MIKE PEGRAM - Thoroughbred Daily News · Mike Pegram at Del Mar *All photos courtesy of Horsephotos. fert. “Every time we go to a racetrack, he takes a walk ... the very least,

MIKEPEGRAM:An UncommonCommon Man

February 2011

2 Magazine

MIKE PEGRAM:An UncommonCommon Man

By BILL FINLEY

A s he walks around the casinofloor at the Carson Valley Inn, MikePegram looks and acts like just anothercustomer -- someone ready to play afew hands at the tables, hoping his luckand his money hold out long enough sothat he can enjoy a couple of CoorsLights on the house. Or maybe he’sheading to the coffee shop, where youcan get an awfully good meal for $7.99.He’s dressed as he’s always dressed, injeans and a comfortable shirt off therack at Sears, or some place like that. Acouple of times he stops to chat withsomeone. Always with a smile on hisface, he seems to know everyone in theplace and everyone knows him. Neveris he Mr. Pegram. Always just Mike.

That’s what you see on the outside,the cover to the book on Pegram. Don’tlet him fool you.

“He's the smartest man I ever met inmy life, and I've met Rhodes Scholars,”said Stew (Turtle) Stewart,the entertainment directorat the Carson Valley Inn.“You know what Mike is?He’s an uncommon com-mon man.”

Pegram must besmart. How else can youexplain what he has donewith his life and career?His racing stable has wonthe Kentucky Derby,Preakness, Dubai WorldCup, Breeders’ Cup Juve-nile Fillies, Breeders’ CupSprint, Kentucky Oaks,

Haskell and dozens of other stakes,mostly with horses purchased for lessthan $100,000. Broke and a 23-year-oldcollege dropout, he started snapping upunderperforming McDonald’s restau-rants in the seventies in the Seattle areaand, from there, built a fast-food empirethat has made him a wealthy man. He

owns two small casinos in northern Ne-vada, one of which has seen significantgrowth since he took over, bucking in-dustry trends.

He is 59, a grandfather, he’s richand the casinos take up most of histime. It would seem to make sense forPegram to sit back and let someone else

worry about California racing’s prob-lems, but that’s not going to happen. Heloves racing and he loves fixing things,like a McDonald’s that wasn’t sellingenough burgers with someone else incharge or a little casino that was gettingrun-down and wasn’t being run right.For similar reasons, he is trying to takeover Del Mar. He thinks he can make itbetter and, in the process, get Californiaracing turned around.

“You look at what’s been going onin California and with horse racing andyou have to ask yourself is [taking overDel Mar] a challenge?” Pegram said.“The answer is absolutely. But it ain’tnear the challenge that Ray Kroc wasup against selling a 19-cent hamburgerin 1955.”

Pegram idolized Kroc, the man whomade McDonald’s what it is today. It’sclear that virtually all his businessphilosophies are borrowed from the

man, who believed that ifyou produced a good,reasonably priced prod-uct and never took youreye off the ball when itcame to customer service,you were bound to besuccessful.

“What Mike is reallybig on and what hasmade him so successful ishis understanding of cus-tomer service, and I’msure he got that from Mc-Donald’s,” said his trainerand close friend Bob Baf-

“He’s the smartest man I

ever met in my life, and I’ve

met Rhodes Scholars.”

Stew “Turtle” Stewart

Mike Pegram at Del Mar *All photos courtesy of Horsephotos

fert. “Every time we go to a racetrack, he takes a walkthrough the whole facility and checks it out. He con-stantly wants to see what's going on; he'll pick up on lit-tle things and see what's working. At Monmouth, heloved the way they had the picnic tables out on theapron. He's so big on customer service. I’m sure McDon-ald’s beat that into him.”

The other major influence on his life was his latefather, Jim, who died in 1987. A one-time minor leaguebaseball player who played for the organizations of theSt. Louis Browns and Chicago White Sox, Jim Pegramran a pool hall in their home town of Princeton, Indiana.Pegram was tough but fair, and he taught his childrenthe type of small-town values that remain at the core ofMike Pegram’s beliefs. One other thing his father taughthim: the joys of going to the racetrack.

Princeton, Indiana, is about 35 miles from Ellis Park,which was, to Pegram, a magical place back in the sixtiesand seventies.

“My father’s passions were baseball and betting thehorses,” Pegram said. “I can never remember not goingto the racetrack. I remember just begging my dad to takeme to the racetrack all the time. I must admit, it wasn’tthe love of the horses. It was the love of the action andthe betting and being around all your buddies. Ellis wasa really happening place back then.”

Princeton is small-town, middle-America, bestknown as the birthplace of baseball Hall of Famer GilHodges. About 9,000 people lived there when Pegramwas growing up. It’s the type of place that reveres its topathletes, the boys who can throw a baseball harder thananyone else or put 20 points on the board on any givennight in basketball. That was Pegram.

