Penn National Presses Case for Racino Design
YOUNGSTOWN, Ohio – Penn National Gaming Inc. insisted Tuesday that it is willing to meet the Ohio State Racing Commission’s requested requirements for seating at its proposed Austintown racino and a similar facility in Dayton, but only if there is evidence to support adding more seats. The company also expressed confidence that it will reach an agreement with the association representing horsemen on the number of stalls at its planned Hollywood Slots at Mahoning Valley Race Course.
In a letter presented to the commission at a meeting Tuesday morning, Penn National’s senior vice president for corporate development, Steven Snyder, argued that officials at the Wyomissing, Pa.-based company “have no reason to believe” that demand at the Hollywood Slots at Mahoning Valley Race Course or the planned Dayton Raceway will exceed the planned seating capacity at either of the projects.
The commission will meet a week from today with Penn National officials to discuss plans for the proposed tracks. The commission is considering Penn National’s application to relocate two of its licenses, including the thoroughbred license from its Beulah Park track outside Columbus to Austintown. Penn National officials have told the racing commission members that it cannot add the 650 enclosed seats the commission requested without a redesign that will take four to six months to complete.
In the letter presented to the commission yesterday, addressed to its chairman, Robert K. Schmitz, Snyder wrote that denial of the two facility plans “puts in jeopardy each of the projects and the associated and very real benefits” each would bring to their communities and to the state. Construction on the two projects has been halted, and $19 million has been spent on the two sites to date, officials say.
State Sen. Joe Schiavoni, D-33 Boardman, said he is working on getting the parties together to iron out the seating and stall issues that remain to be resolved before the commission's April 24 meeting. “I think we’re getting closer,” he said.
Mark Munroe of Boardman, recently reappointed to the commission, said following Tuesday’s meeting that he had had discussions with Schmitz about forming a “small committee” of the commission to meet with Penn National’s representatives before next week’s scheduled meeting.
The letter presented to the commission outlines the consequences of delay and comparisons with other track sites.
Including the relocation fee and license for video lottery terminals, Penn National said it plans to spend $250 million on each of the racinos, and the additional seating requirements requested by the commission could result in an increased expense of $5 million per project.
“Because Penn’s facility plan budget has already met the capital spend requirement of the [c]omission, and because the site remediation and preparation costs have been substantially over budget, the margin for error on those projects is razor thin,” Snyder wrote. “Consequently, Penn simply cannot increase the budget any further, especially in view of the material relocation costs.” Additionally, the letter points to “real and proximate competition” from the proposed Lawrence County racetrack/casino in Pennsylvania, Thistledown’s proposed move to the Akron area, Mountaineer Park and Northfield Park.
Penn National also argues that Mahoning Valley Race Course should be allowed to retain its current seating plan because it has more indoor tiered seating overlooking the racetrack than the most recently proposed plans for Miami Valley, “with nearly no indoor seats with a view of the track and an additional 750 outdoor covered seats along with 375 uncovered bleacher seats overlooking the tracks,” or River Downs, with only 280 of its 850 proposed seats tiered and overlooking the racetrack, and only 80 with a direct view of the deck on its single level space. Penn National also points out it is “disadvantaged” due to the allocation of race dates and likely will have smaller crowds due to the smaller market size.
The letter cites examples of other tracks in markets it argues are similar to the proposed Ausintown racino. Indiana Downs in Shelbyville, Ind., which opened in 2002, has total seating just over 1,200 – slightly over the most recent configuration for Mahoning Valley – with just 634 having a direct view of the track. Penn National Race Course in Grantville, Pa., was built in 2008 and has total seating of 1,202, including 734 interior seats with a direct view of the track.
“We are confident that Penn’s proposed seating plans will meet or exceed market demand and that we can also reach agreement with the horsemen on the number of stalls at Mahoning Valley Race Course,” Snyder wrote.
In addition, Penn National pointed out a six-month delay for both facilities could cost the state more than $40 million in VLT revenue. “In the context of the current economic climate, a cancellation of the projects would be cataclysmic for both Dayton and the Mahoning Valley,” according to the letter.
“I think Penn National has made some progress,” said Munroe, also chairman of the Mahoning County Republican Party. Alhough the company has come back with new seating plans, one of the problems was in order to get the higher seat numbers it eliminated the trackside table seating. “The design they came back with was less favorable to racing fans,” he remarked.
Penn National agreed with Munroe’s point during the meeting, said Bob Tenenbaum, spokesman. “We think it’s a terrible mistake but we’re following the directions we have been given by the commission,” he remarked. “We’re somewhat frustrated in that we’re not sure what the commission wants but we’re certainly encouraged by the fact that the commission is willing to sit with us.”
The commission “is not on the position to design this facility for Penn National,” Munroe responded.
Both Tenenbaum and Munroe expressed optimism that there appeared to be progress on coming up with a plan for additional stall space at the track. Munroe, in fact, pointed to the horsemen indicated they had been in touch with local contractors to get built what they needed for less money than Penn National’s contractors had proposed.
“I don’t know if Penn National is getting the best bang for the buck,” Munroe said. He suggested that Penn National should rebid some of the work and get more local contractors involved “so they could build a better facility for less money.”
Copyright 2013 The Business Journal, Youngstown, Ohio.
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