Simulcast Impasse Continues

by T.D. Thornton 
The simulcast contract dispute that is keeping the signals from Gulfstream Park, Tampa Bay Downs and Laurel Park from a cooperative representing 23 racetracks and simulcast centers nationwide entered its second week on Monday with no resolution in the immediate pipeline. 

The bone of contention between the simulcast provider (Monarch Content Management, owned by the Stronach Group) and the signal recipients (MidAtlantic Cooperative, L.L.C., whose customers wager a collective $1 billion annually), centers largely on the cost of the signals. 

This past weekend came and went with opening day of the nation’s premier winter East Coast track, Gulfstream Park, blacked out to bettors at tracks and simulcast outlets from New Hampshire to Texas. 
“I think it’s pretty clear they believe their content is worth a number that we don’t think is affordable to be able to take the product,” said Phil O’Hara, executive director of MidAtlantic, whose member tracks opted to drop the signals as of Dec. 1 rather than pay the contested rates. 

But officials for Monarch Content and the Stronach Group said the philosophical differences aren’t so much about the actual pricing as their desire to charge more to entities that conduct little or no live Thoroughbred racing. 
Some of the MidAtlantic members, like Colonial Downs, conducted no live racing in 2014. Rockingham Park hasn’t held a live Thoroughbred meet since 2002, and the consortium includes about a dozen harness racing facilities. 

“We don’t feel that the one-price fits-all model works anymore,” said Tim Ritvo, president of Gulfstream and chief operating officer of the Stronach Group. “ADWs and OTBs should be paying a bigger price than the brick-and-mortar facilities, for the benefit of the horsemen who put on the show. It’s just not fair. The [Thoroughbred] industry loses money. This money should be put back in to the [racing] system.” 

O’Hara declined to comment on the details about the price breakdown. 

“We’re just negotiating back and forth,” O’Hara said. “The primary thing is economics, but there are several other terms as well. Just put it this way: It’s like any negotiations in business. There are several moving parts to it, and we’re just trying to arrive at one that’s beneficial to both parties. We sent a counter-proposal early [Monday] morning and are waiting to discuss that with the Monarch representatives as soon as they’re available. In the interim, our wagering sites have no contractual authority to wager on their races.” 

Scott Daruty, president of Monarch Content, said MidAtlantic’s latest counter-proposal is a non-starter. 
“They sent a proposal under which all 23 of their racetracks receive the same pricing,” Daruty said. “And as we’ve said repeatedly, we think the one-size-fits-all pricing approach does not work. We’ll continue to communicate with them and work something out, but right now we seem to be at a philosophical impasse where they’re insisting that everybody in their group get the same price and we don’t think that’s appropriate.” 

O’Hara said it’s too early to tell what the economic impact is for his members, and he would not speculate on how long the standoff might last. In addition to Gulfstream, Monarch controls signal distribution for Santa Anita, which begins its winter season Dec. 26. 

“It’s hard to compare [handle figures] because they had a huge snowstorm in the Northeast last year on [this past] weekend and we didn’t have one [this year],” O’Hara said. “It takes a few weeks to get a good idea.” 
Ritvo agreed that determining the handle difference is also difficult for Gulfstream. By using comparable statistics from the 2013 Claiming Crown weekend, he said Gulfstream handled less money overall, but the increased betting via ADWs enabled the track to turn a slightly higher profit, because the ADWs pay Gulfstream a higher fee. 

“Although we were just a little bit less in total handle, Gulfstream Park and its horsemen made more money,” Ritvo said. “We feel that the shift to ADW business has actually made us more profitable. Two days in [to the Gulfstream meet], the MidAtlantic has probably hurt themselves more than they hurt us.” 

Daruty said that pricing is only one of the issues that must be worked out before the two sides reach a resolution. 
“There are lots of other issues. Most all of them pale in comparison to the big issue of the economics. But I’ll give you an example,” Daruty said. “We’ve had repeated problems getting paid with many of their tracks. And one of the things we’ve insisted is that there be a late payment penalty in the contract, which we think is completely appropriate. If you don’t pay your credit card statement on time, there’s a late payment penalty and interest. And we’re somewhat dumbfounded that they’re arguing against that, because it will never come into play as long as they pay their bills on time.” 

Ritvo said that, for the sake of the bettors who are shut out, he hopes these differences can be worked out. 

“But with that said, I want to be very clear that it was the MidAtlantic who refused to allow their customers an extension,” Ritvo said. “Because we were more than glad to offer our product to the MidAtlantic customers while we continued to negotiate. It was the MidAtlantic that wanted to fight immediately.”