MID-ATLANTIC TRACKS VS TRACKNET MEDIA

An ongoing dispute between dozens of simulcast sites in the Mid-Atlantic (including Colonial Downs) and TrackNet Media, a partnership of Magna Entertainment and Churchill Downs Inc., seems unlikely to be resolved anytime soon. Last week, the two parties continued to lob rocks at one another – this time over the opening of Santa Anita.

The dispute has pitted TrackNet Media against the Mid-Atlantic Cooperative, which buys simulcast signals on behalf of sites in New Hampshire, Massachusetts, New Jersey, Maryland, Pennsylvania, Delaware, and Virginia. The two sides have been unable to come to agreement on a new simulcast contract since the previous agreement expired Nov. 1, resulting in the blackout of various signals.

With Magna's Santa Anita Park opening Boxing Day and Magna's Gulfstream Park scheduled to open on Jan. 3, the dispute is now threatens to negatively impact the most popular wagering signals in the U.S.

This is bad for bettors, Virginia’s horsemen, the local horsemen putting on the boycotted show, Colonial Downs, the local track hosting the boycotted race and the Virginia Breeders Fund - to name just some of the injured parties.

Today the MidAtlantic Cooperative released the following statement to the media:

MidAtlantic Cooperative, L.L.C., a purchasing cooperative representing 17 racetracks, has engaged in good faith negotiations with TrackNet Media, LLC commencing in August 2009. At that time, TrackNet presented its proposal which included an unprecedented increase in host fee rates – rates higher than paid by other racetracks and other simulcast outlets with significantly less annual volume than the MidAtlantic Cooperative, as well as a limited term and several non-economic conditions that went beyond MidAtlantic’s authority as a purchasing coop.

The MidAtlantic Cooperative represents an estimated 12-15% of the daily interstate wagering handle for TrackNet’s respective racetracks and is TrackNet’s largest independent customer.
Contrary to published remarks from TrackNet Media officials, the MidAtlantic Cooperative has not refused to “pay any rate increases.” Rather, it repeatedly discussed increases with TrackNet and presented a detailed proposal to TrackNet Media that included tiered increases in simulcast rates over a multi-year period, allowing for desired increases while providing longer term cost stability for Coop member tracks and avoiding the possibility of further interruptions.

In fact, during the past year, several Cooperative track members already paid TrackNet significant increases in rates charged to certain of their operations. Of course, any increases negatively impact MidAtlantic Coop’s payments to its local horsemen. TrackNet’s response to MidAtlantic Coop’s proposal was a flat out rejection without explanation.

The MidAtlantic Cooperative quickly responded with an offer to compromise on the term of the agreement. TrackNet’s response was that there would be no change on the demanded rate increases and that its earlier proposed two-year deal was now only a race meeting to race meeting offer.

While economics are a large driver of this dispute, TrackNet’s demands on several other matters are troubling and problematic, including regional ADW issues and TrackNet’s desire to dictate local regulatory or statutory matters.

This dispute is not in the best interest of the MidAtlantic member tracks, TrackNet Media (see Fair Grounds recent November handle figures showing a 30% average daily handle decrease from the prior year), or the wagering guests at our respective wagering locations and racing facilities.

The Mid Atlantic Cooperative remains committed to working with TrackNet Media to arrive at an agreement that benefits all parties involved and intends to pursue all options available to it.

Stay tuned. More tomorrow in the “The Blame Game, Part 3.”