De Francis vs. Manfusos likely to end in knockout Winner to influence future of state racing

May 07, 1992|By Jon Morgan | Jon Morgan,Staff Writer

There are few sure things in horse racing, but bet on this: Come next year, one of the two biggest names in Maryland racing -- De Francis or Manfuso -- no longer will have a stake in the state's major thoroughbred tracks.

Most likely, one of the co-owners of Laurel and Pimlico will buy out the other, removing from track management one of two family names that have dominated Maryland racing since the early 1980s.

Breeders, fans and others are watching the looming battle closely, because whoever owns the tracks will determine, to a large degree, the future of the state's troubled racing industry during a time of great change.

"This is high stakes, no question about that," said Richard W. Wilcke, executive vice president of the Maryland Horse Breeders Association Inc.

The eruption of a court battle last week between Joe De Francis and Bob and John A. "Tom" Manfuso, co-owners of the tracks, seems to eliminate any chance of reconciliation between the bickering millionaires.

The lawsuit, filed April 29 in Baltimore Circuit Court by the Manfusos, also provided the first public glimpse at a lucrative agreement signed after the 1989 death of Frank J. De Francis. The agreement provided for multimillion-dollar payouts to participants and for a process by which De Francis' son and heir, Joe, either would own Pimlico and Laurel outright or sell his interest to his father's partners by October 1993.

The Manfusos were surprised when the younger De Francis, then a Washington lawyer with limited experience in the industry, voted his father's stock to install himself as chief executive officer. Joe De Francis said his father, a racing promoter credited with advancing the industry in Maryland, asked him from his deathbed to carry on his life work.

To avoid a messy legal battle for control, the two sides signed in October 1989 a 30-page stockholders agreement, of which only scant details had been public before the filing of the lawsuit last week.

According to the agreement, one side can offer its shares for sale at any price it wants after Oct. 1, 1993. The other side either must buy at that price or sell its shares. This is known as a "Russian Roulette" provision, because the side that triggers the measure in an attempt to take over risks losing its share.

De Francis declined to say what he intends to do next year, but said: "I would certainly speculate that something will happen, and you will see one of the groups no longer here."

He left little doubt that he enjoyed his current position and wanted to keep it.

"My father put his life into this, and I've put an enormous effort into it. This is now my career. . . . I couldn't begin to think of how I could go back to law," De Francis said.

He said he was angry that the Manfusos opted to retire so quickly. The Manfusos left active management of the tracks May 31, 1990 -- eight months after the agreement was signed -- blaming De Francis for a drop in business at the tracks.

The Manfusos remain stockholders and directors of both tracks, with Robert Manfuso serving as co-chairman of Laurel and Tom Manfuso serving as co-chairman of Pimlico.

Under the terms of the 1989 agreement, the Manfusos each received a termination payment of $1.25 million -- representing their original investments in Pimlico -- upon retirement and are receiving severance payments of $125,000 a year through September 1993.

De Francis also was eligible for $1.25 million when the Manfusos retired, according to the agreement. Executive vice president and treasurer Martin Jacobs was eligible for $150,000.

Jacobs and De Francis have not exercised their options to take the money. Jacobs, De Francis and the Manfusos are the only stockholders of the closely held tracks.

"They [the Manfusos] took advantage of the agreement to retire in the spring of 1990 and literally have not lifted a finger to help," De Francis said.

"Given the challenges we face, I don't have a whole lot of patience with people that don't want to help," he said.

Robert Manfuso, a second-generation horse breeder and former pharmaceutical executive, said he and his brother retired because "it was just time to back out and let him [De Francis] put his own stamp on the business."

"With a young guy like Joe, he should have the opportunity to bring in fresh ideas and people. He will be measured by his performance. If you get into the kitchen, you've got to take the heat," Manfuso said.

He declined to say what he and his brother will do next fall, a period he called a "window of opportunity to move one way or the other."

However, he predicted that the current split ownership would not continue, meaning one side or the other will rule the tracks. "How it plays out, I don't know," he said.

The lawsuit was necessary to protect the tracks and, by extension, Maryland racing, Manfuso said.

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