Annual Report to the Membership

1999-2000 Annual Report to the Membership

ntra TM making strides

1999-2000 Annual Report to the Membership

Contents “The NTRA and the Thoroughbred Commissioner’s Message ...... 2 Year in Review ...... 4 racing industry have reasons to be Financial Highlights...... 6 Board of Directors ...... 8 encouraged at the beginning of Advertising and Marketing . . . . . 10 Consumer Promotions...... 12 the new millennium.” Television ...... 14 Sponsorship ...... 16 Industry Programs...... 18 Organizational Structure ...... 20 A Final Word: Your Organization ...... 22 Consolidated Financial Statements ...... 23 1 commissioner’s message

Millions have been exposed We must be much better he NTRA and the Thoroughbred racing industry have reasons to horseracing through financed and more active in inserts in Sports Illustrated Washington, D.C. and at the to be encouraged at the beginning of the new millennium. and USA TODAY. This year, So, after a little more than state level in order to protect the "NTRA Experience"—a two years for the NTRA, our current interstate wager- We reversed downward trends in consumer awareness, For horseracing’s future to T mobile, interactive attrac- there is progress and reason ing system from serious be very bright—bigger purs- made significant progress in national marketing, became more active tion—will generate an esti- for optimism—but, the truth legislative harm. Much of our es, more profitable facilities, mated 30 million consumer is, additional priorities must progress could be stymied if stronger sales and better in the important legislative arena and stand poised to benefit from impressions in major racing be set and much more work we are not focused and pro- breeding economics—we markets across the country, must be done if the industry active on these issues. unprecedented investment in our industry from outside sources. must do all these things and bringing the track experience is going to realize the sub- We must be a catalyst for we need your continued sup- to potential fans in a non- stantive business growth that encouraging the kind of capi- port to make them happen. traditional approach. is possible. Consumer research and bot- ground in the area of public approximately $30 million We now know, for example, tal investment necessary to Note: We are indebted to tom-line operating results awareness. per year, which also builds that 3 million "core" fans We have more than doubled The good news is that, upgrade the industry’s over- retiring directors Doug Donn combined to tell us that over public interest and promotes produce most of our handle, the American Horse Council’s thanks to the commitment all technology infrastructure Using industry funding, we and R.D. Hubbard for their a multi-year period, our a unified brand for our sport, but that there are some 31 lobbying and legislative and support of many diverse and to fund a first-class, have been able to double the service to the NTRA during game had gradually lost visi- directly and indirectly bene- million "light" and "lapsed" budgets in Washington while elements of our industry, the Internet-based direct number of broadcast hours their terms and for their bility to most of the public. fiting NTRA members. fans, prime targets for our working vigorously on the building blocks are in place. marketing program. for racing and also substan- But by working together, the marketing efforts. Kyl/Goodlatte bill and other service to the industry over tially increase and improve We’ve learned a lot more We must be open and industry has been able to initiatives that will ensure We must continue the TV and their distinguished careers. cable TV coverage. Thanks to about our current and We’ve created a program for responsive to the input of our stop the negative racing’s ability to prosper in advertising programs, since Their leadership, dedication racetracks supplementing prospective customers. customer service training for members and more aggres- trend and the coming years. they obviously are working, and wisdom were much their membership dues with We’ve conducted more than racetrack and OTB employ- sive in our efforts to commu- gain and, as we are doing this appreciated and will be additional media dollars, we 46,000 individual ees. Nearly 10,000 employ- In other areas, a task force year, add nationally coordi- nicate with you. We must missed. now have a co-op advertising research surveys and progressees have gone through the on Racing Integrity and Drug nated consumer promotions create consensus on pro- Sincerely, campaign of dozens of focus groups. program to date. Testing has been separately and direct marketing to the grams and policies that funded and launched, with overall marketing and adver- will provide the greatest "super tests" at participating tising mix. economic benefit to all the tracks already underway. stakeholders in the NTRA. We must as an industry do a Tim Smith Commissioner &CEO much better job using technology and the Internet to convert consumer interest into new customers and new revenue.

2 3 1999 In 1999, a record 19 North the year in review American races carried a Triple Crown winner minimum $1 million purse. Secretariat was named 35th In 2000, the Santa Anita on the list of the top 100 Derby joined the list of acing’s leading economic indicators—wagering, purses athletes of the 20th century, $1 million+ races in 2000 A $9.2 billion merger of compiled by ESPN for its and Thoroughbred sales—showed strong increases in and the Arlington Million Gemstar and TV Guide Inc., SportsCentury retrospective. became a $2 million race. Industry Investment 1999. The trend toward industry consolidation and Churchill Downs Inc. parent company of TVG, an The U.S. Postal Service R interactive wagering compa- unveiled a commemorative Thoroughbred Sales increased investment from outside racing continued. On track, acquired Hollywood Park A record 85 horses brought and Calder Racecourse for ny and an NTRA Marketing Secretariat stamp in records were set and champions honored. bids of $1 million or more a total of $226 million in Partner, will put TVG in the October. at auction. Gross sales 1999. Churchill Downs now vanguard of cable portal Robert and Beverly Lewis’ increased for the seventh owns Calder, Ellis Park, development and interactive Charismatic won the first straight year, totaling nearly Hollywood, Hoosier Park TV programming guides Pari-mutuel Handle two legs of the Triple Crown aimed at mass consumer North American wagering $1 billion for weanlings, and Kentucky Downs race- Wagering on the 10-race before injuring himself in a yearlings, two-year-olds tracks, in addition to other audiences. To date, TV was a record $14.408 valiant effort in the Belmont program from the Breeders' Guide’s investment in TVG— billion—up $60.3 million and broodmares. racing-related holdings. In Cup Championship at Gulf- Stakes, earning Eclipse November, the Churchill and racing—is more than or 4.4% over the previous Awards as Horse of the Year stream Park set a single-day Gross sales of yearlings, $100 million. record of $13.805 billion Downs Board of Directors record of $100,336,230 and the leading indicator for and Champion Three-Year- in 1998. Wagering has approved a 2000 Capital Plan represented a 10% increase the bloodstock market, Milestones Old Colt in the process. increased annually for the of $12.7 million for expendi- from the previous high of increased 24.3% over Jockey Laffit Pincay Jr. Jockey Chris Antley’s touch- past six years. tures at the Company’s $91,338,477, reached in 1998. 1998 to $440,078,922 and rode into the record books ing reaction to Charismatic’s racing operations. Wagering on the eight accounted for more than with his December 10 injury was one of our sport’s Breeders' Cup Champion- 40% of all Thoroughbred MI Entertainment Corp., victory aboard Irish Nip at most poignant moments of ship races rose 16% to a sales. headed by industrialist Hollywood Park. The race 1999. Recovered from his record $96,485,255. Frank Stronach, acquired made Pincay the world’s injuries, Charismatic now five racing properties in winningest jockey, with stands at Lane’s Purses 1999, Santa Anita Park, 8,834 wins, and pro- End Farm. highlightsNorth American purses sur- Gulfstream Park, Remington pelled him past Bill passed the $1 billion mark Park, Thistledown and Shoemaker, whose for the first time in 1999. Golden Gate Fields, for mark of 8,833 more than $273 million. had stood In the U.S., purses reached a Early in 2000, MI Entertain- since 1990. record $962.9 million—up ment added a sixth track, 6.5% over 1998’s mark, $904 Great Lakes Downs, to its million—and have increased holdings. annually to record highs for six consecutive years.

