Golden Gate Fields closure: horse racing cannibalizing itself

Golden Gates Field site is now worth half the total income of the horse racing industry

BERKELEY, California––Thoroughbred horse racing at the 82-year-old Golden Gate Fields raceway is to end on December 18,  2023,  announced the Stronach Group,  owners of the track since 2011.

The announcement marks a new phase in the ongoing death spiral of the horse racing industry.

Even as the industry celebrates an 11% increase in betting handles since the COVID-19 shutdown years of 2020 and 2021,  the big money players have begun cannibalizing themselves,  evidently seeing more profit in selling off assets than in racing.

Gambling goes thataway

Horse racing is still plenty lucrative enough to continue,  but at ever fewer tracks,  with ever more of the money coming from off-track betting,  now more and more done online.

Operating card rooms and casinos helped many tracks to remain profitable during the first few decades of the horse racing industry collapse,  but the advent of casinos not anchored to the expense of running racetracks for either greyhounds or horses undercut the racetracks’ appeal to non-racing bettors.

The advent of online gambling meanwhile has begun to sink card rooms and casinos,  leaving racetracks with little longterm hope of recovery.

Going out with the Boomers

According to the business information portal IBISWorld,  since 2017 “The market size of the horse racing tracks industry in the U.S. declined faster than the economy overall,  [also] declined faster than the consumer goods and services sector overall,”  and “The primary negative factors affecting this industry are a declining life cycle stage and high competition.”

Translation:  interest in horses and horse racing is aging out with the passage of the Baby Boom generation,  the last generation to have had much direct contact with horses while growing up,  and Boomers along with younger generations have ever more ways to spend their entertainment dollars,  most of them much more convenient than commuting to tracks to bet on the nags.

“High-grading”

In other industries what appears to be happening now at Golden Gates Fields might be called “high grading.”

“High-grading” is the process of stripping a mine,  a forest,  or a business of the most valuable moveable or consumable assets,  closing the facilities,  and selling property that often has acquired greater real estate value than whatever was formerly done on the land to make money.

The 140-acre Golden Gate Fields property,  alongside San Francisco Bay with spectacular views of the city of San Francisco,  the Golden Gate bridge,  and Alcatraz island,  plus existing access from Interstate 80,  could fetch as much as $10 billion on the current real estate market.

This would be nearly twice as much as the $5.4 billion annual intake of the entire U.S. horse racing sector.

“Steadfastly committed,”  says Stronach

Of course Belinda Stronach,  heading the Stronach Group,  is putting a different spin on the matter.

“The Stronach Group remains steadfastly committed to racing in California,”  Belinda Stronach said in her media release announcing the Golden Gate Fields closure.

Indeed,  Belinda Stronach even pledged to “double down” on racing at the Santa Anita track the Stronach Group owns near Los Angeles,  and on training activity at San Luis Rey Downs,  a nearby Stronach Group holding most remembered for having been caught in the path of a 2017 wildfire.  Forty-six horses were killed in their stables.

“The plan is to expand the Santa Anita race track in southern California and add another day of racing by January 2024,”  the Stronach Group media release said.

“Goal of increasing field sizes”

The Stronach Group anticipates that most of the thoroughbreds,  owners,  trainers,  jockeys,  and stable personnel who have operated from Golden Gate Fields will relocate to the southern California tracks.

Thoroughbred News noted “the goal of increasing field sizes,”  nominally “to further elevate the overall customer experience at Santa Anita Park,”  but reality is that the more horses there are in a field to bet on,  the more bettors will bet on losing horses,  meaning a more favorable ratio of income to payout for the track owners.

New Yorker writer William Finnegan described the Stronach Group struggle to increase field sizes at Santa Anita in an essay entitled “Can Horse Racing Survive?  In a time of changing sensitivities, an ancient sport struggles to justify itself.”

Car parts

            Finnegan also offered a succinct history of the Stronach Group itself.

            “Frank Stronach,  a horse-mad billionaire from Toronto,  bought Santa Anita in 1998,  after making a fortune in auto parts,”  Finnegan recounted.  “He also bought Golden Gate Fields,  and two major tracks in Maryland,  Pimlico and Laurel Park,  as well as Gulfstream Park in Florida. He bought and sold smaller tracks, becoming the biggest owner of racetracks in North America,”  but eventually refocused on dabbling in politics in Austria,  his ancestral home.

“He handed the reins of the Stronach Group to his daughter,  Belinda,”  Finnegan wrote.

“Belinda Stronach was a former Canadian Member of Parliament,  with experience in the family auto parts business and no known affection for horse racing.

“When the manure hit the fan”

“But, when Frank returned from his adventure in Austrian politics,”  Finnegan said,  “she declined to hand the reins back to him.  He sued her and her allies for some five hundred million dollars,  claiming that they had stolen the company out from under him.  She countersued.

“They and their lawyers were still in court when the manure hit the fan at Santa Anita,”  where at least 35 horses died on dirt,  turf,  and training tracks between December 2018 and October 2019.

Santa Anita survived the bad publicity associated with that debacle.

(See Santa Anita deaths just a fraction of the toll in horse racing.)

Scandals at Golden Gate Fields

            But Golden Gate Fields was among the casualties.

