"The Caliente Racetrack itself remains, but the horses and the crowds are gone."
Tijuana’s famed Caliente Racetrack, which opened in 1916, closed in May of 1993. It is no longer even a training track; the thoroughbreds have departed for California, Arizona, and other parts, as have the men and women who trained them. It is perhaps fitting that Caliente’s final chapter was as tumultuous as much of its history and followed a familiar pattern involving powerful interests on both sides of the border.
"In a sense, Caliente lost too..."
In its 77 years, Caliente begat a legend. Most of its innovations are now standard practice at racetracks in North America and worldwide: the public address call of the races, the Pick-Six wager, the jockey safety helmet, to name a few. It was the site where Phar Lap, the great Australian champion, ran his last race, his only race on this continent. Jockeys who became familiar names in the racing world — Eddie Arcaro, George Woolf, Bill Harmatz, and others — began their careers at Caliente, as did America’s most revered trainer, Charlie Whittingham, now in his 80s and still conditioning horses in California.
"... the most devastating [flood] ever to hit the San Diego-Tijuana area, wiped out the new racetrack..."
The saga of the renowned track began a few years after California outlawed horse racing in 1909. San Francisco boxing promoter James “Sunny Jim” Coffroth somehow convinced Baja Norte’s military governor, General Esteban Cantu, to defy the new government in Mexico City, which had already vetoed the racetrack idea. Cantu was a maverick who probably needed little convincing; he would later enter into an unsuccessful conspiracy with Otis Chandler of the Los Angeles Times to “separate” Baja politically from Mexico and transform it into a tourist mecca for Americans.
"The U.S. racetracks Alemany could deal with; Jorge Hank himself was another matter."
Much of the money Coffroth raised to build Caliente came from Adolph Spreckels, who owned a thoroughbred breeding farm near San Francisco. Spreckels also owned the railroad spur between San Diego and the border and stood to benefit from the increased traffic as well. It’s not impossible to believe the idea for the Caliente racetrack came from Spreckels himself.
"Alemany was placed in charge of the Caliente office in San Diego in December of 1987."
The original track was located just yards from the border. It opened on January 1, 1916, with a schedule of six races a day, six days a week. Track attendants were dressed in uniforms from the 1915 Panama-California Exposition in Balboa Park, which had been sold to them by the ill-paid expo guards. Ten thousand people, including notables from the infant Hollywood film industry, came to the dusty village of Tijuana for the track’s inauguration.
“Penny Early is the only one with the balls to stand up to Jorge Hank.”
It rained on opening day, the end of a long drought that had plagued Southern California. It seemed a good omen, but the rain did not stop for weeks. The resulting flood, the most devastating ever to hit the San Diego-Tijuana area, wiped out the new racetrack after little more than two weeks of racing. Sunny Jim vowed to rebuild. “Take it from me,” he told the press, “Tijuana, with San Diego so close, is the ideal place for the Sport of Kings.” Spreckels put up more money to rebuild the track.
"...the fun is gone from his life. 'I miss my horses.'"
Photo by Robert Burroughs
The many intrigues of Coffroth and his associates — American adventurers and gaming entrepreneurs collectively known as the Border Barons — involved a number of Mexican presidents and Baja Norte governors. These schemes centered around both the racetrack (rebuilt at its present site in 1928) and the opulent Agua Caliente Casino, which opened at the same time. These pleasure domes were, and remained for years, the principal tourist attractions and revenue producers in all of Baja.
In 1935 reform president Lazaro Cardenas closed the track and the casino. The track reopened two years later and for a decade passed through various hands. (At one point, mobster Bugsy Siegel, founding godfather of Las Yegas, tried to purchase it.) After World War II, San Diego businessman John Alessio began his long reign as owner of Caliente, which ended when he was convicted in a U.S. federal court for skimming racetrack profits. While Alessio was on trial, in August of 1971, the track burned to the ground. Many suspected the fire was deliberately set to destroy financial records wanted by the U.S. attorneys prosecuting Alessio’s case.
Because Caliente had been the largest single employer in Baja, President Luis Echeverria in 1972 ordered the track rebuilt, calling its ruins a national disgrace. To rebuild and operate the enterprise, Echeverria chose his friend Fernando Gonzalez Diaz Lombardo, the owner of a popular Mexico City newspaper and also an owner of thoroughbreds. A source close to Gonzalez later said the publisher had actually lobbied the president for the Caliente concession in an effort to escape a scandal brewing in Mexico City, which began when he deserted his wife in favor of a much younger woman.
The track reopened in 1973 with a year-round schedule of weekend racing, but Gonzalez’s high hopes were soon grounded. Caliente’s glory days seemed to have played themselves out. Many of the crowd-pleasing innovations, such as the Pick-Six wager, had been appropriated by the big California tracks where the overall quality of racing was higher. Caliente was still profitable, but Gonzalez was having difficulty repaying the construction loans (to Bank of America, among others) and meeting the incessant demands of the track’s militant labor union, which represented most of the workers, including grooms, hot walkers, ticket sellers, groundskeepers, and cooks. The national government denied Gonzalez’s later request for a license to operate a sports wagering facility to increase the track’s profitability.
Fernando Gonzalez began to borrow from his friend (but no relation) Carlos Hank Gonzalez, one of the wealthiest men in Mexico. (Hank Gonzalez, a former mayor of Mexico City, is considered one of the closest advisors to Mexican president Carlos Salinas de Gortari. The loans gradually increased in both quantity and frequency, and in 1981 Fernando Gonzalez relinquished control of Caliente to Hank, who a few years later sent his son up from Mexico City to oversee the day-to-day operation of the enterprise.
According to former Caliente horsemen, Jorge Hank Rhon, Carlos Hank’s son, initially approached live racing with enthusiasm. Perhaps a bit too much. For years Jorge was the top money-winning owner of race horses at Caliente; trainers were reluctant to purchase any of Hank’s horses out of a claiming race for fear of retaliation, which may have given Hank an unfair edge on the competition. Also galling to the professional trainers at Caliente was the man Hank made his chief trainer — his brother-in-law, completely inexperienced at the job. Nevertheless, Hank attempted to support live racing. Among other things, he built a luxurious turf club and also hired an American professional as concessionaire.
By 1988 several developments began to dampen Jorge Hank’s interest in live racing at Caliente. The facility at that time was expanding its chain of race books (off-track betting), made possible by the recent development of satellite simulcasting. The televised importation of quality racing from American tracks to the Baja books competed with the live racing for client dollars and decreased the on-track revenues.
In addition, the track’s labor union was stonewalling Hank’s effort to eliminate the time-honored tradition of featherbedding. The union insisted that three or four persons continue to do work that other tracks adequately handled with one person. Finally, commercial development in Zona Rio, near the track, escalated property values in the area. The track acreage was potentially much more valuable as commercial land than as a racetrack. In late 1991 Caliente tore down some barns in the backstretch in order to clear the grounds for home building.
The most severe blow, however, came in September 1989, when the labor union called a strike. In Mexico a strike legally mandates that the entire facility be closed; in Caliente’s case, that would include both the track and the race books. The union was evidently gambling that its political friends in Mexico City would ultimately decide in its favor, as had been the case for decades. And by cutting off Caliente’s main source of profits — the books, which had also just expanded into sports wagering — the union believed the company would quickly be brought to its knees.
The union’s strategy failed. Shortly after the strike began, Caliente used its own connections in Mexico City (Carlos Salinas de Gortari had been in office about a year, and Carlos Hank Gonzalez was in his cabinet) to obtain a concession to open other race books under the name LF (Libros Foraneos), with a former racing secretary and oddsmaker at Caliente listed as the president of the new company. The new LF employees belonged to a more pliable union.
Although the ruse was apparent to everyone in Baja — including the original union — the “new” books opened and gamblers flocked in, eager to place bets on American football as well as American racing. In the spring of 1990 a federal court ruled the strike against Caliente illegal. This broke the union, once among the strongest and most militant in Mexico. Caliente later “absorbed” LF, and the sports books are now known as LF/Caliente.
Live racing returned in the fall of 1990 and continued off and on throughout 1991, but it soon appeared that the Hank family had had enough. In late 1991, Caliente announced that the next year’s live race meeting would be only 16 days, spread out on weekends over four months. Caliente horse trainers and those employed at the track saw this as the beginning of the end.
I was employed by Caliente — in marketing and as a general advisor — during the turbulent year leading up to the demise of live racing. I began work for Caliente in February of 1988 and resigned in August of 1991. While there, I came to know some of the trainers and a few of the owners who raced horses at the track.
During the 16-day Caliente race meeting of 1992, a friend from Los Angeles, Elvin Chastain, who owned horses racing at Caliente, contacted me to ask what I thought could be done to save the live racing. “This guy, Hank, is out to kill racing in Tijuana,” Elvin said. “I’m willing to fight it, but I’m not sure where to start.”
Chastain was typical of those who sent stock to Caliente. Most were Californians who had a few horses that were not talented enough to compete successfully on the California circuit but could at least earn their keep at Caliente. Some of the large California stables also sent some of their cheaper stock to the Tijuana track, as an alternative to sending them to minor tracks out of state or selling them off for pet food.
