(00:00:00) Hi, this is J.G. Preston, and this is portfolio. It's been nearly five months since the horses have run at Canterbury Downs, but the track has been very prominent in the news lately. The state legislature is grappling with proposals to increase the amount of money available to be won by Horsemen at the downs with me this afternoon to discuss the pending legislation the future of Canterbury Downs, and the horse racing business is Steve Urban a still water based owner trainer and breeder of thoroughbreds and also president of the Minnesota Horseman's benevolent and protective Association. Our phone lines are open for your questions as well at to 276 thousand 2276 thousand the number to call for your questions about horse racing and Canterbury Downs here on sport folio. I don't about you Steve. You're probably always in the mood for horse racing. I'm in the mood the Florida Derby is on TV this afternoon. Get a look at some of those Kentucky Derby and st. Paul Derby prospects for later on in the season. It's getting warm outside. The sun is out. I'm looking forward to going out to (00:01:13) Shakopee and I just came back from the farm this morning and looked at some of our new folds and when you see a new folder on the ground, all you think of is the Winner's (00:01:20) Circle, I guess it's the time of year when when thoroughbreds are being born in great bunches, aren't they? I mean horses can have their children as randomly as people do but you folks in the breeding business kind of time things here for the first little part of the Year first January February March, (00:01:35) right? The foaling season basically is the end of January through about the middle of June through June. Hmm and this year, they're expecting over 750 new folds born here in the state of Minnesota in 1980. Either is only (00:01:48) 50 50 and now 750 correct. Now people talk about the economic impact of the breeding business to you. Maybe you can take that kind of increase in and try to attach the mother Financial numbers to it for (00:02:00) us. Well, you know, I think the first way to start is there was a study done by the Department of Revenue the State Department of Revenue and when that study was done it was looking at the total impact of our new industry horse racing in Minnesota. Not just Canterbury Downs not just the breeding but the whole impact and their study in 1986 indicated that the over 81 million dollars was generated in the state of Minnesota due to the horse racing industry the new (00:02:28) industry that that would include extra jobs in Shakopee at restaurants a jobs related to say the feed business to keep the horses fed to in training and out of the Season that are big right Minnesota all these ancillary type of things, right and about of that (00:02:43) 81. There's about a direct close to 20 million that's just involved in the breeding training. Part of it. And that's all over the state. That's not just a cannon Barry. It's all over the state of Minnesota. (00:02:53) Of course the we should make clear to people who are kind of still feeling their way through the horse racing business. The reason there would be such a dramatic increase in the number of horses that are born in Minnesota is that there are special races at Canterbury that are open only to horses that are born in Minnesota and because of the way it's set up those races actually carry higher purses. There's more money you can win running in those races than you can in in races for similar quality of horses that are open to everybody. (00:03:17) You know, the one word I like to use and I think it's a word in all of our Lives is opportunity. And that's what the horse racing act in 1983. Did it gave minnesotans an opportunity to be exposed and develop a new sport and with that opportunity. There's there's all kinds of things obviously tremendous impact on jobs, three four thousand jobs brand new jobs. They weren't here three four years ago. And with opportunity comes the new excitement and if anybody, (00:03:48) And to (00:03:49) the racetrack or has anybody been to one of the breeding farms and seeing a young foal and then you watch it for 2-3 years grow up. And then you anticipate its first start again that's opportunity to win the money and we have a good breeders program in Minnesota. We have an excellent facility. There's been a lot of people talk about did Canterbury over Builder not overbuild. Well as a Minnesotan, I'm fantastically glad that they did what they did because they gave us the best racetrack in the United States and and that gives us opportunity as (00:04:19) Horsemen, you know, my wife and I were sitting around the kitchen table last night talking about some of the issues that we would be grappling with today because I go to the track more than she does but she'll come with me and she's not a better. I mean she just didn't she enjoys horses. She enjoys kind of the spectacle of the thing and she has a very good time out there. I enjoyed betting I like the spectacle too, but I like the bit but you know, we were talking about how some of the problems that the track is gotten into evolved and part of it is the controversy that maybe candy Is too big to be supported through the attendance and and wagering that we can reasonably expect, you know, the course of the their projections that were made have not been met for the most part is a whole other issue. We'll get back to later because attendance and wedding are actually by industry standard spectacular. I mean, there's no reason to complain about either right now, but the simple fact is attract cost a lot of money to build there's a lot of debt to be paid off and that's a big hole to be in but I recognized the problem though they faced when planning this thing is because in a twin cities were used to big-time Major League entertainment, whether it's Sports, whether it's theater, whether it's the Arts whatever people here pretty much have the best available to them and and it would have been very hard for a track to come in say at 30 million dollars instead of 70 or 80 million and you know not be if a top-grade facility attraction in and of itself would have been tough for this business to even get as far as it's (00:05:44) gotten. Well, you know, there's there's something that people When a new industry comes in and as complicated as horse racing is there aren't any immediate answers to everything but one of the things that if you just sort of try to make it simple and put it in perspective the real key to this whole horse racing issue. Is that where does the money come from? It does not come from the state of Minnesota. It comes from the fan the the person the man and women that the men and women that come out there and want to see the best just as they go to the Twins and the Vikings. I want to see the best and we have a facility thanks to the Canterbury people of quality. So now it's up to the horsemen to put the vest on and if the pursue the / structure relates that that we can run our horses here and raise good horses and give that fan the best the whole system works because without that fan without that Minnesota fan, there is no system week as Horsemen, we can look at it ourselves, but it doesn't make any difference. We need the fan and we got to give him the best we can and that's We're dedicated to do and the purses are part of that process. (00:06:51) Steve Irwin's my guest on portfolio this afternoon. He owns trains and breach Thoroughbred racehorses here in Minnesota. I'm