Odds On Racing - Harness Racing

Prairie Meadows Still in Question

April 27, 2008

Loren Jacobsen of Dallas Center thinks it's up to $10 million less than what the Altoona casino has estimated. Prairie Meadows in November said horse racing lost $29 million in 2006. Jacobsen, a horse breeder who also is a certified public accountant, said that, after going over the estimates with Prairie Meadows officials, he thinks the true cost is $5 million to $10 million less.

"At a minimum, there's $5 million-plus (in expenses allocated to racing) that either would not be related directly to horse racing or would continue if horse racing was discontinued," he said.

Prairie Meadows officials reiterated that they have no interest in discontinuing horse racing, but want to examine the size of the casino's subsidy to cover the cost of horse racing.

Board members didn't disagree when asked if the subsidy could be less than the $29 million estimate.

"That may be true," said board member Gerard Neugent. "It was a good-faith attempt to allocate costs. I think Ann (Long-Richards) said it was her best guess of what a proper allocation would be.

"I'm not sure he could convince me it was as low as ($19 million), but it's still a lot of money, and the public is still interested. I think once you get past $15 to $20 million, people say, 'Wow, that's a lot of money.' "

Long-Richards, Prairie Meadows' chief financial officer, said she estimated many costs in November. Among the gray areas were dividing costs for utilities, salaries for employees who work in both the casino and racing areas and expenses that benefit both sides. However, the $29 million estimate became entrenched in public debate, so horse leaders asked Jacobsen to look at the figures. He said he tried to be objective throughout the process.

"There were a number of occasions or line items that I questioned, and I felt that Prairie Meadows treated them fairly," he said. "I wouldn't say that I'm totally unattached to the situation because I am a horseman, but I tried to look at it as fairly as I could."

Prairie Meadows' audit estimated the racing deficit at $22 million, but had many costs that were unallocated to either the casino or racing. The board asked Long-Richards last fall to divide the costs to get a total estimate of racing's subsidy.

"A lot of those allocated expenses were charged to horse racing based on a percentage of revenues," Jacobsen said. "So there were things that were charged in that $7 million that really don't have anything to do with horse racing and would continue if there were no horse racing."

The biggest example is $4.2 million in rent charged to horse racing when Prairie Meadows' rent to Polk County was $15.6 million in 2006, regardless of whether there was horse racing.

Whatever the deficit is, Prairie Meadows has to examine the racing program, board member Tom Whitney said. That will be discussed at a May 17 board retreat.

"It could be less (than $29 million)," he said. "I hope it's less. We all want it to be less.

"There is a given from the outset that we're going to subsidize horse racing, and that horse racing is going to be here. The issue we have to come to grips with is how much and what kind of horse racing."