Seven reasons Woodbine may have a bright future after all

New Woodbine CEO Jim Lawson: "We’re working at a transformation that’s consistent with getting more people interested in the game". Photo: Michael Burns

As the 2015 live season comes to a close at the Toronto plant, new CEO Jim Lawson gives his take on the year that was and what the future may hold for Canada's largest racetrack.

In May, a little over a month after becoming the chief executive officer of Toronto's Woodbine Entertainment Group (WEG), Jim Lawson was busy setting up a satellite office in the stable area and professing a love for the backside of a racetrack first stoked as a boy on visits to the Woodbine barns with his father.

"There's nothing better that being around a racetrack in the morning and seeing everyone," he said at the time. "They love their job. They just love being around the horses, but they love being part of the community. That's what means a lot to me."

Six months later, a few days before Woodbine will bring an end to both the 2015 racing season and its 9-year-old Polytrack surface, Lawson laughed when asked if being in the backstretch regularly was still good for his soul.

"It’s definitely challenging," he said carefully. "It's an interesting business in that the complaints far outweigh the praise … but that's okay. I understand that and that's why we're back there. If we can make this a better place as a result of that, that's what it's all about."

In a nearly hour-long interview just before yesterday's season-ending card at Woodbine, Lawson spoke candidly and passionately about the state of horse racing at Canada's largest racetrack less than two years after the province pulled the plug on the lucrative Slots at Racetracks Program.

Lawson, who is also the chair of the Canadian Football League and was the league’s interim commissioner when he took the job at WEG, is the son of the late Canadian Horse Racing Hall of Famer Mel Lawson, who established the Jim Dandy Stable in the 1960s.

Being more accessible to the horsepeople is one part of Lawson’s efforts to institute a significant culture change at WEG, one of seven positive indicators — including a 14 percent increase in wagering — that Woodbine may have a bright future.

1. Culture Change

"We’re working at a transformation that's consistent with getting more people interested in the game," Lawson said of the culture change he began leading shortly after April 1, when he took over for outgoing CEO Nick Eaves.

"What we're faced with in this industry is just a challenging landscape in terms of the competition for that sports and entertainment dollar. I think what we need to do is become better as an organization in terms of attracting people and showing people what horse racing can do, how people can come out and enjoy themselves. That starts with having a happy workplace. People who are excited about what they do, they pass on that excitement to the customer."

Lawson said increasing employee investment in the operation requires removing some of the hierarchy in an organization that has nearly 2,000 employees and operates both Woodbine Racetrack just down the road from Toronto’s Pearson Airport and its Standardbred-only sister track, Mohawk Racetrack, 30 miles west of the city in Campbellville.

"Part of our cultural change is challenging people for that new vision to give them the empowerment to do things differently," Lawson said. “I think that’s the way horse racing is going to survive in this province - by being new and innovative - and that's part of our cultural vision and our vision, generally, as a company."

2. Turf is King

One example of different thinking involves experimenting with racing the opposite direction — clockwise — to better utilize Woodbine’s celebrated, European-style turf course, named for the track’s founder, E.P. Taylor, the man who brought the world the incomparable Northern Dancer.

"Why not run clockwise? What’s wrong with that? We never thought of it before. Let’s try something different. Let's build some innovation and excitement back in this game," Lawson said.

"The idea really relates to the fact that we've got this world class turf course and a good part of it doesn't get used unless we’re running a mile-and-a-quarter or a mile-and-a-half on the grass.

"We’ve been looking at ways to add chutes to our turf course and different approaches. We are likely going to experiment in the spring with running horses clockwise. We've already worked horses clockwise successfully. It doesn’t seem to impact the horses at all. I appreciate from a handicapping angle that some horses may turn right better than they turn left, but that’s a handicapping angle. I don’t think, from the experts we talked to, the horses notice the difference.

"I can see us running 25 races or more next year clockwise."

Lawson said one of Woodbine’s biggest selling points is its turf course. The plant could even add a second turf course in the future.

Currently, Standardbreds race at Woodbine in the winter on a dirt track that was a Thoroughbred turf oval prior to harness racing coming to the facility in 1994. WEG is exploring the possibility of Standardbreds racing at Mohawk year-round, which would allow the company to put in a new turf track where the harness racing oval is now. A lot of that is dependent on casino expansion at both facilities, but more on that in a second.

For the time being, WEG is concentrating on replacing its Polytrack surface.

3. Ditching the Poly for Tapeta

Shortly after racing ends on Nov. 29, construction crews will begin tearing out Woodbine’s Polytrack surface in favour of a new synthetic cushion — Tapeta. Weather permitting, the hope is to have the new track installed in December so it can settle over the winter.

Lawson predicts there will be business advantages to Tapeta being installed." It's a very consistent surface, so people coming up here or shipping up here to run know what they’re going to run on," Lawson said. "Our numbers show us that our biggest selling point is our turf course. We're looking at ways of increasing our turf racing. Horses that ship in to run on our turf, they at least have the luxury of knowing that if there's a rainstorm… and the race comes off the turf, they will run on a Tapeta surface. That way they're not faced with scratching the horse on a sloppy or muddy track.

