Colonial Downs Holdings, Inc. Addresses Virginia Racing Commission
NEW KENT, Va.--(BUSINESS WIRE)--May 20, 1998--Colonial Downs Holdings, Inc. (NASDAQ NMS: CDWN). In a letter today addressed to the Virginia Racing Commission (VRC), Jeffrey P. Jacobs, President, Chief Executive Officer and Board Chairman, asked the VRC to promptly arbitrate the Company's dispute with the Maryland Jockey Club concerning the management fee agreement. The commission designated former chairman John H. Shenefield to hear the arbitration. Mr. Jacobs also asked for cooperation from Virginia horsemen's associations in revisiting the current $7 million per year purse account formulas, and the associations' leadership has agreed to meet with the Company's management to discuss this matter. Regarding the legislative mandate to race 150 days per year and a plan to reach that number, Mr. Jacobs informed the VRC that a committee of the horsemen's associations and Colonial Downs has been formed to study the issue. The President of the Virginia Thoroughbred Association, Anne Poulson, has agreed to chair this committee. The committee will study the issues and economics of expanding racing in Virginia and make a recommendation to the VRC and the legislature this fall.
Mr. Jacobs also acknowledged that Colonial Downs is on a pace to lose between $3 - 4 million in 1998 if current trends continue. "During 1998, Virginia's brand new horse racing industry will generate for local communities and the Commonwealth of Virginia over $3.5 million. During 1998, various Virginia horsemen's groups will receive over $8 million in purse money and breeders fund contributions. During 1998, under the current contract, the Maryland Jockey Club could be paid over $3 million. During 1998, Colonial Downs is on pace to lose $3-4 million," according to the letter. In addition, the payment, under pressure from the VRC, of $4.1 million to subcontractors of the general contractor responsible for construction of the Track and Grandstand, has depleted the Company's working capital reserve. |
