Jeffrey Jacobs likes to move fast, which means he’s not afraid to take risks. But he also can spot a risk not worth taking. Take Jacobs’ former hobby of racing offshore speedboats. The Cleveland millionaire took up the sport at the age of 38. By the time he was 40, he was racing in the World Championships in Key West, Fla.
In the middle of the race, the boat in front of Jacobs flipped over. The driver was pinned underneath it and drowned.
”He died right in front of me,” said Jacobs, now 42. ”I never raced again. I figured it was time to slow down a little. Maybe take up golf again.”
But even though he knows how to walk away, speedboat racing is one of the few things that Jeffrey Jacobs has ever quit.
He is better known for venturing into the unknown and making his risks work: developing housing throughout Ohio, masterminding an entire district of nightclubs and restaurants in a once-decrepit section of downtown Cleveland, investing in casinos in Colorado and Las Vegas.
Now, the son of Cleveland Indians owner Richard Jacobs has thrown his confidence – and his considerable financial clout – behind Virginia’s first pari-mutuel racetrack.
It’s a risk, he says, that’s worth taking.
”There have been some problems, but I see so much potential,” Jacobs said, speaking in his slow, measured voice. ”You don’t walk away because things aren’t perfect. If you did that, you wouldn’t get anywhere.”
Backed by a family fortune reported at $875 million, Jacobs has infused $5 million to date into the $55 million Colonial Downs racetrack under construction in New Kent County.
He says he is ready to spend up to $5 million more by the end of the year, to keep the track on course to open next summer for live thoroughbred racing. Colonial Downs has requested a 40-day meet beginning June 15, a request which must be approved by the Virginia Racing Commission.
And true to form, Jacobs has risen to the very top of Colonial Downs management, supplanting Ohio track manager Arnold Stansley about a year after coming on board the project.
Stansley turned to Jacobs because he was in desperate need of capital. He also needed a negotiator to step in, someone who could help revive stalled talks with state horsem*n over a contract to govern the distribution of thoroughbred purses.
Jacobs, a polished businessman, had a proposed contract negotiated in a matter of weeks. Then he reportedly put pressure on horsem*n to accept it by threatening to pull out of the project if the contract was rejected.
”Basically, I negotiate for a living,” Jacobs said. ”Arnold doesn’t. He has the history and the background in horse racing. We each bring something important to the table.”
Stansley, who counts Jacobs as both a business partner and a friend, said the decision to have Jacobs step to the company’s helm was a joint one.
”He brought new life to this project,” Stansley said. ”Jeff, quite simply, is the answer to making this track a success.”
Not everyone, however, is happy to have Jacobs at the helm. His appointment this summer prompted state Sen. Mark Earley to announce plans to introduce a bill to abolish pari-mutuel gambling during the next General Assembly session.
Earley, a Republican from Chesapeake, calls Jacobs a ”casino baron” who would turn Virginia’s racing industry into ”a picture of smoke-filled off-track betting parlors … with slot machines on the horizon.”
Jacobs has no qualms about his gambling investments. He is a 50-percent partner in a $60 million limited stakes casino called Black Hawk Gaming, located in the former mining town of Black Hawk, Colo.
He is preparing to close a deal on an 800-room casino-hotel, the Holiday Inn-Boardwalk, in Las Vegas. His company, Jacobs Entertainment Ltd., has invested $9 million in that project.
But he says he has no plans to introduce slot machines or any other form of gaming at Colonial Downs – even though a competing track in Delaware has seen purses skyrocket since adding 1,000 slot machines in 1995.
”I just don’t believe Virginians want them,” Jacobs said. ”I know what people say about me, but I’m not going to push for something that so obviously is unpopular.”
Robin Traywick Williams, a member of the Virginia Racing Commission, said she and others are looking to Jacobs to improve, not damage, Colonial Downs’ somewhat battered reputation.
”He’s very smooth, very capable,” Williams said.
”We hope he will launch some sort of public relations campaign to change people’s minds about the track. Mr. Stansley is a very nice man, but he has let the critics establish his image. I don’t think anyone establishes Jeff’s image but Jeff.”
Jacobs divides his time between residences in Cleveland and Jupiter, Fla. He entertains friends with dinner on his riverboat and with box seats – with optional dugout access – for Indians games at Jacobs field.
But friends say no matter how hard he works and plays, Jacobs is an ordinary guy at heart.
”It’s unbelievable to me that he’s so down to earth,” said Stansley, who has known Jacobs for more than 10 years.