"We will average a fewer scratches when a race moves from a grass surface to a Tapeta surface."

Lawson said field size is critical to WEG’s bottom line.

"There's such a direct correlation between field size and wagering," he said. "Across North America, every racetrack is struggling with horse supply and field size. Part of the challenge here is to try and increase wagering faced with not only the competition for the entertainment and wagering dollar, but also in our own world, even if we have the wagers there, they're just not going to wager the same amount of money when field sizes are down."

4. Business numbers are up

Despite struggling, at times, to card full fields, Lawson was proud to announce betting at Woodbine was up almost 14 per cent in 2015 over 2014.

"That's a substantial increase in a period where it’s been difficult with all the competition for the wagering dollar. We’re pleased," Lawson said, indicating the numbers are slightly inflated because the Canadian dollar is currently trading around 75 cents compared to the U.S. dollar.

"But it's also indicative, I think, of our product being very well received in the United States, in particular, and the Woodbine brand being recognized," Lawson said. "I think a credit to our marketing people, who work very hard on those U.S. relationships."

Woodbine smashed betting records on its three biggest event days this year — the 156th running of the Queen’s Plate on July 5, the Ricoh Woodbine Mile on Sept. 13 and the Pattison Canadian International on Oct. 18.

The Queen's Plate card produced an all-time record Woodbine handle of $11.06 million (excluding the 1996 Breeders’ Cup held at the track). The previous, non-Cup Woodbine record was the $9.7 million wagered in 2013.

Lawson said he is "boldly predicting" that at next year’s Queen’s Plate, Woodbine will exceed both the $11 million in wagering and this year's Plate crowd of 36,000.

That's the good news. However, betting at Woodbine on the Breeder' Cup at Keeneland was not without its challenges.

Higher commissions imposed by the Breeders’ Cup forced Woodbine to increase its takeout rates for the day, which, despite being well-publicized, rankled some of Woodbine's customers.

"We were faced with some tough decisions. Do we not carry the Breeders’ Cup, which our customers would not have appreciated? Do we go ahead and take a loss? To me there’s something terribly wrong about operating a business of this size and having a Breeders' Cup weekend where we’re going into it knowing we’re going to take a loss on the wagers, or, thirdly, do we try and increase, at least for the day, our pari-mutuel commission takeout? That is the route we took and had to take in order to avoid a loss on those pools."

5. Double the number of Off-Track Betting facilities

Thanks to changes in the post-slots era, Woodbine has also nearly doubled the number of Off-Track Betting (OTB) locations it manages in Ontario from 27 in 2013 to 53 today.

A five-year, $500 million funding package from provincial government that began April 1, 2014, gave WEG authority over all of the province’s teletheatre locations. WEG now pools the OTB revenue and returns a percentage of it to Ontario's smaller tracks.

"We've been working hard at it. The truth is, it’s such a difficult, competitive and, I don’t mind saying, low-margin environment. We need to work very hard to make any gains, particularly any net gains," Lawson said.

6. Casino expansion

Woodbine is already home to one of Canada’s most successful slot machine operations, with 3,000 machines on its gaming floor. Though the track no longer gets direct revenue from the slots, it does get money for leasing the gaming space to the province.

In July, Toronto City Council voted 25-19 in favour of a full casino expansion at Woodbine that would add 300 table games and 2,000 electronic gaming machines. An outside casino company picked by the Ontario Lottery and Gaming Corporation (OLG) will operate the casino.

Lawson said the latest is the OLG, "has now short-listed to seven bidders, but we don’t know who they are… The OLG appears anxious to move (the casino expansion) along."

Though no plans have yet been approved at WEG's Mohawk Racetrack, Lawson said, “my goal, quite frankly, is to duplicate (casino expansion) at Mohawk".

Mohawk is located in the municipality of Milton, which has already approved the zoning for a potential casino expansion. WEG just needs the go-ahead from the OLG.

7. Extensive property development

Casino expansion is critical to unlocking a sustainable future because WEG plans extensive property development to go along with it.

"We have a large land development opportunity and between the two sites we have 1,000 acres of land that we hold," Lawson said.

Lawson is a big proponent of bringing a wide range of entertainment, hospitality, retail and residential tenants to Woodbine's 700-acre property, which features terrific access by surrounding highways, more than 7,000 parking spots and the possibility of a light-rail or subway stop in the future. Pearson Airport just added a rail link to downtown.

It is one of the largest parcels of undeveloped land in the city of Toronto.

"We're keen on what it will mean to the community and the jobs in the community. In effect, once that process gets secure, we have entered into an arrangement or a negotiated agreement for a long-term development at Woodbine Racetrack.

"To me, what that does for the entire industry, Thoroughbred and Standardbred, certainly puts some long-term economics into this organization ,whose sole mandate is horse racing," Lawson said.

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