ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Wednesday, August 21, 1996 TAG: 9608210052
SECTION: VIRGINIA PAGE: C-1 EDITION: METRO
DATELINE: RICHMOND
SOURCE: DAVID POOLE STAFF WRITER
Jeffrey Jacobs, a real estate developer and casino investor from Cleveland, has seized control of the proposed Colonial Downs horse track in New Kent County.
Jacobs confirmed Tuesday that he has nudged Ohio harness track owner Arnold Stansley out of an active management role at Colonial Downs.
Jacobs told the Virginia Racing Commission that he would become chief executive officer and chairman of the board under a public stock offering that would help finance the $55 million track and six satellite wagering facilities.
The five-member racing commission is expected to approve the management shuffle, a tacit acknowledgment that the panel's first choice - Stansley - could not succeed on his own.
"Arnold was overwhelmed," Jacobs told a group of Northern Virginia horse owners and trainers on Monday night. "He was in over his head and he was looking for a partner.
"He knows it's in everyone's best interest - including his own - to step aside."
Stansley said he is not upset over his diminished management role.
"We came here to get a beautiful track and improve the horse industry in Virginia, and we're getting it done," he said.
Two years ago, the Racing Commission surprised many horsemen by awarding the state's first pari-mutuel license to Stansley, a former harness driver who worked his way up to own a harness track in Toledo, Ohio. He also owned a 9 percent share in a Texas track that closed earlier this month because of financial problems.
Jacobs, 42, brings big-league credentials to Colonial Downs - he developed a successful entertainment district in Cleveland known as The Flats, and his family owns the Cleveland Indians baseball team.
"You have a reputation in Cleveland of doing things right," said Arthur Arundel, a commission member from The Plains.
In one respect, however, Jacobs is an unlikely savior for Colonial Downs.
He owns an interest in two Western casinos, the fast-paced wagering that threatens to relegate horse racing to betting's glue factory.
Jacobs acknowledged that the odds are stacked against start-up horse tracks, in the face of competition from state-run lotteries, casinos and other forms of gaming.
"I think the start up of a track by itself is potentially doomed for failure," he said. "But I think a track with with six [off-track betting] parlors - which support the track - can be financially viable."
Colonial Downs must begin live racing in New Kent County by next July or lose its right to operate the betting parlors.
The company opened a betting parlor in Chesapeake last winter and is planning a second in Richmond this fall. Jacobs said the company, which is authorized to open four more, has looked at land in another Hampton Roads city and initiated petition drives for referendums in Manassas in Northern Virginia and Mecklenburg County in Southside, near the North Carolina border.
Once all six parlors are open, Jacobs said, he would like to double the number to 12.
"We need to tell lawmakers, `Take the handcuffs off, let us grow this industry,''' Jacobs told 50 horse owners and trainers who gathered Monday night at Hi Rock Stables in Loudoun County.
Gambling foes contend that Jacobs is interested in Colonial Downs only because it will position him to bring casinos to Virginia.
Jacobs said he would push for new forms of gaming at Colonial Downs only if Maryland, following Delaware's lead, installs slot machines at its horse tracks.
"I think we would be in there lobbying the legislature for video lottery terminals to compete," he said.
William Kincaid, an anti-gambling lobbyist, said there was no real distinction between slot machines and video lottery machines.
"The only difference is the lever," said Kincaid, who said he would seek legislation this year banning video lottery.
In the last 12 months, Jacobs has moved aggressively into the gambling market, investing $10 million in Black Hawk Gaming & Development Co., Inc., in Colorado and $9 million in a hotel/casino in Las Vegas.
Jacobs said he is seeking financing for $120 million worth of gambling ventures, including Colonial Downs.
The proposed financing package for Colonial Downs includes $40 million in bonds and a $15 million public stock offering.
First, Jacobs must strike a deal with horse owners and trainers over revenues from off-track betting parlors. He has offered horse owners 30-day race meets during the first two years, with daily purses guaranteed at $150,000.
Some horsemen have balked, saying they want closer to the 102 days of racing that Colonial Downs promised in its application.
Supporters warn that if Colonial Downs fails, Virginia will never get another opportunity for a horse track. But some Northern Virginia horsemen want the New Kent plan to fail, opening the door for a track closer to home.
A vote by the 800 or so members of the Virginia Horsemen's Benevolent and Protective Association is scheduled for Aug. 29 in Fredericksburg.
Jacobs said the current offer is final.
``If this vote is turned down next week,'' he said, ``there is a good chance that the track is gone and I'm gone.''
- The Associated Press contributed to this story.
LENGTH: Medium: 100 lines KEYWORDS: HORSE RACINGby CNB