The last days of Hollywood Park: the legendary racetrack, built in 1938 by studio head Jack Warner, is likely to be sold as attendance sags and the land attracts interest from developers.

Hundreds of Hollywood Park employees were scrambling to get the Inglewood track ready for the start of its racing season--a calendar that was to kick off with a concert by funk diva Chaka Khan, a $1 million Pick Six jackpot and races worth $1.3 million in prize money.

But there was uncertainty and a bit of sadness surrounding the last-minute preparations because 67 years of horse racing at the storied facility could be drawing to a close.

Inglewood officials say they have been told by executives at Churchill Downs Inc., the track's Louisville, Ky.-based owner, that the nearly 240-acre parcel, worth more than $200 million, may be sold to a developer. Real estate sources said the company has hired New York investment bank Lazard Freres & Co.

"They have made a decision that the land is too expensive to maintain a racetrack," said Inglewood Mayor Roosevelt F. Dorn. "They are either going to sell it or develop it, but it hasn't been determined what they will do. They have put out some feelers and gotten some bids on it."

Inglewood City Councilman Ralph Franklin, whose 4th District includes Hollywood Park, said he believed Churchill Downs is in the advanced stages of selling the park.

"I have been advised they are going through the interview process with developers with the ability to purchase the 240 acres," Franklin said.

In L.A.'s real estate world, monster properties on the order of Hollywood Park don't come along every day, which is why the sale and development of the property is likely to be a lengthy, costly and litigious process. A major complication to any multi-use development could be the Hollywood Park Casino, which is operated by Pinnacle Entertainment Inc. and may not be included in a Churchill Downs sale.

And yet, early interest in the site reflects how thirsty developers are for land in urban Los Angeles. Of special note is the parcel's proximity to LAX.

"It's a big piece of ground that just about anyone would want to get their hands on," said Los Angeles developer Jerry Snyder, who at the moment is not trying to buy Hollywood Park. "Obviously, a residential project there would be a no-brainer, but retail and office would also probably work."

Determining priorities

During a March 17 conference call, Churchill Downs President and Chief Executive Tom Meeker said an evaluation of the site would be completed in a few months, "and at that time we'll be in a much better situation to comment on any specific plans."

Franklin said Churchill Downs executives told him they have already interviewed four interested developers and that talks are planned with several more.

After the interviews are complete, according to Franklin, Churchill Downs will win-now the list to two or three potential buyers with a proven ability to buy the land and complete complex development projects.

Those finalists will then be interviewed by a panel of residents, elected officials and the city's redevelopment agency to determine which developer's project comes closest to what residents want.

"Once they find the potential developer who can buy the site, they'll bring them before the city," Franklin said. The panel, he said, will screen those candidates and pass along the best ideas, which would then be discussed at several town hall meetings and debated before the Planning Commission and City Council. "Everyone will have their chance to be heard."

And most everything is likely to be up for discussion. Dorn said the city would like to have a convention center, plus an adjacent four- or five-star hotel. City officials would also like a large retail development with high-end shops and restaurants, office buildings and housing--both market-rate and affordable homes. "The racetrack has been good for the city, but we are realistic," Dorn said. "Whatever occurs there will be better for the city."

Franklin, for one, believes that Inglewood could collect more tax revenue from hotel rooms, retail sales and property taxes than the $2.1 million it takes in annually from gambling, ticket sales and concessions. The city also takes in about $4 million each year from the card club.

"This is a goldmine of opportunity," he said. "We could finally get the much deserved and needed development that would generate the kind of revenue this city so badly needs."

Rumors have long circulated about the demise of Hollywood Park. For decades, attendance has been slumping and the track--once a dominant presence in Southern California horse racing--has fallen behind Santa Anita and Del Mar.

It certainly didn't start out that way. From the moment it opened in 1938, Hollywood Park was a glamorous playground for the movie industry's rich and famous. The grounds, former bean fields, were purchased by 600 investors led by Warner Bros. Chief Jack L. Warner. Notable partners in the Hollywood Turf Club included Walt Disney, Samuel Goldwyn and Bing Crosby.

But while the 1940s and 1950s were glory years, the immaculately landscaped track has been struggling with declining attendance for the past two decades.

Surrounding development

By the late 1980s, Hollywood Park intensified its focus on the gaming aspect of the sport by opening a card club-casino on its grounds.

With horse racing on the decline, the company went public and began to focus on buying casinos and card clubs across the country. Then in 1999, Hollywood Park Inc. sold its namesake track to Churchill Downs for $140 million. As part of the deal, Hollywood Park--later renamed Pinnacle Entertainment Inc.--kept 138 acres of land surrounding the track and entered into a 10-year lease to operate the casino for $3 million a year.

Since then, Pinnacle has sold off the parcels to developers who are transforming the surrounding Inglewood community.