”Me and that boy go down to the betting parlor and we’ll stay the whole night. You wouldn’t know he had 20 cents in his pocket. You can laugh a lot with him. He’s done a lot of living in his days. He’s moved in some pretty fast circles, but he keeps his perspective.”
For one thing, Jacobs has never rested on his family’s fortune. He has earned three degrees, two of them post-graduate, and is known as a workaholic who examines pages of different investment proposals every day.
Jacobs is guarded in interviews, knowing how to choose his words to reveal just enough to answer a question, and not one word more.
Ask him how he happened to cross paths two years ago with Lynda Dudley, a Cleveland schoolteacher whom he will marry on Friday, and he simply states, ”through mutual friends.”
He also asked that Dudley, as well as his family, not be contacted for this story.
Jacobs grew up in Cleveland with his two younger sisters, Nancy and Marilyn. He graduated from Lake Ridge Academy, a private day school 30 miles west of Cleveland. School officials there say Jacobs continues to contribute money every year and has returned to speak to students about his career.
Jacobs went on to earn a marketing degree in 1975 from the University of Kentucky in Lexington, a master’s in finance from Ohio State University and another master’s in urban planning from Cleveland State.
It was in Lexington that Jacobs became a horse racing fan. He went to his share of basketball games – it being the era of legendary basketball coach Adolph Rupp in the hoops-crazed city, he almost had to – but Kentucky’s other sporting obsession also caught his eye.
About 20 minutes from the University of Kentucky campus, Jacobs found a thoroughbred racetrack called Keeneland. The brick grandstand nestled among a stretch of horse farms became a hangout on a number of days.
”I didn’t win many bets, but it was such a beautiful racetrack,” Jacobs said. ”If we could duplicate some of that atmosphere in Virginia, I would be thrilled.”
Out of college, Jacobs began working in the real estate business in Cleveland. He pauses when asked to list the projects he has overseen since then – not because he is disorganized, but because there are so many.
Jacobs has developed senior-citizen housing throughout Ohio. His company is credited with transforming a rundown area along Cleveland’s Cuyahoga River into a popular strip of nightclubs known as The Flats.
He owns 10 restaurants in the Cleveland area. His current project is developing what he calls a ”yuppie neighborhood” in the city, converting old warehouse buildings into apartments.
Jacobs, a Republican, also has dabbled in government. In 1982, he was elected to the Ohio House of Representatives, where he served until 1986. He also served as a budget analyst for Gov. George Voinovich when Voinovich was mayor of Cleveland.
But powerful though he was, Jacobs was not invincible in politics. In 1986, he lost a race for state treasurer, and in 1992, he lost a primary race for the U.S. House of Representatives.
During his time in the state legislature, Jacobs met Stansley, who owns Raceway Park, a harness track outside Toledo. Over dinner and a tour of Raceway Park, Stansley says, the two became friends.
About a year ago, Stansley approached Jacobs about loaning some money to Colonial Downs. A lawsuit filed by a rival applicant for the track license had frozen investment bonds for Colonial Downs, and Stansley needed capital to keep the project afloat.
Jacobs had a Virginia connection through his mother, Helen Chaney, who lives in Charlottesville. He was interested in horse racing and, despite the legal questions about the track and his lack of experience in the business, he loaned Stansley more than $2 million.
Eight months later, the project was still bogged down by the lawsuit, and Stansley asked Jacobs to become a partner. When the track becomes a publicly-traded corporation this fall, Jacobs will become chairman of the board.
”He didn’t push me out,” said Stansley, who will sit on the board as a member and also will manage Colonial Downs’ harness racing season. ”I chose him, and I needed him. We thought we could do it alone, but we couldn’t.”
Jacobs says he is fully aware of the changes which have hit the horse racing industry in recent years. He knows how slot machines at Delaware Park outside Wilmington have more than doubled purses, to some $152,000 daily, in just over a year. He also knows how some tracks without slots are struggling.
In a few months, he will watch as Maryland track operator Joseph De Francis fights to win approval from the Maryland legislature for slot machines for his Pimlico and Laurel Park racetracks.
How will he make Colonial Downs work? Jacobs says the answer may be asking the General Assembly to approve more off-track betting parlors. Colonial Downs now has permission to open six parlors, with one open in Chesapeake and another scheduled to open in October in Richmond.
How many more parlors he might request, Jacobs says, depends on how much revenue the six produce and ”what we think the population will support.”