He was a star on the basketball court, cementing hisreputation as a small-town hero when he hit a 40-footshot at the buzzer to lead his high school team to victoryin a sectional tournament game. He might have beeneven better in baseball, excelling so much in the sportthat he made the team at Indiana University before heleft school.

“He was definitely good enough to be a professionalbaseball player,” said Pegram’s older brother, Jim. “Atthe very least, he could have been a minor leagueballplayer. He threw hard, was a good hitter and was agood prospect. He was that good of an athlete.”

But Pegram’s memories of his years on the basket-ball courts and playing fields aren’t necessarily goodones. He looks back and sees himself as someone who

February 2011 3

“My father’s passions were baseball

and betting the horses.”

Mike Pegram

didn’t take sports seriously enough. More interested inhaving a good time, drinking beer and hanging out atthe racetrack, he didn’t have the kind of drive necessaryto transform himself from a good athlete into a greatathlete.

“You always think you’re better than you are,”Pegram said. “I thought sports were going to be myfuture. I just gave it away. I didn’t take it seriously.Instead of practicing and working hard, I gave away atalent that most people don’t have and an opportunitythat most people don’t have. Sometimes, I step back andsay, ‘How damn dumb? How stupid was I?’ It was justout and out stupid that I could have had the talent I didand just flat piss it away.”

But Pegram learned something from his short-livedathletic career, lessons that he carries with him today.

“I guess it wasn’t until I was about 21 that I came torealize what I had done with the sports,” he said. “Whenthat happened, I knew that if I ever got another chanceto make something out of myself, I wasn’t going toscrew it up. That’s where a lot of my motivation comesfrom.”

Pegram, who didn’t like going to college, was look-ing for something else to do while at Indiana University.At about that same time, Pegram’s father and his unclehad found their way into the McDonald’s family as fran-chise owners. The elder Pegram used his connections toget his son in on the ground floor in the Seattle area. Butno one was handing him anything. The first McDonald’sthat Mike Pegram owned, which was located in Mt. Ver-non, Washington, was one of the worst performers in thestate and several other more established McDonald’sowners had previously turned down the opportunity torun the franchise.

It was a daunting task. He was young, inexperiencedand had no money to speak of.

“I had to borrow the money to start my business be-cause I had no equity,” Pegram said. “In today’s world,those things just couldn’t happen. That was back in themid-seventies and we were living in different times. Myfirst business was financed 110 percent. The only thing Iowned was a refrigerator and a washer and a dryer, andK-Mart had the paper on them.”

He set out to change his restaurant, making sure thatit was always spotless and that every employee wascourteous to the customers. He was very careful when it

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“I knew that if I ever got another chance

to make something out of myself,

I wasn’t going to screw it up.”

Mike Pegram

came to hiring managers, making sure that he onlyselected people who shared his beliefs, could be trustedand would work hard.

“Ray Kroc just had so much common sense,”Pegram said. “He had a slew of Kroc-isms that I still

live by. He always said that none of us is as good as allof us.”

The Mt. Vernon location took off under Pegram’sownership, which allowed him to buy more in the area.He would eventually own as many as 23 franchises. Hissmarts, the McDonald’s brand and the rapid growth ofthe Seattle area were a potent combination. The once-broke college dropout was rich.

But he didn’t let it change him.“Baffert told me one day that I had to get out of the

bleachers [at the track],” Pegram said. “I looked at himand said, ‘Bobby, you can have your Turf Club.’ The TurfClub is like a boardroom. The higher you get, the worsethe smell. I dealt with boardrooms almost every daywith McDonald’s and I’ve dealt with the corporate cul-ture. I know I’m not good at it, so I don’t try to be some-body that I’m not. I am more comfortable with a pair ofjeans on. That’s just who I am, what I am. It’s where Icome from.”

He knows he is an enigmatic figure. He’s successfuland rich, but does not come across as polished. He’ssmart, but he still sprinkles his speech with words like“ain’t.” He’s a major owner in the “Sport of Kings,” butwould rather spend his time at the track downing beerswith childhood buddies from Princeton, Indiana, thanhanging out with CEOs in the Turf Club. One sports-writer once wrote that Pegram had “the demeanor of alost ‘Hee Haw’ character.”

“If someone wants to judge me for my lack ofsophistication, so be it,” Pegram said. “I am who I am.”

After the 1999 Belmont, in which Pegram ranSilverbulletday, he and his entourage were beingharassed by a bunch of drunks. Pegram told them tostop, but when they didn’t, Pegram’s group took thingsinto their own hands. Pegram, the man who might ownDel Mar someday, got into a post Belmont-brawl with abunch of boozed-up jerks.

