.All Bets Are Off

There’s something eerie about entering a place of excitement and merriment in the off-season; like flying a kite at night, it feels unreal and somewhat unnerving. On an early spring afternoon, the grandstand fronting the racetrack at Albany’s Golden Gate Fields is empty, concession stands shuttered, bathrooms locked up for the season, and rows upon rows of seats, each with little high-school-like desks attached, are waiting to be sandblasted and repainted by a few scattered workers. The track itself looks well rested, tractor tire marks replacing hoof prints in the dirt. A lone lawnmower man moves around the infield, which looks like something from a Southern California movie set–relaxed in a self-conscious way with its clusters of flowers, palm trees, and pools with spurting fountains.

It’s a timeless scene, one that could be witnessed at Golden Gate Fields during nearly any of the last sixty years. While the rest of the East Bay’s shoreline has expanded and been festooned with new marinas, housing developments, and office towers, the changes normally brought by time have swept right on past Albany’s bayfront.

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Despite periodic outbreaks of uncertainty and civic discussion, a pastoral status quo has prevailed here for as long as most local residents can remember. But now, as an eccentric new owner is forced to deal with the negative trends that are afflicting the racing industry across the country, and with talk of development in the land around Golden Gate Fields reaching theme-park proportions, it appears that change may soon be coming to this piece of the East Bay shore.

Golden Gate Fields has consumed Albany’s entire waterfront since 1940. It’s the town’s biggest property owner, its largest employer. It has also represented an uneasy compromise between the city and all the forces that have coveted the waterfront. The Santa Fe Railroad Corporation (and, later, its real estate development company, the Catellus Corporation) which for years owned the land beneath the track, hatched one plan after another to close the track and develop the waterfront with hotels and retail centers. Albany managed to stave off every plan, and the track remained.

Environmentalists, on the other hand, have looked longingly at the property, especially as plans for Eastshore State Park took shape. But since the likelihood of removing all development from the land has seemed far-fetched, most environmentalists have considered the continued existence of Golden Gate Fields to be the lesser of possible evils. The track, representing more an agricultural use than anything else, at least provides open space and relatively unobstructed views of the bay. But as economic tides turn, both for Albany and Golden Gate Fields’ owner–the compromise that is Golden Gate Fields may finally be unraveling, and Albany may no longer be able to keep new development from its waterfront.

Golden Gate Fields takes up 181 acres of Albany’s shoreline, much of that man-made fill. What is left of the shoreline–the man-made “Albany Bulb” and some of the plateau–is owned by the state. The grandstands and parking lot sit on Fleming Point, once a hill overlooking the San Francisco Bay. To elevate the grandstands properly and to provide space for parking, the top of Fleming Point was shaved off and dumped alongside to provide a base for the racetrack itself.

When Golden Gate Fields was built in 1940, it joined an already robust gambling industry in the East Bay. It was not even the East Bay’s first track. Emeryville had hosted a racetrack, and El Cerrito had a dog track located on the site that is now El Cerrito Plaza. But from the beginning, Golden Gate Fields represented a dramatic intensification of the East Bay’s gambling culture, and it wasn’t built without a fight.

The minutes of the Albany City Council meetings of 1939 attest to the concerns over the spiritual and moral decay that were sure to accompany the first few notes of “The Call to the Post.” Albany’s First Baptist Church called on its members to become warriors against the racetrack and authorized them “to protest said proposal for horse racing activities, at any hearing before the Council; and to initiate whatever steps may be required to end forever the menace of the horse track within the City of Albany.” The Adult Bible Class of the Albany Community Church urged the council to consider “the effect of the El Cerrito dog track upon Berkeley and Albany. It is a well proven fact that wherever these tracks have been they have increased crime, as well as keeping desirable people from coming in.” A Mrs. V. Zahn noted that she had taken a special trip to observe the Santa Anita racetrack in Southern California. “A track makes for bad conditions,” she warned, “and brings in certain characters who follow race tracks.”