Jacobs makes no bones about the fact that he is not happy with some of the ”baggage” Colonial Downs is carrying. As he indicated at an August meeting with state thoroughbred horsem*n, he clearly wants out of a joint state racing circuit contract with De Francis.
The contract has De Francis shutting down his Maryland tracks during Virginia’s thoroughbred season, then coming to Colonial Downs to manage its season for a cut of the profits.
Some racing experts say competing with Maryland for horses would be the death of Colonial Downs. But Jacobs says he isn’t afraid of competition.
”All I can say is we’re going to try to fine tune this thing to get maximum benefit for Virginia, not money for Maryland,” he said.
How much involvement Jacobs will have in Colonial Downs remains to be seen. He is reviewing resumes of people interested in becoming president of Colonial Downs, looking for a Virginia resident to oversee some of the day-to-day operations of the company.
He says he hopes to name that person by Thanksgiving, around the time that financial papers should be in order and the sale of racetrack stock to the public can begin.
That’s when he expects to see his risk begin to pay off. He brushes aside concerns that investors may be skittish about buying stock, despite all the delays and legal challenges. He also brushes aside questions that he may not be in the project for the long haul.
”When all the smoke clears, Colonial Downs is going to be here for a long time,” he said. ”Sophisticated investors will see that. We’re not going to quit.”
COLONIAL DOWNS TIMELINE
Here is a list of the major actions which have delayed the opening of Colonial Downs for almost two years. Construction at the track to date has involved earthwork, engineering studies and installing infrastructure. Ground is expected to be broken for the $7 million grandstand this fall, with a scheduled opening date of June 15, 1997. Also listed are dates of Jeffrey Jacobs’ involvement in the project.
* October 1994: The Virginia Racing Commission awards the state’s sole pari-mutuel racetrack license to Ohio track owner Arnold Stansley, in partnership with Maryland track operator Joseph De Francis. Stansley plans to open a track in New Kent County in the fall of 1995.
* November 1994: The Virginia Jockey Club, which wanted to build a track in Prince William County, files a lawsuit challenging the commission’s decision. The lawsuit freezes $40 million in investment bonds for Colonial Downs.
* May 1995: A Richmond circuit judge rejects the Virginia Jockey Club lawsuit. Jockey Club lawyers appeal the case to the state Court of Appeals.
* September 1995: With Colonial Downs in dire need of capital, Cleveland developer Jeffrey Jacobs comes on board as an investor. Jacobs says he will commit $10 million to the project, including an immediate cash infusion of more than $2 million.
* January 1996: The General Assembly passes legislation forbidding Colonial Downs from opening more than two of a planned six off-track betting parlors before the track opens for live racing. Parlor profits are the track’s major revenue source before racing begins.
* April 1996: A three-judge panel of the appeals court rejects the Virginia Jockey Club’s lawsuit by a 2-1 vote. Two weeks later, Jockey Club lawyers drop the lawsuit.
* May 1996: The Virginia Racing Commission votes to allow Jacobs to become a 50 percent partner in Colonial Downs.
* August 1996: Colonial Downs officials announce that Jacobs will become chairman of the board when the racetrack converts to a publicly traded company at the end of the year.
* August 1996: The general membership of the Horsem*n’s Benevolent and Protective Association, the group representing the state’s thoroughbred horsem*n, rejects a proposed contract with Colonial Downs. The HBPA’s board later overrules that vote and announces plans to sign the contract, which must be in place for live racing to begin.
* September 1996: Two Northern Virginia horsem*n file a lawsuit against the board of the HBPA and ask for a temporary injunction to block the contract. The HBPA agrees not to sign a contract until the legal action is resolved.
* Sept. 26, 1996: A hearing on the request for a temporary injunction is scheduled for 9 a.m. in Fauquier Circuit Court.
BIOGRAPHY
Name: Jeffrey Jacobs
Age: 42
Residence: Cleveland
Occupation: Principal owner, Colonial Downs racetrack, New Kent County; President, Jacobs Entertainment Ltd.; real estate developer, Cleveland; partner, Black Hawk Gaming casino, Black Hawk, Colo.; partner, the Holiday Inn-Boardwalk hotel and casino, Las Vegas.
Education: B.A., marketing, University of Kentucky (1975); MBA, finance, Ohio State University (1977); M.A., urban planning, Cleveland State (1979).
Family: Engaged to Lynda Dudley, a teacher; no children
