10/8/2012 6:42:00 AM Yavapai Downs deal struck for $5.5 million
By Joanna Dodder Nellans Contributing Reporter
The resurrection of the Yavapai Downs horse racetrack took one step closer to reality Thursday when a bankruptcy trustee filed a motion for a $5.5 million sale to Gary Miller, the president of the state horsemen's group.
"If we get bankruptcy court approval, we're very confident we can open on Memorial Day Weekend," said Miller, president of the Arizona Horseman's Benevolent & Protective Association.
He said he also would like to bring the county fair back to the site, and he would consider reviving other events including car races as well as horse shows at the county-owned events center next door that has been leased to the racetrack owners in the past.
"I think this is going to be a community place, in addition to the racetrack," Miller said.
The Prescott Valley track never opened for the 2011 summer racing season on Memorial Day Weekend, and it's been closed ever since. Its former owner, the Yavapai County Farm & Agriculture Association, filed for bankruptcy in July 2011.
Miller submitted the top bid of $3.25 million for the track facilities during a bankruptcy court auction on April 3 of this year, but three days later the U.S. Department of Agriculture's Office of Rural Development rejected the bid. Miller then offered $3.5 million and was again rejected. The USDA and Miller have been negotiating ever since.
Along with the bankruptcy court, the USDA has to agree to the bankruptcy sale since it holds millions of dollars worth of loans on the track.
USDA Rural Development originally loaned the Yavapai County Fair Association about half the money it needed to build a new $22 million track in Prescott Valley in 2001 to replace the shorter track in Prescott. The summer racing meet in the Prescott area had been operating since 1960, and horse racing here dates back to territorial days.
USDA still held about $14.7 million worth of loans on the track when the bankruptcy occurred.
The tentative agreement between Mullen and Miller's company, Prescott Valley Race Course LLC, allows Miller to assume $5.5 million of the existing loan. He also will pay as much as $400,000 worth of closing costs. Miller said he is the sole owner of PV Race Course.
He said he's happy with the financial agreement.
"It's going to provide me with the ability to open the track and put people back to work," he said.
Bankruptcy Trustee Brian Mullen asked the bankruptcy court Thursday to expedite a hearing on his motion for approval of bidding procedures at the sale hearing, and the court agreed to an Oct. 10 hearing date in Phoenix.
Mullen wants the sale hearing to take place by Oct. 24. It's possible that someone could attend that hearing and outbid Miller, but no one else has been in the picture since the failed bankruptcy auction.
If the court approves the sale, Miller and the trustee will have an unspecified period of due diligence in which Miller examines the facilities before the two sides close on the deal.
"I'm happy to see we're at the next step," Miller said. "I never doubted it once. Two or three times, but not once."
USDA officials responded to a request for comment late Thursday afternoon with an email confirming the sale procedures.
The Arizona HBPA issued a short statement.
"This is a very positive move forward and we hope Mr. Miller gets bankruptcy approval," the text stated. The HBPA has consistently supported Miller's attempts to buy the track.
The track facilities include a one-mile horse racetrack, the 93,328-square-foot grandstands, about 860 horse stalls and a neighboring car racetrack. Miller said he has visited the site but at this point has no idea how long it would take to bring it back to operating condition.
The Downs employed about 300 people each summer alongside hundreds of trainers, jockeys and assistants.
Miller has owned numerous racehorses since he attended college near Monmouth Park in New Jersey close to his hometown.
Now a commodities trader, Miller said he and other top Asarco copper mining company executives in Tucson saved thousands of jobs when they revived Asarco from a 2005 bankruptcy, and now he wants to do the same at Yavapai Downs. He already is working on a management team.
"In high school I was known as the guy who persevered, and also as an optimist," he said. "My motto was, 'If nobody died, we can fix it.'"