J.G. Preston the program its portfolio on ksjn 1330 your questions about horse racing Canterbury Downs any element of the business are welcome to to seven six thousand is our phone. Number two, two seven six thousand Jeff mcandrew sitting by for the last time with an answer. Your phone is answered the phone so diligently last few weeks. He's going to go get paid more somewhere else. Probably I find that hard to believe though, but 2276 thousand Jeff will get up get on the phone with you and then he'll get you on the air with Steve Urban and me here on sport folio before we talk about some of the legislative proposals that are pending Steve. Let's talk about you say how it's the fan who foots the bill for really everything that happens to Canterbury Ptolemy the fan not only pays a Horseman he and she pays the track he and she pays the state and I'll just go over the breakdown of the money as it exists under the current law the money that's been And there are some differences in different types of bed for your typical your win place or show bit of every dollar bet 83 cents is returned to the betters and forms of the payoffs on the win place and show bets. Now that means broken-down horse players the world that we are out 17% automatically when we go out there, but we're taking the chance each of us that we are so much smarter than the person next to us that we were more than recoup that 17 percent. That's the price we pay to play the game nine and three quarters percent of the money bet goes to the track and that's how they can help meet their overhead and expenses and debt and all that kind of stuff and it they have other sources of revenue to but from the from the wagered dollar that's what they get five percent goes to the purses. So it in this way the amount of money that's bet directly determines how much money is available to be won by the horses and also goes on to directly determine what horses will compete what horses will choose to Go for that level of purses or you know, if they're your better horses can make more money somewhere else. So be it the state gets one and three quarters cents out of every dollar bet so four hundred dollars at a be a dollar 75 one and three quarters percent, right and then breeders fun gets another the last half a cent that's left out of that dollar. This is the way the thing is currently set up and then the course the track gets a much higher percentage of things like admission parking concessions. Those are things that don't go into the pool of money that's available to horsemen for purpose purses that does not go into the pool that goes to the state except for both sales taxes and those type of things but there are no special taxes on those as so the big picture we talk about here is the money that's bet and where it goes now, I'm going to oversimplify this greatly Steve but one of the key elements of the legislation that's being talked about at the Capitol right now is to increase the amount of that dollar bet that goes directly into the purses not so much directly to Canterbury Downs not directly to the state but directly to the person (00:09:48) Well, I'm going to correct your figures just a little bit because in Minnesota what you just stated was basically on your win place and show betting up to 48 million dollars and then it changed after (00:09:58) that. Oh, that's right. And you know last year the total handle was like a hundred and twenty Mill. That's (00:10:02) correct. If it was a small little racetrack that would be where would be that we're dealing with major league here. Okay, and so basically to not complicated for our listeners today you basically have about 21 cents with through the Exacta wagering and so on 21 cents that goes into the industry and that 21 cents is basically broken down approximately 10% ten cents of it goes to Canterbury Downs five cents to the purses five cents to the state and one sent to the Breeders program. Now if somebody's got a pencil I'll show you something. That's very interesting here. That is basically 21 and if you've take the state share five, And / 21 you'll come out very close to 25% So that's the text that is going to the state what the Castoro it's bill is now is saying why not tax the horse racing industry like every other industry. Let's tax it at 6% So in essence out of that 21, then 1.25 goes to the state and the other 3.7 will go into the purse structure and then that will make this whole thing (00:11:21) balance. So just to clarify this the 21 that we're working with. That's the percentage that's coming out of that dollar. That's correct. So the the bill that's being considered would take you'd still be taking the same amount total out of the Dollar Bet the same amount would be returned to betters in the form of winning. That's correct. What would be taken out would be redistributed and and the track share would be would be I mean the state share would be lowered. Yeah. Basically you could set this up. I mean the state could get any amount that the legislature decided. I mean, I'm Saying that any Solution that's right. That's what happened. There's been this is not this is his own separate law. I mean this doesn't automatically fall under sales tax on how many they could decide the state could get 20% of it. I mean there wouldn't be a track here then but they could decide that if they want (00:11:59) and that's just about what's happening right now. I mean our whole industry because the money that is generated in the industry too much as being taken out of the industry and the industry can survive without amount taken out. So the Castoro it's Bill is very simple. It's saying why not text this industry very similar to which the sales tax and everything else we tax in Minnesota. Why should this be any different? So with that theory it basically then reduces the tax to the state and that money goes back into the industry and forms of purses and then all of a sudden the whole cycle starts to work (00:12:34) now, we will go in and redevelop some of the arguments that are pending before the legislature, but we do want to get your questions on the air and give you a chance to call us at two to seven six thousand by the way NatWest the vice president assistant general manager can't Rebounds I'd hoped would be with us today. But Dad is in the hospital at a little surgical procedure yesterday and isn't with us today. So we don't have somebody from the track right here to answer your questions. Although I'm sure that there are people from the track listening who would call in answers if we had questions are left unanswered. But Steve Urban is my guest. He's an owner trainer and breeder and president of the Minnesota Horseman's benevolent and protective Association. Okay, Ron you're sitting there spending all kinds of money in your car phone. Sorry to keep you waiting, but go (00:13:15) ahead good morning. But before I do that I've got for you Stephen. One of the things that concerns me is that when this track was first proposed a number of group different groups of businessmen went before the the state legislature in the state racing commission and made a proposal and different groups offered different set up somewhere less expensive track somewhere more and they and they selected the Canterbury proposal now two or three years later the same people are coming back and saying you we'd like to change the rules the rules that we presented to you and the the scenario that we presented that we told you we could be