Who is Delaware North?

by Dixie Walters  on Monday, May. 2, 1994 12:00 am  

When Arkansans think of the powers that be at Southland Greyhound Park, it's probably General Manager Tom Blayney or Southland President Ness Sechrest who comes to mind. But it is Delaware North Cos., a billion-dollar Buffalo, N.Y., conglomerate, that is the real power behind Southland.

Jeremy M. Jacobs is the 54-year-old chairman and chief executive officer of the sprawling, privately owned international business. His father, Louis Jacobs, founded the company in 1915, along with two brothers, as a concession business for theaters and baseball parks. The company earned a reputation in the early days for making loans to floundering athletic teams in exchange for long-term concessions deals, once dubbed "from here to eternity" contracts.

Concessions and sports-related interests are still the centerpiece of the Jacobs empire, which had 1992 revenues of $1.3 billion and stretches across America and to Hungary and Australia (see graphic on Page 24).

The out-of-state ownership of Southland and Oaklawn Park, a thoroughbred track in Hot Springs, already has emerged as an issue in the debate over additional gambling in Arkansas.

Pari-mutuel wagering, confined to the two tracks, is the only form of legal gambling in Arkansas. But with casinos popping up around the country — especially in neighboring Mississippi and Louisiana — Arkansans are contemplating whether to get into the casino game.

The Southland and Oaklawn interests have brought the state a step closer to that decision with the recent kickoff of a petition drive to place an amendment before voters on the November ballot. The proposal would give exclusive permission to add casino gambling at the two tracks and to establish a state-run lottery.

And so the question: Who are the people to whom the state is considering granting an expanded business monopoly?

Arkansans are more familiar with the power behind Oaklawn than Southland, a situation probably attributable to both longevity and management style. Oaklawn owner Charles Cella of St. Louis is the fourth generation of his family to run the track, which presented its first racing card in 1906. But the Jacobs family and Delaware North are, for the most part, unfamiliar entities.

Even Joe Smreker, the longtime chairman of the Arkansas Racing Commission, has little contact with the man who controls Southland's empire. He says he met Jeremy Jacobs once at a national racing convention. Smreker doesn't seem to mind, though, noting that Southland has good management and that the commission experiences no problems regulating either track.

Delaware North's management is removed from Southland — at least on paper. The track is owned by Southland Racing Corp., a subsidiary of Sportsystems Corp., a Delaware North subsidiary. The company's food-service subsidiary, Sportservice Corp., is concessionaire to the track.

A company spokesman confirms that Delaware North today has 100 percent ownership of the track, though in the past there was some local ownership, according to Racing Commission records. The spokesman says the Jacobses became partial owners of Southland in 1968.

Boston Garden Ownership

Jacobs is perhaps best known as the owner of the Boston Bruins hockey team and of Boston Garden, which is being replaced by the $160 million Shawmut Center. He is a member of the Forbes 400 and has an estimated worth of $500 million. Delaware North, with about 30,000 employees, ranked 119th on the Forbes 400 list of the largest private companies last year.

Although people still think of the "Jacobs brothers" as owning the track, today it's just Jeremy Jacobs. He took over the company when his father, Lou Jacobs, died in 1968. Like his father, he bought out his siblings' interests in the company in the early '80s. Two sons are involved as executives.

Delaware North is the holding company for a vast root system of national and international subsidiaries. According to company literature, there are primarily nine wholly owned subsidiaries. From those subsidiaries stem layers of second-tier companies — between 150-200 other incorporated businesses, not counting another 100 business entities in Australia, says Sam Gifford, vice president of corporate public affairs for Delaware North.

This is the new Delaware North under the guidance of Jeremy Jacobs — a fact Gifford and others emphasize when questions are raised about the company's past.

Delaware North evolved from Emprise Corp., as the company was known under Lou Jacobs. Emprise (a melding of enterprise and empire) dissolved a year before a federal indictment of the company was handed down in Los Angeles. The company was convicted and fined $10,000 for conspiring with six men to conceal ownership of the Las Vegas Frontier Hotel and Casino before its sale to Howard Hughes. Oddly, no individual from Emprise was named in the conviction, but three of the individuals to whom Emprise had made loans were identified as mobsters.

Owning Up

Gifford says the affiliations of the three men — Anthony Zerilli and Michael Polizzi, identified by federal authorities as members of the Detroit underworld, and Anthony Giardano, described by authorities as a syndicate leader in St. Louis — didn't become known until after the fact.

"The loans were made in 1966, and it wasn't until 1971 that the recipients of the loans were identified by federal authorities as members of organized crime," Gifford explains.

"It's not a thing that we've ever attempted to sweep under the rug in any way. But the conviction was in 1972, based on acts that took place by one person in 1966, and our company has long ago passed the test of time on this. We're licensed all over the world."