Wagering on the 10-race program from the Breeders' Cup Championship at Gulfstream Park set a single-day record 4 of $100,336,230 5 2000 NTRA Budget Revenues $30.7 Million OTBs: 2.0% financial highlights Sponsorship & TV: 18.9% Horsemen: 22.1%

riorities in 2000 include additional development Interactive: 2.6% Programs of core marketing and television programs, 25.4% ($7.8) Handle- Other: 3.9% Pcontinued growth of co-op advertising program, based fees 46.9% ($14.4) initiation of national consumer promotions and reduction Member Dues of accumulated operating deficit. Breeder Members: 11.4% 27.7% ($8.5) Tracks: 22.8%

Revenues 2000 April-Dec. 1999 Membership Dues $ 8,477,500 $ 5,290,499 Sales Process: 10.1% Other Dues: 6.2% Handle-Based Fees 14,413,550 10,393,249 The figures represent bud- Program Revenues 7,792,050 3,012,560 geted projections for the Interest Income 20,000 21,836 calendar year 2000 and Total Revenues 30,703,100 18,718,144 actual results for the nine- 2000 NTRA Budget month period from April 1, Expenses 2000 April-Dec. 1999 Expenses 1999-December 31, 1999. $30.7 Million Advertising and Marketing 12,599,500 8,353,782 The NTRA adopted calendar National Advertising: 20.2% Program Expenses 9,881,366 6,583,747 year reporting in 2000 for General and Administrative 5,196,273 5,376,184 Television National Thoroughbred Sponsorship Depreciation and Amortization 260,000 46,525 Racing Association Inc., Bonuses: 28.0% Interest Expense 550,000 186,884 which does not include Total Expenses 28,487,139 20,547,122 NTRA Investments, LLC. Programs Advertising Net Income (Loss) 2,215,961 (1,828,978) 32.2% ($9.9) Consolidated Financial & Marketing Statements for National 41.0% ($12.6) Thoroughbred Racing Assoc- National & Co-Op Advertising Spending Co-Op Advertising: 16.6% iation, Inc. and Subsidiaries, In $ millions Other: 4.2% which contain information on General & $30 Administrative NTRA Investments, are Industry Communications $25 17.6% ($5.4) attached as an appendix of (travel/meetings): 2.3% $20 this report (page 23). Promotions/Web/PR: 4.2% Personnel: 10.7% Deficit Reduction 7.2% ($2.2) Office: 2.6% Interest FY 1999 April-Dec.1999 2000 Other: 2.0% 2.0% ($.6) In addition to dues contributions, member tracks and OTBs add to the effective size of the NTRA’s advertising campaign through the co-op program. 6 7 NTRA Commissioner & CEO Horsemen’s Representatives

Tim Smith Robert Clay Former Deputy Commissioner and The owner of Three Chimneys Farm, Mr. 1999/2000 directors Chief Operating Officer of the PGA Clay began a two-year term in 1998 and TOUR, Mr. Smith also helped reorganize was re-elected to a three-year term in worldwide men’s tennis to form the 2000. he NTRA is governed by a Board of Directors ATP Tour and was responsible for the original marketing plan of the 1996 composed of the NTRA Commissioner & Olympic Games. He was named NTRA Commissioner in April 1998. Alan Foreman CEO, five racetrack representatives and five Chairman of the Board and CEO of the T Thoroughbred Horsemen’s Association, horsemen’s representatives who serve staggered, Mr. Foreman began a two-year term in 1998 and was re-elected to a three-year three-year terms. term in 2000. NTRA Senior Management

Gregory C. Avioli Chip Tuttle Robert Lewis Thomas H. Meeker Deputy Commissioner Vice President, Successor to retired Director Ed The President and CEO of Churchill & COO Communications Friendly, Mr. Lewis is a leading Downs Inc., and Chairman and Director Racetrack Representatives Reed Farley Bryan Pettigrew Thoroughbred owner and the chairman of Hoosier Park, Mr. Meeker was re-elect- of Thoroughbred Owners of California. Senior Vice President, Special Assistant to ed to a three-year term in 1999 when his He began a three-year term in 1999. Bill Bork Industry Development the Commissioner initial one-year term was complete. The President and COO of Penn & Technology National Gaming, Inc., Mr. Bork began Jim Gallagher Ogden Mills Phipps a three-year term in 1998. Keith Chamblin Executive Director, Terence Meyocks Vice President, Industry Racing Integrity & Drug A well-known owner who has been the Successor to retired Director Kenneth Relations & Marketing Testing Task Force Chairman of The Jockey Club since Noe Jr., Mr. Meyocks began a three-year 1983, Mr. Phipps began a three-year term in 1999. He is President and COO of term in 1998. Bryan G. Krantz the New York Racing Association. Successor to retiring Director Douglas Donn, Mr. Krantz began a three-year term in 2000. He is President and Bill Walmsley Lonny T. Powell General Manager of Fair Grounds. Past-President of the National Mr. Powell is MI Entertainment’s Vice Horsemen’s Benevolent and Protective

President of Racing Operations and TM Association (HBPA) and current President President and CEO of Santa Anita Park. of the Arkansas HBPA, Mr. Walmsley In 2000, he began a one-year term, the began a three-year term in 1998. balance of the three-year term of retiring Director R.D. Hubbard.

