Track losses may be consideration in Va.

March 18, 1994|By Ross Peddicord | Ross Peddicord,Sun Staff Writer

The financial problems of Maryland's racetracks might have an impact on who is awarded the license to operate Virginia's first pari-mutuel facility.

Laurel/Pimlico, which according to audited reports lost $7.3 million last year, is competing with five other groups to build that state's first track.

Competitors for the license criticized Maryland operator Joe De Francis yesterday, saying that his Virginia venture is "an absurd situation" since his own tracks are losing money and that the financial condition of Laurel/Pimlico has now become "a public issue, hanging over [the Virginia selection process]."

"I don't see how he [De Francis] can take money out of an operation that needs it to pursue a track in another state," said Jim Wilson, whose proposed Virginia plant, Dominion Downs, is near Haymarket. "He bought out his partners [the Manfusos] for $8 million, lost $7 million and is committing $55 million to build a new track in Virginia. It has to raise a very serious question: Why is this man undertaking all of this? It seems someone would have to say it is not a prudent course. I don't understand why someone on the Maryland Racing Commission doesn't put his foot down and put a stop to it."

According to De Francis, "it's curious that Mr. Wilson, of all people, is making these kinds of charges. In a report he filed with the Securities and Exchange Commission last year, his track in Puerto Rico [El Commandante] lost $4 million."

Karl Schmitt Jr., vice president of corporate communications for Churchill Downs, which proposes to build a track in Virginia Beach, said Laurel/Pimlico's financial losses "are something we're not interested in commenting about." But Tom Aronson, a consultant for the track, said "that citizens at a public hearing [in Leesburg on Monday] raised the question out of the blue. It is going to be an issue."

De Francis attributed the 1993 losses to "two components. We lost $4 million during the first four months of the year before we wentinto simulcasting and opened off-track betting parlors. Then lost $3 million on what I call one-time items, such as paying the Manfusos $600,000 in severance payments, $450,000 in legal fees [to litigate against the Manfusos], $500,000 in start-up costs to go into Virginia and other such expenses. We could have taken emergency measures and done things like cutting people's salaries or closing down stable areas at Pimlico or Bowie. But is it better for the tracks to show a profit or to have people suffer? Purses are up, salaries are up and the tracks are on solid financial ground.

"We just completely re-negotiated our loan with First National Bank. Believe me, that couldn't have happened if we had been on shaky ground. Also if things are as bad as some people portray them, why didn't my partners [Martin Jacobs and Karin De Francis Van Dyke] and I sell out to Hollywood Park in January when we had the chance? We could have walked away with $8.2 million."

Arnold Stansley, who plans to be partners with De Francis in Virginia at a New Kent site, said the Laurel/Pimlico losses "are explainable. I'm a track operator and am amazed that Joe can keep three stable areas open all year. It is hard enough to keep one open. Add those costs to depreciation and you account for the $7 million. Maybe these losses are hard for some people to comprehend, but they are explainable and I'll swear to it."

De Francis said that "in a roundabout way, our losses last year show just how intense competition is at East Coast racetracks and why it's important to have this Maryland-Virginia circuit. The New York Racing Association lost $9 million in just the first three months of this year. In the last seven years, Bob Brennan, who operates Garden State Park, lost $150 million. And Philadelphia Park is hurting so badly that horses are starting to come our way from up there."

De Francis said that although Churchill Downs is debt-free and has stated it has $35 million in cash reserves, "their situation is not analogous to ours. They operate three months of live racing instead of year-round and have the Kentucky Derby. Give me three months of live racing and the Derby and I could do that, too."

NOTES: Edgar Prado, who rode this winter at Aqueduct, returns to action full time at Laurel on Saturday. . . . Oaklawn Park has become Laurel/Pimlico's primary afternoon simulcast signal now that the Gulfstream Park meet is over. . . . Ted Snell, president of Rosecroft/Delmarva, said audits released yesterday show that his tracks lost $1.38 million in 1993.

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