I told Elvin that he had only one chance to save live racing, and that was to involve California racing interests in his effort. Most of Caliente’s revenue came from the books, from wagers placed on the piped-in races from California tracks like Santa Anita and Hollywood Park. Caliente, in negotiating the fees paid for these signals with the California tracks, had consistently pointed out that the live racing in Tijuana offered a venue for cheap California-bred horses and also supported the Mexican racing industry. This was precisely the tactic Caliente used in 1990, during the early days of the strike, when the owner of Hollywood Park, Marge Everett, threatened to stop allowing live racing at her track to be beamed to the Caliente books. She had noted the significant increase in money flowing back into Hollywood’s mutuel machines from bettors who could no longer wager at Caliente’s books.
I suggested to Elvin that he simply reiterate Caliente’s own position and use the valuable satellite signals as leverage. Since a number of small American tracks used the profits from the signals they occasionally brought in from Southern California to support their own live racing, there seemed no logical reason why Caliente should not do likewise. I also told Elvin that because I was not a horseman, I did not want to be actively involved in any effort he might undertake.
Chastain took up a collection from the Caliente trainers who shared his concern about the loss of live racing, mostly Americans, at first. He sent letters to some California horse owners racing at Caliente, in which he outlined the problem and asked their support when he presented his case to the various California racing bodies. In April of 1992, Elvin placed an ad with the same information in the Daily Racing Form, which included his home phone number.
The same day the ad appeared, Chastain received a call from Arturo Alemany, Caliente’s U.S. representative. Alemany requested a meeting with Elvin, which took place a few days later at a restaurant in Long Beach. As Chastain described the meeting, in the course of a long discussion with Chastain and another horse owner, Alemany insisted that Caliente did not intend to phase out live racing, even though it was a money loser. Chastain pointed out that there was a suspicion among the Caliente horsemen that wagers made at the books on live racing were not showing up on the tote board. In denying this, Alemany offered Elvin $10,000 to bet on the live races at the books, to see for himself that the money was indeed being registered. Chastain declined this offer.
A few weeks later Chastain and a friend were in Tijuana for Kentucky Derby Day, which included live on-track racing. Several trainers had advised him not to allow Caliente to pay for his meal and drink, but Chastain was never presented with a bill. Feeling ill, he returned to Los Angeles early.
About a week later I spoke to him on the phone. He told me he had gotten a strong response from his ad and from the mailing. However, because he was bedridden with some sort of pulmonary problem, he asked if I would keep his nascent group moving along if he were incapacitated for any period of time. Casually, I told him I would, figuring he’d be up and around soon.
A few days later, a Caliente trainer called me with some devastating news. Elvin was dead. He had been moved from his apartment to a hospital and shortly after had suffered a fatal heart attack.
When the Caliente trainers got together to chip in for a funeral wreath, each asked the same question: Was there an autopsy? (Elvin’s mother had decided against it.) There was nothing to suggest that Chastain’s death was due to anything but natural causes, but the question was indicative of the suspicions and animosity the group harbored toward Caliente’s management. His untimely passing also increased the quotient of fear and fed the trainers’ anxiety about having their involvement in the group, now known as the Caliente Emergency Committee, become known.
For about a month they searched for someone else to lead what they believed was the final fight to save their careers in Tijuana. No one was willing to step forward. It seemed their movement had died with Elvin Chastain.
Chastain’s friend had delivered to me a large box containing the names and the correspondence he had had with the supporters who had answered his call. During the summer, I informed one of the Caliente trainers that if no one could be found to act on the material, I was going to destroy it.
“Do you know Penny Ann Early?” he asked. “She’d be great for it, if she’d do it, and I think she might. She’s a pony girl at [the] Pomona [racetrack]. I’m going up there anyway in a couple of weeks. Why don’t you come along and we’ll talk to her about it?” All I knew about Penny Early was that she had been one of the first female riders in the U.S. and had trained horses at Caliente for a number of years.
In September I accompanied the trainer to Pomona, toting Elvin’s box of names and letters. At the time, Early was living in the tack room at the track, surrounded by her pets: a goat, a chicken, a cat, and her two workhorses. She was noncommittal about leading the effort but said she’d call around to check into it and get back' to us.
A week later she called me. She’d do it, she said, for her friends at the track, but she’d appreciate any help I could give. “I love Caliente,” she said. “I was there for a long time and made a lot of friends. Some of the little Mexican grooms and hot-walkers are up here, and they’d all like to go home.” She agreed that it should not take more than a few weeks to persuade Caliente to bring back a full schedule of live racing, once the California industry was made aware of what was occurring in Tijuana. Months later, when she was still fighting the battle of Caliente, she’d sometimes refer ironically to the “couple of weeks” we both assumed it would take to resolve the matter.
When the Caliente backstretch personnel heard the news that Penny Ann Early had agreed to step forward to try to save their jobs, they were charged with hope. They knew her well, knew of her reputation for fairness in dealing with the workers and of her stiff-backed attitude when she held firm for what she believed was right. In the opinion of one of the Mexican grooms, “Penny Early is the only one with the balls to stand up to Jorge Hank.”
She had scores of friends in the California racing business — also, as a result of her sometimes abrasive attitude, a few enemies as well. And she was about to get to know the bureaucrats and political appointees from Sacramento who control California racing.
The California Horse Racing Board meets monthly to hear from various concerned parties about current problems to better allow it to regulate the industry in its own best interests. Most of the CHRB meetings are relatively staid and sober affairs.
Such was not the case on October 22, 1992, when the board met in public session near the Santa Anita track in Arcadia. A few weeks before, Penny Early had sent a certified letter to Jorge Hank telling him she would continue Chastain’s effort and the work of the Caliente Emergency Committee. She asked to meet with him to discuss the matter. She also mentioned that I was involved only as an advisor.
Hank never responded to the letter, but Caliente did seem concerned enough to publish a condition book for horsemen an unusual six months in advance of the proposed 14-day meeting scheduled to start in March of 1993. (A condition book details the kinds of races and purses at an upcoming meeting.)
Arturo Alemany also came to the October meeting to make a statement. He was, he said, representing both Caliente and the Mexican Racing Commission. As recorded in the transcript of the meeting, he told the board that Caliente “had been pressured by a system of rumors....” Jorge Hank, he said, “is not turning the racetrack with a 75-year-old history into a shopping center.” As proof, he read Hank’s introduction to the condition book, “This will be the 76th year of horse racing here at Caliente. We look forward to what will be an excellent racing season and we seek your support in our efforts to present live thoroughbred racing at Caliente as the legend continues.” Alemany spoke of the simulcast competition Caliente faced from the wagering facility at Del Mar and the Indian reservations. He mentioned the union problems at the facility and said that Caliente had presented “the numbers, finances, percentage of shares, the simulcasting situation at Caliente, etc., etc., etc.” to bodies like the California Horsemen’s Benevolent and Protective Association, the California Thoroughbred Breeders Association, and to Tony Chamblin of Racing Commissioners International.
Board member William Lansdale was impressed. “We feel like we’re cousins between the two of us. Anything we can help you with individually or collectively, please call on us. We applaud you for your hard work in getting the track open again.”
Penny Early rushed to the microphone to toss her bomb into this atmosphere of comity. “Mr Aiemany has spoken very eloquently about how hard they have tried to keep Caliente open. I dispute that. They have done nothing but try to destroy Caliente in the last four years.”
Early spoke of her desire to protect “the little man, the little breeder, the little owner” who raced stock at Caliente, of the unusual practice of imposing stall fees during race meets, and of the expansion of race books from three in 1974 to almost 30 in 1992. With the races beamed by satellite into these books, she said, “we already are supporting Caliente.... This man [Hank] is making millions and millions... a year off the show that California horsemen put on for him. Personally, I’m highly insulted that Mr. Aiemany has the nerve to say that they are trying to save racing at Caliente.... I’m insulted that he has the audacity to offer a 14-day race meet when it used to be over 100.” She concluded by asking the board to exercise its authority to terminate the satellite signals into Caliente if Hank did not “help us to support the California horsemen” by presenting a viable race meet and by making other reforms.
Brian Sweeney, a spokesman for the California Horsemen’s Benevolent and Protective Association (an organization of California horse owners and trainers) rose to dispute Alemany’s claim that any presentation of Caliente’s financial situation had been made to his group.
Aiemany responded by saying that Early’s Caliente Emergency Committee was “not a duly registered committee with the association” and that she had never attended horsemen’s meetings at the track. He stated that since 1974 Caliente had opened 20 books, “none of them in the state of Baja.” (Almost all of the Caliente books are in Baja.) Further, he stated, Caliente was paying the California host tracks “approximately” the same as Nevada sports books were paying: 4 percent of handle on the satellite races.
Thus exploded the opening round of the final and most public battle of Caliente. The two individuals who would conduct the primary combat for their respective interests were possessed of strong and volatile personalities. I knew Arturo Aiemany from 3 1/2 years of working with him at Caliente. I got to know Penny in the ensuing months, but she was already known to historians of the turf.
Penny Ann Early was born in Chicago’s Near North Side about 45 years ago. Her parents’ principal entertainment was playing the horses, and they often brought their young daughter with them to the racetrack. Penny spent so much of her childhood at the Chicago-area tracks that the sons and daughters of the jockeys and trainers became her playmates and often allowed her to pleasure ride their parents’ horses.