For its part, the council–in those heady days when a promising businessman knew nary of the evils of an Environmental Impact Report–simply sighed and informed its religious protesters that the matter was in the state’s hands. The council could do nothing save deny the track a building permit, and “there was no good reason why this permit should be refused.”

Perhaps there was some divine offense taken, because the opening of the Golden Gate Turf Club was definitely ill-fated. Two weeks of incessant rains immediately before the scheduled opening day turned the track into a giant sinkhole. Even when the rains let up for a day or two, the track remained such a goopy, muddy mess that the opening, scheduled for December 28, 1940, had to be repeatedly pushed back. Horsemen were so angered by the delays that they flooded Santa Anita’s racing secretary with requests to move their horses to that track’s sunnier climes.

When the track finally did manage to open, on February 1, 1941, the goop had solidified just long enough to resemble a track, which was good enough for the investors who were losing thousands of dollars a day as a result of the hold-ups. The race card on opening day attracted 20,000 visitors, mostly gawkers and dilettantes, which irritated San Francisco Chronicle columnist Will Connolly. “The newness of the plant and the numerous stories written about its unhappy birth attracted a morbidly inquisitive turnout of rubbernecks,” sneered Connolly, “some of them at a track for the first time in their well-ordered lives.”

Track conditions remained far from idyllic. A photograph of one of the track’s first races shows the horses slogging through the mud, the lead horse’s foot several inches under the surface. Seven days later, a horse named Melody Boots had the misfortune to step just the wrong way on the slow and muddy track. She was euthanized on the spot. Three days afterward, the state shut the track down, declaring it unsafe for both horse and rider.

Five weeks of waiting to open and the short, disastrous racing meet took its toll on the investors who’d laid their money on “The World’s Fastest Racetrack.” Eight months later, Golden Gate Turf Club declared bankruptcy. Ten months after that, what the Chronicle called “a mysterious syndicate” purchased the $2.5 million property for $1,000 plus the cost of liens, which amounted to less than $500,000. The original investors lost everything.

Events, of course, would have resulted in the closure of the Golden Gate Turf Club even if the track had always been blessed with sunny days and the wind at the jockeys’ backs, as all horse racing was halted in California due to World War II. During the war, Golden Gate Turf Club’s infield was utilized to house Navy submarines; its location on the San Francisco Bay served perfectly to drag injured subs up the shoreline.

The track reopened in 1947 as the Pacific Turf Club, then reorganized itself later as the Pacific Racing Association. For the next forty years the racetrack on Fleming Point would flourish.

High above the deserted track, in the loftiest part of the empty grandstand, the legendary Turf Club presents a much different scene. Even on a Wednesday afternoon, patrons mill around the pari-mutuel windows, wating for their horses to come in. Television screens around the room display multiple images of horses, running for their lives, prancing before a race, their long heads shaking, or wobbling wearily toward their stables. But it’s hard to tell inside the Turf Club the importance of the actual animals versus the importance of numbers–horse numbers, odds numbers, payout numbers.

Though obviously a benefit to the track during the off-season (the live racing meet at Golden Gate Fields runs from November through March), the arrival of off-track betting in the mid-’80s marked a dramatic change in the financial structure of thoroughbred racing. Around every television set is a crowd, as bettors can wager on races at such faraway places as Aqueduct, Oaklawn, Keeneland, or Churchill Downs. The audible excitement that traditionally greets the end of a live race is largely gone here, and people seem more focused and somewhat cheerless, grimly marking up their Daily Racing Forms and programs. But the convenience of betting close to home means that horse racing’s core fans don’t have to travel to Bay Meadows in San Mateo, for example, to bet on a race there. This obviously means lower attendance at the tracks and fewer betters at the pari-mutual windows.

As the impact of off-track betting became apparent in the late ’80s, it led to the most forcefully presented proposal ever to shift the use of Albany’s waterfront away from the faltering horse racing business to other commercial uses. In 1989, the Catellus Corporation, Santa Fe Railroad’s real estate development arm, floated a plan that would dedicate half of the property occupied by the track complex to open space and the other half to commercial use. Catellus proposed building hotels, housing, and retail space on the property, which would total three million square feet–almost three times the entire amount of commercially developed space in all of Albany at the time. Bob Arnold, a member of Citizens for Albany Shoreline and later Albany’s waterfront committee, recalls the moment: “The whole thing was, the racetrack was such a big part of Albany’s income that the guy who represented Santa Fe said, basically, ‘You have to do what we want.'”