8 9 YOUR HORSE JUST RAN A MILE IN A FULL-OUT SPRINT advertising & marketing ★ BUT YOU’RE THE ONE TRYING TO CATCH YOUR ★ Advertising BREATH. Projected to reach $30 he NTRA’s national ad campaign for 2000 uses million in 2000, the NTRA’s co-op advertising program popular music and the concept of turning the rewards participating mem- camera on the fan experience. By highlighting bers for spending additional T media dollars on NTRA- the emotional connection of the fan to the action on created and/or-branded TM advertising in their local markets. Nearly 100% of TM the track—through wagering—the commercials re-create NATIONAL THOROUGHBRED RACING ASSOCIATION member racetracks partici-

ntra.com ©2000 NTRA the unique participatory experience of our game. pate in the program in some form, helping to promote a The ads were developed by national, recognizable brand the NTRA’s New York City- for Thoroughbred racing. In based advertising agency of The NTRA Marketing Licensing and addition, in 1999 the NTRA Merkley Newman Harty. Summit Merchandise developed and produced The NTRA has, for the WhatsHotNow.com, a lead- co-op advertising to pro- Research second year, held a two-day ing e-commerce service mote the Breeders’ Cup An integral component of the Marketing Summit for indus- provider, has partnered with Championship day and the NTRA’s marketing efforts is try members. The Summit the NTRA to design, host and Ultra Pick-6. consumer research. features educational work- maintain the NTRA’s official Commissioned by the NTRA, shops and “hands-on” online store. Two-thirds of New for 2000, NTRA Creative the ESPN Chilton Sports Poll programs that participants member tracks have signed Services, a division of the has conducted 46,000 inter- can implement in their local on to participate in the mer- NTRA’s advertising depart- views since March of 1998 markets. The 2000 interestSummit chandise consignment pro- ment, develops branded, to establish national track- attracted more than 200 gram with WHN. customized advertising for ing of consumer attitudes attendees from 46 NTRA member tracks to use in toward racing. Through this NTRA Properties’ list of member tracks and other their local markets. research, the NTRA has licensed, co-branded prod- industry organizations. been able to learn more ucts now includes images about our customer base from leading Thoroughbreds, Customer Service and identify audiences to jockeys, breeding farms, Training target with various market- owners, the Breeders’ Cup, Nearly 10,000 employees ing strategies. at 12 NTRA member tracks member racetracks and have participated in NTRA NTRA’s own trademarks. Customer Service Employee Training Program, which is specifically tailored for the racing and pari-mutuel industries. 10 11 The NTRA Breeders’ Cup Challenge This international online promotion starts in the consumer promotions weeks leading up to the 2000 Breeders’ Cup Championship day. With or 2000, the NTRA has offered its members new prizes totaling in the multi- millions, the promotion is "turnkey" promotions that can be implemented in geared to Internet usage local markets using NTRA-created materials and at leading up to the November F 4 Championship event. a minimal cost to member racetracks. The promotions help $200,000 NTRA/ drive attendance at major events and expand the NTRA’s fan Daily Racing Form National Handicapping ceremony where he was rec- education programs. Championship ognized with a special award With 45,000 participants to" race calling, wagering presented by DRF Editor and The NTRA Racing from 40 member tracks and simulation games, replica Publisher Steven Crist. Experience The Down the Stretch OTBs, the inaugural event trophies from major races This 60-foot, interactive, Sweepstakes was an instant hit, honoring NTRA All-Star Jockey mobile exhibit began criss- and other fan education and This customized promotion racing’s "core" fans—the Championship at Lone crossing the country in May participation areas. challenges fans to pick the serious bettors. This year’s Star Park 2000, bringing the track winner also earned a trip NTRA Fan Guides winners of six designated Scheduled for June 23, experience to the fans and to the Eclipse Awards Complimentary educational races over a period of two 2000, this event raises potential fans. Sponsored by brochures commemorating days to win a potential $1 money for the non-profit Breeders’ Cup, TVG and major events and featuring million prize. Fifteen NTRA Jockeys’ Guild and Disabled the AQHA, the touring information for novice race- member tracks signed up Jockeys Fund. Televised on attraction features "how- goers will be distributed at for the promotion in the first ESPN2, the Championship participating member tracks quarter of 2000 alone. features 12 of the sport’s throughout 2000. Circulation leading riders. is expected topromote top 1.8 million. $1 Million Mystery Mutuel Voucher The NTRA-sponsored $1 Million Mystery Mutuel Voucher, planned for August 2000, will be racing’s first nationally coordinated direct- mail campaign. Fans will

A young fan tries the Final receive voucher coupons, Furlong game, part of the NTRA redeemable at participating Racing Experience, an interactive mobile marketing exhibit visiting member tracks and OTB markets across the U.S. in 2000. sites, one of which will be worth $1 million. 12 13 NBC's Road to the Breeders' Cup NBC's Road to the Breeders' Cup debuted in fall 1999 with television four new one-hour shows, capped by a 90-minute Breeders' Cup Preview. The hrough the combined efforts of the NTRA, its Road to the Breeders' Cup telecasts will appear on NBC members and its strategic ally, Breeders’ again in 2000, topped by the Cup, Thoroughbred racing has made signifi- 4 1/2-hour Breeders' Cup T telecast on NBC, seen in cant progress in expanding its network and cable more than 60 countries.

television coverage. NTRA Productions In the summer of 1999, NTRA purchased the Thoroughbred Classics horseracing business of on ESPN Classic Winner Communications In 1999, ESPN Classic aired to create NTRA Productions. 8 shows highlighting some NTRA Champions NTRA Racing to The NTRA now has the of our sport's marquee on FOX the Breeders’ Cup industry’s most compre- events. That figure expands From 1997 to 2000, total broadcast and cable hours In 2000, the NTRA NTRA Racing to the hensive video archive of to 17 for 2000. The shows air of racing on television have increased by 37%. Champions on FOX entered Breeders' Cup 2000 will Thoroughbred racing and at least four times on ESPN its second season with an feature 16 hours of pro- is positioned to structure Classic prior to the contem- Total Television improved bonus structure gramming from at least 137 the content of horseracing porary running of the fea- Hours 129.5 (two opportunities to win at seven different racetracks programming on multiple tured race. least $1 million), additional over a three-month period, 112.5 networks. This acquisition races and a highlight show on ESPN and ESPN2, includes rights for annual 94.5 for Champions races tele- including five new races programming on the vised on FOX Sports Net. from Saratoga, Arlington ESPN family of networks and Louisiana Downs. for five years and allows 1997 1998 1999 2000* NTRA to include TV benefits coveragein its national sponsorship packages. *Prior to announcement of complete Fall 2000 schedules.

