, the company operates over 300 video poker machines and collects additional monies from the 300 plus gaming machines operated by Finish Line. Besides Thoroughbred horse racing, Fair Grounds hosts other events, notably the New Orleans Jazz and Heritage Festival. Although a public company, the Fair Grounds Corporation is largely owned by the Krantz family, which bought controlling interest in the track in 1990.

1852-62: Union Track in New Orleans Is Laid Out

In many ways, the complex history of the Fair Grounds is a story about people and horses, about jockeys and trainers, legendary Thoroughbreds and their owners, and even some important historical personages who from time to time appear unexpectedlyfigures like Jesse James brother Frank, for example, who in 1902 became betting commissioner for Samuel Hildreth, then the owner of the tracks largest racing stable; or Pat Garret, who gunned down Billy the Kid, and who, in 1893, ran a stable of horses in the Fair Grounds first 100-day meet; or Broadways infamous Diamond Jim Brady, who, on January 17, 1906, was in the stands when a 200 to one longshot, North Wind, won the tracks feature race.

The Fair Grounds can trace its tracks origin back to 1852, when the Union Race Course was laid out on Gentilly Road in New Orleans, the site of the modern track and facility. The Union Course had competition from other tracks, including the Metairie track, which was laid out in 1838. In fact, the Metairie tracks competition grew too tough, and the Union track closed down from 1857 to 1859, when it was purchased by the Metairie Trotting and Pacing Club and renamed the Creole Race Course.

1863-79: The Creole Race Track Is Turned into the Fair Grounds

During the Civil War, racing in New Orleans, soon under Union occupation, came to a virtual standstill at first. However, in 1863, the Creole Race Course was transformed into a fair grounds that was leased to promoters of everything from bull and bear fighting and boxing and baseball exhibitions to, yes, some horse racing. By then the site was called the Fair Grounds.

After the war, the Metairie Trotting and Pacing Club was reorganized as the Metairie Jockey Club, which rebuilt and conducted races at the Metairie track from 1867 to 1872. During that time, some of the clubs younger members formed a new association, the Louisiana Jockey Club, which, under president Gustav Breaux, renovated the Fair Grounds and began racing there at spring and fall meetings. Meanwhile, the old Metairie track was sold off and turned into a cemetery.

It was on April 13, 1872, that the Louisiana Jockey Club held its first race at the Fair Grounds, a two-mile hurdle with eight jumps. Among other noteworthies who figured in the races held by the Louisiana Jockey Club were General George Armstrong Custer, who owned a horse named Frogtown that raced in two-mile heats, and Grand Duke Alexis of Russia, who attended some of the races.

1880-99: New Louisiana Jockey Club Buys the Fair Grounds

In 1880, after Reconstruction ended, the New Louisiana Jockey Club was formed. Raising $75,000, it bought the Fair Grounds and commenced racing there on March 30 of that year. Notables in the grandstands for that season included Ulysses S. Grant, 18th president of the United States.

In 1886four years after electric lighting was used in the Fair Grounds grandstand for the first timeDuncan Kenner became president of the New Louisiana Jockey Club and, in the next year, management of the Fair Grounds was passed over to Caldwell & Lamothe, a partnership. In that same year, 1887, John Campbell opened a jockey school at the track.

Before the century closed, in 1894, the Crescent City Derby was inaugurated. It became the main predecessor of the Louisiana Derby, which in turn became one of the nations greatest racing events. Two years later, track officials experimented with a new starting gate device that helped insure that all mounts would leave the gate simultaneously. Two years after that, in the summer of 1898, the Fair Grounds was briefly converted into Army Camp Foster for training troops readying for action in the Spanish-American War. Finally, in 1899, the track managers laid out a new steeplechase course.

1900-19: The Fair Grounds Faces Tough Times

Steeplechase racing was short lived at the Fair Grounds, lasting only to 1902, when the course was dismantled. With an enlarged grandstand, the track returned to obstacle-free meets as the only kind of racing. It did face new competition starting in 1905, when City Park opened a winter season and went head to head with the Fair Grounds for clientele. A track war erupted in 1906, but in the next year it was settled when Matt Winn, sent to New Orleans by the American Turf Association, became acting general manager of both tracks. Also in that year, 1907, after betting on horse racing was outlawed in Missouri, the Union Park track in St. Louis was dismantled and sent to New Orleans, where, at the Fair Grounds, it was rebuilt.