Penny dropped out of school at age 17, married, and had a baby. The marriage soon broke up, and she found a job at a real estate office but couldn’t get away from the track. “I was just in awe of it all,” she recalled, “the smell of the hay and the horses, the whole atmosphere. This, I said to myself, is where I belong.”
She begged for a racetrack job but was told it wasn’t possible. Women simply did not belong on the backstretch. However, in 1963 a trainer took a chance and hired her as a pony girl, the rider of the lead pony who escorts the thoroughbreds to the track and to the gate. She followed the races all over the Midwest circuit, a tough and poorly paid life.
While in Kentucky, she became the first female exercise rider ever in the U.S. and, eventually, the first woman ever granted a conditional jockey’s license in Kentucky. Up to that point, no woman had ever ridden in a sanctioned thoroughbred race. To receive her permanent license, she would have to ride in a race before the end of the meeting. She was promised three rides over a period of a week. The first horse was scratched (withdrawn). The trainer of the second got cold feet and put a male rider up instead. And when her big day finally came, the other jockeys boycotted her last-chance race, provoking news stories all over the world. “Yeah,” she says now, “the same little pricks who had just told me to my face they’d [be willing to] ride against me.” The Churchill Downs fans were with her, though, and loudly catcalled the jockeys with epithets of “chicken” and “yellow-belly.” Some racetrackers, however, claimed that a woman could not possibly have the strength to control a half-ton animal at high speeds. “Now you tell me how some mealy-mouthed 98-pound boy can be any stronger than me,” she told Newsweek at the time.
In Kentucky she had met an owner and trainer named W.L. Proctor, who was moving his operation to California. Early decided to head west with him. (Proctor became her lifelong friend and a sort of second father.) Before leaving she called a news conference and stated that the California jockeys had “too much class to boycott just because a woman was riding against them.” An attorney friend had suggested this ploy. Her remarks were transmitted by the wire services, and she later found out that her praise of the West Coast riders had forestalled any potential boycott.
Many women followed the path Early had cleared. A track in New England realized that the women could be a draw, especially for potential female fans. The track organized a stakes race for the women and flew them in first class. Penny was one of the stars, having already appeared on Johnny Carson’s show and been featured in the national media. Early’s first track victory came in this stakes race.
In 1969 Caliente, then under the control of master promoter John Alessio, invited Early to ride against Alvaro Pineda in a match race. As she was being driven into the Caliente track, she saw a huge banner over the entrance: WELCOME PENNY ANN EARLY.
One local paper called the Caliente crowd the biggest in recent years. But Penny lost to Pineda by many lengths. As she and Pineda galloped their mounts back to the finish line for unsaddling, a loud chorus of boos rose from the stands. “My God, when I heard those boos I wanted to die,” she says. But the crowd was booing Pineda; he had humiliated the woman jockey they had come to see. Pineda later told a reporter he couldn’t believe he’d be booed in his own hometown for a victory.
In 1974 Early moved to Caliente to pursue her trade, but a broken ankle ended her riding career and she turned to training. At one time, her public stable included 27 horses.
She trained at Caliente until late in 1989, when the strike that closed the track drove her out. She had often fought with the labor union, at one time throwing them out of her barn when they tried to impose upon her a groom she believed incompetent. At other times she took the union’s side. When the peso was first devalued, her fellow trainers held to the old wage scale for their grooms and exercise riders, putting the exchange rate difference into their own pockets. At a meeting where the Caliente trainers tried to present a united front on the issue, Early dissented. “I told them they were wrong, that I, at least, was not going to pay my help a lot less for the same job just because of the devaluation.” She had met Jorge Hank in 1984 and attended several of his lavish parties over the years. When Hank first arrived at Caliente, Penny was impressed by his apparent commitment to live racing. “I really believe he wanted to make racing go. I’d had my doubts before meeting him, but the guy seemed very sincere. The truth is, the union just fucked it up.”
When Arturo Alemany was about 13 years old, his mother sent him to Tijuana to live with relatives. Arriving by bus from Mexico City in the summer of 1971, he peered out the window and saw a huge fire off in the distance. But one sees many things on the long ride from the capital to the border, and he paid it little attention. He didn’t know or care that it was the Caliente racetrack going up in flames. Later, he would recall the irony of his first view of Tijuana.
Alemany attended Pepperdine and UCLA. While never relinquishing his Mexican citizenship, he worked as a sales consultant for Amtrak. In mid-1987, while employed by a San Diego tour and public relations firm that services Baja, he made solid contacts with executives at Caliente and went to work for Jorge Hank. One of his first jobs with Hank was as a U.S. representative for a Mexican auto insurance agency owned by the Hank family.
Alemany was placed in charge of the Caliente office in San Diego in December of 1987. He didn’t know much about horse racing or gambling, but he did know the basic procedures of American business enterprise. The first thing he did was to begin establishing contacts in the American racing industry, while at the same time making a thorough review of the contracts Caliente had for the simulcasting from American racetracks. These contracts had been drawn up by a middleman, an American who had been a general manager at Caliente. Once Alemany determined that Caliente was being grossly overcharged for the signals, he eliminated the middleman and renegotiated the contracts, saving Caliente tens of millions of dollars. Carlos Hank Gonzalez, in Mexico City, was so pleased with Alemany’s performance on this matter that he presented him with an inscribed Rolex watch.
Alemany virtually idolized prominent American entrepreneurs, as well as major U.S. corporations. He once told me he would go to work for Donald Trump “in a second” if asked, even at a reduced salary. When Caliente, in the U.S., changed its name to MIR, with Arturo as the nominal owner (a device initiated to deter U.S.-based lawsuits against Caliente), he sent the new stationery he had ordered back to the printer. It was not the proper shade of “IBM blue.”
Terms like “corporate structure” and “corporate chain of command” were often used — perhaps overused — by Arturo. Some Caliente executives became so weary of these phrases that for a while Jorge Hank fined him $5 each time he uttered the C word. Arturo, in turn, was not enamored of Caliente’s “corporate style.” When I asked him once if the track might be sold to the Japanese, he replied, “If so, at least things would be done right down there.”
As Alemany climbed the corporate ladder, he aroused envy in other executives, but none could match his valued contacts in the American racing industry. He knew exactly how to talk to the gringos, to put them at ease. “Not all of us are wetbacks wading across the Rio Grande,” he’d joke with the gray suits of the American industry. “At Caliente, we’re chilangos, from the big town, Mexico City.”
In a story I wrote (at Alemany’s request) for the Daily Racing Form in 1989, he stated, “I do what I can to make sure Caliente suffers no credibility gaps with the American racing industry, with racing commissioners, or with horsemen and their organizations.... We have the simulcasts and we have the sports betting, but we are still primarily a racetrack with live, in-the-flesh thoroughbreds competing every weekend, and a racetrack first and foremost is what we will always be.”
The U.S. racetracks Alemany could deal with; Jorge Hank himself was another matter. In gatherings of American industry people, Jorge seldom lost an opportunity to demonstrate Alemany’s inferior status, sometimes making him fetch cigarettes or drinks. At one meeting in Florida, an American executive stood up to praise Arturo. Even while basking in the compliments, he told me later, he knew that Jorge “would find ways to get back at me for that.”
Unlike most of Hank’s executives, Arturo was not a “junior,” one of the sons of Mexico City’s super-rich. Nevertheless, Hank and everyone at Caliente knew that Alemany was an essential part of the Baja enterprise. Hank needed him, and at no time more urgently than for the fight that Penny Early and her bloc had forced upon Caliente.
After the emotion-packed meeting of the California Horse Racing Board in October of 1992,
Early began the legwork for her David versus Goliath struggle. She visited Brian Sweeney, spokesman for the California Horsemen’s Benevolent and Protective Association, at his barn on the Santa Anita backstretch — arriving just after Alemany had left his own meeting with Sweeney. While the trainer was sympathetic to Early’s plea for the Caliente horsemen and track workers, he seemed more interested in getting Caliente to pay a fairer price for the signals. (Forty-five percent of the fee that Caliente paid the California tracks went toward purses for the horsemen of the state, 45 percent to the host track, and the other 10 percent to the State of California.)
Early received a lukewarm commitment from the then president of the CHBPA, Noble Threewitt, to support her effort for an 80-day meet at Caliente and from several other members of the group’s board of directors. The letters and calls she was receiving from horsemen throughout California also fueled her optimism for quick success.
But when Early attempted to bring the matter before the CHBPA board for a vote to recommend terminating the signals should Caliente prove intractable, she ran into opposition from Sweeney. One of the breeders who had phoned Sweeney for his views said he was told that the issue was not as important as Penny Early thought it was and that they had to move cautiously because the matter involved wealthy and powerful individuals in Mexico City. (Sweeney later denied that he had made these comments.)