14 TM 15 sponsorship NTRA Official Sponsors

he NTRA has obtained sponsorships and media support for Thoroughbred racing from prominent NTRA Official Tnational companies, including National Car Suppliers Boise Cascade Rental, AT&T, RCA, John Deere and Korbel. Office Products Equibase Company Hallway Feeds IKON Office Solutions International Game Depending on their level of Technology participation, corporate The Jockey Club sponsors receive a combi- NTRA Productions Information Systems nation of benefits including Media Partners John Deere TV, radio, print and Internet Anheuser-Busch KBC International media, recognition in NTRA- Las Vegas Convention Korbel Champagne paid advertising, title or & Visitor’s Bureau Cellars presenting sponsorships of Long John Silver’s RCA NTRA special events and VISA Thoroughbred Times promotions and on-site Williams Weinstein Jones presence, including signage, Communications & Associates program page inserts and sponsors"NTRA Moment" sponsorships.

National Media Partners Arm & Hammer Combe Inc. NTRA Marketing Partners GetSmart.com Nortel Networks Sempra Energy

16 17 Group Purchasing NTRA members can access group purchasing benefits Eclipse Awards through EquiSource to save For a second year, the NTRA industry programs on widely used products and hosted the Eclipse Awards, services. EquiSource has racing’s year-end honors for Continued work on the developed contracts with outstanding achievement by passage of this legislation n the last year, the NTRA has embarked on several major suppliers including horses and their human by the House is a priority Boise Cascade Office connections. With Daily important programs to enhance business conditions for this year along with state Products, IKON Office Racing Form and the Responsible Wagering legislation enabling account in the Thoroughbred industry, raise public aware- Solutions, RCA and John National Turf Writers Initiative wagering and ensuring the I Deere—with Deere tractor After laying the groundwork Association, the NTRA—with continuation of current ness of the sport of racing and better serve its members. sales topping $6 million in ESPN Sports Center’s Kenny for the initiative in 1999, simulcasting policies nine months. Since the pro- Mayne as host—presented NTRA launched the AWARE under the Interstate gram began, EquiSource has a gala evening for the 1999 program in 2000, in conjunc- Horseracing Act. saved NTRA members over honorees at the Beverly tion with TVG. AWARE— $3 million. In the summer of 2000, the Hilton in Beverly Hills, Always Wager Responsibly— Racing Integrity tests" to be performed at Legislative NTRA will launch a Task California. Award-winning was created to assist TVG and Drug Testing leading universities this After more than doubling Force on Regulation to composer Burt Bacharach and NTRA member racing Task Force summer, the Task Force in its lobbying and legislative increase awareness and bestowed a Special Eclipse associations in addressing The NTRA Racing Integrity 2000 will promote "best budgets, the NTRA has assist member organizations Award on his friend Laffit problem gambling among and Drug Testing Task Force practices" in equine drug worked closely with the with common regulatory Pincay Jr., the world’s win- employees and patrons. Technology seeks to ensure the integrity testing, build a database of American Horse Council on issues. ningest jockey. AWARE training programs IBM Global Services has of our sport and public con- results and coordinate addi- behalf of the Thoroughbred are underway and a special studied the Thoroughbred fidence through improving tional research. These racing and pari-mutuel toll-free number will be industry since April 1999, drug testing processes in efforts are funded via sepa- industries. In 1999 and the established for individuals and projects that racing has part by evaluating current rate contributions. spring of 2000, the NTRA, seeking confidential help. the potential for dramatic testing methodologies and AHC and many other growth through an industry- standards. Having estab- industry representatives wide technology upgrade lished protocols for "super worked for passage of and additional attention to the Kyl/Goodlatte Bill (the Internet marketing. IBM has Internet Gambling expressed interest in financ- supportProhibition Act). As passed ing these initiatives with in the Senate and the House investment that could Judiciary Committee (await- exceed $100 million. More ing action by the full House complete recommendations in June of 2000), the bill based on IBM’s research will would allow racing to extend be presented to NTRA mem- current telephone-based bers in the summer of 2000. account wagering to computer-based subscription services where legal under state law.

18 19 Founding Members Thoroughbred Founding Members The NTRA’s Founding Industry Council Members are Breeders’ Cup To ensure a broad range of input on Ltd., The Jockey Club, policy issues, the NTRA’s Commis- organizational structure Keeneland Association, the sioner and senior management meet National Thoroughbred periodically with the Thoroughbred Association (now part of the Industry Council, which includes he NTRA is a tax-exempt membership organization Thoroughbred Owners and representatives of: Breeders Association) and American Association including racetracks, owners, breeders, trainers, Oak Tree Racing Association, of Equine Practitioners American Horse Council each of which contributed jockeys, pari-mutuel operators, sales companies, American Quarter Horse Association T $1 million to the NTRA’s Association of Racing planning and startup. CKEY horsemen’s groups, racing fans, veterinarians, individuals, Commissioners International O C J Breeders’ Cup Ltd. L

Strategic Alliance E U and other industry-related groups. California Thoroughbred B

NTRA formed a strategic H 1894 Breeders Association T alliance with Founding Florida Thoroughbred Breeders’ Member Breeders’ Cup Ltd. and Owners’ Association NTRA Subsidiaries ¨ in December 1999 and the The Jockey Club NTRA Investments, LLC NTRA Services, LLC NTRA Properties, Inc. NTRA Charities, Inc. two organizations worked Jockeys’ Guild Created for strategic acqui- A subsidiary of NTRA Formed to license and mer- Industry-related charities toward an operational merg- Keeneland Association sitions to benefit NTRA Investments, created to chandise racing industry- that affiliate with NTRA er in the spring of 2000. Kentucky Thoroughbred Association /Kentucky Thoroughbred Owners members, using funds facilitate account wagering branded images and logos, Charities, a nonprofit The proposed merger would and Breeders borrowed from the NTRA in cooperation with TVG, with licensing agreements 501 (c) (3) organization, combine all business, mar- National Horsemen’s Benevolent Founding Members. which currently offers from prominent jockeys, benefit from NTRA-produced keting and administrative and Protective Association account wagering and 24- owners, farms and racing public service announce- functions and transfer cer- Nevada Pari-mutuel Association NTRA Productions, LLC hour televised racing. By venues. Merchandise is ments that run during NTRA tain Breeders’ Cup property North American Pari-mutuel A subsidiary of NTRA Regulators Association the end of 2000, TVG’s distributed at racing venues television time and from an rights and other assets to the Investments formed in July Oak Tree Racing Association distribution is expected to and via the Internet at NTRA-branded VISA card. NTRA, Inc. for joint pursuit 1999 through the purchase Society of International approach 10 million house- ntra.com and its e-com- and management. Progress Thoroughbred Auctioneers of the horseracing business holds. TVG is poised to partnersmerce partner in this area, on this proposal will be com- Southern California Horse Racing of Winnercomm (formerly benefit from the merger whatshotnow.com. municated to NTRA members Industry Fan Committee Winner Communications), between its parent company, throughout 2000. Thoroughbred Horsemen’s Association including the industry’s TV Guide, and Gemstar, Thoroughbred Owners and Breeders Association most comprehensive video which together have broad Special Affiliate Thoroughbred Owners of California archives, programming access to interactive cable The American Quarter Horse Thoroughbred Racing contracts and production Association, the world’s and satellite portals and Associations of North America services. e-commerce services. largest breed registry with Triple Crown Productions more than 318,000 members United Thoroughbred and 4 million registered Trainers of America Quarter Horses in the U.S. University of Arizona Race Track Industry Program and 25 foreign countries, is University of Louisville Equine in its second year as an Industry Program NTRA Special Affiliate.