“The thing that really astounds me about Mike isthat he can come off as a country bumpkin, and his useof the English language isn't always the very best,” saidDan Farley, a writer for Racing Post who also grew upin Princeton. “But he's a very smart guy and he's alwaysvery well prepared when it comes to anything he does.And he's been unbelievably successful.”

February 2011 5

“I am who I am.”

Mike Pegram

Pegram never wanted to belong to the Turf Club ormake it on to the New York Racing Association Board ofTrustees. But he did want to own horses and, with theMcDonald’s profits starting to come in, he had hischance.

His first horse was named Storm Strike. After thehorse won a $7,500 maiden-claiming race at Ellis Park,Pegram’s father and a few of his friends bought thehorse privately and got Mike to join in as a co-owner. Aharbinger of what was to come for Pegram, the horsewon three straight after the purchase, won a small stakesat Beulah and took on John Henry in the 1978 RoundTable at Arlington. (He finished sixth.)

At that time, the thought that he would own horseslike Silverbulletday, Real Quiet and Lookin At Lucky orthat he might one day head a partnership that wouldtake over Del Mar, was unimaginable. All he wantedwas to have a few horses and some fun. In the earlyeighties, even that became out of reach. He had a coupleof down years with McDonald’s and was caught up in acostly divorce. He got out of the horse business.

Things were looking up for Pegram by the mid-eighties, and when his friend Hal Earnhardt asked himif he wanted to go in on a horse, Pegram was ready and

jumped back in. The only problem was that the horseEarnhardt had in mind was a Quarter Horse. Earnhardtwas having some success in that business, thanks inlarge part to a young trainer named Bob Baffert.

Now a Quarter Horse owner, Pegram was eager tomeet his trainer.

“I called Bobby one day and told him I was comingover to Los Alamitos to meet him,” Pegram recalled. “Iasked how I’d know who he was, and he said that he’dbe the guy wearing the white cowboy hat. Well, I gotthere and everybody is wearing a white cowboy hat.He ended up finding me because I had a pretty blondewith me.”

In Baffert, Pegram found a kindred spirit, someoneelse who loved racing and was driven to succeed, butwho didn’t take anything too seriously. Baffert liked tojoke around every bit as much as Pegram did. But whatPegram really liked about Baffert was that he could trusthim. He’ll never forget the time Baffert bought a QuarterHorse for Pegram at a sale and, afterward, figured outthat he had bought damaged goods. Rather than stickPegram with the horse and the bills, Baffert gave Pegramback a chunk of his money and bought part of the horse

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“Why do you want to run for $4,000 or

$5,000 at night when you can

run for $40,000 during the day?”

Mike Pegram

himself.“That told me a lot about him,”

Pegram said. “He ended up putting uphis own money the same way I put upmy money. Early on, I knew I was deal-ing with someone with integrity.”

The Quarter Horse business wasgood to Pegram and Baffert. After awhile, Pegram and some of his partnersstarted to realize they were wasting Baf-

fert’s talents because the purses were sosmall at Los Alamitos.

“I said to him, ‘Why do you want torun for $4,000 or $5,000 at night whenyou can run for $40,000 during theday?” Pegram said. “The rest is his-tory.”

The very first Thoroughbred Baffertbought at auction was Thirty Slews, a$30,000 purchase at the 1988 KeenelandSeptember sale. Pegram got in for apiece of the horse, who would go on towin the 1992 Breeders’ Cup Sprint.

Now entrenched in the Thorough-bred game and living in the West,Pegram was about to discover thepleasures of Del Mar. It would replaceEllis Park as his favorite racetrack, aplace where he could be Mike Pegram,the down-home guy who just wantedto have fun, drink beer, hang out withhis friends and bet horses.

“Del Mar is my favorite experience,and I have a house there now,” he said.“I’ve got a suite up on the sixth floor.That’s where I send my guests. Theycan go up there and do their thing andthe women can get all dressed up.Everybody knows where to find me,out on the veranda. I’m always at thesame table with the same bunch of

cronies and I have the most enjoyableday. You see horses being saddled inthe paddock. You look out on thePacific Ocean. That’s where I want tobe. I may run down to my box in theclubhouse to watch a race if I have onein, but, a lot of times, I never leave thattable. I just love sitting there and enjoy-ing the camaraderie of all the peoplearound me.”

Pegram had yet to make a bigsplash as an owner when he and Baffertentered a 2-year-old by Quiet Americannamed Real Quiet at Del Mar in a Sept.5, 1997 maiden race. The colt was al-ready 0-for-5 in his career and had costjust $17,000 at the 1996 Keeneland Sep-tember Sale. His fourth-place finish thatafternoon belied what was to come.