In an attempt to thwart the development of the waterfront, the Albany City Council put a measure on the ballot that required a vote by the citizens of Albany if there were to be any change in the zoning of the waterfront or if the city were to enter into any development agreement with a corporation. In 1990, Measure C passed with 70 percent of the vote.

After the passage of Measure C, it would take a gargantuan effort on the part of Santa Fe or any other landowner to get a majority of Albany together to approve any project that would replace the racetrack. Seeing this requirement as an insurmountable obstacle, Santa Fe ultimately backed off its waterfront plans, and in 1997 sold the land to Ladbroke Racing. The voters had spoken. The uneasy waterfront compromise that is Golden Gate Fields was intact. Unfortunately, however, that compromise could ultimately only be as healthy as the underlying economic health of the track, and so concern about the fate of Albany’s waterfront remained.

Jim Ghidella, for one, finds it hard not to worry about the future of horse racing. Sitting in the small cafeteria in the backside of Golden Gate Fields, Ghidella pushes his empty coffee cup to the middle of the table. It’s not terribly busy early on a Sunday morning–jockeys sit scanning the newspapers, their riding crops laid out across the table; exercise riders and grooms in cowboy hats and large belt buckles amble up to the counter to place their orders. Not five feet from the door, chestnut colts and fillies dance up to the track, waiting their turn to be exercised.

Ghidella is the Northern California director of the Thoroughbred Owners of California which, as the name implies, represents horse owners across the state. Ghidella’s job is to circulate among the racetracks of the northern zone, which includes Golden Gate Fields and San Mateo’s Bay Meadows and the county fair circuit, talking with riders and horse transporters, adjudicating disputes, and generally keeping an eye on things. These days, one eye is always on the health of the racing business.

“From an owner’s standpoint, costs have skyrocketed,” Ghidella says, and while horse racing is a rich man’s sport, not all horses are owned by corporations and investors; like Ghidella himself, there are many small and independent owners who are in the game because they love horses, not because if they win they could land a good investment or if they lose, a tax write-off. Purses have grown larger only for races featuring top-quality horses, Ghidella says, but ironically it’s the daily races featuring more average horses that bring in the bettors. This decline in average purses has led to a horse shortage (though you wouldn’t know it to walk around the backside of Golden Gate Fields). In cyclical fashion, a shortage of horses means fewer races, which means fewer bets and ultimately less money for everyone involved.

Ghidella moves out to the trackside bleachers, the ones usually reserved for the owners who want to watch their horses breeze in the morning. Exercise riders trot their horses the wrong way down the track, as others peel down the rail for their timed exercises. One exercise rider, a woman, has a large scar running down her face. Her horse canters and tries to buck; “No, no, no,” she chants soothingly.

“It’s a dangerous business,” Ghidella says. “It hasn’t changed in fifty years. The way you see it now,” he says, one foot propped up on the white rail, “is the way it’s always been run.” Just then a light on a post in the infield begins flashing. “Loose horse,” the loudspeaker cries, and soon a coal-black horse comes tearing down the track, whinnying loudly. Soon a rider emerges onto the track and positions herself directly in front of the startled horse. As the black colt whizzed past, his saddle hanging off to the side, the rider pushes her pony to match the colt’s stride, then leans over and grabs the colt’s bridle. They both slow down to a trot as relieved onlookers clap from the mini-grandstand. The rescue went well, but it could easily have turned ugly. Any number of things can happen with a loose horse on the field; it can trip and break a leg, it can run into another horse, it can cause a mini-riot among the other horses. (Once a loose horse found itself on the I-80; miraculously, it was returned to its stable, unharmed.)