successful. Glad we're not able to do it. So we would like to State and the people of Minnesota to take less money than we originally said we could do because we're not able to survive now. I'm a businessman and I entered business recognizing certain set of tax situation that I would have to pay a certain amount of taxes. And if I can't make it in my business, I can't go to the state and say gee I wish you'd cut my taxes because I can't make it why should racing be different than other businesses? (00:14:14) Well, that's a great question Ron and and I'll tell you why it's a great question because it's probably the real issue of this whole (00:14:22) thing. I mean, this is the philosophical (00:14:24) they're looking for this is it when you look at the alternative it's sort of like when you get to the river and there's no Bridge do you turn back or do you build a bridge now? That's what you have to answer and we're at a river right now. And so we're saying we have to build this bridge to make it but let's look at the real Crux of what happened here in the state of, Minnesota. A pair of mutual bill was passed then the legislature went together and wrote the rules of racing or the incentives to make racing in the industry grow here in Minnesota. The basic structure of that legislature was based on a track that was only going to make 48 million dollars in handle a year in other words a minor-league racetrack. (00:15:12) And once again for comparison Canterbury this past season a hundred and twenty million dollars, that's great over the course of the (00:15:17) summer. And so everybody had to play under those rules. So to speak those rules were written for minor league with the under the process and I think we've all been in situations where we've had to compete to interviews or sales or whatever and so you can't change the rules and tell the state of Minnesota that you were wrong because they're not going to choose you because they would have thought they were right and that was where the Crux of the whole problem was they ended. Up putting five percent into the state and 5% into the purses and if you take a look at this Canterbury Downs is not asking for the money to go to Canterbury Downs. They're asking and the horsemen are asking for that money to go into the purses in 1983 a bale of hay was probably a dollar 75 now a bale of hay is probably three dollars and 25 cents so that the expenses of the horsemen are tremendously higher than they were five years ago. And what we're saying is what we have to do is adjust our industry standards now to meet the night the 1988 and Beyond problems that are facing so looking back at that. Let's just play The Devil's Advocate just for one moment and let's say that the state Pick a 1983 wrote the same rules, except they wrote the rules that the purses were nine percent instead of 5% You know what nobody would be up at the legislature right now, (00:16:48) correct? Because that's basically what you're looking to do right now. That's correct. Those of us in our business we have to admit our prejudices. I'll admit my Prejudice. I like horse racing. I'd like to see the track stay in business and Thrive. I guess the reason I can sign on to some legislative changes that would at least effect. The paramutual tax estate would receive is if the alternative is I mean the alternative is that the state's long-term Revenue stream here can shrivel up. I mean sure maybe they'd be making several million dollars Less in direct paramutual tax payments, but I guess the comparison is if racing dwindles to being a very small business or to being a non-existent business eventually, they don't lose just a few million dollars a year. They lose (00:17:35) the whole wad ball of (00:17:36) wax a year. I mean last year this dump are mutual tax alone last year the state made what about 7 million dollars from Canterbury between six and seven million dollars somewhere. (00:17:43) I think they made yeah about seven seven seven point five something like that. And you know what, that's exactly what the purses were in other words the state of, Minnesota. Didn't you know that that had no program virtually involvement? No investment or anything else got as much money out of the industry as a Horseman did and we can't survive it just impossible when it costs us close to ninety thousand dollars a day for the and you know where that money goes It goes to the employment of our Grooms. Our trainers are farriers our veterinarians the tax shops the feed men and so on and all of a sudden there's only x amount of dollars in the system to pay those bills and your Thirty forty thousand dollars a day short. It doesn't work. Go ahead run. (00:18:29) Yeah what but see that all businesses have increased costs and a good business plans for that when they make their original business plan and the original business plan that was presented to the state was made by the Canterbury people sure. I remember people saying there's no way that Canterbury the is going to work. They just can't get by with the proposal they made and and they should have taken a presentation of some of these others people from e And some other places that made the presentation a less expensive one and Canterbury says no we can do it. We can do it now three years later. They're saying well, I guess we can't do it and we want the people of Minnesota to bail us out. Well, that's wrong (00:19:05) Ron. I really don't agree with the answer that the people of Minnesota bail you out because the people of menaced the money is being generated by the product. We're putting on here in the state. But the (00:19:16) money is that much less that's going to go into taxes. They're going to reduce the amount of property taxes and sales taxes and income taxes that we're going to have to pay. That's how we got racing here in the (00:19:24) first place. No, no, I can't quite understand that because what we're talking about is the paramutual tax. Do you realize that that there's over three four thousand jobs that are that are now here that weren't here and those people pay income tax those people by a goods and services here in Minnesota. They add to our gross product here in Minnesota. In other words. It's an industry. We're not talking about just somebody take it some money. It's a big industry. (00:19:50) That's the thing you have to jug here is the state's take is More than just what they make in direct paramutual (00:19:55) tax, that's true for with control that as well honey. Where are my little company and yet if we run into a business problem what we can't make the profit we hoped we'd make we can't go to the state and say reduce our taxes. (00:20:06) Well does your does your company be taxed 25% (00:20:10) That might come your tax 46% That's the corporate (00:20:13) tax on the corporate tax. That's right. Okay, but how about your product that you're selling? (00:20:18) Well, that's the product has a sales (00:20:20) tax on see how much is that? (00:20:22) It has a sales tax and you're not you're not being practiced attack 6% your you're being taxed to one and a half (00:20:27) percent. No, no, we're being taxed. Yeah, I (00:20:29) heard your argument. I heard you play with the figures. It's very simple way. You're right. But in another way you're not right you're getting one and a half percent of the of the money that goes into that track comes out to the state. And that's a small amount should not be (00:20:40) reduced know it's 5% Ron. It's not one in half. It's one and a