Early was also pressuring the California Horse Racing Board to take up the matter of Caliente. She pointed out that Tony Chamblin of Racing Commissioners International denied to her that he had ever examined Caliente’s financial records (Chamblin told her only that Caliente might put up casinos if they were not able to get the signals); and the director of the California Thoroughbred Breeders Association, whom Alemany had also cited at the October state racing board meeting, likewise denied discussing Caliente’s internal finances with Alemany. (The breeders’ association later sent a letter to Hank supporting Early’s position.) The executive director of the state Arturo Alemany racing board, Dennis Hutcheson, delayed several times Early’s request to have the Caliente matter discussed by that group. But, according to Early, several members suspicious of Caliente encouraged her to stick with it.
At about this time, Early received a call from a highly placed person inside the state board, who offered information about the power struggles taking place within that agency. This individual — whom Penny referred to as “DDT” (Deep Deep Throat) to honor a request for anonymity — informed her that Dennis Hutcheson was very friendly to Caliente. DDT suggested that Penny contact an investigative reporter for the Sacramento Bee, who was preparing a series of articles to run in late February about the alleged negligence of Hutcheson in the matter of a recent horse-doping case. The reporter told Penny that he had examined Hutcheson’s record of phone calls and had noticed “numerous calls” he had made to Caliente’s San Diego office. On February 26, Hutcheson was voted out as executive director of the state racing board. Shortly after, the Caliente issue was taken up in earnest by the group.
DDT informed Early that most of the appointed board members were handpicked by the racetracks they were supposed to be regulating. “I’m not trying to discourage you,” the insider told Early. “I just want you to know what you’re getting into.”
Early also began making periodic trips to San Diego to meet with the Caliente trainers and some local owners of horses stabled at the track. These meetings were held in the banquet room at the now-defunct Colony House, a somewhat down-at-the-heels bar on Third Avenue in Chula Vista.
About an equal number of American and Mexican trainers were registered at Caliente. The initial meetings at the Colony House were attended mainly by the American contingent, but as the battle wore on into 1993, more Mexicans showed up to lend support. At these meetings they argued and voted on issues they wanted Early to present to Caliente and to the horsemen’s association and the racing board and brought up various items of gossip from Caliente. There was considerable disagreement as to the best strategy to pursue, but the group was united on two things: full support of Early as their spokesperson and a near-paranoid insistence that their support be kept secret.
Penny heard the words “don’t mention my name” so often that we began to call the meetings the Don’t Mention My Name Society.
Their fears may have had some basis. At one meeting they officially and unanimously elected Penny their sole negotiator and spokesperson by secret ballot, and George Joseph, a La Mesa restaurant owner who served as the president of the Caliente Horsemen’s Association, presented the results of the vote to Caliente.
Then, according to Joseph, several Caliente representatives, including Arturo Alemany, began to call Joseph at his business, demanding that he negate the election and insisting on knowing who was attending the meetings, especially who among the Mexican trainers were in support of Early. Joseph described these calls as “harassing” but continued to stonewall Caliente management, while confessing that he feared that someday he would go down to Tijuana to tend his horses and “find marijuana or something planted in my car.”
In December, Early got a chance to present her case at a meeting of the California Horsemen’s Benevolent and Protective Association in a hotel near the Santa Anita track. Penny asked me to come along to tell the group the number of race books Caliente was operating and to offer a conservative estimate of the daily handle (dollar amount of bets) on the California races at these books.
While waiting in the hotel bar for the meeting to begin, Penny was greeted with an embrace by Charlie Whittingham. “You’re going to vote with me on this issue, aren’t you, Charlie?” she asked the venerable trainer, a member of the CHBPA board. What way was that, he wanted to know. “The way I tell you to,” Penny replied, laughing at that moment Alemany and another Caliente executive walked by and nodded a greeting.
When the Caliente issue came up at the meeting, Alemany spoke first, pointing out that Caliente had labor problems that were unknown at U.S. tracks but that they were doing their utmost to keep racing alive in Tijuana, despite large losses and difficulty in luring horses to compete at their track because of the well-known nationwide shortage of thoroughbreds. Penny tried to refute the payroll figures Alemany had offered and showed pictures of the backstretch where some of the barns had been torn down to make way for residential construction.
I spoke on the number of racing books in Mexico and estimated their dollar handle on California races at about $500,000. The $2200 a day that Caliente was paying to the Southern California host tracks for the signals was therefore a fraction of what the Nevada race books were collectively paying for the same transmissions; but that was okay, I said, if Caliente would present a viable race meet. I believed the estimate of gross handle I presented was conservative, based on having seen daily figures at a few books, on being informed of other figures by book managers, and on my observations in most of the Northern Baja books.
The CHBPA board did not vote on the matter. Instead, Brian Sweeney called for a committee to look into the charges and counter-charges. After the meeting ended, however, Ted West, a board member, told Penny and me that Caliente would have to present viable racing or their signals would be cut.
As the attendees at the meeting gathered in small knots to discuss the issues presented, Alemany and Early had a spirited discussion. Arturo told her that she should be cautious because the Mexican government was interested in and monitoring the dispute, to which Penny replied with an expletive. Alemany, however, did ask her if she would accept a 60-day meeting rather than the 80 she was pressing for. Penny told him that she would have to ask her members, but, she added, Jorge Hank still refused to talk the issues over with her. Arturo then made an offer. Get rid of Bob Owens and he would arrange a meeting between her and Jorge.
I told Penny, by all means, to “get rid of me” and get whatever she felt was right for her friends at Caliente. A few days later she faxed a note to Caliente’s San Diego office, saying I was no longer associated with her group. Alemany then called to arrange a meeting with Jorge Hank. “You’ll like what you’ll hear” at that meeting, Arturo assured her.
A week later, on December 17, Penny met with Jorge Hank at Caliente’s office in Spreckels Building on Broadway, while the Caliente horsemen gathered to party at the Colony House, believing that at last they were going to receive, if not everything they wanted, at least enough to allow them to continue their careers.
Early attended the meeting with Hank in the company of a local horse owner. With Jorge Hank were Alemany, Eduardo Hernandez, the second-in-command at Caliente, and a representative of a public relations firm recently hired by Caliente. According to Early, she began by saying she believed Hank had wanted live racing when he first arrived at Caliente, and she understood his difficulties with the union. However, she pointed out, he was making more than enough on the California races simulcast into his race books to support a live program.
Early says Hank responded by mentioning the financial losses involved in live racing and offering again a 14-day race meeting, the same meeting that had been proposed in the condition book that Early had attacked at the state racing board meeting in October. At that point, she recalled later, “I knew I’d been had.” Why Jorge Hank agreed to this meeting is a mystery. A Caliente insider suggested to me that he simply “wanted to see the face of the enemy” once again.
Early said that there was now no choice but to push to have Caliente’s California race signals cut. He didn’t care about that at all. Hank told her; he had nine other signals from American tracks coming into his facility. She and her group would try to get his signals cut nationally, Early said, to which Jorge responded with a shrug.
Says Early, “I got up and said that it looks like the meeting is over. Neither of us tried to show emotion, but the look on his face was ‘You dirty bitch.’ His people were just sitting there, staring at me like I had just contradicted God. He didn’t want to shake hands, but I forced him to. Up to that time I had the idea that if we could get a viable meeting I might return to Caliente to train. But the look on his face told me that could never happen.”
While Penny and the horse owner waited for the elevator, Alemany raced after her, asking if a 50-day meet would be acceptable. “Forget it, Arturo,” she replied, angry and bitter, “you already lied to me. I knew this meeting was going to be a waste of time.” Early believes that Hank sent Arturo after her with the offer merely to get a reaction. Or perhaps Alemany — who was the one on the hot seat, having to deal with the California authorities — was desperate for some kind of deal.
Early drove to Chula Vista to give the bad news to the horsemen who were still partying at the Colony House. Their inebriation was now salted with considerable disappointment. She vowed to continue the fight with the CHBPA “because if we can get the signals cut, that son of a bitch will bring the racing back, regardless of his bullshit today.”
The next day Early called Ted West to tell him about her talk with Hank. “That’s what he said, did he?”
West exclaimed. “We’ll see what he says when we cut his signals nationally.”
Early returned to San Diego to spend the holidays with her daughter and grandchildren. Before leaving, she put her daughter’s phone number on her answering machine in the event of an urgent call.
On December 22, she answered the phone at her daughter’s apartment. “Penny, I have news for you,” the caller said excitedly. “It’s all over. The CHBPA today decided that they won’t cut the signals to Caliente.” It was Arturo Alemany. Penny was shocked and incredulous. According to Early, he continued, “Yes, it’s true, Penny. Brian Sweeney just called to give me the news. But I’d like to work with you on the 14-day meeting coming up. You have some important people on your side.” Alemany was referring to an ad Early had placed in the Daily Racing Form that had listed several of the key supporters of the Caliente Emergency Committee.
“I’m not interested, and I don’t accept this,” Early replied, slamming down the receiver. She later pieced together what had happened. Sweeney had called an emergency meeting of the CHBPA board of directors, mainly to expel from the board a dissident member. To obtain a quorum on such short notice, several directors were telephoned and put on a conference line. After the matter of the dissident was resolved, the Caliente issue was brought up, even though it was not on the agenda. What was discussed, precisely, is not clear, but the directors voted not to interfere on the Caliente matter, although the same board a few weeks before had mandated an investigation of the issue. Early thereafter referred to this hastily convened meeting as “the big double cross.”
