For the 25 years of its existence as a citadel of Thoroughbred racing on the West Coast, Santa Anita Park has been a model of decorum and dignity. The late Dr. Charles H. Strub, founder and guiding genius, was at great pains to see to that.
But last week a figurative "inquiry" sign flashed above the track's operations as a bitter proxy fight broke out over control. At odds were Dr. Strub's eldest son, Robert, on one side, and an entrenched board of directors, headed by the powerful California industrialist, Reese H. Taylor, on the other.
The issue, on the surface at least, was simple: Strub's son wants to accede to the same absolute, tight managerial control his father enjoyed. The board does not think he is capable of assuming the responsibility. Complicating the board's intransigent position is the fact that the Strub family owns more than 21% of the stock, or more than four times as much stock as all the board of directors combined. If young Strub can put together proxies representing an additional 30% of the stock, he will be in a position to throw out the present board and reconstitute it with people of his own choice. He will make his move to do this at a special stockholders' meeting which has been scheduled for April 28.
The prize in this battle is an operation which, even by horse racing's lush standards, has been fantastically profitable. For most of the 20-odd years of the Strub regime Santa Anita stockholders have had an annual million-dollar pot to cut up amongst their 200 shares. The par-value $5,000 stock climbed to $80,000 a share before it was carved into a 375-for-1 split this year, making it less unwieldy to market. Even the new shares sell for nearly $300 apiece. That would make the old unit worth roughly $100,000 on today's market.
It is the contention of Bob Strub that he had been hand-picked and trained by his late father to take over the direction of this golden operation. It is the contention of Santa Anita board members, privately, that Doc Strub himself gravely doubted his son's qualifications.
One of the ironies of the impasse is that Dr. Strub did hand-pick 13 out of the 15 directors who today bar his son's way. Comprising a virtual who's who of Los Angeles business and society, they were chosen by Strub to give racing a touch of class. Under Strub they had little else to do. Their duties consisted mainly of showing up in the swank Turf Club on Saturdays and, in general, rubber-stamping Dr. Strub's policies and directives. Strub, for his troubles, was paid a handsome 10% of the profits—or a neat quarter to a half million dollars a year.
With Strub's death in March 1958, the picture changed. In the first place, the good doctor's Midas touch seemed to have left him toward the end. In one of his last acts, he allied Santa Anita Park with the Columbia Broadcasting System in an $11 million investment in a seaside amusement firm, Pacific Ocean Park, which was supposed to rival Disneyland. It came more nearly to resemble Coney Island—in the winter.
The board reached out and chose Director Taylor, chairman of the board of the rich and well-run Union Oil Company, to be president. Gwynn Wilson, who had assisted Strub in founding Santa Anita in 1934 and had been vice-president and general manager ever since, stayed on in the same capacities.
Reese Taylor is no man to preside as a mere figurehead at anything. He quickly perceived the first order of business to be the unloading of Pacific Ocean Park. By the time Santa Anita and CBS had settled up losses and bank repayments they found themselves out the full $11 million.
The track's share of this deficit was dumped on the books of the parent Los Angeles Turf Club and resulted in Santa Anita's showing the first loss in its history. President Taylor accordingly announced to the shareholders they could not expect a dividend for two years. This was illegal, said Bob Strub. Not so, countered Gwynn Wilson and the board. The company ran at a loss and thus cannot, under law, declare a dividend until it has shown six months of profitable operation. When the board of directors later voted to record its intent to pay a $6-per-share dividend, or $450,000, if projected earnings warranted that amount, Strub insisted the action was only an afterthought on the part of the board, provoked by his threat of a proxy fight.