20 21 A final word: your organization financials

he NTRA is a membership organization formed National Thoroughbred Racing Association, Inc. and Subsidiaries Consolidated Financial Statements for the purposes of increasing awareness of Nine month period ended December 31, 1999 TThoroughbred racing and improving the econo- and Year ended March 31, 1999 mic conditions of all industry stakeholders. Simply stated, the NTRA’s main job is to help our members’ businesses, Contents both currently and in the future. Report of Independent Auditors...... 24 Consolidated Balance Sheets With Consolidating Details...... 25 Consolidated Statements of Operations and Accumulated Deficit With Consolidating Details...... 26 The NTRA is a flow-through Consolidated Statements of Cash Flows...... 27 organization. Money Notes to Consolidated Financial Statements ...... 28 received from members in the form of annual dues, The NTRA and its Board of fees and contributions, Directors properly consider and from sponsorship and our members as our most marketing partnerships, important constituency and is reinvested to benefit our most valuable resource. the membership in one As we plan for the future, of two ways: we will continue to solicit your input and • First, in growing the welcome your ques- awareness and popularity tions, comments and of horseracing through concerns. Please do not advertising, marketing, hesitate to call on any of promotions, television and us as we move forward in publicity. developing the business • Second, in improving of Thoroughbred racing. the business conditions for industry participants through strategic investments, legislative advocacy and shared economies such as improving the industry’s technological capabilities.

22 23 National Thoroughbred Racing Association, Inc. and Subsidiaries National Thoroughbred Racing Association, Inc. and Subsidiaries Report of Independent Auditors Consolidated Balance Sheets with Consolidating Details

The Board of Directors NTRA Intercompany National Thoroughbred Racing Association, Inc. and Subsidiaries NTRA, Inc. Investments, LLC Eliminations Dec. 31, 1999 Mar. 31, 1999 Assets We have audited the accompanying consolidated balance sheets of National Thoroughbred Racing Association, Inc. as Current assets: of December 31, 1999 and March 31, 1999, and the related consolidated statements of operations and accumulated Cash $ 1,667 $ 1,033,538 $ – $ 1,035,205 $ 213,338 deficit and cash flows for the nine month period ended December 31, 1999 and the year ended March 31, 1999. These Marketable securities 456,801 – – 456,801 470,718 financial statements are the responsibility of management. Our responsibility is to express an opinion on these finan- Accounts receivable, net 3,533,959 784,309 (351,311) 3,966,957 2,794,648 cial statements based on our audits. Prepaid expenses & We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we other current assets 478,448 124,636 – 603,084 1,286,149 plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materi- Total current assets 4,470,875 1,942,483 (351,311) 6,062,047 4,764,853 al misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates Other assets 25,464 12,171,255 – 12,196,719 77,564 made by management, as well as evaluating the overall financial statement presentation. We believe that our audits Property and equipment, net 301,898 – – 301,898 94,456 provide a reasonable basis for our opinion. Total assets $4,798,237 $14,113,738 $(351,311) $18,560,664 $4,936,873

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the con- Liabilities and accumulated deficit solidated financial position of National Thoroughbred Racing Association, Inc. at December 31, 1999 and March 31, Total current liabilities: 1999, and the consolidated results of its operations and its cash flows for the nine month period ended December 31, Accounts payable $2,131,851 $84,950 $(351,311) $ 1,865,490 $3,292,950 1999 and the year ended March 31, 1999, in conformity with generally accepted accounting principles. Accrued liabilities 3,467,212 206,568 – 3,673,780 1,743,231 Our audit was conducted for the purpose of forming an opinion on the consolidated financial statements taken as a Deferred revenue 803,685 – – 803,685 187,500 whole. The consolidating details appearing in the consolidated financial statements are presented for purposes of Total current liabilities 6,402,748 291,518 (351,311) 6,342,955 5,223,681 additional analysis and are not a required part of the consolidated financial statements. Such information has been subjected to the auditing procedures applied in our audit of the basic consolidated financial statements and, in our Deferred purchase consideration – 5,500,000 – 5,500,000 – opinion, is fairly stated in all material respects in relation to the consolidated financial statements taken as a whole. Long term debt 3,216,345 8,500,000 – 11,716,345 2,705,070 Total liabilities 9,619,093 14,291,518 (351,311) 23,559,300 7,928,751

Minority interest – 25,000 (25,000) – –

April 11, 2000 Accumulated deficit (4,820,856) (202,780) 25,000 (4,998,636) (2,991,878) Total liabilities and accumulated deficit $4,798,237 $14,113,738 $(351,311) $18,560,664 $4,936,873

See accompanying notes.