Early notified many of her supporters about the results of the CHBPA telephone meeting and urged them to call Brian Sweeney to protest. One woman, the co-owner of a San Diego horse transport business that was the primary shipper of thoroughbreds to and from Caliente, also phoned her old friend Ted West to excoriate him mercilessly as a “turncoat.” The upshot of it all was that the horsemen’s association reopened the Caliente matter; there would be an investigation after all.
In January of 1993, the CHBPA held a public meeting at the Santa Anita track, and Caliente was one of the items on the agenda. Several hundred people were in attendance. The first half of the meeting consisted of bitter attacks on Sweeney’s stewardship of the CHBPA made by partisans of the recently ousted board member. When the Caliente issue came up, Early pressed the attack, questioning Sweeney’s veracity and pleading for justice for the Caliente horsemen, several of whom were present—at Early’s insistence — hiding at the back of the room or behind pillars. They had spotted Alemany and were fearful he would spot them. The group’s attorney, who was chairing the meeting, repeatedly tried to shut her off, and a shouting match ensued. Several of the California owners and trainers spoke in support of Early. One referred to “people being murdered” who incurred the wrath of Caliente’s owner; that, he stated, was the reason the Caliente trainers themselves dare not show their faces. Many of those who sided with Early received loud applause. Alemany gamely defended Caliente’s position; he appeared to be under considerable stress.
The CHBPA decided — again — to set up a five-man investigating committee to look into the Caliente matter. Shortly after this meeting I spoke on the phone to both Ted West and Brian Sweeney. Both seemed interested in an amicable settlement. West implied that he was still very supportive of the Caliente horsemen, some of whom he knew personally. I told him that the horsemen would probably be willing to meet privately with him but, as they were scared witless of their involvement becoming known, would not likely want to express themselves to anyone from the CHBPA they did not know. Both he and Sweeney asked me if Penny had the full support of the Caliente horsemen. Based on the meetings I’d attended, I told them, there was unanimous support for her, and all issues were freely and openly discussed and debated.
The CHBPA investigating committee consisted of West and Sweeney; Walter Greenman, a Southern California trainer who also knew some of the Caliente horsemen and who referred to Caliente management as “the Mafia”; and two horsemen from Northern California, one of whom, Michael Steele, had told the January meeting at Santa Anita that he was a good friend of Carlos Hank Gonzalez. Penny and the Caliente horsemen had their hopes pinned on West and Greenman coming to Tijuana to gather and report back the facts.
But only two members of the committee visited Caliente in late January, Michael Steele and the other Northern California horseman. They met with two Caliente trainers on the backstretch. Steele informed them that Jorge Hank would never deal with Penny Ann Early and that he, Steele, was “nominating” one of them, Junior Nicholson, to represent the trainers in her stead. Nicholson, who had trained horses in Mexico and California for more than 50 years, was one of Early’s staunchest supporters. He turned down the offer but did agree to travel around the state to get horses, in the event a race meeting materialized.
When Steele returned to Northern California, he phoned George Joseph and promised to try to get a 30-day meeting — if Penny Early was out of the picture. According to Joseph, Steele also said that while in Tijuana he attended a large birthday party for Jorge Hank and met with his friend Carlos Hank Gonzalez. He also asked Joseph who exactly was financing Early, and what did she really want? (Early’s basic expenses were covered by contributions from supporters of her effort. During the last few months of the battle, she asked the Caliente trainers to pay her a salary, since she was neglecting her own business and had little income. The salary they were able to raise for her came to less than $100 a week.)
Early traveled to Chula Vista for another meeting with her supporters. If they wanted to choose another negotiator, she told them, that was fine with her. They re-confirmed their support of her efforts.
Another significant January meeting that Early attended — and I, at her request — was that of the California Horse Racing Board’s pari-mutuel committee, held in Orange County. Board commissioner Stefan Manolakas led off by asking “the participants to try to keep it on a something less than a personal level and stick to the facts.” Alemany thanked him and added that “my family and my holiday season has been plagued” by what he construed as personal attacks.
Arturo pointed out that the national Horsemen’s Benevolent and Protective Association had held a convention in San Francisco over the holidays and had refused to issue any statement in support of Early’s effort and “found in favor of the Caliente Racetrack....” Penny had attended that San Francisco convention and discovered that an earlier promise to allow her to speak had been withdrawn. The national HBPA was reluctant even to discuss the matter for fear of being charged with conspiracy to violate rules of interstate commerce.
Manolakas was unsympathetic to Early’s position. “The issue of whether or not the live racing continues at Caliente is an issue for the Mexican government and the horse racing board down there.”
Early’s frustration was evident in her opening comments. “I’ve become very educated in the way things are handled. I thought the very people that would be supporting horse racing obviously are not.” She told the board that the national HBPA had made no statement at all supporting Caliente and that aside from their fear of litigation, the horsemen at the convention supported her efforts. The satellite signal, she said, “was to help the horsemen. Now it’s turned into their worst nightmare.” If the state racing board permitted a signal to go to a track that phased out live racing, “You’re turning your backs on the very people you’re supposed to be supporting, the California horsemen. These are the people you’re supposed to be defending.”
Manolakas disputed Early’s claim that California horsemen did not benefit from simulcasting to Caliente, since they received a part of the fee paid to the host track. Early reiterated that many California horsemen would, without Caliente, have no place left within reasonable distance to send their inferior stock. Then she turned to the matter of the simulcast fee itself. “California does not receive the money they are justly due from the signal because they’ve given you false facts.... They have lied to this board many, many times.”
Richard Stern, Caliente’s attorney, addressed the issue of Caliente’s simulcast handle on California racing, stating that it might be against Mexican law to disclose such information. “Every contract is a separate negotiation that’s done at arm’s length. I’m involved to keep it at arm’s length with my client and that is how the fee is arrived at.... But we have a problem with disclosing information. We might jeopardize our license....”
Bruce Matthias of Santa Anita then addressed the CHRB committee. “In our case, speaking for Santa Anita, the information we would love to have is handle information.... At present Caliente is the only site to which we simulcast from which we receive no handle information....” Cliff Goodrich, Santa Anita’s general manager, was more direct: “As far as Santa Anita is concerned, if we don’t get that information, we’re not going to send the signal anymore.... I don’t care what the law down there says...because we’re dealing in the blind. I’m not saying they’ve been untruthful. I’m just saying we have to deal from a full deck and we haven’t been able to do that so far.”
I spoke briefly to the committee to confirm Penny’s claim regarding the simulcasts and concluded by saying that the only way the CHRB could confirm or disprove my estimate of gross California handle at the Caliente race books would be to exercise their legitimate authority and subpoena the books of AutoTote, the giant totalizator company that set up and operates Caliente’s computerized wagering terminals in exchange for a percentage of the handle. Commissioner William Lansdale, chairing the meeting, said this was “a good thought.”
In the wake of this state racing board meeting, Caliente was clearly concerned. In late January, they sent a directive to all their race book managers to the effect that any reporter who might come around asking about simulcast handles be immediately directed to the main office. Their concern arose from the fact that a number of publications — including the Daily Racing Form, the San Diego Union-Tribune, and the San Diego Business Journal — were preparing stories on the Caliente imbroglio.
In February, Early sent a letter to the Caliente Emergency Committee supporters and also to a 1200-name mailing list of the California Thoroughbred Breeders Association. This list was secured and the mailing paid for by one of her strongest partisans, an owner-breeder from Temecula who was quite angry at what was occurring at Caliente. This letter detailed the issues, spoke of the attempt by one of the CHBPA investigating committee members to “usurp the democratic process” of the Caliente horsemen, and again urged those concerned to call Brian Sweeney to insist that Caliente act responsibly in return for receiving the signals. If Caliente did not so act, the letter stated, they should then pay the same percentage of handle as did the race books in Nevada. That would amount to about $20,000 daily, rather than the $2200 a day the Southern California tracks were receiving.
In a San Diego Union story of February 14, Brian Sweeney is quoted as saying that the Caliente fee for the simulcasts was “a separate issue” from their dispute with their horsemen but that he had, in the words of the Union reporter Hank Wesch, “been trying to negotiate a compromise between the combatants north and south of the border.” In the same story, Alemany was quoted, “We have tried to make a commitment to the sport and to the owners and trainers of California. But all the authorities and entities we are responsible to are in Mexico City.”
The Business Journal story quoted T. Pat Stubbs, director of corporate development at Del Mar as saying, “Caliente hasn’t provided us with audited reports in the past; now we are asking for some backup on the estimates they’ve given us. If they don’t provide the figures, we’ll take direction from the racing board.” In the long article in the Daily Racing Form headlined “Caliente Dreaming,” Don Robbins, president of Hollywood Park, said that “unless we feel Caliente has provided us with information that makes us feel comfortable about what’s going on, and the only way I can see that happening is by seeing the figures, we are not going to send them our signal.... One thing I can say is that all the California tracks are 100 percent united on this issue.” The Big Three of California racing had thus publicly made known their stand.
