Johnnie Crean
Incumbent
Dear Fellow Cal Club members,
I’ve been massively impressed with the effectiveness and ability of the Cal Club Board these past two years. The folks on the Board know how to run the best racing events and to effectively manage Club expenses.
Cal Club knows how to efficiently run a race weekend. My main concern is Cal Club’s stewardship of the huge investment we have in the racetrack.
My belief is that Cal Club is entitled to receive some current return on its 30 year old investment in Buttonwillow Raceway. Though folks get wealthy by not spending and investing, 30 years is a long time to wait for some economic benefit. It seems unreasonable to be informed that Cal Club needs to wait another 10 years before getting any return on its Buttonwillow investment. Saving for our future for 40 years is remarkable, but it is also true that the future is now. For the record, the San Francisco region receives approximately $250k annually from their investment in Thunderhill racetrack.
Over two decades, Cal Club has relentlessly transferred wealth to outside investors in the following way:
During the past, Buttonwillow made profits. The outside investors had tax obligations caused by their share of the profit. The Buttonwillow Racetrack Board decided to transfer cash from Buttonwillow Ractrack to the outside investors to fund the investors tax obligations.
At the same time, no cash went to Cal Club. As Cal Club owned 60% of Buttonwillow, Cal Club should have received 150% of however much cash was transferred to outside investors. Instead, Cal Club received nothing, leaving the cash in Buttonwillow for investment, and thus the outside investors additionally benefitted at the rate of 40% of the cash not transferred or credited to Cal Club. (When Cal Club leaves a dollar in Buttonwillow Raceway to invest, 40% of that value immediately transfers to the outside investors, as they own 40% of Buttonwillow.) . Clearly, Cal Club is twice fiducially damaged by this action: (1)Cal Club receives no cash. (2) Cal Club does not receive any increased equity for leaving the cash, so 40% of the value benefits the outside investors at cost to Cal Club. During the past decades, outside investors received nearly $600,000 in cash from Buttonwillow Raceway, while Cal Club received nothing. Since Cal Club owned 50% more stock than the outside investors, Cal Club should have received $900,000 in cash, or show a receivable to Cal Club on Buttonwillow Racetrack books, or received more stock in Buttonwillow!
Recently, significant wealth was transferred from Cal Club to specific individuals and outside investors in the following action.
Apparently, the Buttonwillow Track Board mismanaged their funding effort to construct a second track. Consequently, Cal Club had to give away 12% equity to enable Buttonwillow Racetrack to receive a loan from a new investment group for approximately $3 million at 9% interest. (The terms seem well above market, and no competitive bidding was done).
The greatest concern is that the 12% equity came entirely from Cal Club. Cal Club agreed to transfer 12% of its ownership to individuals for $10! While Cal Club owned 60%, outside investors owned 40%, why did only Cal Club have to transfer shares, and not any of the outside investors? By Cal Club transferring its shares to a new investment group (who are members of the track board), Cal Club ownership went from 60% of the track to 48%. These outside investors now have the majority and control of the track. This could be judged fiducially irresponsible or unwise action by those involved in making the choice to transfer Cal Club equity and wealth to outside individuals to benefit Buttonwillow Raceway.
Ten years ago, Cal Club owned 60% of a debt free Racetrack making hundreds of thousands of dollars a year. Today, Cal Club owns 48% of a corporation that owns two racetracks and which owes $15,000,000 to banks and others! Furthermore, Cal Club has yet to receive any return on its 30-year investment.
My personal values won’t let me be part of a situation where wealth is being transferred from our non-profit Cal Club and its members to individuals who mismanaged the track while they served on the Race Track board, and to outside investors. This is just not right!
If you are ok with this draining of Cal Club wealth to others, don’t vote for me. But if this isn’t ok with you, just vote for me, and thus send a message to the Cal Club Board. If I am resoundingly re-elected to the Cal Club Board, I will know that I have a mandate to address the issues I’ve discussed above. If I’m not re-elected, I will respect that other opinions are as valid as mine and happily continue to race at Cal Club events. I’m willing to serve my fellow members if desired, but have no need to be a relentless minority whiner!
Johnnie Crean
Cal Club member since 1972.
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