State tracks finish out of money again Pimlico/Laurel lost $750,183 in 1992

March 17, 1993|By Jon Morgan | Jon Morgan,Staff Writer

Maryland's major racetracks -- saddled with heavy debt and financial troubles on breeding farms -- lost money for the fourth straight year in 1992, although there was some improvement from the year before.

The jointly owned Pimlico and Laurel race courses, the state's primary thoroughbred tracks, lost $750,183 in 1992, according to financial reports released yesterday by the Maryland Racing Commission. That compares with a loss of $859,299 in 1991.

After leading the American racing industry in growth through the last half of the 1980s, Maryland's tracks have seen a steady decline in business attributed to everything from changes in the tax code to changes in track management and a national shortage of horses.

Because the tracks are the hub of the state's tightly interconnected breeding, racing and equine investment industries, losses there spread worry far beyond the grandstands. The red ink also fuels the increasingly hostile dispute among track owners, which recently focused on CEO Joseph De Francis' pay of more than $700,000 a year.

"We're concerned about the health of the tracks because they are our market. When they are doing poorly it casts a pall over the industry," said Richard W. Wilcke, executive vice president of the Maryland Horse Breeders Association.

Pimlico and Laurel have not earned a combined profit since 1988, and since then have racked up $2.8 million in losses. The last time one of them was in the black was 1989, when Pimlico eeked out a meager $35,949 in net income that was overwhelmed by Laurel's loss of $370,312.

Track attendance of 2.6 million was off by nearly 3 percent last year and total betting of $375.6 million was down nearly 6 percent. It was the second year in a row those figures fell, although the drop was less than the fall of 6 percent in attendance and 7 percent in betting posted in 1991.

"Obviously we're disappointed that our financial performance has not been stronger, but the economy has been poor and the horse breeding industry has been extremely weak," said De Francis, who is both chief executive and majority owner of the tracks.

The documents list his salary and "non-officer" compensation at $719,400. In past years, the documents did not include the "non-officer" compensation, a practice De Francis said began with his father, the late Frank De Francis, from whom he took over operation of the tracks in 1989.

In an amendment last week to their ongoing suit against the younger De Francis, Tom and Bob Manfuso, estranged partners of De Francis and minority shareholders in the tracks, questioned the high salary, saying his pay exceeds that of similar executives at other tracks nationwide.

Martin Jacobs, executive vice president of the tracks, received $389,740 last year.

De Francis said yesterday that he has no plans to cut his pay, but would consider doing so if the losses continue.

"I have to do whatever is necessary to protect the viability of the business and if that means working for free I will do it," De Francis said.

The industry still is reeling from a 1986 change in the U.S. tax code that removed loopholes that favored investing in horses. That, and a drop in betting, attendance and purses related to the recession, has created a "horse shortage," he said.

Laurel and Pimlico last year cut their average cards from 10 to nine races a day.

But De Francis predicts 1993 will be a turning point, with the commencement of off-track betting and enhanced simulcasting among tracks around the nation.

Although it lost more money, Pimlico, the home of the Preakness, seemed in somewhat better shape last year. The Baltimore track had an operating income of $1.6 million, but saw it erased by $2.4 million in interest payments left over from the purchase of the track in 1986. Pimlico posted a net loss of $465,644, down from $500,597 in 1991.

At Laurel, in Prince George's County, a decline of nearly 8 percent in racing revenues outstripped a 2 percent drop in expenses for an operating loss of $97,272.

That compares with an operating profit of $1.2 million the year before. But interest costs related to its purchase in 1984 pushed the track $284,539 into the red last year, down slightly from a loss of $358,702 the year before.

Both tracks suffered declines in nearly every category: admissions, concessions, program sales and betting. One area of growth: television and radio income for Pimlico, related to the Preakness.

Track management reduced in salaries and the promotion budget, among other things.

Bob Manfuso said yesterday that he had not seen the financial results and couldn't comment on them. But, he added, #i "Obviously you're always concerned if an investment is headed south."

The state's harness tracks also had their problems. Delmarva posted a loss of $575,304 last year, compared with a loss of $566,305 the year before. Rosecroft, still recovering from a grandstand fire in late 1991, lost $2.5 million last year, compared with a $710,464 deficit the year before.

"We had a lot of start-up costs and are doing a lot of promotion and renovation," said Edward "Ted" Snell, president of Colt Enterprises, which bought both tracks through bankruptcy court 1991. "But we should break even this year."

Losing at the track

K?

Profits or losses at Laurel and Pimlico starting in 1988:

Year ...... Pimlico ......... Laurel

1988 .... +$1,600,000 ...... -$67,744

1989 ....... +$35,949 ..... -$370,312

1990 ...... -$483,972 ..... -$365,086

1991 ...... -$500,597 ..... -$358,702

1992 ...... -$465,644 ..... -$284,539

So: Md. Racing Commission

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