The rash of stories prompted Alemany to send a “Dear Dennis” letter to Dennis Hutcheson, the soon-to-be-dismissed executive secretary of the state racing board, enclosing some of the articles. The letter read, in part, “The state of California has never been denied a fair contract when dealing with Caliente or the other Race & Sports Books operators in Mexico during our past negotiations,” Alemany wrote, and Caliente was “trying to respond accordingly” to the current dispute. “We would greatly appreciate your support to help us clear the record with the appropriate authorities and the U.S. media who are portraying Caliente and Mexican Race & Sports Books in a negative and inaccurate manner.” Caliente wanted to “maintain open communications,” the letter said, but did not wish “negotiations to become the subject of press fodder in the local newspapers.”
In late February, Early drove to the CHBPA offices in Arcadia and straight into a confrontation with Brian Sweeney, who was incensed about the letter she had sent out a few weeks before attacking the behavior of the two men Brian had sent to Caliente to investigate. (“I was quite calm,” Early says. “Brian was in a fit.”) Sweeney told her that he was going to send to Caliente a proposal regarding a live race meeting. Early insisted that he had no right to do that without first consulting her. According to Early, Brian said he would do it anyway.
Sweeney, says Penny, was also saying “that I had lost my leverage because I revealed Caliente’s underpayment of simulcast fees to the racetracks.” What Sweeney meant was that once the California tracks realized they were being shortchanged by Caliente, their sole interest would then be to get more money for the simulcasts and to hell with the horsemen at Caliente or to the mainly small-potatoes owners and breeders who depended on continued live racing in Tijuana.
Penny’s idea in publicly revealing the probable underpayment by Caliente was to put Jorge Hank into a squeeze between the California tracks, the state racing board, and the CHBPA, and then to rely upon the latter organization to employ its considerable power and request that the tracks allow some underpayment by Caliente in return for the presentation in Tijuana of a worthwhile race meet that would benefit the California industry. She also believed that she had to reveal the simulcast fee underpayment to her supporters throughout the state to galvanize them into putting pressure upon Sweeney himself to act.
On February 23, Alemany shot off another letter, this time to Brian Sweeney. “It appears,” read Alemany’s letter, “you are now experiencing the same nightmare our racing association has been experiencing over the last several months as a result of the actions of the self-serving and self-created Caliente Emergency Committee.... The CEC is attempting to force our racing association, the other racing associations in the Republic of Mexico, as well as the CHBPA, into increasing the number of live racing dates at Caliente. They are attempting to accomplish this by holding the California simulcast signals hostage.... CEC disagrees with the [state racing board] and through disparaging remarks about our racing association as well as members of the CHBPA; the CEC is attempting to obviate [sic] the position of the [board].”
Alemany concluded by referring to the “shortage of horses” and to the competition from the Indian reservations in Southern California and by asking the CHBPA “to take affirmative action against the CEC and its few instigators in order to prevent both a domestic and international nightmare.”
On the same day that Arturo sent his letter to Sweeney, Sweeney faxed to Arturo a proposal for live racing at Caliente, with a copy going to Penny Early. Despite Early’s apprehensions, this proposal, in the view of most of the Caliente horsemen, contained at least a solid basis for negotiations. It suggested a 26-week meeting, on weekends, with no stall rent during the meet. It also allowed horsemen access to suppliers of their choice. (Jorge Hank had required that all supplies be purchased through one of his associates.) It advised that a committee of Caliente management and the horsemen be set up to make “a biweekly assessment of the availability of horses.”
The Caliente horsemen and others in the industry believed that the much-publicized shortage of racehorses affected only the better grade of thoroughbreds; the cheaper stock was still being produced in significant numbers and needed more places to race. The Caliente horsemen were also disappointed that no mention was made of the profits Caliente generated from the simulcasts from California. The small American tracks that mixed satellite races from California with their own live programs diverted 50 percent of their profits from the simulcasts to support local racing, and Caliente spokesmen had often equated their track with those in America. But overall they felt that Sweeney’s proposal was a starting point. Sweeney seemed desirous of settling the matter; at that time he was much preoccupied with the increasingly virulent attacks upon him by the dissident horsemen’s group in California.
On February 26, Jorge Hank faxed a counterproposal to Sweeney (but not to Early, to whom Sweeney delayed sending a copy until March 8). Hank proposed two separate 16-day race meetings that year, the second occurring only if certain conditions were met during the first. The $5 daily stall rent would be waived during the meets, but Caliente would require “a minimum average of 72 conditioned horses starting every racing day.”
Further, the counterproposal stated, the “average minimum handle for each day of live racing must be $175,000.” (The daily handle for the 16-day meeting in 1992 had been less than $ 100,000.) If the minimum requirements were not met, the proposal stated, “The parties agree that Caliente’s management at its sole discretion may close the related training facilities or its live racing operation permanently. Caliente’s management stands ready and willing to open live racing and let the market prove that live racing can be successful. However, if the minimums are not met, the parties agree now and forever that, in the event live racing is canceled permanently, there will be no future claims or controversies regarding live racing at Caliente.” Hank’s signature appended the proposal, with two lines left open for those of Sweeney and the CHBPA president, but none for Early’s or George Joseph’s.
Gathering again with Early at the Colony House, the horsemen reacted to Hank’s proposal with a mixture of disgust and rage. They felt that Caliente was continuing to separate racetrack revenues from simulcast profits, the opposite of what other minor tracks practiced that imported California signals. (They had often pointed out that the competition from the simulcasts from California was the chief reason for the decline of live racing at the border plant.) They believed that no horsemen at any track could “guarantee” 72 horses starting each day. “They could write a condition book that didn’t fit the horses on the grounds and then say there weren’t enough horses to race,” one trainer observed. Others thought the minimum handle requirement of $175,000 daily was an attempt to push the task of advertising and promotion onto their shoulders. “It’s a trap,” said one Mexican trainer, “to give them the excuse to get rid of live racing forever.”
It was decided that Penny would inform Sweeney of their rejection of the Caliente proposal. She’d return to Los Angeles to meet with Chris Clark, an insurance company executive and newly elected president of the CHBPA, to/eel him out about terminating Caliente’s signals to force them to act with justice for the horsemen. And, if necessary, she would again try to mobilize the California trainers to bring pressure on the CHBPA in behalf of their besieged brethren in Tijuana.
Caliente was also fighting off the demands of the tracks and the state racing board. With Dennis Hutcheson gone, the state agency was drawing a line in the sand with Caliente. A followup Business Journal story of March 1 quoted Sue Ross, a spokeswoman for the CHRB: “It is my understanding that the CHRB fully intends to get the Caliente figures.”
The frustration and paranoia that had previously belonged only to the Caliente trainers seemed to be spreading. Cliff Goodrich of Santa Anita told the Business Journal, “There is a growing paranoia here. The more Caliente hesitates to release figures, the more some people think they have something to hide. The CHRB has become concerned because Mexico either doesn’t have the same rules or it doesn’t play by the rules.” In the same story, Alemany said that the racetracks “are changing the rules of the game, asking us to turn 180 degrees in a few days, and that is very frustrating for everyone concerned.”
State racing board staffers were reflecting the militancy of the tracks. An internal memorandum dated March 3 was being circulated in the board’s Sacramento office, which read, “Not only are they politely refusing to give us handle information relative to their book operations, they are asking us to give them the names of anyone who has given us such information implying to me that they will punish those that have given us information.”
The letter to which the memo referred was a fax to state racing board commissioner William Lansdale from the Comision Nacional de Carreras de Caballos y de Galgos (National Commission of Racehorses and Greyhounds) in Mexico City, stating in part, “The commission does not allow for public disclosure of handle information from private book operations located in Mexico.... If there has been disclosure of private book handle information... please provide us with the names of the Mexican entities who have violated our comision policy prohibiting disclosing such information.” The Mexican commission was the same agency that Alemany had represented at the October board meeting, at which Penny Early had launched her initial assault.
The refusal of an agency of the Mexican government to release the requested data became the formula horse Caliente would ride to the finish line. On March 17 Caliente’s attorney, Richard Stern, writing on the stationery of his San Diego law firm, faxed to commissioner Stefan Manolakas his concern about the position the state board might take in their upcoming March meeting. Stern said he would be unable to attend that meeting, but “after listening to you at the meetings and talking to you, I am confident my absence will not adversely affect my client’s rights.” Stern mentioned the Mexican Racing Commission’s policy of nondisclosure of book handle information and expressed the hope that Caliente and the California tracks could enter “into arm’s length negotiations on an individual basis to determine a fair market value for the signal.”
This letter seemed to contain a subtle shift in Caliente’s position; up to that point they had insisted that they were paying fair market value. And, if individual agreements with each track could be worked out, the state racing board — and thus the general public — would never see the AutoTote figures from Caliente.
Shortly before the state board’s climactic March meeting, Caliente received a nasty shock in the form of a letter faxed to Sacramento and to the simulcast director of Hollywood Park. This was sent by Dan Francati, the general manager of the Juarez Sports Book and Racetrack, located in that Mexican city, near El Paso. Juarez, apprehensive about the signals being cut, took a very different tack than did Caliente.
Francati referred to the nondisclosure letter from the Mexican Racing Commission to William Lansdale. The Juarez book, he wrote, “has not been notified by any Mexican government agency that they should not give their handle to a host track.