half of the first 48 million dollars and then five then six percent of the money after that and since the industry is generating. Hundred and twenty two million dollar industry. There's a tremendous amount of taxes going (00:20:57) out came out to about three percent on average I (00:21:00) guess but it's about 5% but that there's not a nothing here is inherently right? I mean this doesn't I mean this is this is completely set. I mean this is negotiated by all parties (00:21:09) involved and the rules the rules can be changed. You can change the rules. I just don't think they should I think it's unfair to every other business has not been able to be (00:21:17) successful then we just act as we let me just interject something here. I think there are plenty of businesses who are also going to the legislature complaining about their taxes. I don't think that's endemic to Canterbury down. (00:21:27) Well, you know, I just like to go back to one issue Ron and and you know, I'm I understand, you know, the whole situation and I wish that a lot of minnesotans would understand our situation. Our product is what we do at Canterbury Downs in other words. Our product is what the people bet that's it. It's don't that's the only income that anybody has out there basically and especially the horsemen and so if that's 21 Scent or 21 cents on a dollar. All we're saying is then under the Castoro. It's built acts that that's a sales tax it at 6% (00:22:02) that people who set it up at 21% to use your figure was Canterbury. There's no no, no (00:22:08) that no. No. No, they Canterbury did not set those up. These rules were made by the (00:22:12) legislature. Great. (00:22:14) I think I think Ron's point is those rules did exist when Canterbury applied for the (00:22:17) license. Well, yes, but but out of 27 racing States throughout the country and the last five years 25 of them have reduced the paramutual tax to allow the industry to survive so that this is just not new to (00:22:30) Minnesota. See what I mean. What for the discussion to get anywhere both on this program and in the legislature what you have to say is okay. Yeah all this happened three four years ago. That's great. Now here we are. What are we going to do? (00:22:42) That's right, you know, (00:22:44) you can certainly can say know the rules are the rules and that's it. And if the thing goes away the thing goes away and I guess maybe that's just a somehow but I mean my feeling is a State loses in a Run the state at the state is losing potential (00:22:55) Revenue. Well, you know when you think about something really simple, let's get away from just the Canterbury situation. I mean the 1983 there were 50 thoroughbreds bread in the state of Minnesota in 1988. We're expecting over 750. Now, that's all the Breeders throughout this state that have put their money where their mouth is. They they're they're putting their money into the agricultural products. They're putting their money into help to raise these animals and that is the industry that will not exist. If we don't get this thing straightened around to the weight that the whole system will work and the only way it's going to work. Is it's just like if you if your you've got to well. And you take water out of that well to nurture your crop and if you just take too much water out of that well and don't have enough to nurture your crop your trops going to die. And that's exactly what the impasse that we're at right now. (00:23:54) I've got some callers waiting wrong. We have to get to one but call back if you're not satisfied. Thank you. Ron to 276 thousands our phone number on sport folio here on ksjn 1330. I'm J.G. Preston. My guest is Steve Irwin who owns breeds and trains Thoroughbred racehorses, and we're talking about situation with towards racing in the state of Minnesota and at Canterbury Downs your questions and comments are welcome at to 276 thousand will go to Minneapolis. Hi Burt. (00:24:18) All right Yugi, I guess I'd like to compare this situation to a horse racing fan started out by going to I was inducted into horse racing fandom by going to the Kentucky Derby which has a lot more Sideshow that horse racing (00:24:38) sometimes for sure, (00:24:39) but I really enjoy it and I like the idea. How to get the strong horse racing industry on the other hand, I guess I look at this is Canterbury Downs is a great facility in many ways. I compared with places like river place or gold pure plaza where I mean, they're just wonderful facilities, but the cash flow isn't there and what's happening is that various pieces of them are being sold off or refinanced or whatever and what I guess I'm thinking as an alternative to the decrease its proposed in the Coast or its legislation. What if We were able to have retained the same amount of Revenue going to the state in the legislation as is as is currently provided and okay, let's say at that point the current group operating Canterbury down says, okay, we can't make it. We're going to have to go we're gonna have to sell out at that point. There would be some kind of a workout agreement or refinancing or something and the overhead generally what happens in these cases is that the bank's declare their losses the loans are written off the overhead goes down in that case you'd be able to put more money in the purses retain the current percentage going to the state still have a viable horse racing industry. I guess. I'd like to hear some comments along those lines about why that's not a feasible alternative for mean. I don't like anybody to lose money in their investment. But if they overbuilt the overbuilt and you can ask Bob boy clear about that and And so I'd be interested in some comments on (00:26:24) that in other words basically restructuring the debt and Canterbury in the bankers would be absorbing Financial impact there. And then (00:26:33) if they made bad choices they have to pay to just like it at River Place and gold here (00:26:37) plus and maybe you can talk about this Steve to the extent that you know, I mean what effect do the bankers? I mean, there's a lot of money that's owed here what effect of the bankers have on what actually gets done how much our track Management's hands tied by its lenders. (00:26:51) Well, obviously, I can't directly answer those questions as I don't have that kind of complete knowledge, but you know, let's just think of something philosophical here a second and when you hear these questions you think you think about an industry Did Canterbury Downs over build, you know, a lot of people say that but you know, where did that money go that money went into the Minnesota construction business. It was jobs Edge and profit for people that built so it stayed right here in Minnesota. So all of a sudden this is Minnesota. This isn't just a couple guys that own a racetrack. This is Minnesota. They gave us A tremendous facility I work out there. I have been on the backside of Canterbury Downs the trainers and so on out there you'll find probably one of the most educated bunch of trainers that it up here in Minnesota and you know, why because of our facility, we're not in some sleazy Place back there. And if you have not been there boy call me when the racing season opened up. I'd be more than happy to have you be a guest of mine back in the back side and watch how the lifestyle is in Minnesota to work on the backside of that Canterbury dance and I'll tell you A lot of people that are hardworking people in Minnesota if they saw the opportunity