Brave new world for horsemen
Mike Ballezzi, executive director of the Pennsylvania Thoroughbred Horsemen’s Association, reflects on the enormous changes underway at Philadelphia Park.
Interview by Lucy Acton

Philadelphia Park, which opened for business in November 1974 and was known in its early years as Key­stone, has been transformed—quite dramatically—into Philadelphia Park Casino and Racetrack.

On December 19, 2006, it officially became Pennsylvania’s first Thoroughbred racino.
Slots revenues are expected to boost Philadelphia Park to heights far beyond anything ever seen within the Mid-Atlantic region, or in fact the nation, with purses amounting to as much as $500,000 a day for a year-round program focused primarily on allowance and claiming competition.

Mike Ballezzi, executive director of the Pennsylvania Thoroughbred Horsemen’s Association (PTHA), which represents owners and trainers at Philadelphia Park, reflected on the enormous changes under way during an interview with Mid-Atlantic Thoroughbred editor Lucy Acton that took place on December 22 in his office on the Philadelphia Park backstretch.

Ballezzi, an attorney who holds an undergraduate degree from Rutgers University and a law degree from the Widener School of Law, has an extensive background in the Thor­oughbred business. He trained horses in the Mid-Atlantic region for several years in the 1970s, and has been a licensed owner since 1973.

It might be simplest for you to begin with a general overview, and then respond to questions as we go along.

When I became involved with the association (in the early 1990s), purses were being paid at approximately $85,000 a day and the backside was in deplorable condition with the future very dim. Handle was on a downward spiral. Thoughts of alternative forms of gambling were then swirling around, but no one had a fix on it.

One of the first things I realized we had to do was to get involved in the legislative process. I realized very quickly that the only way we were going to be successful was to have legislation that would enhance racing. Over the 11 years (since Ballezzi became executive director of the horse­men’s association), it was a struggle. One year we would have the Senate on our side: They would pass a gaming bill and the House would reject it and of course Governor Ridge at the time threatened to veto anything. The next year we had the House of Representatives on our team, passed the bill, and the Senate rejected it.
Fortunately with Governor Rendell it all came together in 2004. We were able to get the gaming bill, which, in my opinion, certainly saved racing in Pennsylvania. More than saved it, I think it created the environment for some of the best racing in this country. Within the next three to five years you’re going to see tremendous improvements—not only in higher purses but an improvement to the entire atmosphere of Philadelphia Park, from frontside to the backside.

Management is going to spend over $12 million in rehabbing barns and dorms, building new barns, paving, drainage and beautification.

The entire atmosphere of racing is very positive, and we believe that the slots bill in fact did that. But we’re not naive, we realize there’s a cost for that. When you get in bed with the gaming folks, you have to compromise. As an example, if you look at our frontside right now, 90 percent of the building is dedicated to gaming—slot machines. But we can live with that. We have the fifth floor, which is being renovated into the horse racing floor. We have our paddock, and right off the paddock is another area where owners, trainers and patrons can wager, watch the races and replays on TV.

Management has tried to accommodate us. They understand that racing is our primary business from the horsemen’s perspective, and it’s this mutual cooperation between management and horsemen that will make Philadelphia Park Casino and Racetrack a successful venture.

Effective January 1, our overnight purses increased from $110,000 per day to $175,000 a day—a substantial increase. Our first (condition) book runs from January 1 to January 24, and hopefully on the 24th we’re looking for another increase.

We do have an arrangement with frontside (track management) that over the last two years they’ve advanced us about $7 million for our purses in anticipation of slot revenue. It basically kept us alive the last two years. Our current live racing agreement requires that we pay back 50 percent of the slot earnings to pay off that $7 million; we anticipate we’ll pay that off by the spring of 2007. When that happens, 100 percent of the slot revenue will be added to our purses and we anticipate $200,000 to $225,000 in overnights—you can see the immediate impact on our industry.

It’s an exciting time. And it’s the result of collaboration by a lot of folks who have a vested interest. I represent the Philadelphia Park horsemen. Of course we have the horsemen’s association at Penn National and the Thoroughbred breeders association. Mark McDermott (executive secretary of the Pennsylvania Horse Breeders Association) and I have worked very closely with our respective boards formulating what we believe will be the outstanding breeders’ program in the country.