24 25 National Thoroughbred Racing Association, Inc. and Subsidiaries National Thoroughbred Racing Association, Inc. and Subsidiaries Consolidated Statements of Operations and Accumulated Consolidated Statements of Cash Flows Deficit with Consolidating Details Nine Month Nine Month Period Ended Year Ended NTRA Intercompany Period Ended Year Ended Dec. 31, 1999 Mar. 31, 1999 NTRA, Inc. Investments, LLC Eliminations Dec. 31, 1999 Mar. 31, 1999 Cash flows from operating activities Net loss $ (2,006,758) $ (646,652) Revenue Adjustments to reconcile net loss to net cash used in operating activities: Handle-based fees: Depreciation and amortization 776,774 11,569 Racetracks $ 5,360,044 $ – $ – $ 5,360,044 $ 5,116,394 Minority interest (25,000) – Horsemen’s organizations 4,645,381 – – 4,645,381 4,417,997 Changes in current assets and current liabilities: OTBs 387,824 – – 387,824 466,236 Increase in accounts receivable (1,172,308) (2,462,148) Total handle-based fees 10,393,249 – – 10,393,249 10,000,627 Decrease (increase) in prepaid and other assets 799,380 (1,270,859) (Decrease) increase in accounts payable (1,427,460) 2,631,990 Other: Increase in accrued liabilities 1,930,549 1,701,999 Program revenues 3,012,560 4,474,616 (1,522,750) 5,964,426 1,908,634 Increase (decrease) in deferred revenue 119,989 (2,812,500) Breeders, sellers and buyers 4,332,555 – – 4,332,555 5,518,179 Net cash used in operating activities (1,004,834) (2,846,601) Other 957,944 42,000 – 999,944 1,498,693 Total other: 8,303,059 4,516,616 (1,522,750) 11,296,925 8,925,506 Cash flows from investing activities Investment in assets of Winner Communications (6,945,607) – Founding members – – – – 5,000,000 Capital expenditures (253,967) (96,504) Total revenue 18,696,308 4,516,616 (1,522,750) 21,690,174 23,926,133 Other (10,000) (43,500) Net cash used in investing activities (7,209,574) (140,004) Operating expenses: Advertising and marketing 8,353,782 – – 8,353,782 14,726,119 Cash flows from financing activities Program expenses 6,583,747 2,198,239 (1,442,750) 7,339,236 4,611,198 Issuance of notes payable 8,500,000 – Management fee – 982,500 – 982,500 – Borrowings under credit facility 16,827,692 19,136,230 Depreciation and amortization 46,525 730,249 – 776,774 11,569 Payments under credit facility (16,316,417) (16,431,160) General and administrative 5,376,184 431,099 (80,000) 5,727,283 5,112,439 Minority interest contribution 25,000 – Total operating expenses: 20,360,238 4,342,087 (1,522,750) 23,179,575 24,461,325 Net cash provided by financing activities 9,036,275 2,705,070

Operating income (loss) (1,663,930) 174,529 – (1,489,401) (535,192) Net increase (decrease) in cash and cash equivalents 821,867 (281,535) Cash and cash equivalents at beginning of year 213,338 494,873 Minority interest – – 25,000 25,000 – Cash and cash equivalents at end of year $ 1,035,205 $ 213,338 Interest income 21,836 11,211 – 33,047 16,473 Interest expense (186,884) (388,520) – (575,404) (127,933) Supplemental disclosures Net loss (1,828,978) (202,780) 25,000 (2,006,758) (646,652) Cash paid for interest $ 503,774 $ 103,922 Accumulated deficit at beginning of year (2,991,878) – – (2,991,878) (2,345,226) Accumulated deficit at end of year $(4,820,856) $ (202,780) $ 25,000 $(4,998,636) $(2,991,878) See accompanying notes.

See accompanying notes.

26 27 National Thoroughbred Racing Association, Inc. and Subsidiaries National Thoroughbred Racing Association, Inc. and Subsidiaries Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements

1. Nature of Business and Organization ming; (b) archival footage of Thoroughbred and Quarter Under the Services Agreement, NTRA Productions Off-Track Betting Companies Horse racing included in Winner’s racing video library; paid a management fee of $982,500 to Winner for the Off-track betting companies (OTBs) and casino race books The National Thoroughbred Racing Association, Inc. and and (c) all intellectual property rights relating to the period covering July 1, 1999 to December 31, 1999 for pay annual membership dues based on a proportionate its wholly owned subsidiary, NTRA Charities, Inc., (collec- programming (collectively, the "Acquired Assets"). The production and programming services and will continue share of the pari-mutuel handle at their facilities or other tively, the "NTRA" or "NTRA Inc."), is a not-for-profit programs currently produced by NTRA Productions for to pay management fees as follows: methods as agreed upon. Annual memberships entitle membership organization that was incorporated in ESPN include the "Racing to the Kentucky Derby" and them to participate in the NTRA’s programs. December 1997. The purpose of the NTRA and its sub- Year ended December 31, 2000 $2,023,950 "Racing to the Breeders’ Cup" series, "Racehorse Digest," sidiaries, as further described below, (collectively, the Year ended December 31, 2001 $2,084,669 a weekly television magazine, "2Day at the Races," a high- Members’ Dues "Association") is to strengthen the Thoroughbred racing Year ended December 31, 2002 $2,147,209 lights show, "Thoroughbred Classics" and "America’s industry by increasing public awareness, creating a cen- Year ended December 31, 2003 $2,211,625 Founding Members Horse," a television magazine for Quarter Horse racing. tralized national structure, implementing comprehensive The NTRA’s five Founding Members are the National The total contracted purchase price for the Acquired marketing strategies and achieving significant revenue The management fee covers all of Winner’s selling, Thoroughbred Association, Inc., The Keeneland Assets is $27.5 million, subject to adjustment as described increases, consolidated purchasing of goods and services general, and administrative expenses related to the Association, Inc., Oak Tree Racing Association, Inc., below, payable over a five-year period without interest. and cost reductions through various industry programs Acquired Assets, as well as in-house production expenses The Jockey