we have back there for the facility you'd think about coming back to (00:28:19) work and it's actually physically attractive. It's comfortable you've got room to work and for the standards of the horse racing business, it's plush. I mean, I know that there are plenty of trainers who would love to race here. Just just to be there. I mean, it's physically a variant Place to work. (00:28:33) That's right. We have it. We have one of the best Turf courses in the country. No Canterbury didn't have to put the money into that but they did because they wanted to give minnesotans the opportunity to have the best and what happened to the US people in Minnesota. It just was a brand new industry for us. We weren't going in there second-rate we have to now his Horsemen produce. We have to produce quality racehorses to be able to compete, you know at Canterbury and why because we want to give the best as a fans the best so, you know philosophically can you do something too good? I don't think so. I don't think our our symphonies in Minnesota and I don't think the Guthrie Theater has been around for years. Is that too good or should it have been not so good. I don't know. I can't answer that philosophically the kid the question is is why not get all this negative attitude away. We in Minnesota. We've got a great state and if we in Minnesota would work together to have the best. That's what we Have and instead of bickering about this. Let's solve this problem and I believe our legislators have been educated now to what the real problem is here. And I think this year you're going to see a tremendous change in attitude and if we can get our proposal through where our industry just is allowed that opportunity to exist. You're going to see the best horse racing in Minnesota. And in that probably in the year 1990, you're going to probably see the best horse racing in the midwest right here in Minnesota. That's if we want it now if we don't want it, Then we can throw the towel away and not cross that River (00:30:07) but it's a it's clearly a choice and it's it's a public forum at the legislature. That's correct. How long you been in this horse? Business yourself Steve? (00:30:15) Well, it's always a tough question to answer in this business for I guess why I speak from from the heart when I talk about quality back in 1972 73 and 74. I was the fellow with a couple other friends that put on horse racing up in Anoka and then over at Lake Elmo and I called the races and was a racing secretary. In fact my partner and I every Sunday morning got up and cooked eggs free for the horsemen that came there and their families. In fact, some of those families are some of the well-known trainers now and you have to understand that this is a this is a big family participants the owners the trainer's the young people that growing up the jockeys. These are athletes just like the Is and it really does hurt when people say let's destroy it or let's turn it over to somebody else. I'll tell you the quality that we have here in Minnesota is worth fighting for and I mean not just at Canterbury Downs but I mean our whole lifestyle and that's probably why I'm sort of outspoken a little bit to stand up and say look it let's keep the quality because we have it in so many other things and and and so basically that's how I got started in 1972. I won my first race in 1975 with a horse called Fritz the grape press the grapes. Yeah. Well, he was such a small horse. We didn't think he was going to be real great. So we called him Fritz the grape and then in 1977 one the Minnesota Derby which was run up in up in Canada with a course called Alexander the grape and and then when the quality proposal when the racing commission selected the the quality proposal but of Canterbury Downs, it was obvious to me that minute. Go to had the opportunity to have great racing and great breeding in this state and that's what we're doing in the last three years. That's what we're attempting to do (00:32:12) and all those years while you work with the horses for love. You were also making a living as an architect, huh? (00:32:16) Yeah, maybe that's why I might have a little more emotion in this in the whole thing. Yeah. It's been a very interesting life. This is say the least the very tough one with the amount of hours. You have to put into the racing but once you understand and love the people and loved the horses that are involved, I'll tell you it there's a great reward when you see your home bread when it Canterbury (00:32:37) Downs you listening to ksjn 1330. I'm J.G. Preston. This is portfolio. Steve Urban is my guest Steve is an owner trainer and breeder thoroughbred horses has a farm up by Stillwater and always has a whole flock amount of Canterbury Downs 2276 thousand phone number if you have some questions or comments about the racing business to directed Steve Urban. We got some callers waiting. We'll get right back to him to st. Paul. Hi, Bob. (00:33:02) Hi, you might want to consider comparing Canterbury Downs to the tektite industry back in the 70s when the cap the taconite industry greatly expanded. There were all sorts of new taxes established. And because they thought that industry would be great and they build very large provide a lot of jobs. Now. It looks like they greatly over build and they've gone back to the legislature a couple of times successfully reducing their taxes in order to support an industry think the only problem you have is that if you compare category Downs with other sporting events, there is not legalized gambling allowed with other sporting (00:33:45) event, right and that's what gets the legislature involved in this whole process in the first place. (00:33:49) Right? And you know, it's one of the sin taxes. It's like liquor and cigarettes gambling is now another one the syntax is where you got to raise taxes somewhere you do it there first before taxing anything else. The other problem we have is when you compare with Arts facilities the Ordway theater the Guthrie Theater, they were all built with cash. The money was raised in advance in when the money was there and then the bricks were late and they're also nonprofit entities which get by with a lot of low paid people that are doing this for the love of the art in not to get rich. And so you have your analogies a little mixed up when you're trying to compare Canterbury Downs with twins or with the Guthrie because you don't have gambling involved. You don't have big private operations that went in heavily leveraged in order to to build a (00:34:46) facilities. Yeah, clearly of Canterbury were not heavily in debt just as you know, I mean as you would expect for something getting started right off the ground, We wouldn't have a problem basically mean everybody could find a way to be happy. If (00:34:58) you'd have a problem. You'd still have the problem (00:35:00) and there but there'll be more room for negotiation than because the tracks needs also wouldn't be as (00:35:04) pressing know because like I mentioned earlier 25 of the other states in the United States have changed their paramutual tax and that places where the so those are paid basis like Churchill Downs and Arlington Illinois and and so on and the reason is that the money has to go back into the industry for the / structure. I mean, that's that's the key. You see everybody likes to jump on the bandwagon and take the darts and throw it at Canterbury, but Canterbury made a deal they were to get their percentage there are ten