Over the next 14 months, Pegramwould explode on the scene. Real

Quiet, who capped off 1997 with a vic-tory in the Hollywood Futurity, wouldwin the Kentucky Derby and thePreakness and lose the Belmont by anose. Silverbulletday would win theSorrento at Del Mar, the Alcibiades atKeeneland and the Breeders’ CupJuvenile Fillies and an Eclipse Award.

The sport had never seen anythingquite like the team of Baffert and

Pegram, both irreverent, both given tomaking wisecracks, both refusing totake themselves too seriously.

These guys were good. Some,Pegram remembers, thought maybethey were too good.

“Back in the early days, with RealQuiet and Silverbulletday, we werecalled cheaters,” Pegram said. “Theyput labels on us. It was really tough onBobby. Too good to be true; that’s

February 2011 7

Real Quiet wins 1998 Kentucky Derby

Bob Baffert

“That’s one reason Baffert’s been great for me. He’s able

to see the lighter side of everything and joke about things.”

Mike Pegram

exactly what they thought of us.”If nothing else, Pegram won some

admirers with his grace in defeat. Winor lose, he never changed. He alwaysseemed to be enjoying himself andnever once complained about whateverbad luck he might have had on the race-track. Never was that more evidentthan when all that stood between RealQuiet, $5 million, immortality and aTriple Crown was a nose. Pegram neveronce whined about his bad luck and,instead of pouting after the Belmont,held a party for his friends and associ-ates at the Garden City Hotel.

“You’re either going to go throughlife pissed off or laughing,” Pegramsaid. “In any situation, there’s alwayssomething in your brain where, no mat-ter how difficult things might get, youcan make a choice–either get pissed offor laugh your ass off. That’s one reasonBaffert’s been great for me. He’s able tosee the lighter side of everything andjoke about things.

“When Real Quiet got beat like that,why would I get upset? How in the hellcould I? That horse took us on a magi-cal ride. My dad, he should have been aphilosopher. He told me one time, ‘If allyour bad luck comes at the racetrack,you’re a pretty lucky boy.’”

After a few quiet years, Baffert andPegram stormed back onto the scenewith Lookin At Lucky, among the un-luckiest horses ever. After nightmarishtrips in the Breeders’ Cup Juvenile, theSanta Anita Derby and the KentuckyDerby, the colt proved just how talentedhe was when winning the 2010 Preak-ness, Haskell and Indiana Derby, and

becoming the first colt to win theEclipse Award at two and three sinceSpectacular Bid, over 30 years ago.

Pegram loves the action and heloves winning big races, but he’s also abusinessman. With a horse with thatmuch ability and pedigree, Lookin AtLucky simply became too valuable tostay in training. After his colt finishedfourth in the Breeders’ Cup Classic,Pegram announced that he was beingretired and would stand at AshfordStud.

“If you never sell a horse, you’renever going to make any money in thisbusiness,” Pegram said. “RetiringLookin At Lucky was one of the mostwrenching decisions I ever had tomake. I knew he was a great horse andwe could have won a lot more raceswith him at 4. But I also know he’ll be agreat sire.”

If Pegram ever rubbed anyone thewrong way or people didn’t under-stand him, that all seems to havechanged. He is now seen as an industryleader, someone whose advice and

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Real Quiet (inside) came up a nose short to Victory Gallop in the Belmont

Dual Champion Lookin At Lucky

“If you never sell a

horse, you’re never

going to make any

money in this business.”

Mike Pegram

leadership is welcomed, if not coveted.A Member of the Board of Directors ofthe Thoroughbred Owners of California,he is particularly involved with issuesrelating to California racing. Pegrammight not have all the answers, but heclearly wants to do everything he canfor the sport, particularly in the West.

“What I came to learn about Mike isthat he absolutely loves horse racing,”said Stewart. “I mean he really, reallyloves it. I’m not sure I have ever seensomeone so passionate about some-thing. He’s not the kind of guy whowants to sit back and let problems gounsolved or let someone else worryabout them.”

Trainer Ron Ellis, also on the Boardof Directors of the TOC, says he sensesPegram would rather stay in the back-ground, but has been motivated tocome forward because he thinks he canhelp.

“I’m not really sure that Mike wantsto be an industry leader,” Ellis said.

“He’s the kind of guy who doesn’t wantto be in the spotlight. But he’s decidedto take the bull by the horns with thisDel Mar thing. He may not know it, butby doing that he is looked upon as aleader. It’s becoming a case of leadingby example. He’s not looking to besome sort of celebrity or someoneeveryone showers credit on. A lot ofpeople feel he’s someone who will dothings the right way at Del Mar andthat he’s only doing this because hetruly loves the game.”

What can Pegram do for Del Marand for California racing? The answerscan be found at two little casinos tuckedin between Reno and Lake Tahoe.