Club, Inc. and Breeders’ Cup Ltd. Each paid The Association paid approximately $6.8 million at the and targeted areas, including television production and for the related programming. $1,000,000 in founding members dues, which was date of acquisition, representing the initial installment of growth of account wagering. The purchase price for this acquisition has been recognized in the year ended March 31, 1999 based on $8.5 million required under the Purchase Agreement, The Association continued to enhance its programs preliminarily allocated to the Acquired Assets and is when the Founding Members’ agreements with the NTRA reduced by certain adjustments, as defined in the during 1999 to further improve the national brand for subject to change. Operating results for the acquisition were finalized. Purchase Agreement, of approximately $1.3 million, and Thoroughbred racing, including a focus on national and are included herein from its acquisition date. The Founding Members funded the initial operations further adjusted for deferred revenue and prepaid expens- cooperative advertising campaigns and increased hours Certain March 31, 1999 amounts have been reclassi- of the NTRA with payments of $2,750,000 in the period es totaling approximately $400,000 as of June 30, 1999. of national television coverage of the sport. In addition, fied to conform to the December 31, 1999 presentation. from inception (December 5, 1997) to March 31, 1998 The remaining payments are $5.5 million, paid on April 1, the Association proceeded with consumer promotions, and $1,850,000 in the year ended March 31, 1999. Funds 2000, and three additional payments of $4.5 million each, customer research initiatives and a national group pur- Membership collected by the NTRA during the nine month period payable April 2001, April 2002 and April 2003. chasing program for the industry. The Association is NTRA’s membership consists of several key groups within ended December 31, 1999 included $400,000 that was In conjunction with the purchase, NTRA Productions emphasizing strengthened legislative capabilities for the Thoroughbred racing community: included in accounts receivable as of March 31, 1999. and Winner entered into a Services Agreement (the the Thoroughbred industry on a federal and state level. Memberships for Founding Members are of indefinite "Services Agreement"), whereby Winner will continue to Effective July 1, 1999, NTRA formed three new Handle-based Fees length and Founding Members are entitled to the use of provide all of the production and programming services entities, NTRA Investments, LLC ("NTRA Investments"), Racetrack Members the Association’s marks, periodic briefings from the related to the television series previously mentioned. NTRA Productions, LLC ("NTRA Productions") and NTRA Management estimates that member tracks account for Association’s management, acknowledgment as a Winner will also be responsible for generating advertising Services, LLC ("NTRA Services"). NTRA Investments was approximately 95% of pari-mutuel handle in the United Founding Member, and participation in Association and sponsorship revenue in connection with the program- formed, pursuant to an operating agreement, whereby States as of December 31, 1999. Each member racetrack programs and functions. ming. During the term of the Services Agreement, which NTRA was granted a 75% ownership interest and the pays its annual membership dues based on a proportion- extends through December 31, 2003, Winner guarantees remaining 25% interest was owned collectively by The ate share of the pari-mutuel handle and purses awarded Breeders minimum net income, as defined, of $13 million in the Jockey Club, Inc., Breeders’ Cup Properties, Inc., at all member racetracks. Racetrack members are Breeders, breeding farms and syndicates may become aggregate (subject to adjustment of approximately $1.3 Keeneland Association and Oak Tree Charitable eligible to participate in the NTRA’s programs. members of the Association by paying annual member- million). The annual amounts payable to Winner in 2000 Foundation (the "Minority Partners"). The Minority ship fees equal to the value of a stallion season for each through 2003, as stated above, are contingent upon such Partners initially contributed $25,000 to NTRA Investments Horsemen’s Organizations stallion they designate. During the nine month period guarantees. If the minimum annual net income is not met and loaned NTRA Investments $8.5 million in order to Management estimates that the NTRA’s membership ended December 31, 1999, individual stallion farms paid in a given year, the payment for that year is reduced on a finance NTRA Productions’ purchase of certain assets of includes approximately 84% of the Thoroughbred horse- the membership dues on their own behalf. During the dollar for dollar basis by the net income shortfall. If the Winner Communications, Inc. ("Winner"), as described men’s associations in the United States as of December year ended March 31, 1999, Breeders’ Cup, Ltd. funded minimum annual net income is exceeded in a given year, below. Both NTRA Productions and NTRA Services are 31, 1999. Each member pays its annual membership $3,500,000 to the Association in stallion membership NTRA Productions will pay Winner 25% of the excess. wholly owned subsidiaries of NTRA Investments. dues based on a proportionate share of the pari-mutuel fees on behalf of its constituents. For the period ended December 31, 1999, the minimum As of July 1, 1999, NTRA Productions purchased handle and purses awarded at all member racetracks (continued) guarantee was met by Winner, and no significant additional certain assets of Winner, including Winner’s right, title and in its state. Thoroughbred horsemen’s associations are payments by either NTRA Productions or Winner were interest in: (a) long term contracts with ESPN to produce eligible to participate in the NTRA’s programs. required. Thoroughbred and Quarter Horse racing and program-