Gifford refers to Lou Jacobs, whose business dealings were the subject of a 1972 Sports Illustrated cover article that dubbed him "The Godfather of Sports." The magazine linked Jacobs to alleged business deals over a number of years with a virtual gallery of mobsters.

The conviction led to increased scrutiny of Emprise in numerous states and of organized crime involvement in sports — a matter taken up by a congressional committee. Liquor and racing commission officials began to take a hard look at Emprise, and Arkansas followed suit.

In fact, the state Racing Commission revoked Southland's franchise in 1971, according to minutes of a July 15 meeting. The decision was appealed to the state Supreme Court, which reversed it and said the revocation order was "conditional." Commission minutes didn't specify what was meant by that, but discussion contained in the minutes suggested that revocation was dependent on whether the California indictment held up.

It did. But at the first commission meeting of 1975, an order passed 4-0 (with the chairman not voting), stating that control of Southland had been transferred from Emprise to Southland Holding Co. and that there was no substantial evidence to justify revoking the franchise.

Between that first action in 1971 and the 1975 vote, three commissioners who had taken adversarial positions against the track were replaced when their respective terms expired, substituted by members who voted to keep the dog track as their first piece of business of 1975.

Resurfacing Issue

Although the Emprise conviction is now history, it pops up periodically. The Dallas Business Journal took note of it in the fall of 1993 when Delaware North took over the $30 million-a-year concessions operation for the Texas Rangers baseball club. The Texas Alcoholic Beverage Commission sought detailed information about the company's executives before granting a liquor license.

According to the Fort Worth Star-Telegram, Delaware North and the TABC had clashed in 1989 over the agency's opposition to renewing the company's license to sell alcohol in several Texas airports, "accusing the company of using subterfuge to obtain the licenses." A suit between the two parties was settled out of court the following year.

The Dallas Business Journal reported that the criminal history led Vermont officials to reject the company's plan to build a dog track there in 1984, and the company was barred from bidding on a concessions contract in Massachusetts in 1987 — an action over which the company sued. The matter was settled out of court.

In 1992, Delaware North's parks division subsidiary beat out five other bidders to get a 15-year contract to provide visitor services at Yosemite National Park in California. The contract is expected to generate revenues of $2 billion. Forbes carried an article in its June 7, 1993, issue criticizing elements of the selection process and questioning whether Delaware North was the most qualified bidder.

"The Park Service's selection of Delaware North was smelly enough that Congress has held hearings and sent a letter to Bruce Babbitt, the Secretary of the Interior, suggesting the whole process was 'deeply flawed,' " the magazine said. The contract was approved, however, and is now in effect.

Arkansas' concern about the company's history appeared to end in 1975. Officials in West Memphis speak favorably about the track and its positive impact on the community.

"Southland has always been an excellent corporate citizen in this community," Mayor Keith Ingram says.

Even state Sen. Mike Everett of Marked Tree, who has been vehemently opposed in two political campaigns by Southland interests because he fought the track's efforts to increase its take, doesn't have any major complaints nor does he think the company's past is particularly relevant. He's not totally sold, however, on the level of community devotion.

"They're businessmen, but that's not to say they're criminals," he says.

Good Business

Indeed, the track has flourished as a business and as a good source of state and local revenues, contributing an estimated $200 million over a 37-year period.

The track had a total handle of more than $212 million in 1990, one of the best years in recent history. Its handle has dropped considerably since the opening of casinos in Mississippi, and the state's 7 percent take has dipped accordingly.

Although the West Memphis track would seem to be a small piece of Delaware North's empire, the company apparently views the facility as its stellar track. In addition to revenues from betting, the company brings in millions from the concessions operation it runs there.

Delaware North describes Southland in company literature as "the most popular greyhound racecourse in the nation, based on pari-mutuel wagering handle."

Gifford says he can't say exactly how successful because he doesn't know how much the Southland operation contributes to the company's bottom line. But based on an approximate formula provided by the racing commission, the track would appear to have brought in $22 million in pretax revenues from wagering alone in 1990, and that's after giving the state and kennel owners their take.

Although private companies such as those running Oaklawn and Southland don't have to make available the detailed financial statements that public companies do, Racing Commission Chairman Smreker says that presents no problem in regulating and auditing the tracks.

"As far as auditing, it is very closely scrutinized," he says.

And as for Delaware North's history, Smreker says it's a "moot question."

"We're talking about a company that's operated here 30 years or more without a blemish on their record," he says.

Smreker notes that it's always the media that bring up the Southland history.

"I mean God only made the Jews wander through the desert for 40 years for cleansing, so it amazes me that this thing keeps being brought up," he says.