If off-track betting has negatively affected the gate at tracks across the country, it’s been even worse news for horsemen, who see even less of the betting money go into purses. Golden Gate Fields’ races are simulcast in around 500 venues nationally and internationally, and “after the state takes its tax, the horsemen and the track divide the remainder,” Ghidella explains. “So if you decide to bet on a Bay Meadows race from New York or Nevada, the horsemen’s purses will get only about one and a half percent of what you bet. If you come to the track, the purses get seven to eight percent.”

That’s also bad news for Albany, which only gets tax revenue from bets placed on live races at Golden Gate Fields. In the off-season, the city sees no betting money flowing into their coffers, just the usual property taxes and proceeds from sales of hot dogs and beer. Over the last few years, the amount of general-fund revenue generated by the racetrack has been steadily waning–and that’s not because Albany’s budget is getting bigger. Albany receives one-third of one percent of all the money bet on live races at Golden Gate Fields, a figure that amounts to around $500,000, or five percent of Albany’s total budget. This is in sharp contrast to the take the city received from the track in earlier days.

Albany once depended on Golden Gate Fields to provide nearly 25 percent of its entire city budget. When a janitors’ strike shut down the track for seventeen days in 1976, the city of Albany responded to the loss of revenue by shutting down its health department. The mayor then found himself the target of a recall effort due to a pro-union letter he had penned on city stationery. Finally, then-assemblyman Bill Lockyer, now California’s attorney general, was called in to mediate between the track and the union. At the end of the strike, Albany estimated that it had lost nearly $40,000.

Whether people are simply not as interested in the races anymore or whether they’re just shifting their patronage to off-track betting doesn’t matter–either way, Albany loses out.

So, in the early ’90s, faced with the prospect of continually declining revenues, with no apparent option to replace them, Albany made a move that was probably the biggest mistake in the city’s and track’s shared sixty-year history. To this day, no one will claim full responsibility for the idea. But the goal was clear.

In a 1992 the City Council received a memo from then-assistant city administrator Daren Fields titled “Alternatives for Increasing Revenue from Golden Gate Fields Racetrack.” In the memo, Fields outlined several revenue-boosting options that the council could pursue that would preserve the racetrack while increasing its tax revenue stream. These ideas included adding a restaurant, having the track host special events like a carnival or bungee jumping, limited retail development, or a card room. The council was particularly excited by the card room idea, especially after hearing that the city of Inglewood in Southern California was estimating possible tax revenue from a card room at its racetrack, Hollywood Park, to be somewhere in the neighborhood of $10 million per annum. For a town whose entire city budget was less than that, the idea was compelling. In 1994, a study group appointed by the council came forward with a recommendation: a card room was definitely the way to go, it said, and what’s more, Ladbroke, the track’s owner, was interested.

But they had to act fast. A piece of legislation was pending in California that would slap more restrictions on card rooms operating in the state, but if the card room were approved by the end of 1994, it would be “grandfathered” in, and would be exempt from the new rules. The council acted so fast, in fact, that former city councilmember Robert Good remembers “the legal language was being hammered out while the actual meeting was going on.”

The card room campaign is one of the sorest spots in Albany’s history; most citizens cannot remember anything being remotely as ugly and divisive. Soon residents’ mailboxes were stuffed with fliers and glossy brochures warning of the crime and drugs that would follow the introduction of the card room or, alternately, of the dire financial straits that Albany would face if the card room proposal were to be rejected.

Extra time by city staff, additional lawyers hired by Albany to supplement the efforts of its one city attorney, and a citywide mass mailing were all paid by Ladbroke. The mailing, a “City of Albany Special Newsletter,” dated summer 1994, contained exactly two stories, placed with equal prominence side by side: “Albany Faces Financial Dilemma” and “City Council Considers Placing Card Room Proposal on November 8 Ballot.”

“If no action is taken,” read the “Dilemma” story, “this deficit is projected to grow to approximately $1.2 million in 1997/1998, and all of the City’s reserves will be exhausted in two years.” For those citizens more visually oriented, a graph on the front page demonstrated just how deep in it Albany would be in the next few years; it projected revenues and expenditures meeting each other in 1994 and then sharply diverging after that year.

