Dave Roepke, Published February 18 2010
Some worry financial issues could kill horse racing in Fargo
Winston Satran, the state director of racing, said he will ask the Racing Commission to consider requiring track management to address the 28 fiscal control issues raised in a state-ordered review completed last month before licensing Fargo races this season.
The report by Eide Bailly said Horse Race North Dakota, the nonprofit that runs Fargo’s races, needs to establish policies guarding against fraud, reduce conflicts of interest on its board, track its finances better and take other steps to bolster internal controls.
“Those are standard management practices, and they have to be implemented,” Satran said.
He will ask racing commissioners at their Tuesday meeting to consider requiring all the concerns to be addressed.
Issues raised in the report – plus a pending sale of property in the grandstand area now owned by Horse Race North Dakota in Fargo – worry horse owners such as Shirley Swenson.
“I don’t think there is a future for racing in Fargo,” said Swenson of Rolla, N.D. “Not this year and probably not next year.”
Satran said that before it worries about racing next season, Horse Race North Dakota should first make sure its bills are paid.
“I think the highest priority is to get the vendors,” he said.
Swenson said the North Dakota Horse Park Foundation, the separate nonprofit that owns the actual track and formed Horse Race North Dakota, offered to pay $200,000 to buy the grandstand facilities.
She said she’d rather see the horse-racing group try to get fair-market value for the property, which she estimated at $600,000. She said a group of horse owners has made an informal offer for more than what the foundation would pay.
Ken Pawluk, president of the foundation, said the offer the group made Jan. 4 should help Horse Race North Dakota pay its bills. Eide Bailly’s report said the nonprofit had more than $220,000 in pending invoices at the end of 2009.
Pawluk wouldn’t confirm the size of the offer or other financial details of the deal until it’s complete. He said the foundation would lease the property back to Horse Race North Dakota for a fee, which in turn would allow the foundation to pay down debt it will have to take out to finance the deal.
“Everything is very favorable to Horse Race North Dakota,” he said.
Not favorable enough for detractors like Swenson or other critics who have been vocal enough to prompt Satran to issue an e-mail to numerous figures in North Dakota horse-race circles.
“The rhetoric has heated up and there are divisions being created in the North Dakota Horse Racing world that will be difficult to overcome if we do not reduce the speech-making that is taking place,” Satran wrote in an e-mail sent Tuesday.
The outcry has been loud enough that the president and the vice president of the volunteer board that governs Horse Race North Dakota resigned Monday.
Carolyn Goerger, a fellow board member and vice president the two previous years, said she believes the two board officers – former President Dirk Monson and former Vice President Jess Bergem – resigned due to complaints about the pending sale.
“Hopefully, the horsemen who created this problem will stay in the woodwork,” Goerger said.
Bergem declined to talk about the reasons she resigned. Monson said many factors played a role in his resignation, but the chief problem was a lack of time. He wouldn’t discuss the situation further.
Goerger said the board’s first task is to replace Monson and Bergem. She said Wednesday afternoon that she was trying to set up an emergency meeting for today or Friday. Later on Wednesday, Swenson said that a meeting was set for tonight at 6.
The financial review by Eide Bailly initially stated there is a $17,603.79 discrepancy between bank deposits and reported revenues in 2009, though the auditing firm is reviewing that figure.
Julie Cardwell, former president of the horse-race nonprofit, sent a letter to Satran last week detailing purported errors in the report. The discrepancy is actually $3,830.09, and that is only using estimated revenue, she claimed.
Goerger said the report had important suggestions, but she questioned some of them. For example, limiting board members from working at the track to reduce conflicts of interest might not work due to the size of the Fargo operation.
“Smaller tracks will do that,” said Goerger, who in 2009 worked at the track’s gift shop.
Goerger put much of the blame for management issues listed in the Eide Bailly report at the feet of Heather Benson, the former general manager.
“I just took it that she was really overwhelmed,” she said.
Swenson agreed, saying Benson’s unwillingness to be open about the track’s financial trouble “was a spin, spin, spin mentality.”
Benson didn’t return a message left on her cell phone Wednesday.
Benson resigned late last year, saying that a decision by the Racing Commission to stall funding of Horse Race North Dakota put the 2010 race season in limbo. She blamed the deficit on a drop in Internet wagering.
Pawluk also said declining off-track betting was a problem, but added that the Racing Commission needs to help out as well to make racing viable in Fargo.
“Horse racing does not pay for itself,” he said.
Readers can reach Forum reporter Dave Roepke at (701) 241-5535