“We therefore will give the necessary handle information available to any host track in California which requests it for the purpose of reaching a fair simulcast agreement.” Francati said he “will continue to request from federal agencies in Mexico a ruling from them that supports our stand on making our handle available.”
While Arturo Alemany prepared for the March meeting of the California Horse Racing Board, Penny Early tried again with the CHBPA, where, she believed, the decisive power lay. She was convinced that if the official organization of the California horsemen requested the tracks to discontinue transmission of their signals to Caliente, the tracks would comply and Caliente would cave in to most of the demands of the Caliente Emergency Committee.
Early visited the offices of Chris Clark, the new president of the CHBPA. She brought with her a thick file of petitions and letters from California owners, breeders, and trainers who supported her cause.
Clark seemed sympathetic but noticed that the petitions (which Early had collected several months earlier) stated only that they, the horsemen, wanted a viable live meet at Caliente. There was nothing in them, he pointed out, that indicated they were prepared to request termination of the signals if live racing in Tijuana did not materialize. “If you had put that in these petitions,” Clark said, “you wouldn’t get this kind of support.”
Early asked him if he would support a termination request if she were able to fill out another petition with that statement included. Clark replied that he would certainly have to give serious consideration to the wishes of his members, especially those active in Southern California.
The following day, Penny traipsed the backstretch of Santa Anita, where the trainers were putting their horses through early morning workouts. By mid-morning, after she had collected some three dozen signatures on the new petition, she spotted Clark at the “gap,” an area where horsemen watch their animals gallop.
She showed him the petitions. Was it enough, she asked, or did he need more? Early says he replied, “These have no bearing. We have over 10,000 members in the CHBPA, and most have no interest in this issue.”
Penny was crushed. All her work had been for nothing. She went to one of the barns and cried for a long time. “Then,” she says, “I got mad. I told a friend I was going out to get the rest of the names. He asked me what the use of that was since Clark wouldn’t even look at them. ‘I’ll get the names,’ I said, ‘just to shove them up his fat ass.’ ”
She spent the next two days canvassing the barns obtaining the signatures of almost 100 trainers and owners at Santa Anita, many of them marquee names familiar to racing fans. Some of them expressed surprise that, under the circumstances, Caliente was still receiving the signals. Only two had refused to sign. Penny put many of the names in another Daily Racing Form ad published just before the next CHBPA meeting, where the Caliente matter was again discussed and again not brought to a vote of the board. The Caliente issue had been placed at the end of a long agenda, and by the time it came up, several of the Northern California representatives had left, leaving the board short of a quorum.
Although Penny was losing hope, she agreed to fly to Northern California to attend the March California Horse Racing Board meeting, a trip paid for by the husband-wife team that owned the San Diego horse transport business, who realized that their sole means of livelihood was slipping away. The CHRB pari-mutuel committee met in Albany on March 25 and 26, near the Golden Gate Fields racetrack.
Outside the meeting room Penny ran into Alemany. “I’m surprised to see you up here,” he said. “Oh, just keeping tabs on you,” she replied. Arturo told her their constant encounters were becoming fun.
Sue Ross opened the meeting by noting the letter from the Mexican Racing Commission, the fax from the Juarez operator, and the fax from Richard Stem, “which unfortunately does not speak to the points.”
Stefan Manolakas, at least at the outset, still appeared favorable to Caliente’s position of nondisclosure. “I have been assured by the track owner that the negotiations with Mexico have been conducted in good faith and have been provided on the basis that the handle, if not fully disclosed, is verified in a manner that they feel comfortable that they’re getting their fair share. In essence, we’re partners with the tracks negotiating in the open market, with their best interests at heart, we are the third party beneficiaries and if in fact the host organizations are comfortable that they’re getting sufficient information from the Mexican racing authority, and more importantly are able to verify that information, then likewise we should feel comfortable inasmuch as ours is based on. Our money is derived on what the host tracks get from their facilities.”
George Nicholaw, vice president and general manager of KNX radio in Los Angeles and a recent board appointee, spoke next. “Well, I don’t feel comfortable at alL.it seems that they’re telling us two different things down there.”
Cliff Goodrich of Santa Anita reiterated that he didn’t care what Mexican law said; if the information was not delivered by Caliente to Santa Anita, “we simply are not going to do business with them.” However, he also stated that he didn’t think “there needs to be any public disclosure of that information.”
Manolakas jumped back in. “What I’m hearing is if the host tracks feel that they’re getting adequate information, then we shouldn’t take any action on the part of the board.” Don Robbins of Hollywood Park said that the last he had heard, Caliente had informed his simulcast coordinator that the concept of full disclosure was unacceptable, and so Caliente would not be receiving their signal that summer.
Penny Early asked if any figures had been received from AutoTote. Goodrich replied that his track had not asked for them and did not plan to. “I think it puts AutoTote right in the middle. Remember, they are a contractor with Mexico. I think it puts them in an awkward position. And all we want is the information and we don’t care how we get it. We just want to put the burden on Mexico.”
Don Robbins offered, “I never — frankly, I never dreamed of it becoming this big project.” Robbins also said that although he’d take Caliente at their word regarding the figures, it was up to the board to verify their accuracy when received. He pointed out that, considering the volume of business Hollywood Park does, the fee from Caliente was in any case “not a matter of dire economic consequences for us... And we don’t want to be harsh, but when everybody else in the world we do business with, including books in Mexico, is willing to share with us their annual numbers, it’s a little difficult to understand why a particular operator in Mexico is unwilling to.”
Finally, Arturo Alemany took the microphone as the California racetrack executives leaned forward in their chairs. Manolakas opened the interrogation. “The question I have, Mr. Alemany, assuming for a moment that the board isn’t going to interfere with making those numbers public, which I think is one of your major concerns but we are interested in assuring that our tracks have adequate information not only from Juarez but also Agua Caliente to assure that the negotiations are proceeding with open eyes on their part.
“The very simple question I have for you is, when will that information be available to all the tracks that are going to be simulcasting down to Agua Caliente?”
Alemany: “Very simple answer to you as well as the board, is that the fact that on our board renegotiations with each association over the last five years, we have crossed bridges as we came to them...actually we found a private way to release the approximate figures of how our system operates.”
George Nicholaw asked if Santa Anita could receive this information. “Mr. Goodrich,” Arturo replied, “has received a negotiation.”
Nicholaw: “He just stood before us and said he hasn’t received anything. He’s hopeful to get something at the end of the meeting.”
Alemany: “I think he might be basically — we have dealt in good faith in the terms of the law of our associations. In terms of how we do business in the best of faith and to intertrack associations that we have been associated with over the last several years. We have made sure that every time we reach a compromise, it’s on the table and above board.”
Manolakas: “George, I think sometimes it gets a little diluted.” Nicholaw: “Am I missing something?”
Nicholaw: “Have I been back at the microphone too long, Tom, Stefan, please explain to me.”
Manolakas several times asked Alemany directly if handle information would be provided. At one point Alemany replied, “The answer is depending on the situation. You’re asking me a question that has many facets and cannot be reviewed at this meeting.” After more inconclusive questions and answers, Alemany finally made a statement: “Mr. Manolakas, I guess all I’m asking for, at the expense of being too naive, is that as a United States liaison for Caliente Race Track, Race & Sports Books in Mexico for the last five years, what I’m asking for is the respect that is due to another country....”
Another somewhat perplexing exchange took place between Alemany and Nicholaw. Manolakas tried to interpret Alemany’s remarks. “What he’s saying is he can choose, at least when it comes to a track-by-track basis, to enter into a contract with entitled tracks and if he does and they ask for the handle and he chooses to enter into a contract with them, then yes, he will provide it.
“If on the other hand it’s not in his economic interest to enter into a contract then, in fact, he’s going to make a decision not to provide that information.”
Nicholaw summed it up, “Well, Stefan, I got to tell you, if the amount of money that comes in reflects, impacts on the State of California, I think it’s very important that this board know, because if they get into a contract with anybody, the amount of money they collect reflects on the money that the State of California gets. So I don’t see how — we’re cutting off the link here, is what I’m saying.”
The legal counsel of the state racing board concluded by speaking of “the public nature of the information once it reaches the board’s hands. If it’s necessary to verify with the tracks the contractual arrangements they have with out-of-state betting jurisdictions and to verify the State of California is receiving an appropriate amount of tax money, that information provided by the tracks to the board is public information... if you have no way of getting the information from the tracks, then you may be in the position where you may not authorize the tracks to send the signal because you have no way of making sure the state is receiving the appropriate amount of money that it, by law, is required to receive.”
Neither Early nor Alemany attended the second day of the meeting, when George Nicholaw said, “Now, Mr. Alemany came back again and tap danced for us until we were blue in the face. This has been going on for a long, long time.
“In fact, he even told me how long it had been. I must say that I was very, very insulted by his comments to this committee. He started off by cautioning the board not to do anything that would be disrespectful to Mexico. I called it to his attention that I don’t believe that any member of this board has ever been disrespectful to Mexico. First of all, when we started talking about this, everyone agreed that, in general, that it’s best to allow the facility to negotiate with Caliente for the simulcast things. And we had a number of people report — Don Robbins of Hollywood Park pointed out that during the strike at Caliente, Hollywood Park actually made more money by not sending the signal there. He also said that he wasn’t getting the information that we have requested of Mr. Alemany. And Mr. Alemany insulted us even further by saying that he’s only been on this for 365 days!
