Feasibility study puts Clovis at front of pack

A consultant’s feasibility study for the New Mexico Racing Commission concludes three Clovis applicants for a horse-racing track and casino would generate the most revenue. The study also details downsides for each Clovis bid, and a frontman for a Tucumcari applicant called the study “fatally flawed.”

The commission on Thursday posted on its website the 138-page study from Convergence Strategy Group, a gaming consulting firm based in New Orleans. A 46-page PowerPoint presentation Convergence gave to the commission during an executive session Thursday also was posted on the website.

Convergence made no recommendations on which applicant should be awarded a license. It stated it “provides insights to the scope, objectives, benefits and challenges of a sixth license.”

Izzy Trejo, executive director of the racing commission, told the Quay County Sun in email last month the study cost between $56,000 and $60,000. The commission did not hire such a consultant the last time a horse-racing license became available 10 years ago.

Warren Frost, a Logan attorney and principal for the proposed $80 million Coronado Park horsetrack and casino on Tucumcari’s east side, said his biggest bone of contention was Convergence’s estimates on how much revenue the Clovis applicants would take from existing tracks in Hobbs and Ruidoso.

The Convergence report states the projected “cannibalism” rate from existing New Mexico racinos would range in 2021 from $2.05 million by the La Posada proposal in Clovis, $884,000 by Curry Downs in Clovis and nearly $630,000 by Clovis Racetrack and Casino — mostly from Zia Park Casino in Hobbs and a lesser amount from Ruidoso Downs Racetrack and Casino. The projected cannibalism rate for Coronado Park in Tucumcari is just $326,000, mostly from The Downs in Albuquerque.

Frost said the estimated Clovis effects against the Hobbs and Ruidoso tracks are too low.

“Even Convergence acknowledges between $15 million to $20 million is coming from Lubbock (Texas) for the Clovis casinos,” Frost said Friday. “Yet they say that’s not going to have any substantial impact on Zia or Ruidoso Downs. That’s just nonsensical to me. As a result, the report is fatally flawed in that perspective.

“There never has been any question a Clovis racetrack would make more money than we do,” Frost added. “The issue is how much of that money comes from Hobbs and Ruidoso. That’s were the Convergence people missed the mark.”

Despite the report, Frost said he remains optimistic about Tucumcari’s chances.

“I think we’re going to be able to demonstrate this is going to damage Hobbs and Ruidoso, and we have an excellent chance of getting the license. I’m still extremely upbeat about it,” he said.

Pros and cons

Convergence found several flaws in the Clovis applications. For La Posada del Llano, the report noted it has proposed 15 minutes between races instead of the usual 30. Convergence panned the idea: “We assume the industry has roundly rejected the concept as being feasible long ago.”

Convergence also rejected La Posada’s plan for a moving grandstand, which it stated “sounds infeasible, a safety hazard, and potentially a viewing obstruction for anyone not in it.”

The firm also cast doubts on La Posada starting its racing season in early February, because of winter-weather concerns.

Convergence stated Curry Downs’ proposal for a turf course “may be too costly to be feasible and to maintain quality over time in this environment.”

The firm stated Curry Downs’ horse-stall count of 1,008 was “somewhat small” and offered concerns about an racing schedule overlap with Ruidoso Downs.

Convergence wondered about Clovis Racetrack scheduling only 36 race days. The plan also did not state what kind of racing it would offer, making it “more difficult to evaluate the quality of their bid.”

Convergence’s only “con” for Tucumcari was potential purses 10 to 20 percent lower than the Clovis and Curry bids and 35 percent lower than La Posada’s. Representatives from Convergence, who attended the commission’s Oct. 4 hearing in Tucumcari, noted “locals appear most enthused,” its “proximity to I-40 make attraction of horses from Amarillo very possible” and its “significant distance from nearest racino.”

Frost expressed doubts whether the Clovis applicants — especially the $200 million La Posada project, which also includes a waterpark, hotel and golf course — would offer as much purse money and revenue as they anticipate.

“There’s no way a casino in Clovis can generate enough income to pay for a $200 million site,” he said of La Posada. “I don’t understand where the money’s going to come from. It doesn’t make business sense on spending so much money on so little income coming out. The (commission) people are businessmen and -women, and they understand the big picture. I don’t think it’s going to fly.”

Public support

Convergence emphasized in its report that community support would be crucial for any racino bid.

“We understand and recognize the importance of the fact that public approval is necessary to develop a racino in any county; at least as significant a factor in determining an optimal site for a racino as other factors such as economics and issues related to the racing product, as a highly feasible project becomes totally infeasible if it is not permitted,” the report stated.

Frost said that part of the report favors Tucumcari.

“Everyone acknowledges from a public-support perspective, Tucumcari and Quay County is the best place,” he said. “The question is how much that should factor in. I think it ought to factor quite a bit — especially when you have the mayor of Clovis coming out against it.”

Convergence also noted “substantial opposition on moral and ethical grounds” to a Clovis racino, including from its mayor, a city commissioner, a county commissioner and the Hobbs Economic Development Corp. Convergence also cited an Oct. 3 letter to the racing commission from the New Mexico Horsemen’s Association that stated a Clovis casino might “siphon off Zia’s clientele.”

The report stated “Clovis sites outside city limits need to be annexed to receive public service and sell alcohol.”

It also noted “the availability of water has been raised as a concern for Clovis,” but city officials assured the water supply is “not overly scarce.”

Convergence did not bring up recent reports about Cannon Air Force Base firefighting foam contaminating some water wells in Curry County.

Money matters

The La Posada plan, because of its sheer scope, tended to generate the biggest numbers in the report. In terms of new gaming revenues, it would generate an estimated $66 million by 2021. Curry Downs would generate $53 million and Clovis Racetrack $51 million. Coronado Park would generate about $43 million.

In purses, La Posada anticipates $15.2 million, Curry Downs $12.3 million, Clovis Racetrack $11.3 million and Coronado Park $9.9 million.

La Posada would have an estimated economic impact of $237 million, Curry Downs $150 million, Clovis Racetrack $135 million and Coronado Park $131 million.

What about Lordsburg?

Lordsburg, in the southwest part of New Mexico, has been considered a long shot in landing a license. Convergence’s report seemed to do little to improve those odds.

Lordsburg typically finished far behind the pack in numerous metrics used by Convergence. The firm also criticized its application for being “light on details,” and its proposed 1,500 horse stalls “does not sound feasible or attractive.” It also noted “insufficient regional population” compared to other parts of the state.