Slowly but surely, as the campaign progressed, the uneasy compromise that Golden Gate Fields had always represented for Albany was coming apart. If the racetrack was no longer an effective solution for Albany’s waterfront, perhaps other notions should be considered. One member of the Albany Waterfront Committee, Jerri Holan, asked the council to consider the possibility of a public aquarium and ferry landing. Ashkenaz owner David Nadel suggested that a “multicultural/multinational venue for the performing arts with ample space for the public to dance” would a better way for the city to rake in money.

Good says he’s the only one on the council who opposed the card room from the beginning, and he says he never bought the financial arguments put forward by the city. “We’ve always been a year or two from bankruptcy,” Good says, noting that Albany always seems able to make do with limited reserves.

After a quick series of public hearings over a three-month period, the city hammered out a 95-page development agreement with Ladbroke over the card room. According to the development agreement, the card room itself would be built within the grandstand area, and would contain a maximum of 150 gaming tables. In a bow to environmentalists, Ladbroke agreed to try to purchase land around the racetrack for inclusion in the Bay Trail that was hoped would eventually traverse the entire East Bay shore, and to develop it at a cost of $500,000. At a minimum, city staff figured that Albany stood to receive $1.2 million more per year from Ladbroke as a result of the deal.

In accordance with Measure C, the city put the issue on the November 1994 ballot, and it narrowly passed, 51.5 to 48.5 percent. And then came the lawsuit.

“At that point,” says David Arkin, “we might have been a company town.” Arkin is head of Citizens for Responsible Government, a nonprofit group that originally organized to fight the card room. Albany attorney Robert Outis represented CRG in a lawsuit that was filed against the city and Ladbroke shortly after the vote in January 1995. The suit claimed that the city had violated its own rules as well as those of the state by not requiring an Environmental Impact Report on the project.

The city and Ladbroke were to eventually lose the court battle at the state Court of Appeals level in 1997. Rather than attempt to reformulate the project, Ladbroke brokered a settlement with CRG in August 2000, covering attorneys’ fees for both the city and itself to the tune of nearly $2 million. “It ripped the city apart, but it didn’t cost them anything dollar-wise,” Outis says. Even as it was settling accounts in Albany, Ladbroke decided to cash in its chips and divest itself of all its gaming interests in the United States, including Golden Gate Fields in 1999 and its neighboring Casino San Pablo card room last year.

It’s still a painful memory. “I’m glad it’s behind us” is all current mayor Allan Maris will say. And what about the dire financial predictions? Although Albany has at times had a dangerously low reserve of as little as $20,000, the city has not had to operate in the red since the card room debate was concluded.

So was Albany on the verge of becoming a company town? “It’s a big tail on a small dog, no doubt about it,” says Good, but he insists the city’s effort on Ladbroke’s behalf was simply a good-faith effort to keep a strong financial partner in the city. Outis is less diplomatic. “To essentially turn the keys to the city over to a developer and run the city government for its benefit and then send it a bill for the benefits you’re providing it, that’s outrageous,” Outis says. “And that’s exactly what the city of Albany did.”

However one looks at the tempestuous events of the mid-’90s, however, the most salient fact for 21st-century Albany is that Ladbroke is gone, and the property on Fleming Point has a new owner. His name is Frank Stronach, and the power of his vision could change Golden Gate Fields and Albany’s hopes for the future of its waterfront right along with it.

Visionary, genius, charismatic crackpot: all these terms and more have been applied to Golden Gate Fields’ latest owner. Frank Stronach began swallowing California racetracks one after the other, starting with Santa Anita in Southern California in 1999. He now owns San Mateo’s Bay Meadows in addition to Golden Gate Fields. Stronach’s entrance into the declining racetrack business was itself a brazen move, but only one of dozens that the restless auto-parts magnate has made in the past few years. In fact, the various track purchases apparently so worried Stronach’s investors that his financial planners, always ready to mop up after their enigmatic leader, moved to separate the horses from the distributor caps by starting up a subsidiary company, Magna Entertainment, to handle Stronach’s racing interests.