But when it comes to an issue as controversial and emotional as expanded gambling in Arkansas, casino proponents will probably find that everything is destined to be fair game. n

When Arkansans think of the powers that be at Southland Greyhound Park, it's probably General Manager Tom Blayney or Southland President Ness Sechrest who comes to mind. But it is Delaware North Cos., a billion-dollar Buffalo, N.Y., conglomerate, that is the real power behind Southland.

Jeremy M. Jacobs is the 54-year-old chairman and chief executive officer of the sprawling, privately owned international business. His father, Louis Jacobs, founded the company in 1915, along with two brothers, as a concession business for theaters and baseball parks. The company earned a reputation in the early days for making loans to floundering athletic teams in exchange for long-term concessions deals, once dubbed "from here to eternity" contracts.

Concessions and sports-related interests are still the centerpiece of the Jacobs empire, which had 1992 revenues of $1.3 billion and stretches across America and to Hungary and Australia (see graphic on Page 24).

The out-of-state ownership of Southland and Oaklawn Park, a thoroughbred track in Hot Springs, already has emerged as an issue in the debate over additional gambling in Arkansas.

Pari-mutuel wagering, confined to the two tracks, is the only form of legal gambling in Arkansas. But with casinos popping up around the country — especially in neighboring Mississippi and Louisiana — Arkansans are contemplating whether to get into the casino game.

The Southland and Oaklawn interests have brought the state a step closer to that decision with the recent kickoff of a petition drive to place an amendment before voters on the November ballot. The proposal would give exclusive permission to add casino gambling at the two tracks and to establish a state-run lottery.

And so the question: Who are the people to whom the state is considering granting an expanded business monopoly?

Arkansans are more familiar with the power behind Oaklawn than Southland, a situation probably attributable to both longevity and management style. Oaklawn owner Charles Cella of St. Louis is the fourth generation of his family to run the track, which presented its first racing card in 1906. But the Jacobs family and Delaware North are, for the most part, unfamiliar entities.

Even Joe Smreker, the longtime chairman of the Arkansas Racing Commission, has little contact with the man who controls Southland's empire. He says he met Jeremy Jacobs once at a national racing convention. Smreker doesn't seem to mind, though, noting that Southland has good management and that the commission experiences no problems regulating either track.

Delaware North's management is removed from Southland — at least on paper. The track is owned by Southland Racing Corp., a subsidiary of Sportsystems Corp., a Delaware North subsidiary. The company's food-service subsidiary, Sportservice Corp., is concessionaire to the track.

A company spokesman confirms that Delaware North today has 100 percent ownership of the track, though in the past there was some local ownership, according to Racing Commission records. The spokesman says the Jacobses became partial owners of Southland in 1968.

Boston Garden Ownership

Jacobs is perhaps best known as the owner of the Boston Bruins hockey team and of Boston Garden, which is being replaced by the $160 million Shawmut Center. He is a member of the Forbes 400 and has an estimated worth of $500 million. Delaware North, with about 30,000 employees, ranked 119th on the Forbes 400 list of the largest private companies last year.

Although people still think of the "Jacobs brothers" as owning the track, today it's just Jeremy Jacobs. He took over the company when his father, Lou Jacobs, died in 1968. Like his father, he bought out his siblings' interests in the company in the early '80s. Two sons are involved as executives.

Delaware North is the holding company for a vast root system of national and international subsidiaries. According to company literature, there are primarily nine wholly owned subsidiaries. From those subsidiaries stem layers of second-tier companies — between 150-200 other incorporated businesses, not counting another 100 business entities in Australia, says Sam Gifford, vice president of corporate public affairs for Delaware North.

This is the new Delaware North under the guidance of Jeremy Jacobs — a fact Gifford and others emphasize when questions are raised about the company's past.

Delaware North evolved from Emprise Corp., as the company was known under Lou Jacobs. Emprise (a melding of enterprise and empire) dissolved a year before a federal indictment of the company was handed down in Los Angeles. The company was convicted and fined $10,000 for conspiring with six men to conceal ownership of the Las Vegas Frontier Hotel and Casino before its sale to Howard Hughes. Oddly, no individual from Emprise was named in the conviction, but three of the individuals to whom Emprise had made loans were identified as mobsters.

Owning Up

Gifford says the affiliations of the three men — Anthony Zerilli and Michael Polizzi, identified by federal authorities as members of the Detroit underworld, and Anthony Giardano, described by authorities as a syndicate leader in St. Louis — didn't become known until after the fact.

"The loans were made in 1966, and it wasn't until 1971 that the recipients of the loans were identified by federal authorities as members of organized crime," Gifford explains.

"It's not a thing that we've ever attempted to sweep under the rug in any way. But the conviction was in 1972, based on acts that took place by one person in 1966, and our company has long ago passed the test of time on this. We're licensed all over the world."