percent and they're not coming back saying we want more right the people are saying they're saying that they're not saying that the horsemen are coming back and saying look the 5% that was written in 1983 was incorrect. For a new industry and and so what we're saying is take this like 2025 the other states the only other state that hasn't had a pari-mutuel tax changes, Wyoming (00:36:04) which barely as a peer Mutual (00:36:05) track. Well, it has a handle I think of about $300,000 a year (00:36:11) and so is 220 million in Minnesota. Yeah. So (00:36:14) her mutual tax would have been approved by the voters if there wasn't that tax in the first place. (00:36:21) I didn't quite get the (00:36:22) question all your industry probably would not exist. If there wasn't this taxed consideration in the first place because the voters of Minnesota probably would not have authorized paramutual betting the only reason they did it is because just like with the discussion about the lottery is there was a possibility for a significant new source of Revenue to offset income tax or property tax. And if that significant source of Revenue wasn't there I don't think minnesotans would have allowed paramutual (00:36:51) betting sure that that I mean the prospect of easy money from the pier Mutual text. Well, this is Bob is this right? Yeah, that's not. Okay (00:36:57) Bob. You're you know, you're absolutely right. But also there was one other factor and that was also wasn't just sold on the tax. It was sold on an industry and the industry and I opened the show by stating. I didn't make these figures the Department of Revenue in the state of Minnesota talked about the gross product of 81 million dollars because of the horse racing industry and the little amount of money we're talking about Out is for five million dollars. That's all we're talking about. Now, if the industry is successful the state is going to get two and three fold back more in taxes in wages in all types of products that that are (00:37:37) involved and that's the thing we have to come back to there's the easy money to be made from the paramutual text. But that is not the only source of Revenue to the state from the horse racing business. Oh it's and you can if you can lower that easy money you can you can maybe find a way to make a lot more of the other (00:37:51) money. Well, I think that's sort of how businesses work. Mmm. I mean you don't take your profit out in your business you stick it back in so it can grow and when you take a look at just for example on the backside of Canterbury Downs, and these these figures are documented that every day. There's about forty six thousand dollars in wages and that money is spent in, Minnesota. There's approximately 18,000 dollars in feed and bedding and that grain comes from northern Minnesota. The grain comes from Western Minnesota the hay and the the straw come from western and southern Minnesota. You know that's going right back every day into our economy. Now, we can't solve all the problems the horse racing but let the industry were come on it on itself and all of a sudden we will give you more, you know, gross product and that's really what business is all about. We I understand (00:38:49) as long as we're all clear that there is more money to be made then you can make just to the paramutual tax that the state can still come out ahead even with lower paramutual tax personal opinion. I got that on the table. So, you know where I'm coming from two to seven six thousand is our phone number. It's 18 minutes before one o'clock here on sport folio ksjn 1330. I'm J.G. Preston with Steve Urban owner trainer and breeder Thoroughbred racehorses. Let's go back to the phones to Minnetonka High Maddie. Thanks for (00:39:15) Yes, I have a question. The first question I missed was what percentage did you say would go back to the Bettors? (00:39:23) It's a on your regular win place and show betting it's 83 percent eighty three cents out of that's what's actually paid back to us through the window those of us who cancers winning tickets. (00:39:32) Okay, then I have another statement to make in 1981. Now we're a business to we're a family that's a business indirectly. We pay high taxes. Hmm in 1981. We lost their home to the illness. Nobody helped us state city. Nobody, you know what has happened since since 81 we've been on welfare. You know, what well for we cost welfare in seven years, if we'd been helped they could have saved thousands and thousands of dollars not billions, but thousands (00:40:08) just to just to clarify that Maddie they being the state and money that you (00:40:12) could have and the high Assessments in our community because I'm big company wouldn't come into our area unless everybody hooked up to Water and Sewer or put it in that cost us 20 thousand plus are illness and So we were hurt by a big Corporation coming in and the big Corporation is the Big D and I haven't spent a penny in that store since nor in the community there, but I'm (00:40:42) I'm sorry about the situation, but I guess I'm missing the relevance to our (00:40:45) discussion. We're a big business. We played for a plenty School six schools were built while we were living. There are taxes were ridiculous. Our assessments were out of sight. Nobody helped us. Why should you get a break? It's no pleasure being on welfare. And for for 7 years now, we've been on welfare. Do you know what the cross the state and the county? If they helped us then we wouldn't be in this predicament. (00:41:15) I'm sorry to hear that. But I guess I'll just have to leave it at that. I just don't know what to do with that for as far as this discussion is concerned. We have a caller standing by Minneapolis. Go ahead Mark. (00:41:22) I'm on yes, you are. Okay. I had to leave my car. So I'm at a payphone. Okay, but I guess I would like to maybe attack one of the assumptions that I think your guests makes which is what's going to happen to the track. If they were to go bankrupt. It seems to me that if they were to go bankrupt, of course there would be creditors and they would try to recoup as many losses as they were. So if they were able to get a 69 cents on the dollar something for the track. I think that there would be another buyer who would come in and buy the track and be able to run it at a profit and it's just too bad. That's the way the capitalism works for these people who've lost their money on the initial investment. (00:42:01) Yeah, and that was somebody else's suggestion to basically let Canterbury management go belly-up and then see what happens after that. (00:42:06) Okay, Mark what would happen to our Industry (00:42:14) well, I would presume I mean your industry seems to be fairly well organized and I'm sure that they'd be able to Lobby the legislature to come up with some sort of incentive perhaps Rudy perpich always seems to be willing to pull up his dress for any Suitor who might come by so you might be able to do that. I'd it seems I see I'm just attacking your subject. I really don't think that they're not because the track is going to be there. They already have this building that's built out there. They're not going to use it to hold Canada festivals of every weekend or something like that. It's a horse track. They're going to have to use it as a horse track and I just don't believe that there is no investor in the world who would come in and be able to run that track at a profit. So, hence, I think the industry would be able to (00:42:54) survive. Yeah, but