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Commission Tells Penn National to Revise Plans
COLUMBUS, Ohio -- Penn National Gaming Inc. officials will appear again before the Ohio State Racing Commission a week from today, with revised plans and answers to questions that they hope will satisfy the commission’s members.
Members of the commission, including its chairman, Robert Schmitz, were often openly skeptical of design aspects, including accommodations for watching live racing, for the proposed Hollywood Slots at Mahoning Valley Race Course that Penn National plans to develop in Austintown.
“I find what you presented inadequate,” Schmitz bluntly stated toward the end of Penn National’s presentation.
Penn National, of Wyomissing, Pa. has applied to relocate licenses for two of its Ohio tracks. The gaming company wants to transfer the thoroughbred license from its Beulah Park track outside Columbus to Austintown and the license from its Raceway Park in Toledo to Dayton. The company plans to construct similar $125 million racetrack and video lottery terminal facilities at the new locations. For each site, Penn National will pay a $75 million track relocation fee and $50 million for a VLT license.
Construction of the track and gaming centers is expected to create 1,000 construction jobs at each location and 1,000 direct and indirect permanent jobs.
John Finamore, senior vice president of regional operations for Penn National, and Chris McErlean, vice president of racing, pleaded their case for the transfers before the often skeptical commission members here Tuesday -- the chief point of skepticism being seating for patrons who want to view live racing.
The proposed design has unenclosed 268 seats in the lower clubhouse area and 498 seats in the enclosed upper clubhouse, said Penn National Spokesman Bob Tenenbaum. “The proposal we put forth today has actually more than we had originally planned,” he said. Under a configuration that would enclose the lower grandstand, there would be 502 seats in that area, bringing grandstand seating to 1,000. The building will have 1,000 VLTs, with the potential for an additional 500.
“We think this is the right size facility for the market,” McErlean said. “If the market does respond, and we hope it does that, we can come through with an expansion plan as well.” Racing is “very challenging now” in terms of its ability to draw people, he said. Even at tracks with live races under way, many of the patrons are focused on simulcast races, which accounts for its emphasis in the design.
“Both the Austintown and Dayton facilities are master planned for expansion,” Finamore said.
The commission’s chairman, Schmitz, questioned the inability for patrons in the upper level restaurant/sports bar to have an unobstructed live view of the entire track from their seats, although they would be able to see the races on television screens or by getting up from their seats.
“So these 92 clubhouse seats you cannot see the racetrack?” he asked.
“Probably not,” McErlean responded.
Mark Munroe, a commission member from Mahoning County, also commented on the overall lack of seating.
“I would like to see more provision for folks to be able to see the racetrack,” Munroe remarked. He pointed out that there is “a lot of excitement in the community” regarding the project.
“What would it take to pull the trigger on outdoor seating?” Munroe asked. In Mahoning County, people “aren’t shy about” watching a Youngstown State University football game “in a blinding snowstorm,” he pointed out.
Outdoor bleacher seating would probably be both easier and quicker than doing an enclosed area, McErlean said.
At the request of the commission, Penn National officials will be return March 20 with specific plans for both projects -- the company submitted a plan to the commission for the Austintown track, explaining that the designs for both were similar. The company was asked to assemble as much information as it can regarding expanded grandstand and bleacher seating as well as stabling of the horses, another area of concern for members during Tuesday’s hearing.
Finamore noted Penn National is targeting an April construction start for both projects, and site work has been under way at the two locations. “We remain concerned that we want to stay on that schedule so we can deliver these facilities on time,” he said.
“The other thing is this is an issue of economics,” he continued. Penn National starts out paying $75 million to relocate each of these tracks, $50 million to license them. “We’re spending $125 million up front, $75 million of which is to put these facilities in better locations to benefit all the stakeholders, and I think that’s an important consideration.”
“We are thrilled to see a development like this come to the Valley. It’s well needed,” Munroe remarked. “But at the same time, there’s still a certain degree of disbelief that somebody would spend $250 million between license fees and relocation fees and build-out fees … to build a racetrack and only a couple of hundred people can actually sit down and watch a live race. That’s still stunning.”
Jim Davis, chairman of the Austintown Board of Trustees, urged the commissioners to come to a “speedy decision” regarding the transfer. “We’ve got two hotels that are ready to put shovels in the dirt as soon as this track [license] has transferred,” he said. “I spoke with one of the developers this morning on the way here, and they’re hesitant until this is transferred. … That’s a big investment on their part. So they want to make sure that the project is there, that they’ll be able to serve those people when they come to the area.”
Tenenbaum said the commission’s concerns “were certainly not a surprise” to Penn National but they are not “serious problems” for the project.
“We’ve studied the market. We think this is an adequate facility to start with” but the company also presented the option of expanding seating in the future if demand warrants it, he said.
“Now we will go back and consider what was asked of us today,” Tenenbaum added. “We want to be as cooperative as we can with the commission but also we need to make this a project that can work economically.”
Copyright 2013 The Business Journal, Youngstown, Ohio.