Stronach takes a keen personal interest in his racetracks. He himself is a horseman and owns a stable bearing his own name. His portrait on Magna International’s Web site depicts the white-haired executive, arms crossed in a show of victorious complacency, against a backdrop of racehorses. One of the horses to emerge from Stronach Stables, Thunder Blitz, placed a respectable fourth in this month’s Kentucky Derby.

Stronach’s string of racetrack purchases had to be approved by the California Horse Racing Board, which had to determine that the purchases are in the best interest of horse racing. Robert Tourtelot, who chairs the board, voted for the purchases and has faith that Magna will revitalize the industry. “Golden Gate Fields and Bay Meadows were owned by companies that really didn’t have much interest in horse racing, so this gives us some hope that with an entity devoted to perpetuating live horse racing and building a fan base, the situation in Northern California will improve,” he says.

Stronach has already sunk nearly $4 million into improving the stable and barn areas at Golden Gate Fields, and there are strong indications that he has plans for more improvements –a lot more. He’s already made proposals in Arcadia to build “family-style entertainment centers” around his Santa Anita racetrack, which include a restaurant and multiple retail centers. These proposals echo the most prominent theories about what will revive the fortunes of the racing industry. Much of horse racing’s devoted fan base is made up of older men, the theory goes, so areas around the racetracks should be developed in ways that will attract more “light users”–i.e., women and families. Magna Entertainment’s first quarter SEC filings for this year indicate that the company is in fact looking at ways to make better use of the land around its racetracks; these uses could include “themed entertainment and retail-based developments.” And the developments can be expected sooner rather than later: Magna Entertainment has yet to post a profit from its racetracks (in fact, the only way it has been able to see any gains lately is by selling off its real estate holdings).

Magna hasn’t yet forwarded any proposals on Golden Gate Fields’ future to Albany officials. And though any ideas that Magna has must be approved by the voters, Stronach would have a lot of ammunition in any fight since he could threaten to close the track altogether. “The worrisome thing is that he might eventually decide to stop horse races and he’ll want to sell the property,” Arnold says. “That would mean that someone else would develop the land,” and the compromise that is Golden Gate Fields would be gone.

If there’s one man who represents some sort of continuity–a calm spot in the eye of the storm of multiple owners–it’s Peter Tunney. The vice president and general manager of Golden Gate Fields, Tunney has been a fixture at the track for twenty years and, like almost everyone in the racing business, comes from a family of horsemen. One look at Tunney’s office at Golden Gate Fields, shaped like a six-furlong track, immediately conveys the sheer value of the land at Golden Gate Fields. From every vantage point the view is beautiful. The office is right above the track, just to the right of the finish line. A string of windows to the south brings the stable area into view, and to the west is a stunning panorama of the bay, Cesar Chavez Park, and the bridge, all bathed in wisps of fog and clouds. Inside, the office has a muted, dated splendor, fit for a horseman: wood-paneled walls, a fireplace, pictures of steeds.

Tunney hopes that things at Golden Gate Fields will turn around under Stronach’s management and influx of funds. He wouldn’t give exact attendance figures, but admits those figures are off lately. “The crowds started to diminish when we started simulcasting in 1985,” Tunney explains. “It’s hard to tell whether we have lost the fan base or whether they’re just going to satellite locations. It has become more of a television monitor sport.”

Tunney points out the effects of the capital Magna has provided to Golden Gate Fields. The stables along the backstretch have been painted, the track surface has been rehabilitated, and the drainage improved. The four pools in the middle of the infield that until now look decorative, actually contain wastewater from the stable area, water that once drained directly into the bay.

All of this has definitely made an afternoon at the track more attractive, but what else is in store? What are Magna’s ultimate plans for the track? “Stronach is extremely visionary,” is all Tunney will say. When Stronach first visited the property he came away with “a great vision for what he might do,” T*unney says, then adds, “given the constraints of both communities.” While the vision is yet to be seen, the contraints are clearly changing.