Homebuilder Ray Watt, chairman of John Laing Homes, has developed a 375-home subdivision on 37 acres purchased from Pinnacle on the northern border of the racetrack on 90th Street between Prairie Avenue and Crenshaw Boulevard. Those homes, in a gated community being built by several developers including John Laing, are being priced between $300,000 and $500,000.

Pinnacle has also sold 60 acres of former racetrack property to Santa Monica-based Rothbart Development Corp. for $36 million. Rothbart is working with the city on entitlements for a shopping center that would include a Wal-Mart anchor store.

Wal-Mart Stores Inc. was rebuffed last year by Inglewood voters when the company tried to bypass a hostile city council with plans for a Supercenter--a larger Wal-Mart with an attached supermarket--with a referendum.

Imperial Partners LLC plans a large development that could contain a 140,000-square-foot medical office building and surgical center. On adjacent land the company has also tentatively proposed a 300-room hotel, 10-story parking garage and 120,000-square-foot shopping mall. Combined, Imperial has said its projects could total $100 million.

Forum Enterprises Inc., owners of the Great Western Forum, have hired CB Richard Ellis Inc. to consult on building shops on the company's property.

Hollywood Park President Rick Baedeker concedes that because of all the nearby activity, redeveloping the site does make sense. "Let's face it, you're four miles from the ocean and you're a 15-minute drive from LAX," Baedeker said. "You couldn't ask for a much better location."

Still, he hinted that Churchill Downs could choose to participate in a redevelopment effort by including a racetrack on much smaller grounds with less seating. Two years ago, Churchill Downs was rebuffed by Irvine residents and elected officials when it proposed building a smaller Hollywood Park as part of the redevelopment of the former El Toro marine base.

"The record crowd here is about 80,000 but those days are long gone," he said. "It's tough to justify having such a large facility when the bottom line is being squeezed. We need to provide a more intimate and busier environment because when the crowd is spread out this big building feels like there's nobody here."

Any redevelopment may have to include a casino. Pinnacle Entertainment President Wade W. Hundley told analysts and investors in a conference call last May that nothing would happen to the casino if Churchill Downs sold the track.

Hundley said that the lease has provisions for increased rents in 2010, but that there are also clauses allowing the company to extend its lease. "The Hollywood Park Card Club is in a building that is leased from Churchill Downs and I believe has another 16 or 17 years to go under that lease," he said.

While the redevelopment of Hollywood Park presents a rare opportunity, an ensuing fight over what should be built on the parcel is more than likely. Finding a compromise for the high-stakes site won't be easy if the community, historical preservationists, environmentalists and the developer have competing objectives.

Even if a plan gets approved by the City Council and a public referendum, it's likely to be controversial and generate lawsuits by disgruntled groups, which often include nearby homeowners.

Still, most any project at the site is likely to still pencil out, according to Richard Ackerman, a principal at Apollo Real Estate Advisors.

Ackerman is involved in two acrimonious developments--a new 1,200-room convention center hotel in downtown L.A. and Sunset Millennium, a hotel and residential project on West Hollywood's Sunset Strip.

"It's never easy," he said. "But if you're patient and you do the right thing and try to work with as many people as possible, it can be done."

Ackerman should know. West Hollywood approved the Sunset Millennium project earlier this month and the Los Angeles City Council has given conditional approval to a $177 million public financing package to help build the convention center hotel.

As speculation mounts about a development deal, racetracks continue to battle for gamblers with competing Indian casinos.

Baedeker said allowing slots are a must for Hollywood Park and other racetracks in order to raise purses large enough to attract the top horses from around the country.

Los Alamitos in Cypress is also pressuring Hollywood Park. In March the track's owners announced plans for a two-year, $40 million upgrade of the facility that would allow it to race thoroughbred horses in the afternoon and quarter horses at night.

While that would still require approval from the California Horse Racing Board, the track's owners would be available to absorb the 65 races run at Hollywood Park each season. That, Franklin said, could help set the stage for a sale, although he acknowledges that any project on the site is likely to be controversial.

"Realistically, with all the red tape that's involved, it may take several years before the ultimate goal of building the structures comes into existence," he said. "But the possibility of what could be accomplished there is just so exciting."

RELATED ARTICLE: Early glitz.

HOLLYWOOD Park got its start in 1938 when members of the showbiz elite, led by Warner Bros. chief Jack Warner, decided that Santa Anita Park across town could stand some competition. But this was more than a business venture, for at the time horse racing was still the sport of kings--and celebrities.

The day after its opening, one newspaper headline blared: "Film Stars Attend Races: Hollywood Turns Out En Masse for Opening of New Turf Club."

Those early years provided daily star-sightings, with Al Jolson, Bing Crosby, Raoul Walsh, Jack Benny, Irene Dunne and Ronald Colman among the regulars. Columnist Hedda Hopper claimed she was visiting the track in search of gossip almost as often as she was going to the studios. In those days, it was just a 20-minute drive from Hollywood.

