ONE-ON-ONE
- May 2001
by Ed G. Lane ‘...We Have
the Best Race Track in the World Without a Winston Cup
Race’
Developer and entrepreneur Jerry Carroll runs in fast
circles
 |
Jerry
Carroll
Jerry Carroll, 57, is chairman and co-owner of
Kentucky Speedway and Louisville Motor Speedway.
Kentucky Speedway's inaugural Kroger 225
Craftsman series truck race drew over 70,000 fans
last summer, and this year the track takes
another hopeful step toward the Winston Cup
series by hosting the Outback 300 Busch Series
Grand National race. An
Indiana native, Carroll came to Kentucky after
successfully developing commercial office
properties near the Nashville, Tennessee airport.
Once in the Commonwealth, he looked to do the
same in Northern Kentucky. After purchasing
Turfway Park with partner James Thornton for
$13.5 million and developing its surrounding
property, Carroll sold the track in 1999 to
Keeneland, Harrah's and GTECH for $37 million.
His
latest project is a proposed $76 million,
40,000-seat track near Newton, Iowa.
|
Ed Lane: During the 1970s, you started your business
career in Tennessee. By the mid 1980s, you were one of
the state’s largest office building developers. What
prompted your move to Northern Kentucky in 1984?
Jerry
Carroll: Citibank of New York was working with me as
a partner at that time and lending me money to
develop office buildings. We had completed so many
buildings around Nashville that we were actually
looking for a new area in which to develop. I’ve
had such great success around airports. I knew the
Cincinnati and Northern Kentucky markets in
particular were doing very well. The airport is in
Northern Kentucky, so I started an office park here.
It’s called Turfway Ridge.
EL: So
Turfway Ridge was your first office development in
Kentucky.
JC: Yes,
I came to Kentucky to do an office building, but I
continued to live in Nashville.
EL: How large
is Turfway Ridge?
JC: About
300,000 s.f. total. We constructed two buildings, and
we sold them.
EL: At what
point did you get into the horse racing?
JC:
It’s a unique story. While we were under
construction at Turfway Ridge, I went to the fifth
floor of the building. As I was looking out over the
interstate, I could see Latonia Race Track. I was a
horse fan and already raced horses. I had been to
Latonia many times, but when I got up on top of the
building, I could see that Latonia sat on quite a big
parcel of land. I wondered if the land next to the
interstate was part of the racetrack. So I researched
it and found out that Latonia owned almost 300 acres.
I went about finding out if Latonia was for sale. It
was not. So I knew the people that owned it –
Delaware North up in Buffalo – and I would call
them every Friday at 3 o’clock and say,
“You guys want to sell that horse track
you’ve got over there?” It was in bad
shape, and finally, after months the guy said,
“We want to sell it.” So I said I’d
buy it contingent upon getting the property zoned. I
got the property re-zoned, and I bought the entire
thing. I bought it as a dual purpose – as a real
estate development and as a horse track.
EL: Do you
remember the purchase price?
JC: Yes.
$13 million – which is quite a good price.
EL: In
working through the rezoning and development of the
property, did you get good cooperation from local
government?
JC: Yes.
People were very excited that we were going to
renovate the race track and that we were going to
develop it. They knew what kinds of office buildings
I built because we had one of them going up right
then. We got total cooperation. I have been more of a
zoning change person than anything in my development
career. The first thing I did was get the Houston
Road extension put in. We went to Governor Wallace
Wilkinson for help.
EL: There are
lots of hospitality services out there – hotels,
restaurants, etc. Are you involved in the ownership of
any of these business?
JC: No.
We basically sold the land to users or the developers
who were going to build their buildings. We
subdivided it and had different projects.
EL: Turfway
Race Track was doing very well when you decided to sell
it. What was the deciding factor in selling?
JC:
Without question the key factor was the coming of the
casinos in Indiana – one in Lawrenceburg and one
in Rising Sun. We saw a definite trend in gambling
patterns that seemed negative for racing and we
didn’t want to buck it.
EL: When you
decided you wanted to buy Latonia Race Track you had some
experience with racing. Did any equine-related
organization assist you when you bought the track or give
you advice or consulting services?
JC: We
just bought the track and operated it like a
business. We thought we could build a fan base and
operate it better than its previous absentee owners.
We devoted ourselves to making the track successful
and we believed in simulcasting. There really
wasn’t any single one that came to bat for us.
The state Racing Commission was always there and we
could bounce things off of them. The good cooperation
we received from the Commission helped Turfway move
into the big leagues. We changed racing quite a bit
in Kentucky.
EL: You
mentioned that you decided to come to Northern Kentucky
because the airport has a significant economic impact on
the local economy. Was there any other factor about the
Kentucky economy that you also felt was important?
JC: I
liked the dynamics of the Northern Kentucky economy
and the way the planning commission stuck to its guns
on what to build or not build. Boone County seemed to
be in a growth area. It’s everything we hoped it
would be and more.
