Labor dispute could mean end of Surfside Race Place

Unless a new labor agreement is reached between the satellite wagering employees union and the California horse racing industry, Del Mar’s Surfside Race Place and the rest of the state’s off-track wagering facilities may close come June 30, officials say.

“It seems like it would be so catastrophic that it can’t happen,” said Jack Liebau, president of Hollywood Park. “I mean something’s going to have to give, and it’s not going to be pretty. Racing is dependent upon these satellite facilities for the handle that they generate.”

Failed negotiations could ultimately result in the shutting down of Southern California Off-Track Wagering Inc. and its Northern California counterpart, which provide the live simulcasts to the region’s satellite wagering facilities. The networks are funded by a small percentage of total bets at the brick and mortar centers, projected to run at a $4 million deficit this year. Because of this, SCOTWINC has been operating at a loss of $24,000 per day, 70 percent of which is spent on contractually obligated labor.

The current collective bargaining agreement, valid through 2011, guarantees SEIU Pari-Mutuel Employees Guild 280 a specific number of workers and hours per day regardless of need or finances available.

Unless a new agreement is reached that will reduce pay, benefit eligibility and staffing requirements, the two networks may cease operations at the end of June. At that time, a yearlong commitment from the Thoroughbred Owners of California to subsidize the simulcasts expires.

“It doesn’t appear to be a sustainable business model any longer,” said California Horse Racing Board Chairman Keith Brackpool at a recent California Horse Racing Board meeting.

Union members voted down an agreement on Feb. 1 that would have cut required staffing hours by 22.5 percent and probably kept the system running.

Because the agreement was rejected, courts are likely to toss out the collective bargaining agreement for Santa Anita and Golden Gate, which have filed for Chapter 11 bankruptcy. SEIU Local 280 President Richard Castro said the union’s attorney told him it is unlikely justices would extend this ruling to the financially afloat tracks in California, but the tracks are pushing for it nonetheless.

“But you know come 2011 when that contract is due, there will definitely be a labor dispute,” Castro said. “It’s going to be a fight to the death, and we’re going to lose that one.”

Castro also said his negotiating team would continue to work to come up with an agreement acceptable to its members by a June 10 deadline. He said the previous vote, which lost 293-218, might have been compromised due to a lack of space in the facility rented. The union consists of more than 1,800 members.

“The reason they (should) want to vote for it is because we’re helping the industry continue to stay in business, and hopefully there will be a turnaround,” he said. “We’re gambling on the future, but the future right now is really bad.”

Average daily attendance at Surfside Race Place is down to 639 per daytime race this year. Fairgrounds Chief Executive Officer Tim Fennell, who did not return calls seeking comment, has said back in its prime that there used to be 3,000 people in attendance per day.

In 2009, the facility took in $51.5 million in bets, but that represents $21 million less than it did 10 years earlier. In roughly the same time period, phone and Internet wagering increased from $149 million annually to $467 million, while statewide on-site handle decreased by nearly $1 billion.

There are currently changes being proposed that would shorten the required distance between two off-track wagering facilities and introduce more outlets at casinos. The industry can also temporarily increase the percentage a facility is allowed to take from the total handle, but that can discourage bettors from participating. The fairgrounds says it currently takes 2 percent of the total handle at Surfside Race Place.

However, it seems none of these measures would be able to make up the difference if the manning clause stays in effect to staff relatively empty facilities.

“We’ll face that when we have to,” Liebau said. “But hopefully we won’t have to get to that bridge and jump off.”