On Wednesday, October 30, Woodbine Entertainment Group President and CEO Nick Eaves penned a letter to the editor of the Toronto Star in response to an article the publication ran this past weekend.
The article claimed that former Ontario Finance Minister Dwight Duncan abruptly cancelled the Slots at Racetracks Program in fear of the possibility of an 'ORNGE-style scandal.' For more on the article, click here.
The contents of Eaves’ letter to the editor of the Toronto Star appear below.
Letters to the Editor
Toronto Star
One Yonge Street
Toronto ON M5E 1E6
Attn: Michael Cooke, Editor
Dear Mr. Cooke,
Our mandate and commitment at Woodbine Entertainment Group (WEG) is and has always been to support horse racing. Everything we do – from operating two of the country’s most successful racetracks to managing Canada’s most extensive off-track wagering system – is toward that end. We invest in our facilities, in our equine athletes and in our industry. We bring horse racing to millions of Ontarians every year and we support thousands of jobs in Toronto and tens of thousands more throughout the province. And it’s all with the goal of preserving and growing the sport we and millions of other Canadians love.
That’s why we take issue with any allegation that WEG has behaved otherwise. The Toronto Star’s recent article ‘Slot machine revenue vanishes’ (Oct. 26, 2013) implies that revenue earned by Ontario racetrack operators, including WEG, through the Slots at Racetracks Program (SARP) may have been “misspent or overspent,” and that government concerns over this alleged misspending led to the cancellation of SARP earlier this year. Your reporter asks, “Did all the money designated for growing the sport in Ontario end up in the correct place?”
We cannot speak for other racetrack operators, but from WEG’s perspective the answer is clear and unequivocal: Yes.
Every dollar and every cent that WEG earned through SARP – or through our other sources of revenue – was accounted for. Every dollar and every cent earned by WEG was and is put into purses, operations, investment in track facilities, or other vital areas. Every dollar and every cent has been spent in a way that is absolutely consistent with our core mandate of supporting and growing horse racing.
To make comparisons, as your article does, with ORNGE or any example of misuse of government funds is both deeply offensive and inaccurate.
Let’s be clear: under SARP, WEG was not the direct recipient of tax dollars. Rather, WEG earned a share of customer-generated sales in return for making available our land, our buildings and our parking facilities, as well as providing extensive services, infrastructure and capital investment.
Unfortunately, your article mischaracterizes several other facts about WEG’s financial stewardship. For example:
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Your reporter notes a provincial audit “highlighted $45 million in cuts that had to be made over the next two years if the province was to keep funding Woodbine,” suggesting that this money was somehow previously misspent. On the contrary, the cuts to Woodbine’s operating budget were necessitated by the cancellation of SARP and the resulting sharp reduction in revenue for WEG. We reduced our expenditures (through fewer race days, staff reductions and other operational changes) not because money had been previously misspent, but because after March 31, 2013, WEG made less money. Any other business, faced with the same fiscal reality, would have done much the same.
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As well, you suggest that WEG’s prior pay-for-performance program was somehow unusual or extravagant. In fact, WEG’s company-wide employee profit-sharing plan was similar to those used by many other companies operating in a competitive environment. It was designed to incentivize all employees to think and perform their jobs as though they were ‘owners’; by contributing to WEG’s success, they would share in that success. Unfortunately, as a result of SARP’s cancellation and the new direct funding arrangement with the provincial government, our pay-for-performance program has been cancelled.
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Your article suggests that WEG paid $8.9 million for Hastings Racecourse in Vancouver in 2002, only to sell it off two years later with nothing to show for it. Here are the facts: We did not pay $8.9 million for Hastings Racecourse. After we were asked by the BC horseracing industry to take over Hastings and apply our successful business model there, WEG acquired Hastings for $10 and sold it less than two years later for a net gain of $8.9 million. Not a penny of Ontario-generated slot revenue went to Hastings. In fact, the $8.9 million WEG realized from the Hastings sale has been reinvested into Ontario horse racing.
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The article questions WEG’s plans for development of the Woodbine site through Woodbine Live! It’s true that given the uncertainty created by the cancellation of SARP, WEG put its plans on hold. However, our long-term property development plans remain, because we believe that pursuing these opportunities will be valuable to our horse racing operations, to Woodbine as an evolving world-class entertainment destination, and to Rexdale and the City of Toronto, where further development will create jobs and economic growth. The zoning approvals secured to date and the resulting increase in the value of the subject lands position WEG very well to capitalize on these development plans in the future.
Finally, the article raises questions about accountability. Our position is clear: Throughout the SARP period, and today, WEG has been entirely accountable for the revenue it has earned, both from SARP and from its core horse racing business. WEG has provided audited financial statements to the Ontario Lottery & Gaming Corporation (OLG) annually; we have similarly shared audited financials and detailed business plans with the Ontario Racing Commission every year. In 2010, the OLG requested from WEG and other racetrack companies in the province 10 years of detailed reporting on our operating and capital expenditures. WEG was happy to comply, even though it is a private company and SARP was a private commercial agreement.
Beginning April 1, 2013, WEG went from being party to a private commercial agreement (SARP) to being a recipient of direct subsidy from the provincial government. We understand that this funding status requires from us an exceptional duty of accountability to Ontarians, and we accept that responsibility gladly. We will continue to be thoroughly accountable in all of our expenditures and investments, and will continue to put all revenue “in the correct place” – toward ensuring a successful future for horse racing in Ontario.
Sincerely,
Nick Eaves
President & CEO
Woodbine Entertainment Group
cc: Mary Ormsby, Toronto Star