EL: Tri-ED is
the joint economic development entity for Boone, Kenton
& Campbell counties. How effective is this
organization?
JC:
That’s a good operation. Mark Simendinger,
president of Carroll Properties, works very closely
with them, and Tri-ED has been a good conduit to
attract business to Northern Kentucky.
EL: Did you
decide to get into auto racing before or after you sold
Turfway?
JC: I
still owned Turfway track. The transition was when we
knew the casinos were coming and different things
were happening, so we thought we needed something to
boost our attendance and maybe build something else
around the track – some kind of entertainment
facility. We had some other land and asked,
“What else is happening?” So what I’d
do is travel around to other markets – Atlanta,
California – to see what was going on. As I
traveled and inquired, everyone was talking motor
sports. Everybody was talking NASCAR and how that was
the fastest growing sport. To be very candid, I had
never been to a NASCAR race. That’s what got us
interested. We felt like the people out there were
telling us that’s the future.
EL: Did you
utilize public opinion surveys to analysis market
conditions in the region?
JC: I
hired two research companies and they conducted
surveys and a three-month study of where in this area
would be a good place to put a track. The study was
completed early and it indicated this is a perfect
place to build a NASCAR race track.
EL: Do you
remember about how much the studies cost and would you
recommend that expense to other entrepreneurs?
JC:
Twenty-five thousand dollars to $50,000 for the
reports, and then we also worked closely with the
Kentucky Tourism Cabinet. A lot of people think I
take big risks, but they’re all very calculated.
We do a lot of research. You’re only as good as
the knowledge you have about whatever you’re
going to do.
EL: Being a
successful real estate developer, obviously you know the
importance of a good location. Why did you build Kentucky
Speedway in Gallatin County, Kentucky?
JC: We
looked at 47 sites in Kentucky and tried to pick a
site as close to Cincinnati, with proximity to
Louisville, as we could get. We were having a very
difficult time finding a site. Finally, the judge
executive in Gallatin County, who was a fan of motor
sports, heard we were looking. He actually assembled
four different farms and called me and said,
“You might want to take a look at this
area.” The site was approximately a mile off
Interstate 71 and it was at an exit where nothing was
really happening. It was perfect for us. Whatever the
people asked for their land, we paid it. We bought
all the land.
EL: Did the
site require any zoning approvals?
JC: No
zoning was required.
EL: What
about sanitary sewer services?
JC:
Kentucky Speedway has its own sanitary sewer system.
There will eventually be something like $60 million
of new road systems that will go into Gallatin County
alone. The state was very cooperative with our
efforts. Kentucky Speedway obtained a grant from the
Tourism Cabinet. There have only been two of them
awarded – one to the Newport Aquarium and one to
us. You have to meet eight requirements. We met all
eight. Then you have to engage one of the big six
accounting firms and they conduct additional
research. That’s another cost – about
$80,000. In the final analysis, Gallatin County was a
natural for what we were trying to accomplish.
EL: Were the
incentives for tourism development – tax rebates or
actual cash?
JC: No
cash. It was tax incentives – not having to pay
certain real estate taxes – and the road systems
that were a help.
EL: Are
Kentucky Speedway events pulling a lot visitors from
Ohio?
JC: Our
biggest crowds come from Ohio.
EL: Have the
local residents of Gallatin County been excited? Has the
Speedway created jobs for them?
JC: Yes.
It creates jobs, it sparks business, it gives the
town a name. Our races will be on national television
three times this year. Sparta, Kentucky will show up.
Gallatin County is now the third fastest growing
county in the state.
EL: When you
get rolling, what do you think will be the potential
revenues generated from this one facility?
JC: When
there is a Busch or Craftsman truck race, the race
track can bring in almost as much revenue as any
Super Bowl. A Winston Cup event will bring in Super
Bowl Money.
EL: Are there
any hotels going up?
JC: Some
hotels are going up in Carrollton and there are
hotels on the drawing board, but we only have five
events a year. What happens is the hotels throughout
the region benefit from each race.
EL: When you
were working on the Speedway, what were the two biggest
obstacles?
JC:
Finding the site was the biggest one without question
because of all the things we wanted to create at the
track. Second was the actual design and moving of the
dirt. We moved 7.2 million cubic yards of dirt, which
is, from our understanding, the largest single site
excavation for one project in the history of
Kentucky.
EL: As part
of your due diligence on the property, did you conduct
soil borings? Did you encounter a lot of rock?
JC: We
had a lot of clay. There wasn’t a lot of rock.
We did hit areas that had rock and we had to do some
blasting, of course. When you’re moving that
much dirt, you hit just about everything.
Fortunately, we did not hit any underground water. No
gold, no oil and no bodies.
EL: Were you
responsible for building all the roads or did the state
help?
JC: The
state built the outside perimeter roads, and we built
all the roads within and surrounding our project.