Warner, a longtime horse racing enthusiast, enlisted his celebrity friends and rival studio chiefs to help bankroll the venture. All told, there were around 600 shareholders who invested in what had been a muddy patch of land in the small community of Inglewood, best known for its commercial chinchilla farms (and Mines Field, which had been turned over to the city of Los Angeles for what would eventually become Los Angeles International Airport).

From the start, there was no question that the track was named Hollywood Park for a reason. "Like motion pictures," Mervyn LeRoy noted, "racing is amusement and in the amusement field the public will patronize only the best."

Beyond being a showbiz hangout, the track also became recognized for its Hollywood Gold Cup, a high-stakes centerpiece race for older horses that was designed to draw talent from other parts of the country. Seabiscuit, the horse immortalized in numerous books and a movie starring Jeff Bridges and Tobey Maguire, won the inaugural Hollywood Gold Cup.

Racing at Hollywood Park was suspended with the outbreak of World War II, except for a brief run to benefit the war effort (the grounds were used as a storage facility). Racing resumed after the war, and Hollywood Park continued to attract top contenders.

Three years later, a fire incinerated the racetrack's grandstand and clubhouse, which pushed the season to rival Santa Anita. The facilities were quickly rebuilt for the following season.

Hollywood Park made headlines in 1951 when the Gold Cup made Citation horse racing's first million-dollar earner. But by the 1970s, track attendance was on the decline and Hollywood Park wasn't immune.

Owners tried to drum up interest with expansions and improvements--doubling the size of the turf club, adding the Winner's Circle Dinning Room and renovating the stables.

As attendance continued to slide, the track focused more on gambling and promotions to draw large crowds. In 1973, it became the first track in the country to begin Sunday racing.

"Going to the races used to be a social event," said Rick Baedeker, president of Hollywood Park. "Honestly, now there is more focus on the gambling part of the sport because you've got our live races but also 30 other races imported into Hollywood Park on any given day."

After decades of being the premier destination for racing, Hollywood Park now draws the third-largest attendance in Southern California, after Santa Anita and Del Mar.

--Andy Fixmer

RELATED ARTICLE: Long odds.

Horse racing is on the skids.

Greater choice among gambling venues, increased popularity of other sports and a decline in the number of horses bred for racing have created a trifecta for declining attendance and profits.

Though overall betting is up, 85 percent of revenues at racetracks nationwide are generated off site. The result is an often lackluster atmosphere at the track and a decline in overall profits.

"Increased competition from other forms of gaming and entertainment is the most important single factor in the decline in attendance at race tracks throughout the United States," said Mike Martin, spokesman for the California Horse Racing Board, the state's regulatory authority. "At the same time, you have a declining number of horses racing. As any bettor will tell you, the smaller the field, the less attractive the race is for wagering."

Hollywood Park is a good example.

Off-site gambling was the major reason why the Inglewood track's pari-mutuel betting revenues jumped to an average of $10.4 million per day in 2004, up from $6.9 million in 1991. But the park must share the revenue with the entity that generated it, and it also loses out on ancillary sales such as hot dogs and beer that come with live attendance.

As a result, Hollywood Park's earnings before interest, taxes, depreciation and amortization dropped to $7.3 million last year, from $18.9 million in 2000, according to Securities and Exchange Commission filings by Louisville, Ky.-based Churchill Downs Inc., which owns the facility.

A three-decade peak for on-site betting at thoroughbred races came to a close in 1991, when state legislation opened the door for Southern California venues--Hollywood Park, Santa Anita Park, Los Alamitos Race Course and Fairplex Park in Pomona--to take bets for each other's races.

Statewide, racetrack attendance fell to 3.8 million in 2004 from 7.6 million in 1991, according to the California Horse Racing Board. Even including customers who bet at off-track venues, attendance fell to 8.9 million statewide from 13.8 million in 1991.

Hollywood Park, which hosts 95 racing days per year in spring, summer and autumn meets, is now open year-round to attract local customers making bets at other tracks using simulcast TV screens. Still, annual attendance on race days fell below 550,000 last year, compared with 1.4 million in 1991.

"Inter-track betting really hurts because it takes people away from the live product, which diminishes the excitement," said Mike Mooney, a spokesman for Hollywood Park. "It's not a positive sign to have a grandstand half empty."

The spread of legalized gambling on Indian reservations and elsewhere--as well as new technology--have also siphoned off attendance.

Off-site betting parlors are open in San Bernardino, Lancaster, El Cajon, Ventura, Victorville and two in Indio. Online gambling outlets such as Woodland Hills-based Youbet.com and L.A.-based Television Games Network allow gamblers to bet at home as well.

"California is a very competitive gambling market," said Julie Koenig Loignon, a spokeswoman for Churchill Downs. "That's definitely a challenge for those of us in the parimutuel gaming industry."

--David Greenberg