Approximately five years ago, we realized that as purses increase, it was important that the breeders receive a fair share of the horsemen’s revenue to maintain breeder’s awards and bonuses consistent with our purse increase. Consequently, we agreed that 16 percent of the horsemen’s revenue would go to the Pennsylvania Breeding Fund. As a result, the breeders would maintain one of the highest owner bonuses in the country at 40 percent at Philadelphia Park. In addition there will be restricted races—initially maiden special weight, a-other-than and two-other-than allowances with the potential for other restricted races as the program matures. Any PA-bred finishing first, second or third in open company earns an owner bonus equal to 40 percent of the purse share. I’ll give you an example: Our maiden special before slots was $20,000. With slot revenue, starting January 1, it’s $28,000, with the 40 percent bonus on top of the $28,000, the purse for PA-breds will have a value of $39,200.

Fortunately, Mark McDermott and the breeders’ board understood that the horsemen and the breeders had to be partners and that by maintaining the 40 percent owner bonus and the addition of PA-bred restricted races, we created an outstanding opportunity for PA-breds to run successfully at Philadelphia Park.

How about the other horsemen’s group in the state—the Pennsylvania division of the Horsemen’s Benevolent and Protective Association (HBPA), which represents Penn National and Presque Isle Downs. Have you worked closely together on the slots issue?
Our relationship has always been very good. We understand we have common goals. We’re all horsemen. We get up in the morning and take care of our livestock, try to put on the best show we can, and do the best we can.

Unfortunately, the purses paid at Philadelphia Park and Penn National have not been very good. It’s remarkable, when you deal with the horsemen day in and day out, how dedicated they are. How tough a job they have—yet they put on the show, and the show goes on every day, rain or shine, despite the economic hardship they must live with as a result of inadequate purses. I work very closely with Todd Mos­tol­ler, executive director of the Penn National horsemen’s group, who understands the issues clearly. In fact, just recently I was fortunate enough to be elected chairman of the Penn­sylvania Horse Racing and Breeding Coalition, which has representatives from every major commercial racing entity in the state, which includes both Thoroughbred and Stand­ard­bred horsemen and breeders associations. We established the coalition realizing that we have common goals, common responsibilities, and certainly we have common needs.

The purpose of the coalition is to protect Pennsylvania racing and, in fact, get the maximum benefits out of the slots legislation. It’s a coalition of breeders, owners and trainers who have formulated this coalition to protect Pennsylvania racing—to have been named the first chairman obviously is an honor, but it shows our collective cooperation. We have one common goal, and that’s to enhance racing and breeding in Pennsylvania.
What are the coalition’s priorities?

Our priority is to protect the gains we’ve made under the slot legislation. As you know, we have a substantial share of the slot revenue. We start out at 12 percent, and as stand-alone casinos are built, our percentage increases from 12 to 18 percent. Consequently, it is in the best interests of all Pennsylvania horsemen and breeders to protect the gains we have made with the implementation of the slot bill. We are adamant about our live racing program. Under the statute, Penn National and Philadelphia Park are guaranteed a specified number of racing days. We want to protect live racing, and in order to protect live racing, we have to be diligent when it comes to racing days being submitted to the racing commission, and make sure that racing isn’t on the back burner.

We’re at the table; we were at the table throughout the entire negotiations for the slot machines. We had a full voice. We had great representation through all the negotiations. We continue to have lobbyists and P.R. people as well as having an excellent working relationship with the Pennsylvania Gaming Control Board through their liaison, Melinda Tucker. We have a seat at the table, and we don’t intend to lose that seat. We’ll be there, in the future, legislatively. We have a legislative approach; the statute protects live racing, and we intend to defend that protection vigorously.

Do you see the emphasis remaining on overnights at Philadelphia Park? Do you envision an elaborate stakes program in the future?
I think there’s going to be a combination of both. Obviously, the overnights will be the mainstay of our program—that’s the bread and butter. For example, we’ll have the open allowance, which could very easily be $70,000 or $80,000. We’ll have the four-other-thans and the three-other-thans, the maiden specials, a-other-thans, and we’ll have a wide array of claiming races.