28 29 National Thoroughbred Racing Association, Inc. and Subsidiaries National Thoroughbred Racing Association, Inc. and Subsidiaries Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements

Public Auction Sales Companies sellers and buyers are recognized at the conclusion of Advertising and Other Assets pursuant to written membership agreements by and Public auction sales companies are also members of the each sale. Other membership dues are recognized as The Association expenses print advertising costs as between the NTRA and its members. The outstanding NTRA and pay annual membership dues based on one- revenue when earned according to contract terms. incurred and media advertising costs the first time the balance has been classified as non-current due to the fact tenth of one percent (0.1%) of net sales proceeds generat- Program revenues are earned based upon the satisfaction advertising takes place. Advertising expense was approxi- that, effective May 1, 2000, the Association has committed ed from their public auction sales each year. Buyers and of specific terms of contractual sponsorship and advertis- mately $6,980,167 for the nine month period ended to a new line of credit agreement with PNC Bank, N.A., consignors/sellers at public auction sales also may ing agreements and are reported net of agency commis- December 31, 1999 and $12,760,000 for the year ended expected to mature on April 30, 2001. Under the terms of become members by paying one-tenth of one percent sion. When the Association receives contributions from March 31, 1999. As of March 31, 1999, the NTRA had this new agreement, the Association will be able to borrow up to $7,450,000 for working capital purposes, incurring (0.1%) of the net purchase price. other organizations and individuals with whom there is no included in other assets approximately $1,034,000 relating interest at a rate of Prime Rate minus 1%. set membership agreement, revenue is recognized when to amounts paid for production costs in advance of adver- As discussed in Note 1, in order to fund the purchase Other Members the amount is received. tising being aired. As of December 31, 1999, there were no of the Acquired Assets and the establishment of NTRA The Association has multiple additional membership prepaid production costs. Inventories are recorded at cost. categories within the Thoroughbred racing industry, Cooperative Advertising Program Productions, NTRA Investments entered into a term loan including individual racing fans, veterinarians, attorneys Racetracks and OTBs are eligible to participate in the 3. Property and Equipment agreement (the "Loan") on July 7, 1999 with the Minority and professional associations. In addition, the Association Partners. The maximum loan amount to be extended is Association’s cooperative advertising program. Under Property and equipment consists of the following: has entered into a Special Affiliate Agreement with the this program, members are entitled to be reimbursed a $16,000,000, bearing interest at a rate of Prime Rate plus Dec. 31, 1999 Mar. 31, 1999 American Quarter Horse Association ("AQHA") whereby portion of dues paid to the NTRA for costs incurred by 1% and maturing on July 7, 2004. As of December 31, Furniture and fixtures $ 205,042 $ 80,314 the AQHA and its members contribute to and participate the member to run NTRA-produced television and print 1999, NTRA Investments had outstanding borrowings of Other equipment 54,338 21,602 in the programs of the NTRA. advertising in their local markets. Included in accrued $8,500,000. The Loan is secured by the assets of NTRA Computer equipment 102,516 6,013 liabilities at December 31, 1999 and March 31, 1999 are Investments, including NTRA Productions and NTRA 361,896 107,929 2. Significant Accounting Policies $2,879,000 and $975,000, respectively, relating to the Services. Less: accumulated Basis of Presentation program. Principal maturities of long-term debt over the next depreciation (59,998) (13,473) five years, as of December 31, 1999, are as follows: The consolidated financial statements and accompanying $ 301,898 $ 94,456 Amortization of Acquired Assets 2000 $ – notes have been prepared in conformity with generally 2001 3,216,000 accepted accounting principles, which requires manage- Acquired Assets, relating to the Winner acquisition, are 4. Letters of Credit being amortized on a straight-line basis over a prelimi- 2002 – ment to make estimates and assumptions that affect the NTRA acquired letters of credit from a financial institution, nary useful life of five years, resulting in amortization 2003 – amounts reported. Actual results could vary from these which are collateralized by marketable securities consist- expense of $730,249 during the nine month period ended 2004 8,500,000 estimates. All material intercompany items and transac- ing of United States Treasury Notes, to secure leases. As December 31, 1999. Total $11,716,000 tions have been eliminated. of December 31, 1999, these treasury notes mature in May The Association has changed its year end to 2000, June 2000 and July 2000. The investments have been On April 1, 2000, the Association borrowed an December 31 from March 31, resulting in a nine month Property and Equipment recorded at face value plus any unamortized premium as additional $5,500,000 from NTRA Investments’ Minority fiscal period ended December 31, 1999. Property and equipment are recorded at cost and depreci- marketable securities in the consolidated balance sheet. Partners, under substantially the same terms as ated using the straight-line method over their estimated Upon maturity, the funds will be reinvested for the remain- described above, in order to fund the second installment Cash and Cash Equivalents useful lives as follows: ing term of the related agreements. payment to Winner. As of December 31, 1999, this balance Computer equipment 3 years The Association considers all investments purchased with was recorded as deferred purchase consideration on the Other equipment 5 years an original maturity date of three months or less to be 5. Long Term Debt consolidated balance sheet. The amount is considered to Furniture and fixtures 7 years cash equivalents. On April 1, 1998, the NTRA entered into a line of credit be non-current as the subsequent payment was financed agreement (the "Credit Facility") with Fifth Third Bank of by increasing the Loan. Depreciation expense charged to operations relating Revenue Recognition Kentucky, Inc. (the "Bank") that had an original maturity to property and equipment was $46,525 and $11,569 dur- The Association’s primary sources of revenue are contrac- date of September 30, 1999, although the Bank extended 6. Income Taxes ing the nine month period ended December 31, 1999 and tual member dues and handle-based fees. Handle-based the Credit Facility until May 1, 2000 under substantially the the year ended March 31, 1999, respectively. The NTRA is exempt from federal income tax under revenues are based upon specific calculations and recog- same terms. Under the terms of the agreement, the NTRA section 501 (c)(6) of the Internal Revenue Code. nized as invoiced, generally on a quarterly basis. Breeders may borrow up to $4,000,000 for working capital purposes, Certain activities of NTRA Investments are subject to dues, pledged at the beginning of the calendar year incurring interest at a rate of Prime Rate minus 1%. As tax as unrelated business income. For the period ended breeding season, are recognized ratably throughout the of December 31, 1999 and March 31, 1999, the NTRA had December 31, 1999, these activities resulted in a net year. Revenues from public auction sales companies, outstanding borrowings of $3,216,345 and $2,705,070, operating loss for tax purposes. respectively. The line is secured by all uncollected dues (continued) 30 31 National Thoroughbred Racing Association, Inc. and Subsidiaries Notes to Consolidated Financial Statements

7. Commitments and Contingencies 9. Barter Transactions Total rent expense amounted to approximately $296,000 The Association has agreements with three Thoroughbred and $418,000 for the nine month period ended December racing industry publications which provide the NTRA 31, 1999 and the year ended March 31, 1999, respectively. various advertising and marketing benefits. The value of Future minimum lease payments under existing lease these benefits are recorded at fair market value when agreements as of December 31, 1999 are as follows: the benefits are received. The revenue for barter transac- 2000 $408,000 tions is recorded at the fair market value of the advertis- 2001 379,000 ing to be received when the related agreement becomes 2002 380,000 effective. Advertising expense is recorded each time an 2003 317,000 advertisement is run. For the nine month period ended 2004 39,000 December 31, 1999 and the year ended March 31, 1999, Thereafter 10,000 the Association recognized revenue and related expense Total $1,533,000 from these members of approximately $817,000 and $340,000, respectively. 8. Related Parties 10. Benefit Plan The Association continues to conduct numerous transactions with a variety of industry organizations beyond the During 1999, the NTRA adopted a defined contribution scope of membership. The Association has formed 401(k) plan for all eligible employees. For 1999, the alliances with leading industry news and information Association elected to match 50% of the first 6% con- organizations, including The Blood-Horse and Daily Racing tributed by each participating employee. The amount of Form (Official Sponsors of the Association) and Equibase the cost recognized as expense was approximately $35,000 Company, The Jockey Club Information Systems and and $17,000 in the nine month period ended December 31, Thoroughbred Times (Official Suppliers of the Association). 1999 and the year ended March 31, 1999, respectively. These partnerships provide the Association with promo- tional and advertising vehicles and enable the Association 11. Year 2000 (Unaudited) to provide timely information and statistics (via the During 1999, the Association upgraded its information Internet and other media) to both new and existing fans, technology systems and software to be ready for the Year as well as non-industry publications wishing to cover 2000. Subsequent to December 31, 1999, the Association Thoroughbred racing. is not aware of any significant or adverse effects of Year The Association has established a group purchasing 2000 problems on its information technology systems. program through its affiliation with EquiSource of Louisville, Kentucky. The National Thoroughbred Association ("NTA"), one of the NTRA Founding Members, no longer exists independently but has become a part of the Thoroughbred Owners and Breeders Association. Effective January 1, 1999, the operations and staff of Thoroughbred Racing Communications ("TRC"), an entity that provided communications services to the Thoroughbred racing industry, became part of the Association communications department. The Association recognized revenue of $187,500 and $62,500, respectively, during the nine month period ended December 31, 1999 and the year ended March 31, 1999 as funding for TRC from The Jockey Club. 32 Kentucky New York

NTRA NTRA 230 Lexington Green Circle 444 Madison Avenue Suite 310 TM Suite 503 Lexington, KY 40503 NATIONAL THOROUGHBRED RACING ASSOCIATION New York, NY 10022 TEL 859-245-6872 TEL 212-907-9280 Fax 859-245-6868 Website: ntra.com E-mail: [email protected] Fax 212-907-9281