In time, the McDonald’s restaurantsdidn’t need much help from Pegram.He hired the right people to run themand he trusted them to take care of theday-to-day duties. He even felt com-fortable getting out of the Washingtonmarket and trying something else. Healways liked the Phoenix area, so, about

nine years ago, he swapped his Seattlearea franchises for someone else’srestaurants in Phoenix. Currently, heowns 26 restaurants in Arizona andnone in Washington.

With everything running smoothlywhen it came to McDonald’s, he couldmove on to the next thing. Casinosalways interested him. He likesNevada, particularly the beauty of theCarson City-Tahoe area, and he likes togamble. Another consideration was hischildren, none of whom seemed inter-ested in the fast food business. Hewanted to involve them in a family en-terprise that they would enjoy. Hisdaughter, Amy, and son, Tim, haveimportant management roles at thecasinos.

Pegram started with Bodines. Heand his partners (Pegram owns 73.5percent of his gaming properties) built acasino with 250 slot machines and arace and sports book in Carson Cityright off U.S. 50, a main road that leads

February 2011 9

The grandstand at Del Mar Race Track

to Lake Tahoe.It opened in 2008. One of the few

bumps in the road at Bodines was alegal challenge thrown at Pegram byCBS over the name Bodines, which wasthe name of the family in the ‘BeverlyHillbillies’. Jethro Bodine himself, oth-erwise known as actor Max Baer Jr.,even got in on the act. He was in theplanning stages of opening a casino ofhis own and also objected to Pegram’suse of the name Bodines.

"In my opinion," Baer told theNevada Appeal, "Bodines casino isattempting to take advantage of thepopularity and fame of 'The BeverlyHillbillies' and of the 10 years plus thatI have been developing Jethro Bodine'sBeverly Hillbillies Mansion and Casinoin Northern Nevada."

Pegram, who said the name wastaken from a former restaurant on thesame location, eventually won out andthe lawsuits and threats of lawsuitswent away.

Pegram says that Bodines has donewell since it was built, but it’s clear thathis pet project is the Carson Valley Inn,which he took over in January, 2010.

Pegram said he had his eye on theplace for a long time. The Inn is situatedin Minden, Nevada, and is nestled atthe foot of the Sierra Nevada MountainRange. The natural beauty that sur-rounds the Carson Valley Inn is breath-taking, and Pegram figured he couldn’tgo wrong owning something with somany aesthetic qualities going for it.

But getting the hotel and casino toturn a corner wouldn’t be easy. Like thefirst McDonald’s he took over in Mt.Vernon, Washington, the place hadproblems and was underperforming.There’s nothing glitzy about the CarsonValley Inn, which would be completelyout of place on the Las Vegas strip. Withonly 152 rooms, it’s small and it’s meantto be charming and cozy. The problemwas, the place was in desperate need ofwork. With previous owners not rein-vesting in the property, it was gettingrun-down. So Pegram immediately in-vested $8 million into the hotel andcasino in the first of several plannedrenovation stages.

But even that wouldn’t be enough.The Nevada gaming industry ingeneral isn’t doing well, and Northern

Nevada, in particular, has been hithard by the spread of Indian casinos inCalifornia. In Washoe County, Nevada,which includes Reno, 31 casinos com-bined to lose $27.5 million on revenueof $1.5 billion in 2010. A trip throughonce-bustling Lake Tahoe revealsboarded-up casinos and empty parkinglots.

What Pegram needed to do was toincrease the Carson Valley Inn’s marketshare, to take customers away from hisrivals. To do so, he figured, he’d have toprovide the best customer experience inthe area.

“We’ve done it here with capitalizedinvestment and with personal service,”he said. “We’re giving the customerwhat they want.

“At a small-town casino like this,our biggest competitor is the movietheater. When people have two hours tokill, they’ll go to the movies. It coststhem $10 each for tickets and another$10 for popcorn and pop. With acouple, they’ll spend $30. They cancome here instead, have a couple ofpops and, who knows, maybe win a$1 million jackpot. But when we get

The picturesque Genoa Lakes Golf Course near the Carson Valley Inn

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February 2011 11

them here, we have to entertain them.People want good value for theirmoney, they want clean surroundingsand they want friendly employees.It’s no different if you’re running aMcDonald’s or a racetrack.”

The Carson Valley Inn has a Cheers-like feel to it; it’s the type of friendlyplace where, yes, everybody knowsyour name. Pegram is such a stickler forcleanliness that Stewart says he hasseen him personally grab supplies andstart cleaning the bathrooms himself.There may not be another place inNevada that gives its customers morevalue when it comes to meals. AtKatie’s Country Kitchen, you can get agiant hamsteak and a plate full of eggsthat no one could possibly finish for just$5.99.

Pegram is always thinking of waysto get people to come to his casinos. InAugust, he brought in the Flying ELVI,a group of Elvis impersonators whojump out of an airplane. So many cameto see their show that roads wereclogged for miles.