We will always protect those who have been with us through the tough years. We have approximately 4,000 owner and trainer members of our association with a core group consisting of approximately 150 trainers. It has always been our pledge to protect that core group of owners and trainers and protect their right to be stabled at Philadelphia Park.

If a longtime trainer has had 10 stalls at Philadelphia Park, we’ll assure him 10 stalls. What he puts in those 10 stalls is up to him and his owners. If he’s competitive and he stays in business and races with the additional competition, everything’s fine. If not, he may go from 10 to eight stalls. Or, he may be successful and go from 10 to 20 stalls. It will depend on the trainer’s personal record. But it’s been our pledge, and frontside has been cooperative with us. Sal Sinatra, our racing secretary, understands that in the lean years these folks were here, and kept the racing program going. Now in the good years, we’re going to protect our group of folks. Management understands and has cooperated with us just as we’ve cooperated with them in getting the slots scenario up and running—sharing our space in the grandstand, understanding the way they have to do business.

Now, it would be naive to think that other trainers aren’t going to come in from other states. When the purses are $300,000 or $400,000 a day, you’re going to see stall applications increasing dramatically. There will be room for new outfits, but we will maintain the philosophy of protecting our core horsemen.

Is there a lot of concern among horsemen about the increased competition?
Sure. There’s always concern. Part of my job is to make them understand the facts. Several times a year, I have general membership meetings—closed to everyone but the owners and trainers. I try to answer their questions, but more importantly give them information and facts. You know there’s no better rumor mill in the world than the backside of a race track. And you’d be surprised what comes through my office door every day. I must talk to 100 or so trainers a day, and they all have a different perspective.

We’re unique in that we don’t have a transient trainer population. We race all year round. The overwhelming majority of trainers and owners live in the area. They have homes here, they raise their families here, their children go to school here. Of course, they’ll ship out and run at Monmouth, or in Maryland. But this is their race track. It’s my job to make sure that I protect those families and their opportunity to make a living here, and that’s what we intend to do. Philadelphia Park horsemen have always been very competitive wherever we race. I have no doubt that as our level of competition improves, so will our horsemen improve their racing stock and continue to win and improve greatly the quality of life for their families.

As to the second part of your question, the stakes program: At Philadelphia Park, 7 percent of our revenue goes to stakes races. The responsibility on my part is to make sure that we spend 7 percent and that the racing secretary, in conjunction with our condition book committee, develops a series of stakes races consistent with the best interests of our racing program. For the foreseeable future we’re probably going to use that 7 percent for listed stakes—stakes of $100,000 or more. Probably stakes in the area of $200,000. The Pennsylvania Derby—hope­fully we’ll get that to $1 mil­lion, maybe even $2 million and have it become a marquee Grade 1 race.

We can also think about writing overnight stakes. But if we’re looking at high-priced allowance races, they usually take the place of overnight stakes. Certainly the listed stakes will be part of our program, and we’ll have somewhere in the area of 10 to 15 of them. Additionally, the breeders are considering several $100,000 restricted PA-bred stakes. These are the long-term plans, and as we generate more revenue, this opportunity becomes available to us. And I can assure you, and I’ve assured my horsemen, that it will be a well-rounded program.

There will be something for everyone. Obviously, we want to increase the marketability of our program, but more importantly the prestige of our program. We believe we have a responsibility to the industry that as we generate this revenue from slots, we must provide the best racing possible. We intend to look at it very closely, and maintain the best racing program in the country. And I think we can do that. The money is available. Now it’s our obligation to make sure we fit a program to the money, and to our horsemen.

It’s not an easy job. But that’s the fun of the job. That’s why I get up in the morning and I can’t wait to come to the office. We’re out there in front. We’re constantly charting new ground. A lot of this has never been done before. You can throw money at something, but sometimes that’s not enough. I think it takes an intelligent approach.

