Panel rips De Francis' track record

April 14, 1994|By Ross Peddicord | Ross Peddicord,Sun Staff Writer

Members of the Maryland Racing Commission admonished Joe De Francis, owner of Pimlico and Laurel race courses, yesterday for poor management skills, making "dumb mistakes" and showing a lack of concern for his customers.

The unusual public tongue-lashing of a Maryland racetrack owner was sparked by the tracks' losing $7.3 million last year. That loss was examined by a commission subcommittee, headed by John H. "Jack" Mosner Jr., which in a public hearing yesterday at Timonium Race Course imposed stringent new requirements on track management, including a demand that De Francis provide the commissioners with monthly financial statements.

"The racing industry means too much to this state," Mosner said. "We don't want to see these tracks go into bankruptcy or be sold to out-of-state owners."

However, the commission's power is limited because the tracks are privately owned.

Mosner said that there is a "people chemistry problem" among managers at the track. "If they can't find a way to get along, he should fire them. There are unproductive individuals there, dead wood," he said. "He should tell them what he wants done and if they don't perform, get rid of them."

Mosner did not name the individuals.

Mosner said the tracks are offering "a poor racing product. I wonder sometimes about the judgment of the racing department. It seems sometimes like they look for the worst races to card on a Saturday [traditionally the busiest day of the week]."

Mosner also cited "lack of pride" among employees and "a dismal atmosphere" at the tracks.

"It costs nothing to fix many of these things," he said of needed physical improvements to the backstretch and in public areas for the fans.

The board requested that De Francis submit a business plan by the end of June. Mosner also urged De Francis to hire a chief financial officer quickly to succeed Frank Trigeiro, who resigned in February.

Mosner said the tracks took in about $400 million in bets last year. Of that amount, the track and horsemen received about $56 million "and expenses exceeded that. The costs are going up, but handle is not increasing that much," he said. Mosner proposed that the tracks seek "unusual ways" to produce more revenue, such as obtaining legislative approval to increase the takeout on exotic wagers and adding a surcharge on out-of-state simulcast bets.

He added that the tracks no longer can afford to keep three stable areas open year-round for training and suggested closing the Bowie Training Center.

De Francis said the financial condition of the tracks is expected to improve in two major areas:

* Bank debt. Pimlico/Laurel has renegotiated its approximately $40 million loan with First National Bank and has received a seven-year extension, until 2001. Interest on the loan has decreased from more than 10 percent to 7.5 percent, saving about $1 million yearly in interest payments.

The tracks also expect to net about $2.5 million from the sale of a tract of land at Bowie called Saddlebrook. About 60 percent of that money will go to lower the debt service. A portion of the additional sale of 100 acres of Laurel land to Washington Redskins owner Jack Kent Cooke for his proposed football stadium also will be paid to First National.

* Salaries. Under terms negotiated with the bank, De Francis and his sister, Karin Van Dyke, cannot receive salaries unless the tracks start making a profit. The salary of the tracks' executive vice president and general counsel, Martin Jacobs, has been halved. Yearly savings is put at $1 million.

De Francis said many of last year's losses were one-time items dealing with severance payments; attorneys' fees resulting from litigation against his former partners, the Manfusos; and $500,000 spent in pursuing the license to build a track in Virginia.

Mosner questioned auditors from Ernst and Young, the accounting firm that performs the yearly racetrack audits for the commission. One of the auditors, Cecil Flamer, said that the tracks are in "viable financial shape." Mosner said a credit report showed that the tracks' bills generally are paid on time.

De Francis said: "It was perfectly appropriate for the commission to seek an explanation, since we lost money last year."

De Francis said he is willing to cooperate with the commission to improve the tracks' performance.

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