It’s working. According to Pegram,business at the Carson Valley Inn is up35 percent since he took over.

For now, he’s very hands-on at thecasinos, but more and more of his atten-tion is turning to Del Mar and whatrole, if any, he can play in the track’s fu-ture and the future of California racing.

It’s not that Del Mar necessarilyneeds fixing. Unlike the Mt. Vernon,Washington, McDonald’s or the CarsonValley Inn, it is successful, one of themost successful racetracks in America.It’s easy to see why–it offers goodracing, a short meet and is in one of themost beautiful and wealthy areas in thenation. Pegram also believes the track iswell run. He says he is a big fan ofDel Mar executives Joe Harper andCraig Fravel.

But it is owned by the State of Cali-fornia, and no one believes that govern-ment-run racetracks can do what theprivately operated ones can. Del Maralso finds itself trying to maneuverthrough what are difficult and uncer-tain times for California racing.

Mike Pegram’s success as an owner often starts at

the sales, where he and trainer Bob Baffert have

found dozens of stakes winners, many of which

cost less than $100,000. Pegram says he gives

Baffert free rein and has little if anything to do with

choosing the horses they buy. It’s been quite a

partnership. Here is a look at some of the best pur-

chases Pegram has been involved in, whether as

the sole owner or a co-owner:

* Pegram purchased Midnight Lute privately for $300,000 after the horse was a March 2005 OBS 2-Year-old RNA.

Horse Purchase Price/Sale Record Earnings

Captain Steve $70,000 FTKJUL ‘98 25-9-3-7 $6,828,356

Lookin at Lucky $475,000 KEEAPR ‘09 13-9-1-1 $3,307,278

Real Quiet $17,000 KEESEP ‘96 20-6-5-6 $3,271,802

Silverbulletday $155,000 FTKJUL ’97 23-15-3-1 $3,093,207

*Midnight Lute $300,000 private 13-6-3-1 $2,690,600

Isitingood $87,000 OBSFEB ‘93 24-11-3-4 $1,219,430

Thirty Slews $30,000 KEESEP ‘88 21-7-5-2 $872,590

High Stakes Player $37,000 KEESEP ‘93 38-14-5-5 $845,629

Commitisize $20,000 KEESEP ‘96 34-10-3-5 $784,887

A jubilant Preakness trophy presentation

Hollywood Park is slated to close,handle keeps going down and it’sbecoming increasingly apparent thatthere aren’t enough horses out there tomaintain 52 weeks of racing.

The idea of a new group coming into take over Del Mar surfaced in2009 when then-Governor ArnoldSchwarzenegger proposed the idea ofthe state selling the property to helpbalance the budget. The city of Del Marwas the first to react and convincedState Senator Christine Kehoe to intro-duce a bill that would transfer the prop-erty to the city. Civic leaders in Del Marwere motivated, in part, by a desire tokeep the track and the fairgrounds justthe way it is. Others are pushing forbold plans that call for, among otherthings, building a hotel, condominiumsand a convention center.

Pegram, along with Karl Watsonand Paul Weitman, both part-owners ofLookin At Lucky, came together as agroup and joined forces with the city ofDel Mar in an effort to wrestle away theracetrack from the grips of the state's22nd Agricultural District Association.

Watson is the owner of Chevroletand Infiniti dealerships in Tucson. Hebecame enamored with racing whenworking for a car dealership in Omaha,where he started attending the races atAk-Sar-Ben. It was Watson who cameup with the name “Lookin At Lucky,”playfully boasting that when peoplelooked at him, they were looking at lucky.

Weitman is also in the car businessand is the owner of several dealershipsin the Tucson area. A former high schoolbasketball coach, he got into the busi-ness when putting in $2,000 to go inwith Baffert and his brother, Bill, on ahorse.

Under the current deal on the table,the city would own the fairgrounds, butallow Pegram’s group to manage theracetrack. According to the San DiegoUnion-Tribune, the city is calling theset-up a Public Benefit Trust, and itwould buy the property for $120 mil-lion from the 22nd Agricultural DistrictAssociation. The Pegram group wouldput up $30 million. The remaining $90

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Mike Pegram’s trophy caseBob Baffert and Pegram’s Silverbulletdayare inducted into the Hall of Fame

Paul Weitman, Pegram, Karl Watson andjockey Garrett Gomez after the Sprint

Mike Pegram and Bob Baffert with theEclipse Award for Lookin At Lucky, out-standing two-year-colt

Pegram and partners with Midnight Lute after the 2007 Breeders’ Cup Sprint

million would come from the sale ofbonds and a loan from the state.

Pegram’s group would act as a for-profit entity, but the profit motive isn’tnecessarily what is behind their plans.