There is a lot of asphalt.
EL: You
recruited investors. How did you structure the deal?
JC: I
called five friends and got them to get into the
deal. They are very influential people. I originally
had Bruce Lunsford (CEO of Vencor), but we took him
out and paid his money back when he had a reversal of
fortune. Outback Steakhouse is also our
concessionaire. They’re the sponsor for our
Busch race. They’ve been a big help. It’s
great when you come to the races and smell steak and
bloomin’ onions.
EL: What are
your future goals for the Speedway?
JC:
Perhaps we were the only investors in the world to
start a race track of that cost – without a
race. While we were constructing the track, there was
a truck race at Louisville Motor Speedway. I went
down and negotiated with the owner and bought
Louisville Motor Speedway. Then we inherited the
truck race. We also hired Andy Vertrees, who was the
owner, and he is Kentucky Speedway’s operations
man. He’s been a great help. We have had one
goal from the start – that’s to get a
Winston Cup race. We built the track so that we could
get a Winston Cup.
EL: How large
is the trade area for Kentucky Speedway?
JC:
Within a hundred miles of our race track, the
population is about seven million. Within a hundred
miles of Nashville it’s three million; a hundred
miles of Kansas City it’s around three million.
And within 300 miles of the Speedway the trade area
has 52 million people.
EL: What
advice would you offer a young adult who is starting
his/her career in business?
JC: One
of the suggestions I always give people is do what
you can do and don’t worry about what you
can’t do. Too many people sit around and worry
about what they can’t accomplish; therefore,
they accomplish nothing. Set your goals and standards
to where you can achieve what you want to accomplish,
and you will find out there is nothing you can’t
do. We live in a free enterprise system, and
opportunities abound for everybody. You have to stick
to it and have fortitude.
EL: Looking
over the last 25 years or so of your career, what would
you say was the biggest mistake you made from which you
learned something?
JC:
Probably trying to get someplace too quickly. You
realize that the knowledge that you develop, the
education you get on the job is very, very valuable.
You don’t want to envy someone else doing well
in your field. You want to be respectful. I think I
tried to climb the ladder really quickly. Some people
think I did climb it quickly. Be flexible, too. I
learned to adjust to the situation. I was a little
stubborn at the start, but I learned if you make a
mistake, you admit it and go on. If you want to take
the credit, you have to take the blame, too.
EL: When you
made your initial contact with the state, did you talk to
the governor?
JC: Yes.
Paul Patton was very enthusiastic. The governor is
somewhat of an engineer. I’m a big fan of the
governor and supported him. Mark Guilfoyle is one of
our lawyers and we went down and said “Governor,
we think we’re going to do this. We’re
going to get some people to invest over a $100
million in the state of Kentucky.” He did not
know too much about motor sports but he was very
enthusiastic and the state has been 100 percent
behind what we are doing because we bring in a lot of
people. This year we’ll have approximately
600,000 people visit that race track.
EL: Do you
remember the first contact you had with NASCAR?
JC: Oh
yeah! The first time we got to meet Bill France,
whose family owns NASCAR, he told us that everybody
wanted to build a race trace, but nobody did. They
found race tracks to be too expensive. NASCAR is not
going to give you a race. You have to earn it, and
nobody really wanted to take that chance. We said we
were going to build a track, and he didn’t
believe us. We built this race track and did it in
record time from the idea to development to finished
product.
EL: Since
race tracks around the country are different, did NASCAR
provide a design criteria or do you just build the track
and if NASCAR likes it, they’ll race on it?
JC:
NASCAR was planning two tracks of its own, and they
were a mile and a half so I figured if that’s
what they wanted to build in their own tracks,
that’s what I’d build. We hired an engineer
out of Birmingham named Bill Moss. He did a
remarkable job of designing. It’s an
engineering, rather than an architectural feat. The
engineer laid out the track and it’s patterned
after Las Vegas, which had just been completed. We
banked it and got Darrell Waltrip to be our
consultant, and Darrell helped us a lot. He’s a
driver – a Kentucky boy from Owensboro.
EL: Is he
still active at Kentucky Speedway?
JC: Yes.
In fact, we’ve just bumped Darrell onto the
investment committee group, and he is taking a huge
interest in the track. He is one of the voices of
NASCAR on Fox Television. He announces the races and
has a very important role. He is important to us and
is working very hard to help us get a Winston Cup
race.
EL: I guess
you don’t want to forecast when you’re going to
do that?
JC: We
hope to have it within the next two years.
That’s totally up to NASCAR. They’re
watching closely what kind of crowds we have in
comparison to other tracks. There’s no question
right now we have the best race track in the world
without a Winston Cup race.
Ed G. Lane is
chief executive of Lane Consultants Inc. and publisher of
The Lane Report.
edlane@lanereport.com
Back to One on One Index
Back to the May Issue
|