where they going to get the horses Mark, I mean us people can't survive. We can't survive running for 50 60 thousand dollars a day out there. (00:43:02) There's no way to me that well. Okay, so maybe you do need more money, but that's your argument with the Canterbury officials the category officials knew when they went into the There was going to be all the taxes. They knew what the arrangement was up front. So it's really it falls on deaf ears at least in my corner when they start complaining about that your argument is with the Canterbury officials. No Mark, I don't see why any Mark Street deserves any more of a subsidy just because the because the industry is threatened Mark. Let's clarify this you were to lose money for it. You're even if the track were to be closed for a year. Well, that's life. I mean there's they're wiser men out on the coast when oil slick happens. There's never a Mark that Mark stuff like shut up (00:43:40) for a second and listen now Steve's arguments with the state of Minnesota. This money isn't coming from Canterbury. There are people who don't understand when canterbury's got problems too. Don't get me wrong. But but the The Horseman don't get their money from Canterbury Downs they get their money is determined by the state legislature. Now, that doesn't mean that you know, they're still there are still personal choices to be made here, but don't confuse who's going to who here (00:44:00) so the state is pasted the state sets what the person should be you got that, right? Okay, so why okay, so what are your love? So you're lobbying the state then just to increase the purses. Yes. At State for the tax break or (00:44:12) anything. That's right. The money the money then goes directly to the / structure. It does not go to Canterbury Downs that is the whole issue and see the last two years. It's been blown out of proportion. And that is what's happening. Canterbury isn't actually asking for money. (00:44:28) Okay, but what my point is is there going to be less Revenue coming into the state because of this Arrangement that you're proposing (00:44:36) totally totally there will be more revenue generated (00:44:40) in authority figures, but I'm not now listen now, you've got to separate the paramutual (00:44:45) tax and all revenue streams coming to the track people. I don't mind you coming to get on a soapbox, but get your facts straight. Now, do you understand the difference there Mark? (00:44:53) I understand the difference. But I yeah, I know he's saying that there's income taxes and things like that and the turnover in the money and stuff like that. The state makes my Beyond question is is there less money that will be all I'm just talking about this one particular issue here is there less money coming into the state coffers because of this Arrangement that he's Posing (00:45:12) okay into the you're talking about on the paramutual tax or you talking about the industry. (00:45:18) If you're talking about state revenue Mark, the answer is probably more although that remains to be determined. If you're asking about the pyramids will tax which is one element of what goes to the state you're talking about a reduction. (00:45:28) Okay. So we are talking of Mark now. (00:45:31) Listen Mark you're talking to if you're talking about State revenues God I haven't yelled on the air before is great. If you're talk about State revenues, you're talking about everything you're talking (00:45:38) about. That's right. Okay are going to disappear right? They're going to turn up they're going to turn Canterbury down to some sort of tenement that should belong in Harlem and maybe all the bums can go out there and live there because all the creditors are just going to sit there and go. Oh, well, I guess (00:45:58) your Denmark now listen, unfortunately Mark has the grain of an issue there. Unfortunately, he's blown his argument. I mean there are there are those who say yeah. Let's see Canterbury management go belly-up. They're not going to plow the thing under there's gonna be a racetrack there and somebody's going to run races there and somebody will come bet on the races and somehow the state will make money. Now. We recognize emotions run deep on this issue and I like to get in arguments. Sometimes that's you know, that's fine with me just to argue with people but get your facts straight. We want to try it at least untangle some of the issues involved here. It's about time ksjn 1330 had some controversy on the air and we're going to Burnsville next 2276 thousand is your number if you want to tell me how stupid I am because I don't mind that and Steve Urban is our guest who will try to Enlighten the somewhat go to Burnsville. Hi John. (00:46:39) I haven't hear what the last caller said other than the beginning but I didn't miss much. I think the point I'd say if is that if Canterbury Downs has restructured then the only people that lose are the shareholders and the bankers in a Fray sourcing is a valuable industry that we that's being claimed for it. Then they'll still be selling feed to the horses and this stuff will still keep going on. In other words the state group The Gross State product won't decline just because Canterbury Downs has restructured. That's Point number one. Hmm right now. R2 is that we don't know how much Canterbury down is costing the state and things like increased welfare benefits for people that become called compulsive gamblers. He doesn't know how much that is. And I don't know how much that is, but I'd be willing to bet the numbers not trivial. So it seems to me that two points is that there's no reason to bail out the owners of Canterbury Downs, (00:47:34) which is by the way that makes which is by the way not what we're talking about. Okay, John is that clear? (00:47:39) That's the argument the argument is if they don't get relief the track will shut down John John John. We're not talking about (00:47:45) John. We're not talking about any money going into canterbury's Pockets at all. You understand is we're talking about what's going to be paid off in purple and pressure (00:47:51) confused. That's the (00:47:53) problem. Okay, then set me straight (00:47:55) if Canterbury Downs doesn't make it because they don't have high quality horses. And they can't afford it as it is. They'll end up selling the (00:48:04) track, but John that's a side (00:48:05) issue that that Lord the (00:48:08) overhead you understand that but the legend (00:48:10) in the shareholders. (00:48:11) That's why Canterbury supports this legislation I think is because they feel like if purses are up and horses are better that they will benefit through that. Yeah that that is right. (00:48:19) And that's all we're talking about is they made the batter is no no take the (00:48:23) loss. You know, what we're not talking about any change in the proportion of the Canterbury gets out of the bedding dollar. The change only goes into purses now to the extent that that will benefit Canterbury they think it will and that's fine. But that's not that's not the issue were talking about (00:48:35) here. The whole thing is that They'll be able to contribute more to the purses if they have lower overhead. Is (00:48:41) this John? Is this John is John John? I'd like to ask you a question. Maybe you should be asking me one, but I'd like to ask you a simple question. If a new industry came in, let's not even think about horse racing just talk industry and the state of Minnesota. Took out in the operating