Anoka County harness track faces money woes, turns over reins

After losing $4 million its first racing season and laying off 10 percent of the Running Aces Harness Park staff, troubled Southwest Casino Corp. announced Friday the transfer of its ownership interest in the Anoka County track to a Connecticut finance company.

Although Black Diamond Commercial Finance LLC reportedly does not have a license to operate the state-of-the-art card room and harness track in Columbus, the high-stakes takeover is not expected to interrupt daily business at the $64 million Running Aces Park.

While Bloomington-based Southwest Casino and West Virginia-based MTR Gaming were listed as equal partners when the track opened in April, it was Black Diamond Commercial Finance that put up two-thirds of the park's funding -- about $42.2 million, Thomas Fox, president of Southwest Casino, said Friday.

Southwest Casino, the local partner that claimed 50 percent ownership, invested only $9.5 million of its own, with the remainder coming from a loan through Black Diamond, Fox said. MTR, which weeks ago announced it was trying to sell its 50 percent share of Running Aces, invested between $9.2 million and $12.5 million, Fox said.

The deal between Southwest and Black Diamond gives Southwest the option of repurchasing its 50 percent ownership in Running Aces over the next nine months by paying down its debt, Fox said. The agreement also calls for Southwest to provide consulting services to Black Diamond for four months.

"We remain committed to the success of Running Aces," Southwest CEO James Druck said in a statement. "We look forward to ... ultimately, the ability to repurchase our 50 percent interest in the track."

But the current financial climate may not allow that.

Running Aces' money problems started long before the stock market plunge. When the track opened last spring, Southwest hoped realistically to lose, at worst, no more than $2 million through its first racing season, Fox said. But it lost twice that much -- $4 million, Fox said. In September, the company announced layoffs of close to 60 workers at the harness track.

Canterbury Park Holding Co. in Shakopee on Friday also announced it will cut 60 full- and part-time positions by Oct. 30.

Meanwhile, Southwest lost a potential $30 million when the Oklahoma-based Cheyenne and Arapaho tribes declined to renew their option to have Southwest run their casinos for $6 million a year over the next five years. The tribes and Southwest are suing each other over the matter.

David Hughes, CFO for Black Diamond, did not immediately return calls from the Star Tribune.

The Running Aces transfer of ownership reportedly blindsided the Minnesota Racing Commission. Although the deal was believed to be completed earlier this week, the commission did not receive an e-mail about the agreement until around 5 p.m. Thursday, commission member Kris Sundberg said Friday.

Though Black Diamond hasn't yet gone through the state licensing process, the track itself has a license to operate, Fox said. The license will likely be reviewed because of the ownership transfer. Dick Krueger, executive director of the Minnesota Racing Commission, could not be reached for comment.

Running Aces seemed to be dealt a series of bad hands from Day One. The owners fought initial rejection by the Racing Commission, legal hurdles about simulcasting thoroughbred races, protests from local residents and a state statute that would not allow opening of a card room until completion of the initial 50-day meet.

"A business is vulnerable when it opens," Fox said. "But the track's been great, good for the community, good for horsemen. We're pleased that that's going to continue."

Paul Levy • 612-673-4419