Group confirms it might close Santa Anita track.

Top officials of an investment group bidding for control of the Santa Anita Cos. acknowledged for the first time last week that they might close Santa Anita and move all L.A.-area thoroughbred horse racing to Hollywood Park.

Consolidating racing at Hollywood Park in Inglewood or Santa Anita

in Arcadia "is something we have looked at," said William Scully, principal of Koll Arcadia Investors, a group that has offered as much as $200 million for a controlling interest in the Santa Anita Cos., which owns the racetrack, an adjacent regional shopping mall and surrounding property.

"It is not something we can comment on until sometime after we have acquired Santa Anita," he said.

Scully said that if the group is successful in acquiring Santa Anita, it would take time to consider a number of alternatives to increase shareholder value, including consolidating Santa Anita and Hollywood Park racing dates.

"It would take us ... close to a year, probably at least six months, before we could choose a course of direction," Scully told the Business Journal.

Both Scully and James Watson, another KAI principal, acknowledged they have reviewed plans by Thomas Gamel, a current Santa Anita shareholder and long-time business associate of Hollywood Park Chairman R.D. Hubbard, to close Santa Anita and move all live racing to Hollywood Park in Inglewood.

Although that plan is considered an option, KAI could choose to retain or even expand racing at Santa Anita, Scully and Watson said.

KAI, a group made up of Newport Beach-based real estate magnate Donald Koll and former Drexel Burnham Lambert dealmaker Leon Black, is engaged in a bitter bidding war for Santa Anita Cos. with L.A.-based real estate investment firm Colony Capital Inc.

Santa Anita's management had agreed in August to accept an offer by Colony to buy a 45 percent stake in the racetrack company for $138 million.

But in early October, KAI made a competing, unsolicited offer to buy a 55 percent interest in Santa Anita in a deal valued at as much as $200 million.

Last week the KAI group announced that over the last two months, it had acquired 800,000 shares, or about 7 percent of Santa Anita's stock. The largest Santa Anita shareholder is investor Mario Gabelli, who holds 15 percent. Gamel has a 3 percent stake.

Since KAI made its offer to acquire Santa Anita, speculation has surfaced that KAI plans to close the Arcadia track and move live racing to Hollywood Park.

That talk has been fueled by the fact that Koll has had long-term ties to Hollywood Park Chairman R.D. Hubbard and has real estate expertise that would enable him to redevelop the Santa Anita track into alternate uses.

Gamel, a former board member of both Hollywood Park and Santa Anita, last week issued a press release urging the Santa Anita board to accept Koll's offer to buy the company.

For 10 years, Gamel has been lobbying Santa Anita officials to consolidate the Santa Anita and Hollywood Park racing dates at one track and redevelop a higher-valued use on the other track site.

In a May 20, 1996 letter to Santa Anita Chairman and CEO William C. Baker, Gamel outlined a detailed proposal to form a new company to be called the Los Angeles Turf Club.

That proposed entity would run all the racing dates currently granted to Santa Anita and Hollywood Park. All racing would be moved to Hollywood Park, and Santa Anita would be closed, with its real estate redeveloped.

Officers of Gamel's proposed consolidated racing entity would include Hubbard as chairman, Baker as vice chairman and Gamel as CEO.

"Racing is dying, and there is not enough interest in racing for the two tracks to survive," said Gamel, in a telephone interview with the Business Journal last week.

Gamel said he is not a part of KAI, but that he has submitted to that group studies on the subject of consolidating racing at either Santa Anita or Hollywood Park.

Gamel added that he has talked to Watson and Scully about the details of his plan for the past several weeks. "Let's just say they understand the sense of it," Gamel said.

He also said he has recently talked to Hubbard about his plan, and "he's in favor of it."

Gamel said he also has talked to Baker about consolidating the two tracks' racing dates. "I think Baker is in favor of consolidation, but I think he would prefer to consolidate at Santa Anita," Gamel said.

Gamel, a former board member of both Hollywood Park and Santa Anita, helped Hubbard gain control of Hollywood Park in a proxy fight in 1991.

Talk of consolidating racing at one of the two tracks is fueled by the fact that on-track attendance at both tracks has declined precipitously over the last 10 years. At the same time, the amount of money wagered on races at both Santa Anita and Hollywood has increased significantly.

Simulcast wagering, which allows bettors to wager on televised races at off-track facilities, has contributing to the decline in attendance and the upswing in betting, racing experts say.

Hubbard, who owns a racehorse scheduled to run in the Breeders' Cup Turf race, was traveling to the Toronto racetrack last week and could not be reached for comment.

Colony officials declined to comment on KAI's plans for the Santa Anita property.

But Kelvin Davis, chief operating officer of Colony, said, "In our view Santa Anita is the pre-eminent horse racing franchise in the U.S. and the company's greatest asset. We are committed to maintaining and enhancing live racing at Santa Anita as one of our primary objectives."

Officials of both Hollywood Park and Santa Anita declined to comment.

But a person familiar with the racing operations at Santa Anita said top officials there may be willing to consider the consolidation of racing dates.

"It's their opinion that, if there is consolidation of racing, it would be better to have it in Arcadia," said the source.

Scully said that if KAI does acquire Santa Anita and decides to consolidate racing dates, its principals "don't have a position" on whether racing should be held at Santa Anita or Hollywood Park.

The group would talk to the professional horse racing community and Arcadia officials before making a decision on a track, Scully said.

He added, however, that if the group is successful in acquiring Santa Anita, "we would like to forge a more cooperative relationship between the two tracks."

There has been a rivalry between Hollywood Park and Santa Anita that has been "very damaging to racing," Scully said.

Watson added, "There is a movement to consolidate the racing product and market California racing as a single product." If all the racetracks would agree to package their races as a single package, the group could negotiate higher prices for simulcasts of thoroughbred horse racing.

Shareholder Thomas Gamel's pitch to Santa Anita

"The long-term viability of thoroughbred racing as a business and a sport is questionable. For several years, the on-track attendance at Santa Anita and at other tracks has been declinings...

Knowledgeable people in the racing business agree that thoroughbred racing can support only one racetrack in the greater Los Angeles area. It makes no sense to have two racetracks 27 miles apart, each operating a little over 100 days a year. ...Hollywood Park has the better probability of surviving.

I am keenly aware of how difficult it will be for you to evaluate this proposal dispassionately. It will require courage to break the link between live racing and Santa Anita."

- An excerpt from Gamel's May 20 letter to Santa Anita Cos. Chairman and CEO William C. Baker.