of that industry what it needed to help control the or regulate that industry and the owner cut a deal and said look, this is what I get and the horsemen could or excuse me this industry and the employees or the workers said look give us an opportunity to make a fair wage. And then let that industry survive. Would you agree with that? (00:49:31) It seems to me that when the industry started they proposed this track with a high (00:49:36) overhead. No, no, no. No, I didn't ask you that. I asked you would you agree with that philosophy? (00:49:41) I don't think it's the duty of the state to create Industries if (00:49:44) that's the question. Well, then I can't (00:49:48) I mean that is a potential argument but there there are other people on that one. (00:49:52) But but the point is what this restructuring of the paramutual tax does it allows 90,000 a day approximately for the purses which equals what the expenses Four Horsemen are. The racetrack does not get another dime it gets exactly what the deal they cut back in 1984 when they were when they made their proposal and the state of Minnesota covers its expenses on the racing commission and the other incidentals to run the operation. So if you look at that in theory what we have done we have we have made in the industry work together the state paying its bills the horse. And paying its bills and the investor painted spills and what it does then is generates an eighty to a hundred million dollar type of a business in the state of Minnesota. Not you see when you look at it in theory. I it's hard for me because I'm so close to it as a Horseman but it's hard for me to understand why people can disagree with that. (00:50:49) Unfortunately, we're not going to get to all the college today, which is too bad because we're getting them out of the woodwork. This is really does arouses Deep Emotions, and there is there's not necessarily I mean, we all have to come to our own right answer on this. I have my opinion, which is clearly not a unanimous opinion are by any means that's okay. It's a public discussion 2276 thousand phone number which I just gave out a habit cause there's no room left on the phones. But Falcon Heights is waiting. Hi, Jim. Jimmy still there. Yeah, go ahead Jim (00:51:15) Paul. I guess I didn't make it clear. First of all J.G. Glad that you're back on the radio help that you was faithful Island. Ksjn, and then I'm gonna find gonna reiterate a little bit of what the last two people said, but it seems to me one reason why there's so much emotion, especially in areas like Woodbury, maybe an inverter Grove or wherever the other proposed place was that people feel that the Canterbury is changing the rules in the middle of the game here because they couldn't make it on the what they did. In fact agreed to the first time around. I understand. I've been following the argument. I understand that this is not directly for Canterbury, but it is indirectly I also not sure what I agree and I feel about this proposal Let Let It Go belly-up, but maybe there ought to be at least I don't know some sort of penalty for the people who came in with this. Go and who got the track when maybe it would have gone somewhere else if people had been more realistic and I guess the question would be if you could explain I know you're at much time at a little bit about how it happened that things were so misjudged back in in in 83 84 to where you know, now you find yourself in this kind of situation where the amount of money the state is taking was, you know was so (00:52:39) unrealistic, you know, unfortunately, I personally am undereducated on situation and we are running short on time. But I think you did hit a crucial issue here is that the the whole aftermath of the track selection process did create a lot of bad feelings and I do think it's a source of a lot of the emotion that's involved with this. Is there still a lot of lingering bitterness about how that happened. Well, obviously hmm. (00:53:03) But what are we going to do about it is minnesotans. I mean, what do you do now? What do you do now? And that's done. Do we throw everything away? And listen? (00:53:10) I'm sorry that we spend public money on a metronome. I really am. I'm sorry that the things there because I like the Mets stadium but the Mets gone the Metrodome was there I go to the Metrodome and I'm happy to do it and that's where the Twins play. I was a great World Series I was warm (00:53:24) but you know just to let let to try to educate here in the last couple minutes to for example, there has been a paramutual tax change in 25 other states right now in Chicago, which is Sportsman's Park is racing the purses are running approximately a hundred and twenty thousand dollars a day. Sportsmen that's correct. Now, where would you want to run your horses you had to have a chance to make it if it's costing you ninety thousand dollars a day. So the point is is it's time that we look at this industry. We update the the problem and like I said to one of the caller's earlier if the / structure would have been written in at nine percent back in 1983. There would have never been an issue but at but it wasn't (00:54:14) there may not be any such thing as a quick call on this issue, but we'll try one. Anyway, this is this is a Falcon Heights. Is this you Jim. Go ahead. (00:54:21) I have a quick question. What is the average tax rate for the tracks in the United States? (00:54:28) The you mean that what if the state's get? Okay, basically it right it goes from in Nebraska right now. They don't even take a paramutual tax out none at all none at all. And that is a paid for facility at exorbitant is a non-profit facility. That would happen because of the dog racing came and they started losing fans and so on due to dog racing so that would be the extreme on that side (00:54:53) and it's our bin is very comparable to Canterbury and very informative horses attendance handle all that. Yes very (00:54:58) much. And so Nebraska state of Nebraska take zero out of the paramutual tax because they understand how much they're getting in the total industry. Then you'll run up to approximately one to one-and-a-half percent depending on which state so it varies from zero to one and a half percent (00:55:15) just because it's my personal program. I'll go back and reiterate. My personal opinion is that the state of Minnesota can afford to take less of appearing Mutual tax because it will benefit more from its other revenues and I may be wrong about this. There are other people who think that that position is right there clearly plenty of people who think that position is wrong at any rate. I can't wait for this stuff to get out of the legislation that thing to get decided and we can have you back on Steven actually talk about the horse racing the business of training and breeding in the whole works is there's a lot of fun stuff and let me tell you this has been (00:55:43) three years of this and and we're all ready to give Fan a tremendous program out there if we could just get this over with (00:55:50) Steve Urban. Thank you very much. I appreciate your coming over. Thanks to Jeff Walker our technical person and Jeff mcandrew our phone answer and thank you for listening and thanks for calling up to argue with me cuz I liked it too. I'm J.G. Preston. You're listening to ksjn 1330 Minneapolis-Saint Paul next up. We have world and national news from the Associated Press after that Mark I said is back with the week in review. It's one o'clock.