Between 1908 and 1915, the so-called Locke Law brought a hiatus to racing in New Orleans. The law had emerged from growing public annoyance with the corrupting influence of bookmakers and a growing disillusion with the sport of kings. When it did start up again in 1915, under the control of the Businessmens Racing Association, bookmaking at the Fair Grounds was not allowed. That was only one of its problems, though. In 1917, Jefferson Park, another competing track, opened and, late in 1918, fire destroyed the grandstand at the Fair Grounds. In the next year, the grandstand was rebuilt from the disassembled parts of the grandstand from the defunct City Park racetrack.

1920-41: Parimutuel Betting Is Once More Legalized

Through the early 1920s, the most exciting thing happening at the Fair Grounds was the emergence of Black Gold, one of the all time great Thoroughbreds in the history of racing. In 1926, two years after Black Gold won the Louisiana Derby, Colonel E.R. Bradley, owner of the Palmetto Club, bought the Fair Grounds and ordered the construction of a new clubhouse and stables. Black Gold, which had also won the Kentucky Derby, was put down in January 1928, after going lame in the running of the Salome Purse. The famous horse was buried on the tracks infield.

In 1932, Colonel Bradley retired and the Fair Grounds was leased to a group of Chicago investors headed by J.C. Shank. The hard times led the new owners to reduce the race purses, ultimately dropping them in half. Then, in 1934, they sold out to a syndicate headed by Robert S. Eddy, Jr., and Joseph Cattarinich, who were operating Jefferson Park. The syndicate bought the Fair Grounds for $375,000.

Eight years later, on the eve of World War II, under Governor Sam Jones, Louisiana once again legalized horse-race betting and formed the Louisiana State Racing Commission as an oversight agency. However, that same year, 1940, the owning syndicate sold the Fair Grounds to real estate developers, whose plans were to turn the track and grounds into a subdivision. In 1941, at the last possible minute, a group of New Orleans businessmen led by William G. Helis formed the Fair Grounds Corporation and saved the track from destruction. That year also saw the formation of the Fair Grounds Breeders and Racing Association, which oversaw racing at the track.

1942-82: Racing Continues in the War Years and After

Racing continued during the war. Notably, in 1942, Whirlaway, Calumet Farms famous Triple Crown winning Thoroughbred, won the inaugural Louisiana Handicap. Whirlaway ran at the Fair Grounds as part of a war relief event scheduled by the newly created Thoroughbred Racing Association.

After a brief closure ordered by the War Mobilization Department in January 1945, the Fair Grounds got back in business. For the next several years, it hosted some of racings legendary mounts and jockeys, including Bill Shoemaker, who in 1950 rode in races during the final month of the tracks season. Shoemaker went on to take the national riding title and become the most famous of all jockeys in the sport. Later, in 1958, Tenacious, a very popular Thoroughbred, won the New Orleans Handicap, then won it again the next year.

Company Perspectives:

The Fair Grounds Corporation is a multi-faceted operation that includes a live Thoroughbred racing meet, off-track wagering, and video poker at locations throughout the region and account wagering to local, national, and international customers. As the Thoroughbred racing industry grows and becomes more competitive than ever, Fair Grounds continues to make progress and looks forward to the future.

In 1971, the Fair Grounds, by then very rich in tradition, established its Racing Hall of Fame. In that same year, Jefferson Downs opened at a new location, in Kenner. The old Jefferson Downs was destroyed by Hurricane Betsy. Three years later, Tony Bentley began his 22-year career as Fair Grounds track announcer. He would go on to call some important races, including the 1975 victory of Master Derby in the Louisiana Derby and the 1982 win by El Baba in the photo finish of that same event.

The middle and late 1980s produced considerable excitement at the Fair Grounds. In the 1983-84 racing season, jockey Randy Romero, a native of Erath, Louisiana, set a record for most wins at the Fair Grounds when riding to his 181st victory. Famous mounts running and winning at the track included, in 1984, Wild Again, eventual winner of first Breeders Cup Classic; Tiffany Lass, 1986 winner of the Eclipse Award for the countrys top three-year-old filly; Risen Star, which in 1988 won the Louisiana Derby and went on to win the Preakness and Belmont Stakes; and Honor Medal, which in 1989 just missed his bid to become the only Thoroughbred to win the New Orleans Handicap three times.