“According to state horse racing board data,  15 horses died at Golden Gate Fields in 2022, and an ABC7 news report last month said at least seven others had died through late April,”  recalled SF Standard reporter George Kelly.

“In 2020,”  Kelly continued,  “a national blood-doping scandal led to the indictment of 27 people.”

None of this helped the reputation of Golden Gate Fields.

Direct Action Everywhere

Also not particularly helpful to Golden Gate Fields were protests led by the Berkeley-based organization Direct Action Everywhere,  though the major immediate effect of the demonstrations was only to delay a COVID-19 vaccination clinic held at the track on March 4,  2021.

Direct Action Everywhere founder Wayne Hsiung ran unsuccessfully for a seat on the Berkeley city council in October 2020 on a platform which included trying to build affordable housing on the by-then-lightly-used Golden Gate Fields parking lots.

Ironically,  Golden Gate Fields survived as long as it did largely because it had a superior safety record to Bay Meadows,  operating from 1934 to 2008 in San Mateo,  California,  located diagonally across San Francisco Bay.

The California Racing Board in 2006 mandated that racetracks had to switch to artificial surfaces,  to reduce fatal injuries to horses.

Bay Meadows

Golden Gate Fields complied,  achieving a reduction in fatalities of more than 50%,  but Bay Meadows,  anticipating closure within the next two years,  did not.

After unsuccessfully appealing for an exemption from the artificial surface requirement,  Bay Meadows ran on dirt for the 2007 season.  Sixteen horses had died at Bay Meadows in 2006.  Twenty-five horses died at Bay Meadows in 2007,  not counting any casualties from an outbreak of equine herpes that also hit Golden Gate Fields and the Alameda County Fairgrounds in Pleasanton,  California.

The outbreak,  the first ever at a California track,  meant 2,100 thoroughbreds stabled at the
three locations were temporarily quarantined.

Built on garbage

Horses may have been informally raced at Fleming Point,  where Codornices Creek enters San Francisco Bay and where Golden Gate Fields has stood since 1941,  as early as 1842,  when Jose Domingo Peralta and family became the first documented residents of the eventual city of Berkeley.

Peralta sold that portion of his property to John Fleming,  for whom the point is named,  in 1853.

The surrounding salt marshes were mostly filled with refuse and dirt bulldozed away from the path of the road that became Interstate 80,  before Golden Gate Fields was built in emulation of the success of Bay Meadows and Tanforan Park.

Tanforan Park,  a thoroughbred track in San Bruno,  operated from 1899 to 1964,  until the site became part of the San Francisco International Airport.

Hot property

Berkeley conservation advocates have long anticipated that the closure of Golden Gate Fields could lead to restoration of the lost salt marshes.  Reality,  though,  is that the property is much too valuable for the Stronach Group to be expected to part with any of it except through sale or legal duress.

“With the start of World War II,”  recounted J.R. Stone for KGO television news,  “the U.S. Navy took over Golden Gate Fields for the storage of landing craft to be used in the Pacific theater. After the war ended,  racing returned to the site.

“Among the horses who competed at Golden Gate Fields were 1948 Triple Crown winner Citation,  John Henry,  Shared Belief,  and come-from-behind specialist Silky Sullivan,  who is buried in the track’s infield,”  Stone said.

Losers & winners

“The track was immortalized in book and movie form. In Jack Kerouac’s 1957 novel On the Road,  Sal Paradise visits the track with his friend,  who loses all their money.

“In the 1997 movie Metro starring Eddie Murphy,”  Stone continued,  “his character visits the track to gamble and blames jockey Russell Baze for losing his money.”

Baze was the biggest winner at Golden Gate Fields,  Stone added,  “winning 5,765 races there during his career,”  including his 10,000th career victory in 2008.

Baze retired in 2013 with 12,844 wins,  the all-time horse racing record.

Irby & the dodo

“It’s no surprise to hear that they’re closing,”  Animal Wellness Action senior advisor Marty Irby told George Kelly of SF Standard.  “I’ve said for a long time that if racing as a sport doesn’t clean up its act,  it’s going to go the way of the dodo bird.”

Perhaps,  like the dodo,  horse racing will be last seen on the Indian Ocean island of Mauritius,  east of Madagascar,  where the Champ de Mars Racecourse has operated continuously since 1812,  and is currently popular with online bettors.

Meanwhile,  noted Kelly,  California governor Gavin Newsom has “instituted a policy of not appointing members to the California Horse Racing Board who own horses themselves.

26 horse deaths in fiscal 2023

“The state horse racing board said in a press release issued earlier this month,”  Kelly continued,  “that 26 horses died from injuries during racing and training at state facilities during the fiscal year that ended June 30,  2023,  down from 39 the previous year.

“But deaths by non-exercise-related injuries rose from 66 last year to 69 this year, with 26 suffering musculoskeletal injuries and 43 suffering other common causes of death,  including gastrointestinal and respiratory diseases.”

What will become next of the Golden Gate Fields site,  Berkeley mayor Jesse Arreguín told Kelly,  is “too early to speculate,”  but the “priority right now must be on ensuring that workers are made whole and supported and that the horses are given proper care and relocation during the closure.”

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