22nd District Agricultural Association continues to seek new uses for struggling Surfside Race Place

One fair board member acknowledged the Surfside Race Place satellite wagering center is “dramatically underutilized.”
One fair board member acknowledged the Surfside Race Place satellite wagering center is “dramatically underutilized.”
( / Courtesy)

Officials with the 22nd District Agricultural Association, the entity that operates the state-owned Del Mar Fairgrounds, describe the property’s 91,000-square-foot satellite wagering center as “beautiful,” “fabulous,” and one of the finest such facilities in the nation.

The Surfside Race Place, which was completed in 1991 at a cost of about $12 million in state funds, contains enough space for as many as 5,000 customers a day to watch and bet on televised feeds of live horse races from around California, the United States and even the world.

But in recent years, attendance and revenue at the center have plummeted. According to statistics provided the district, 108,000 people visited the Surfside Race Place in 2010, and that number had dropped to 62,068 by last year. A recent district staff report pegged average daily attendance at 300 to 350.

Net revenue has also dwindled from $471,771 in 2010, to $128,489 in 2014.

District officials say changes in the industry, such as the rise of Internet gaming, Indian casinos and other types of gambling and entertainment options, have fueled the decline, which has hit satellite wagering centers across the state. As far back as 2010, the chairman of the California Horse Racing Board was quoted as saying that satellite wagering “doesn’t appear to be a sustainable business model any longer.” According to published reports, a number of satellite wagering centers in California have closed their doors.

Del Mar officials don’t plan, however, to shutter the Surfside Race Place. Instead, they are looking at alternative uses for the building to complement satellite wagering.

“We need to turn that (building) into an income-producing property for us,” said Stephen Shewmaker, a 22nd DAA board member who sits on a committee charged with finding new uses for the Surfside Race Place. “So it’s not only standing on its own two feet, but providing us with a revenue stream as well.”

The question, though, is what to put in the building that would be consistent with the fairgrounds’ mission of promoting agriculture, education, entertainment and recreation, while not conflicting with such major events as the San Diego County Fair, summer and fall horse racing meets, and other activities throughout the year.

For the past two years, the district has been actively researching potential new uses for the building, but has hit some snags. The district declined, for different reasons, to embrace proposals for a high-end movie complex, a bowling and entertainment center, and a micro-brewery to be operated by a subsidiary of beer giant MillerCoors. Last fall, a request for proposals from local brewers to build a craft brewery generated no bids.

Tim Fennell, the fairgrounds’ CEO and general manager, insists that a craft brewery remains a possibility, as well as a beer tasting room, restaurant and entertainment or music venue.

“Nothing is off the table,” he said.

He acknowledges, however, that the district must find additional, revenue-generating uses for the building, because of the decline in satellite wagering, which appeals mostly to an “older demographic.”

“There are opportunities, in my opinion, that would complement what we do on the grounds and fall within our mission statement,” he said.

As for a timeline, he said, “I would be very disappointed if, by this time next year, we didn’t at least have a good solid plan going forward,” Fennell said, if not seeing some new elements already up and running.

On a recent Friday morning, Surfside general manager George Bradvica and supervisor Kevin Buenafe took a reporter on a tour of the building. On the ground floor is a general admissions room including rows of tables, multiple TV screens and betting windows. Next door is a theater, where customers can gaze up at races on big-screen TVs, or use smaller monitors mounted into consoles at their seats.

Upstairs, a members-only club (which horse racing enthusiasts can also access by paying a day-use fee) offers another place for relaxing, betting and dining from a full menu.

The Surfside Race Place also has a number of large spaces that can be rented for private events, such as an outdoor patio overlooking the horse racing track, and an enclosed room with a bank of windows above the adjacent Del Mar Arena.

In May, the ground-floor room will be used for a major horse auction, and the animals will be led in and out of the building through large roll-up doors. That will be the first return of horse sales to Del Mar since the early 1990s, Bradvica said.

The facility also hosted this week’s 22nd DAA board of directors meeting, which Shewmaker arranged so his board colleagues could get a first-hand look at the facility. In the past, the building has been used for meetings where large crowds were anticipated, such as a 2011 debate over whether elephant rides should continue to be offered at the San Diego County Fair.

Although the Friday morning crowd was sparse, Bradvica said business would pick up in the afternoon during races broadcast from the Santa Anita race track in Arcadia, and also on the weekend. The venue’s largest crowds come during major horse racing events such as the Kentucky Derby.

In spite of the competitive pressures on satellite wagering, Bradvica said Surfside has the advantage of offering personalized customer service, such as staff members learning the names of regular customers.

“We are running, in my opinion, the finest facility in the U.S. and we offer the highest level of customer service,” he said. “Surfside Race Place won’t close. This (business) model needs an adjustment and we’re working toward that.”