Gifford refers to Lou Jacobs, whose business dealings were the subject of a 1972 Sports Illustrated cover article that dubbed him "The Godfather of Sports." The magazine linked Jacobs to alleged business deals over a number of years with a virtual gallery of mobsters.

The conviction led to increased scrutiny of Emprise in numerous states and of organized crime involvement in sports — a matter taken up by a congressional committee. Liquor and racing commission officials began to take a hard look at Emprise, and Arkansas followed suit.

In fact, the state Racing Commission revoked Southland's franchise in 1971, according to minutes of a July 15 meeting. The decision was appealed to the state Supreme Court, which reversed it and said the revocation order was "conditional." Commission minutes didn't specify what was meant by that, but discussion contained in the minutes suggested that revocation was dependent on whether the California indictment held up.

It did. But at the first commission meeting of 1975, an order passed 4-0 (with the chairman not voting), stating that control of Southland had been transferred from Emprise to Southland Holding Co. and that there was no substantial evidence to justify revoking the franchise.

Between that first action in 1971 and the 1975 vote, three commissioners who had taken adversarial positions against the track were replaced when their respective terms expired, substituted by members who voted to keep the dog track as their first piece of business of 1975.

Resurfacing Issue

Although the Emprise conviction is now history, it pops up periodically. The Dallas Business Journal took note of it in the fall of 1993 when Delaware North took over the $30 million-a-year concessions operation for the Texas Rangers baseball club. The Texas Alcoholic Beverage Commission sought detailed information about the company's executives before granting a liquor license.

According to the Fort Worth Star-Telegram, Delaware North and the TABC had clashed in 1989 over the agency's opposition to renewing the company's license to sell alcohol in several Texas airports, "accusing the company of using subterfuge to obtain the licenses." A suit between the two parties was settled out of court the following year.

The Dallas Business Journal reported that the criminal history led Vermont officials to reject the company's plan to build a dog track there in 1984, and the company was barred from bidding on a concessions contract in Massachusetts in 1987 — an action over which the company sued. The matter was settled out of court.

In 1992, Delaware North's parks division subsidiary beat out five other bidders to get a 15-year contract to provide visitor services at Yosemite National Park in California. The contract is expected to generate revenues of $2 billion. Forbes carried an article in its June 7, 1993, issue criticizing elements of the selection process and questioning whether Delaware North was the most qualified bidder.

"The Park Service's selection of Delaware North was smelly enough that Congress has held hearings and sent a letter to Bruce Babbitt, the Secretary of the Interior, suggesting the whole process was 'deeply flawed,' " the magazine said. The contract was approved, however, and is now in effect.

Arkansas' concern about the company's history appeared to end in 1975. Officials in West Memphis speak favorably about the track and its positive impact on the community.

"Southland has always been an excellent corporate citizen in this community," Mayor Keith Ingram says.

Even state Sen. Mike Everett of Marked Tree, who has been vehemently opposed in two political campaigns by Southland interests because he fought the track's efforts to increase its take, doesn't have any major complaints nor does he think the company's past is particularly relevant. He's not totally sold, however, on the level of community devotion.

"They're businessmen, but that's not to say they're criminals," he says.

Good Business

Indeed, the track has flourished as a business and as a good source of state and local revenues, contributing an estimated $200 million over a 37-year period.

The track had a total handle of more than $212 million in 1990, one of the best years in recent history. Its handle has dropped considerably since the opening of casinos in Mississippi, and the state's 7 percent take has dipped accordingly.

Although the West Memphis track would seem to be a small piece of Delaware North's empire, the company apparently views the facility as its stellar track. In addition to revenues from betting, the company brings in millions from the concessions operation it runs there.

Delaware North describes Southland in company literature as "the most popular greyhound racecourse in the nation, based on pari-mutuel wagering handle."

Gifford says he can't say exactly how successful because he doesn't know how much the Southland operation contributes to the company's bottom line. But based on an approximate formula provided by the racing commission, the track would appear to have brought in $22 million in pretax revenues from wagering alone in 1990, and that's after giving the state and kennel owners their take.

Although private companies such as those running Oaklawn and Southland don't have to make available the detailed financial statements that public companies do, Racing Commission Chairman Smreker says that presents no problem in regulating and auditing the tracks.

"As far as auditing, it is very closely scrutinized," he says.

And as for Delaware North's history, Smreker says it's a "moot question."

"We're talking about a company that's operated here 30 years or more without a blemish on their record," he says.

Smreker notes that it's always the media that bring up the Southland history.

"I mean God only made the Jews wander through the desert for 40 years for cleansing, so it amazes me that this thing keeps being brought up," he says.

But when it comes to an issue as controversial and emotional as expanded gambling in Arkansas, casino proponents will probably find that everything is destined to be fair game. n

 

 

Please read our comments policy before commenting.