1990-2001: Ownership Changes Usher in Significant Revenue Growth

The Fair Grounds changed ownership again in 1990, when the Krantz family bought a controlling interest in the track and saw the facility through a decade of exciting moments. In 1991, the track hosted the first Louisiana Champions Day, an event dedicated to an all-Louisiana bred, ten-race card. Two years later, in 1993, another legend in the making, Dixieland Heat, completed an unbeaten season of racing. Disaster also struck that year when, on December 17, a fire completely destroyed the grandstand. Racing continued with temporary facilities, and in the next year construction began on a new $27.5 million complex that was finally fully completed and opened in 1997. In the interim, in 1996, Dixie Poker Ace became Louisianas all-time money-winning Thoroughbred, and Grindstone won the Louisiana Derby before going on to win the Kentucky Derby, becoming the only horse besides Black Gold to accomplish that feat. Also in 1996, the Fair Grounds set an all time single-day record when, on February 3, racing fans plunked down almost $3.85 million in bets.

Towards the end of the 1990s, increases in purses brought status changes and new records. The Louisiana Derby was upgraded to Grade II status in 1998, and two years later, its purse was increased to $750,000. Before that, in 1998, the Louisiana Champions Day had combined purses of $1 million, making it the richest day in Louisiana racing ever. These milestones at the track testified to how well the Fair Grounds was doing. The best year was 1998, when the Fair Grounds revenues reached $36.8 million and generated a profit of $9.0 million. Its revenue climbed to $41.8 million the next year, but its profits declined to $1.4 million, and in 2000 dropped to $100,000 from gross revenues that had dropped slightly to $41.7 million. Although disappointing after the performance of 1998 and 1999, the income for 2000 was still a long way up from the tracks performance in 1994, when the Fair Grounds lost $1.5 million on a gross of only $22.4 million, a sink hole partially created by heavy competition from the gaming industry but one from which the company climbed through the rest of the century.

In the fall of 2000, Fair Grounds stockholders were considering a reverse stock split which would allow the company to revert to the private sector. According to Fair Grounds president, Bryan Krantz, the cost of being a public company was the main consideration. At the time, company stockholders only numbered 413, and the stock traded very thinly. The change was at least deferred, however, and the company was still a public entity in the fall of 2001.

Key Dates:

Union Race Course is laid out on Gentilly Road in New Orleans.
Competition from Metairie racetrack forces the Union Race Track to close for two years.
The Metairie Jockey Club reorganizes and rebuilds its track, running from 1867 to 1872.
Metairie Jockey Club begins racing at the renovated Fair Grounds track.
Former Metairie Jockey Club members, Robert Simmons and G.W. Nott, form the New Louisiana Jockey Club.
Duncan Kenner becomes president of the New Louisiana Jockey Club at the Fair Grounds.
Caldwell & Lamothe partnership takes over management of the Fair Grounds.
The New Orleans Jockey Club begins winter racing at City Park in direct competition with the Fair Grounds.
The Locke Law ends racing in Louisiana for seven years.
Racing returns to Fair Grounds, but bookmaking is still prohibited.
Fire destroys the grandstand at Fair Grounds but within a year is replaced by the grandstand from the City Park track.
Colonel E.R. Bradley becomes Fair Grounds new owner.
Bradley retires, and Fair Grounds is leased by a Chicago group.
Syndicate operators of Jefferson Park purchase Fair Grounds.
Fair Grounds owners sell track to real estate developers.
Newly formed Fair Grounds Corporation saves Fair Grounds when developers put it on the auction block.
Fair Grounds Racing Hall of Fame is inaugurated.
Krantz family purchases controlling interest in Fair Grounds from Roussel group.
Rebuilding of grandstand and clubhouse commences but is halted the following year because of gaming industry scandals.
New grandstand and clubhouse facility is opened.

Principal Competitors

The Edward J. DeBartolo Corporation; Harrahs Entertainment, Inc.; Isle of Capri Casinos, Inc.

Further Reading

Brannon, Keith, New Orleans Fair Grounds Seeks to Rejoin the Ranks of Private Companies, New Orleans City Business Online, http:// citybusiness.neworleans.com/21.13.7-NewOrleans.html.

Fair Grounds Corporation Intends to Restate Fiscal 1998 and 1999 Financial Statements, Business Wire, December 17, 1999.

Finn, Kathy, Worried Days at the Races, New Orleans Magazine, December 26, 1991, p. 84.

United Gaming Inc., Fair Grounds Corp. Sign Agreement, Wall Street Journal, March 3, 1992, p. B4.

John W. Fiero