We’re fortunate at Phila­del­phia Park that the manage­ment team—Hal Handel (chief executive officer), Joe Wilson (general manager) and Sal Sinatra—and the PTHA have a good working relationship. Our intention is to make Phila­delphia Park the best racing we can. That’s our agenda. As long as we stay in line, and that’s one of my responsibilities, to try to keep everybody in line, I think we’re going to get it done. You’re going to see remarkable progress in the next several years.

What about the traditional horsemen’s concern about being “in management’s pocket”? (Under the control of track management, which may then make decisions that are not necessarily in the best financial interest of horsemen.) Has the PTHA’s close working relationship with the track generated those fears about that?

Fortunately not. They’re in our pocket, because we’re a partner. That 12 to 18 percent (of slots revenue) is the horsemen’s money. Traditionally (at Philadelphia Park), purses are controlled by management. They have the account, and they pay out purses as they’re earned. That will continue with the pari-mutuel side. But on the slots side, our money is paid directly to us. It’s paid directly into a purse account that the horsemen control. By virtue of our existing live racing agreement and the legal requirements established by the slot bill, management and the PTHA must cooperate in establishing our overnight and stakes program.

So Philadelphia Park’s purse share is not legislated?
The percentage of the slots revenue is legislated. But the percentage of the mutuel handle is by contract. That’s approximately a third right now. We receive a third of revenues on the pari-mutuel side for purses. Management will continue to pay that. We then will contribute our 12 to 18 percent, depending on where we are, less the breeders’ share—and 4 percent to a health and pension plan.

Philadelphia Park horsemen will have one of the best health and pension plans in the country. What we intend to do is to have a health-care plan for our trainers, their spouses and children, plus their employees and also a pension benefit.

Many of our trainers are without health care and without pensions. They work 30 years, 40 years, and at the end of the day, unless they can get up in the morning and work, they have nothing. That’s totally unacceptable in my opinion. Slot legislation will provide an opportunity for all horsemen to have health care and a pension. Eventually, when we have the maximum slot revenue, we’ll be able to afford a very good pension and health-care plan for our horsemen.

What kind of health care do you have on the backstretch now?
We have nurses who come once a week, and a doctor one or two days a week. They perform basic services and recommend long-term care or immediate care, depending on what they find. It’s paid for by the PTHA. That’s something we’ve been proud to fund. And also we have a benefit trust fund that provides payment for doctors’ visits and hospitalization, prescriptions, dental care, optical—an all-around health plan. But again, it’s not enough. And with the slots revenue, we’ll have full medical coverage and a full pension plan for our horsemen.

Is there a downside?
In my opinion, there is no downside, because the little inconveniences that we have to go through, or some of the compromises we have to make, are minor.
Economics suggested that they build a temporary casino in the grandstand. The long-term plan is to build a stand-alone casino. But for the immediate future, it’s my understanding they’ll probably be able to put about 3,000 machines in the grandstand. They have about 2,000 to 2,100 machines right now, which have allowed us to receive slot revenue without waiting a year or two to build a casino.

The Penn National horsemen went a different direction with their management to build a stand-alone casino, and I think that has its merits as well. But we decided to go ahead and begin our program immediately, and as we speak, I think I can hear the jingle of slot machines. If you stretch, you can hear it. We’re up and running, and that’s the important thing.

As many people are aware, the PTHA has had off-again, on-again alliances with umbrella organizations of horsemen’s groups. Could you address that issue?
When I first was hired as executive director, we were part of the THA (Thoroughbred Horsemen’s Association). For whatever reasons, we had our differences and we left the THA and became part of the HBPA (Horsemen’s Benevolent and Protective Association). We stayed with the HBPA for about five years, until about a year ago.
There are very important national issues—such as medication—and we monitor them very closely. But our association—our board of directors and our president, Larry Riviello—realized that there was a need to take care of our home front first. That’s why the Pennsylvania Horse Racing and Breeding Coalition was created.

When we decided to withdraw (from the national HBPA) and save about $60,000 a year, we believed it was more important to take that revenue and put it into a Pennsylvania coalition. This allowed us the opportunity to address local issues, and concentrate our efforts on regional and statewide issues without losing sight of broader national issues.