“Now, that’s a full year to me. I find that really very, very tough to accept.... Now, it appears to me, Mr. Chairman, that our contracts that are in existence now between California racing associations and Caliente are not complete and are illegal from the standpoint that they do not insist on getting that handle information.”
A discussion ensued as to what date should be given to Caliente to provide handle information, what Manolakas called “the drop-dead date.” It was decided that the state racing board staff would notify Caliente of an appropriate date. This would come in the form of an ultimatum. But, “I don’t want to start an international incident,” Manolakas cautioned.
On March 31 the acting executive director of the state board, Roy Minami, sent a letter to Alemany. “As you can see,” the letter read in part, “the withholding of handle information is not only a great disadvantage to the associations in negotiating contracts but also compromises the [board’s] responsibility to the State of California by not ensuring the maximization of public revenue, i.e., fees generated from the satellite signal contract.”
Minami pointed out that AutoTote had informed the board that complete handle information at Caliente could be provided. “I request that this information be sent on a continuous and daily basis starting not later than April 15, 1993. Please be advised that if this information is not received, I will take immediate action to rescind approval for you to receive any signal from California host associations.”
Sometime after this letter was dispatched, Penny Early called Minami to find out what was happening. He told her that the racetracks were very upset over his strong letter to Alemany and would prefer to negotiate directly with Caliente and that no Mexican handle figures would be made available to the CHRB. However, Minami assured her, the CHRB would soon amend the rules to allow that agency to receive verified AutoTote figures. Early then called Don Robbins at Hollywood Park to ask him if he was backing down on getting the Caliente figures. “I’m crumbling like a cookie,” Robbins replied, according to Early, and then laughed it off.
Shortly afterward it came out that Caliente had agreed to a $2000 daily fee increase to the Southern California tracks for the satellite signals, even though a year earlier Caliente had resisted paying only $200 a day more. Don Robbins told the San Diego Business Journal that Caliente had provided him the AutoTote wagering figures, although Alemany refused to confirm that, reiterating that to do so was contrary to Mexican law. “This has been a grueling matter but it has proved there was no wrongdoing on anyone’s part,” Alemany was quoted. “Cool heads prevailed, and we’ve reached fair agreements that are consistent with the growth of satellite wagering in Mexico.”
Cynics who believe that in state regulatory agencies the tail often wags the dog might believe that the California tracks were engaged in a kind of Punch and Judy show, using the California Horse Racing Board to bring pressure upon Caliente, so that the tracks could secure the best deal possible. That the agency, and therefore the public, be provided with Caliente’s AutoTote figures was apparently an item not in the. interest of the tracks. This would perhaps answer the question why the tracks, provided they could get more money, were always willing to negotiate privately with Caliente and to force the CHRB to back off on public disclosure.
If the estimated daily handle on California tracks of half a million dollars is correct, or even close, why would the California tracks settle for a lot less than the verified percentages (through the State of Nevada) that the Las Vegas race books pay? (The Nevada books now pay 2.7 percent of handle, but even that would be more than $ 13,000 a day on a handle of a half-million, considerably more than the $4200 daily that Caliente negotiated with the tracks.)
Caliente may have told the tracks the same thing that a representative of their public relations firm told a reporter from the Business Journal, that if denied the California signals Caliente would simply “black box” them — steal them from the satellite. When Marge Everett, former owner of Hollywood Park, expressed her intention in 1990 to terminate the signals into Caliente, Alemany told me that he had warned Hollywood that they could steal the signals and that “the case would be tied up in the World Court for decades.”
Caliente may also have threatened to use Carlos Hank Gonzalez’s influence in Mexico City to obtain authorization for casino gaming in Baja. (Racetracks, with their slow gambling action, generally fare poorly in competition with slot machines and table games.) Tony Chamblin, of Racing Commissioners International, had once mentioned this Caliente option to Penny Early.
Or perhaps Caliente engineered a master bluff by telling the California tracks that rather than release handle information to the CHRB via AutoTote, they would decline to receive the signal.
In mid-May, Penny Early made the trip to the Colony House for what was to be her final meeting with the Caliente trainers, “my guys,” as she referred to them. She was blunt. Their last hope, she told them, lay with the CHBPA board requesting termination of the signal. At that point one of the trainers showed her a copy of a letter that had been handed to him by the Caliente racing secretary.
It was from Chris Clark of the CHBPA, to Caliente. It stated that the CHBPA would take no action regarding the transmission of racing signals from California to Caliente.
A week later, on May 25, 1993, Caliente announced to the press that they were closing the Caliente Racetrack.
The Caliente trainers lost their epic struggle to save the old track and have gone their separate ways. A few reportedly are training horses in Arizona and other states. Some have moved their operation to San Luis Rey Downs, a training facility near Vista. Others are out of the racing business entirely. George Joseph, the last president of the Caliente Horsemen’s Association, is one of these. His East County bar and restaurant businesses are doing fine, he says, but the fun is gone from his life. “I miss my horses.” Some of the former grooms and exercise boys are unemployed in Tijuana. Others are working at various California racetracks, several illegally.
In a sense, Caliente lost too, in terms of diminished credibility in the U.S., which Arturo Alemany had worked so hard for five years to build up. And they are paying over half a million dollars more annually for the California signals, which, at least in the view of Early’s supporters, is still not enough. Jorge Hank told the Los Angeles Times in the summer of 1992 that racing may one day return to Caliente. Penny Early has a short comment on that — “Bullshit.” But some of the trainers still in the area have been excitedly swapping rumors about the resumption of racing at the track.
Caliente, meanwhile, plans to expand its race book network into Central and South America. Whether they will pay a proportionally increased fee to the California tracks in that eventuality is not known.
The California Horse Racing Board seems also to have lost, at least with regard to those staffers who still may be convinced that Caliente is not paying fair value. I spoke to Roy Minami a few months ago, and he told me, rather dispiritedly, that the agency was satisfied with the private arrangements the tracks had made with Caliente. There would be no amendment to the rules to allow the state racing board to receive the AutoTote figures from below the border.
George Nicholaw was reached by phone at the L.A. offices of KNX a few months ago. “I was a very independent voice on the board,” he said. Referring to his jousts with Alemany, he commented, “He was just doing what he was told by his company, so he had to bear the brunt of the bad tidings.” Nicholaw said he did his best to obtain fair value for the state and the people of California and seemed surprised that the state racing board was not receiving AutoTote figures. He said he would raise the issue again this year, but right now “there are international problems with Mexico and I don’t want to get it in an uproar.”
Ted West was defeated in his bid to be re-elected to the California Horsemen’s Benevolent and Protective Association board of directors, though Brian Sweeney and Chris Clark are still officers of that group. Shortly before the battle of Caliente ended, I asked Clark what he would do if the Northern California tracks decided to end live racing and simply receive racing signals from the Southland. Speaking for himself, he said, he would probably ask the Los Angeles-area tracks to terminate the signals into the Bay Area plants to pressure them to continue the on-site racing.
Arturo Alemany continues to represent Caliente in the United States from his office in the Spreckels Building.
Penny Ann Early is again working full-time as a pony girl at the Pomona track. She may be moving out of state next year. Roy Minami suggested she apply for the permanent position of executive secretary of the California Horse Racing Board, a position he wasn’t himself interested in assuming. Penny was flattered but declined.
Penny today says that if she had to fight the battle of Caliente over again, she would first approach the California racetrack executives to try to persuade them to her side. Though without at least some of the Caliente trainers standing up to speak for themselves, it allowed those hostile to their cause to direct all the firepower at Penny Early and so diminished their chances.
The Caliente Racetrack itself remains, but the horses and the crowds are gone. (Caliente’s greyhound racing remains, however.) For a while tour buses were showing Tijuana visitors around the corpse of the history-laden hippodrome, and they may start doing so again.
Shortly after the announcement of the closing of the racetrack, the popular Tijuana weekly Zeta began a series of articles attacking the Hanks for attempting to sell off the racetrack grounds; that property, said the newspaper, is “the patrimony of the Republic.” One Tijuana politician proposed that the land be turned over to the city so that a “sports center” could be built on the site. A coalition of Tijuana residents was founded last year to press for a public referendum regarding the ceding of the land to the city. However, the land development continues, and lots are being sold for what will be an exclusive and very expensive walled community.
Another report in Zeta claimed that research into the terms of the original concession granted to Fernando Gonzalez back in 1973 proved conclusively that the track acreage belonged to the Mexican people, and why wasn’t Carlos Hank Gonzalez being brought to the bar of justice for trying to sell off the land? A Zeta reporter who has been monitoring the issue believes that the end of President Salinas’s term in office will change nothing. Alejandro de la Vega is Jorge Hank’s partner in the residential development of the racetrack property. De la Vega was also a college roommate and remains a close friend of Luis Donaldo Colosio, the recently unveiled candidate of the ruling party, almost certainly the next president of Mexico.
The Caliente Racetrack thus dies as it had been born, with controversy the only sure thing in sight.