10/31/2012 10:39:00 AM Court accepts horseman's bid for Yavapai Downs
If all goes well, racing could resume next year at Yavapai Downs.
Courier file photo
A bankruptcy court on Tuesday approved the tentative sale of the Yavapai Downs racetrack to Gary Miller for $5.5 million.
Miller is president of the Arizona Horseman's Benevolent & Protective Association that represents horsemen.
"I'm thrilled with how the court hearing went," Miller said. "I was confident in my business plan. Now I'm going to focus on due diligence and getting up there."
Along with the bankruptcy court, the U.S. Department of Agriculture's Office of Rural Development had to agree to the sale since it holds $14.65 million in loans on the track. The USDA agreed to the deal earlier this month.
Miller and USDA officials now will enter a 45-day to 90-day due-diligence period before signing the final sale documents. Miller plans to come up to Prescott Valley next week to inspect the condition of Yavapai Downs infrastructure, since it's been shuttered for more than a year.
If he sticks with the purchase, Miller will assume $5.5 million of the existing federal loan at an interest rate of 4.375 percent and have as many as 37 years to pay it off, according to court documents. He also has agreed to pay as much as $400,000 in closing costs.
At this point it's unclear how much bankruptcy creditors might get from the sale, or when. Bankruptcy Trustee Brian Mullen didn't respond to a request for comment Tuesday.
Miller has stated that he'd like to get the track open again for the 2013 horseracing season that traditionally starts on Memorial Day Weekend.
"It's going to end up being better than it ever was," predicted Tom Metzen, executive director of the Horseman's Benevolent & Protective Association (HBPA) in Arizona.
He doesn't think Miller will have any trouble filling the Yavapai Downs horse stalls, since Arizona horsemen have been forced to race outside the state for the last two summers and that costs them much more money. Some just idled their steeds until Turf Paradise opened for the winter in Phoenix.
"They're excited as all get out about getting (Yavapai Downs) open and making a success out of it," Metzen said.
Jockey Vince Guerra and his wife Jacque, a trainer who has trained horses for Miller, said they are looking forward to returning to Yavapai next summer instead of traveling all the way to Denver like they did the last two summers.
"It costs too much to go up there," Vince Guerra said.
Like many other horsemen including Miller himself, the Guerras lost thousands of dollars when the previous Yavapai Downs owner announced they wouldn't open in May 2011 after the horsemen already arrived, and then the owner filed for bankruptcy.
But the Guerras, who had been racing up here for about 15 years, have a lot of confidence in Miller's ability to run the place.
"Gary is going to be a real asset to the horsemen community," Jacque Guerra predicted. "He's a very good businessman and a real good person. He knows a lot of people and knows how to get things done. He'll have a top-notch facility."
Vince Guerra also praised Miller.
"He's a very fair person, and he loves racing," Guerra said. "He wouldn't be doing it unless he thought he could make a success out of it."
Re-opening the track will bring back 300-400 seasonal jobs to the track, Metzen noted, along with hundreds of supporting industry jobs.
Prescott Valley Town Manager Larry Tarkowski attended Tuesday's court hearing and told Miller the town would do everything it can to help him reopen the facilities, such as getting building inspectors out to help look the place over.
"I'm glad to see that asset in Central Yavapai County will be put back into the local job-creating market," Tarkowski said after the hearing.
Higher bid rejected
USDA officials did not respond to repeated requests for comment on the agreement and the reasons behind their objection to a higher bid.
The court on Tuesday rejected a higher bid of $6.5 million from an unknown Arizona/California consortium represented by Christopher Gibbs of Agoura Hills, Calif., after the USDA didn't support Gibbs' offer. Gibbs wanted to assume $6.5 million of the USDA loan.
In a written court response to Gibbs' offer, the USDA said the offer didn't comply with approved bidding procedures since Gibbs didn't make a cash bid and didn't want to submit the $400,000 cashiers check required for bidders outside of Miller.
The USDA objection called Gibbs a new bidder, but Gibbs had expressed interest in the track before an April bankruptcy auction and he submitted court documents saying he had been negotiating with the USDA since USDA officials contacted him on April 16. That was two weeks after the USDA rejected Miller's initial winning bid of $3.25 million in cash at the bankruptcy auction.
Gibbs said he had a tentative written agreement with USDA in May to buy the track for $5 million, then USDA State Director Alan Stephens told him in June that the USDA had another offer. Gibbs criticized Stephens for allegedly telling Miller how much Gibbs already offered. Stephens has since left that job.
Gibbs said he then increased his offer to $6.385 million if USDA would agree to stop negotiating with other bidders. When the USDA denied the request, Gibbs decided to bid at Tuesday's court hearing.
The track facilities include a one-mile horse racetrack, the 93,328-square-foot grandstands, about 860 horse stalls and a neighboring car racetrack.
The Prescott Valley track never opened for the 2011 summer racing season, and it's been closed ever since. Its former owner, the Yavapai County Farm & Agriculture Association, filed for bankruptcy in July 2011.
USDA Rural Development originally loaned the Yavapai County Fair Association about half the money it needed to build a new $22 million track in Prescott Valley in 2001 to replace the shorter track in Prescott.
The summer racing meet in the Prescott area had been operating since 1960, and horse racing here dates back to territorial days.