“I'm not looking at this as a get-rich-quick thing at all, and I don't think theother two guys are, either,” Weitmansaid. “We all know that horse racing isnot in good shape nationally. AndSouthern California racing is not ingood shape. We know it is risky, veryrisky. I would not like to go into itknowing I was going to lose a lot ofmoney, but I also believe I’m not goingto make a lot of money. I want to keepour heads above water, have some funwith it and make some improvementsto the facility.”

As is usually the case where mil-lions are being talked about and stateand local governments are involved,Pegram’s attempt to take over Del Marwill not come without a fight, red tapeand other assorted headaches. But he is

confident his group will get it done.“I cannot predict local politics, but I

know the numbers work,” he said. “Awhile back, I never would havebelieved that the State of Californiawould turn loose that property, butnow it makes total sense for them to doso. There are a lot of issues, but the first

thing you look at in a situation like thisis, who are the losers? With this, thereare none. The only losers, as I see it,are the people who have strong ties tothe 22nd Ag, and some of thosepeople are going to lose their jobs.Otherwise, this looks like a big win-win

for everybody.”Pegram believes the deal will get

worked out some time this fall, and thathis group will run racing at Del Mar in2012. The main thing standing in theirway is the 22nd District AgriculturalAssociation, which, it appears, is tryingto hold on to its fiefdom.

“Selling off a state asset that is paidfor, which makes money, which createsjobs, makes no sense,” agriculturaldistrict chief executive Tim Fennell toldthe Union-Tribune. “Something’s notright there.”

The Pegram, Watson, Weitman bidto take control of Del Mar also cameunder question when influential ownerand breeder Martin Wyogd told theNorth County Times in February thathe believed the state had no intention ofselling the track.

“I think it’s dead,” he told the paper.“I think the governor took it nicely offthe market.”

Wygod made his statement shortly

February 2011 13

At left, Paul Weitman and Karl Watson join Mike Pegram and Bob Baffert for the Eclipse Award ceremony

“I’m not looking at this

as a get-rich-quick

thing at all, and I don’t

think the other two guys

are either.”

Paul Weitman

after Gov. Jerry Brown announced thathe was canceling the sale of severalstate office buildings which had beenput on the block in an attempt to closethe state’s budget deficit. The originalidea of selling Del Mar came to fruitionunder the administration of GovernorArnold Schwarzenegger, Brown’s pred-ecessor.

“Buying it is a farce,” Wygod alsosaid. “It didn’t make sense from thebeginning.”

Pegram said he wasn’t surprised byor discouraged by Wygod’s statementsand that nothing has changed when itcomes to his attempts to buy the track.

“The one thing that people don’tseem to understand is that the propertyis never going to fall into privatehands,” he said. “My deal is not withthe state of California. My deal is withthe city of Del Mar. Where the city andthe state stand, I cannot tell you. Thishas been a work in progress and it in-volves state and local politics. I just gotdone having another round of talkswith the city, so they obviously stillthink the track is for sale. All I know isthat we are ready and willing to per-form if the city gets the property fromthe state. We’re not dealing with thestate; we’re dealing with the city. I’mstill very hopeful.”

But the momentum seems to be infavor of the Pegram group, and it’s nothard to envision Del Mar being run bythe folksy Turf Club-avoiding racehorseowner from little Princeton, Indiana,whose favorite thing to do is to hangout on the veranda, drink the beer andplay the horses.

“Right now, owning Del Mar is

Mike’s dream in life,” Stewart said.Pegram and his partners believe the

single biggest issue facing Californiaracing is the horse population and thepotential for disaster when HollywoodPark closes, which will mean the loss ofabout 2,000 stalls.

“How long is Hollywood going tobe in business?” Watson said. “Nobodyreally knows. So what happens if Holly-wood goes away? Where are all thosehorses going to go? In my mind, Holly-wood is going to go away. The $64,000question is whether it will go away inone year, five years, what? When itdoes, what will happen to racing inSouthern California? I want to see rac-

ing continue in California, and I’m notsure it’s going to have a life if some-thing different doesn’t happen. If DelMar continues with 37 or so days,where will those other days go to? Wecare about these things. I’m not sureeverybody else cares to the same levelthat we do about the future here.”

To solve the potential problems,Pegram wants to open the Del Mar sta-ble area year-round. He doesn’t wanttrainers shifting between Santa Anitaand Del Mar, but picking one or theother and making that their year-roundbase.

“What needs to be done is to utilize

Del Mar as a year-round training facil-ity and get more people from the Eastto come out here for the winter,” hesaid. “If they don’t have to move theirbarns from track to track, I think they’llkeep a string of horses in the summeror the whole year. We want to make itso simple for them that they don’t haveto leave. We need Todd Pletcher outhere and Bill Mott racing 52 weeks ayear. I think we can do that.”

