8/26/2013 8:44:00 AM Horse track stalled at the gate: Financing still eludes new owner
Matt Hinshaw/The Daily Courier< Spectators watch as the Yavapai Downs gates fly open May 29, 2010. The horse racetrack has been closed since May 2011, and its new owner is having trouble obtaining the financing to reopen it.
Yavapai Downs trial delayed
A potential trial date for a lawsuit over the Yavapai Downs horse racetrack has been pushed back from this month to April 2014.
Yavapai Downs federal bankruptcy Trustee Brian Mullen filed the lawsuit against the track's former board of directors and managers in Yavapai County Superior Court in September 2011.
He accuses the track directors and managers of a poor job of running the track before shutting it down in May 2011 and filing for bankruptcy two months later.
Not much has happened in the case since Mullen filed an amended complaint in October.
Mullen's amended complaint accuses the board of breaching its statutory duties by allowing an insolvent company to incur new debts they knew or should have known they couldn't repay. The then-new board of directors accepted a $14 million federal loan shortly after taking over the Prescott Valley track in 2009. Gary Miller bought the track early this year and hopes to reopen it next year.
The amended complaint includes former Yavapai County Farm & Agriculture Association board members Charles Krause, Jeff Wasowicz, Rod Cordes, Kevin Keighron, Laurie Boaz and Phil Bybee, as well as their spouses.
The amended complaint also accuses former general manager Gary Spiker and former finance director Sharon Fischer of breach of statutory duties and breach of contract.
The defendants accused Mullen of filing detailed financial reports about the track in the court case just to "generate publicity and poison the jury pool."
The report from the MCA Financial Group and a supplemental MCA report say the damages to the corporation from the board and managers' actions total $7.5 million to $9.5 million.
The board projected a $100,000 loss for its first year when the previous board had just lost $1.9 million and the new board made few if any changes, the MCA supplemental report said. The new board ended up losing $1.5 million its first year, Mullen said.
The board also neglected to conduct an audit even though it was required by the U.S. Department of Agriculture's Rural Development arm, the Arizona Department of Racing and the board itself, the MCA supplemental report said.
Gary Miller continues to seek financing so he can open the defunct Yavapai Downs horse racetrack in Prescott Valley that he purchased through the bankruptcy court in February.
He already reopened the neighboring car racetrack, and hopes to re-open the events center this fall.
Miller had hoped this spring that he might open the horse track this month for a short season, but he still hasn't got the financing.
The opening has been delayed until next year at the earliest, he said. He now hopes to open on Memorial Day weekend, the weekend the track traditionally opened each year for the summer after the winter season at Turf Paradise in Phoenix.
The site won't host the Yavapai County Fair this fall either, he said. He hopes to do that next year as well. The fair will take place this year at Tim's Toyota Center in PV, where it has been held for the last two years.
The Yavapai County Farm & Agriculture Association's board of directors abruptly shuttered the Yavapai Downs racetrack in May 2011 without warning, leaving many horsemen stranded there. The board said the track didn't have enough money to open, and by July 13 of 2011 it filed for Chapter 7 bankruptcy.
Miller bought the track by assuming a $5.5 million federal loan and faced the daunting task of trying to clean up the grounds and replace the roof on the 93,000-square-foot grandstands. He said he's already invested more than $1 million of his own money.
Miller said his financing for repairs and start-up costs at the track fell through in February, but a confidentiality agreement prevents him from talking about the deal.
Arizona Sen. Steve Pierce of Prescott says the Gila River Indian Community and Navajo Nation tribes were the financiers, and the Navajo Nation backed out of the agreement. Pierce is a local rancher whose quarterhorses have raced at Yavapai Downs, and he sponsored successful legislation this year to help the Arizona Department of Racing and the PV track.
"They would have been good partners," Pierce said of the tribes. They would not have been able to claim the property as ancestral lands and try to build a casino, he said.
Erny Zah, spokesman for the Navajo Nation's president's office, said Friday he's not familiar with the agreement and would need more time to research it. Gila River officials were not available for comment.
Pierce and Miller both would love to see the state legalize "racinos," allowing slot machines at horse and dog racetracks.
"I think its good for employment, good for the state and good for the horsemen," Miller said.
"There's a lot of people who don't want statewide gaming but...it's already here," Pierce said. "We're passing up $1 billion."
He doesn't plan to sponsor any legislation legalizing racinos unless he senses enough support for it.
Gov. Jan Brewer signed Pierce's Senate Bill 1146 that will give the Arizona Department of Racing director discretion to allow more "dark" or simulcasting racing days than live racing days, he and Miller said. It also gives the director more authority to penalize horsemen who violate laws and rules.
The bill helps rural Arizona, Pierce said.
Miller said he still has several prospects for financing the re-opening of the horse track.
"We're negotiating with several groups and talking with local banks, too," Miller said.
He doesn't have to start making monthly loan payments to the U.S. Department of Agriculture's Rural Development program until the end of March 2014.
"We have a good relationship and they're supportive," Miller said of the U.S. government.
Pierce says he's confident the track will reopen.
"He'll get it - it's just slow," Pierce said. "It's a shame, because that would be a huge boon" to the local economy with as many as 700 jobs during the season.
Miller already reopened a dirt car racetrack on site June 1 and says it's already in the black. He estimated 700 to 800 people attend each Saturday, and the track also has hosted mud bog races on occasional Fridays.
"We put a lot of money into the track, mainly for safety," he added.
The neighboring events center should re-open in October with activities such as kids rodeos, bull riding, car auctions and horse shows, Miller said. He has a liquor license and a concessionaire will serve food. The Yavapai County government owns that building.
While he's fixed up the events center, some major repairs such as the roof still need to be done on the horse racetrack grandstands.
"I have not started major repairs on the main building," he said. "We have small leaks, but no major problems." He hopes to repair the roof before winter.
He's featuring Mexican dances on the first floor of the grandstands on some weekends, with a $20 entry fee and alcohol service.