We still have communication with the national HBPA on medication, simulcast and other national concerns. When the PTHA was a member of the national, I was chairman of its simulcast committee as well as a member of its medication committee. Those things were and still are very important to me and the PTHA. The critical part of our responsibility going forward, however, is to maintain the progress we’ve made. We will continue locally with the Pennsylvania coalition. This is no reflection on the national HBPA or its president, Joe Santanna, who is a Penn­sylvanian, president of Penn National HBPA and a personal friend. Joe is a bright, articulate leader whom I have known for many years, and I applaud his accomplishments with the national HBPA. He understands our industry and is an active participant in the Pennsylvania Coalition. We just took a different direction at this time. We left the door open to eventually become part of the national (HBPA) again, but we want to make sure Pennsylvania racing is on solid footing and get the job done locally as our main point of concentration. I want you to take away from this meeting the real optimism we have for our industry in Pennsylvania. It hasn’t always been that way; it’s been a struggle, in many respects. I’ve negotiated five contracts over the last 11 years (between horsemen and track management regarding purses and other issues).

When money is tight, both sides have problems. But now we have our fair share, due in large part to the superior efforts of several individuals with whom I have had the privilege to work. Larry Riviello, our president, has been with us 23 years, and he’s participated in so many changes that have benefited all horsemen in Pennsylvania. Another individual is our first vice-president, Sal DeBunda. I believe that his hard work, insight and expertise on the legislative side have created a slots bill that is second to none and which will provide the economic basis for a bright future for our horsemen and their families. What we have today has a great deal to do with Sal DeBunda’s leadership. The PTHA board of directors, we have a very progressive young board of directors—owners and trainers—who have allowed us the platform to go ahead and do what was necessary to get the job done. They’ve given me a tremendous opportunity to go out and do the things that are necessary. It’s been a combined effort. And I must mention Steve Wojdak & Associates, our lobbyist, without whom we wouldn’t have had an entry to the legislative process in Harrisburg.

We’ve compromised on many issues, and on other issues we’ve taken a hard line. Anything that would have watered down racing was a deal-breaker. Two hundred days of racing, maintaining our autonomy as a horsemen’s organization, controlling our own purse account, and the mandate that management is obligated to build and construct backside improvements are very important to us. I must say, that though the slot bill requires improvements to the backside of approximately $6 or $7 million, management at Philadelphia Park will spend approximately $12 million on backstretch improvements, due largely to the cooperation between management and the PTHA that I have been talking about. Hal Handel, Joe Wilson and Sal Sinatra are the key players in the improvement to the backside of Philadelphia Park. Every indication is that this spirit of cooperation will continue and if it does, Phila­delphia Park racing will be as good as, if not better than, any other racing facility in the Mid-Atlantic region, if not the country.

Could you describe the horsemen’s current contract with track management?
We are currently operating under a seven-year contract that runs through 2011. In addition to our percentage of all pari-mutuel revenues for purses, the contract provided that in anticipation of slot legislation, management would provide interest-free advances to purses up to $12 million. The actual advance amounted to $7 million, which helped to keep our racing program alive.

We put aside our differences, agreed to go forward and get the job done. It was important that we concentrate not on fighting each other but fighting the system and trying to get the slots implemented. That was job one. We got it done, and it’s a win-win for everyone.

Given the facts we are confronted with today in our industry, it would be foolish to think that we could turn the clock back 40 or 50 years. That’s not going to happen.
Nonetheless, racing still has all the beauty and trappings of what it always was, and it can be that again. It simply must be funded a little differently, that’s all. In the past we were funded by the two-dollar bettor. Can’t do that anymore. So we fund it by alternative gaming—that’s fine. We can still keep the integrity, the beauty and the grandeur of what the sport has always been. And have a revenue source that’s more lucrative and secure. That’s what we’ve done. But it doesn’t mean in any way that we have to compromise the value of racing in Pennsylvania—or nationally. We still have that responsibility. Those of us in leadership have the responsibility to protect that which has been handed to us. We can do that. We will simply fund it differently.