In Pegram’s model of the future, DelMar would run more than just sevenweeks in the summer. He wants to holda fall meet at Del Mar that would takethe place of the current meet that oper-ates at that time of the year at Holly-

14 Magazine

“Right now, owning Del Mar

is Mike’s dream in life.”

Stew “Turtle” Stewart

The beautiful Del Mar by the sea

wood Park. He sees Santa Anita havingthe bulk of the racing dates, with therest, maybe 19 weeks, going to Del Mar.

He needs more horses and he needsmore fans, even at Del Mar, and espe-cially if Del Mar is going to becomesomething more than a short boutiquemeet. Ask Pegram how he’s going to dothat and he doesn’t have any magicalanswers. Rather, he makes thingsas simple as possible. Just as hedid with McDonald’s and at theCarson Valley Inn, he wants cus-tomer service to become the No. 1priority at Del Mar. His recipe forsuccess elsewhere has been cus-tomer service, a good product andvalue. He wants to do the same atDel Mar.

And he’ll start with (what else)the beer prices.

“The biggest challenge we’regoing to have at Del Mar is whatto do with the beer prices,” he saidwith a laugh. “I go there every dayand bitch about having to pay $7for a beer. So, I have to put mymoney where my mouth is, right?Ok, let’s say I reduce beer pricesby 40 percent, then we have to see a 40percent increase in beer sales, otherwisewe’ve just cannibalized ourselves.That’s an important decision for us–long-term gain or short-term pain? Ihaven’t figured that one out yet. That’sgoing to be the most common questionasked of me. I know one thing–if I don’tlower beer prices people are going toroast my ass, and rightfully so.”

There are, of course, more importantissues in California and at Del Mar thanthe price of a beer. Pegram sees the big-ger issues, ones that go beyond Del Mar.

“The horse racing situation in Cali-fornia right now is scary as hell,” hesaid. “The only reason why I got myselfinvolved in the Del Mar situation is be-cause Del Mar is the linchpin when itcomes to the success of California rac-ing as a whole. Without Del Mar, youdon’t have Southern California racing.

“I’m not knocking Frank Stronach,but when he started buying up race-tracks, California became just another

dot on his map. He was in Michigan,Oregon, Florida, all over. Californiawasn’t where he was at. Churchill camein and made their play at Hollywood,and then it didn’t take them long to de-cide they wanted to get the hell out ofthere. We went through this wholephase of corporate ownership, and Ithink there’s been a lot of cases where

we took our eye off the ball.”The solutions, he says, involve put-

ting people back in the seats.“When I see 2,200 people at a place

like Hollywood Park, well, we ain’t try-ing,” Pegram said. “I’m going to try. Imay go broke doing it, but I will try.”

He doesn’t offer anything more thancommon-sense solutions. Try to makethe racing product as good as possible.Keep the place clean, show the cus-tomers a good time, make sure everyemployee understands they must comeacross with a smile on their faces.

Run Del Mar like he has run the

Carson Valley Inn and his fast foodplaces. Accentuate customer service. Dothe little things right.

“Any facility, be it a basketball arenaor a racetrack, they always need im-provements, and that takes money,”Weitman said. “Keep the place fresh forthe customer. That’s no different thanwhat I try to do for the customer in my

business.”“There’s no such thing as a sav-

ior,” Pegram said. “The only wayyou really make things work isfocus on the customer. I will keeprepeating myself all day long if Ihave to. Take care of the customers.”

Make sure people have fun,even if that means bringing the Fly-ing ELVI to Del Mar. Don’t rip peo-ple off when it comes to beer prices.Make Del Mar better than it alreadyis. In an industry that is struggling,lead by example.

“One of the problems Craig[Fravel] and Joe [Harper] have hadis that their job status comes upevery five years,” Pegram said.“Every five years there’s a new RFPso far as who’s going to operate the

track. That has put them in a politicalsituation where they can’t piss anybodyoff. They’re in no position to make ene-mies. I never understood why Craigand Joe weren’t more vocal leaders.They couldn’t be; it would have beencareer suicide. We can change that. Ifthis goes through, I see Del Mar beingin a position where it can be a realleader in the entire industry and a forcefor positive change.”

Yes, Mike Pegram wants to makemoney running Del Mar. He doesn’tapologize for that. But there’s more to itthan that. He likes racing and he likeschallenges. He sees a sport that strug-gles and he doesn’t just want to im-prove things -- he wants to make thesport as great as it can be.

“We’re going to go into Del Mar andnothing will be status quo,” Pegramsaid. “That’s not the way I do things.That might work for the average per-son. There’s nothing about me thatwants to be average.”

“The only way you really

make things work is

focus on the customer. I

will keep repeating myself

all day long if I have to.”

Mike Pegram

February 2011 15