De Francis unveils changes to help tracks' bottom line

April 29, 1994|By Ross Peddicord | Ross Peddicord,Sun Staff Writer

Pimlico/Laurel race courses owner Joe De Francis -- in an apparent response to concerns expressed by the Maryland Racing Commission earlier this month -- yesterday announced two key changes designed to help avoid another loss like last year's $7.3 million.

At a news conference at Pimlico, De Francis announced the appointment of a new top financial officer and plans to hire a consultant to teach employees how to make the track more appealing to the public.

De Francis also released figures showing that net revenues for the first quarter of 1994, after the deduction of simulcasting fees, are $3 million ahead of the same period last year.

However, last year's first quarter was one of the worst in history. De Francis has said they lost $4 million in that quarter.

Yesterday, De Francis said he could not immediately determine if the tracks had made a profit during the first quarter. He said the cancellation of 13 live-racing cards and higher-than-expected maintenance costs, mainly snow removal and care of the tracks, will hurt.

At an April 13 public hearing of the racing commission, De Francis was urged to make several major changes and was scolded for the financial loss and overall track management.

Commission members requested that a financial officer be hired soon to replace Frank Trigeiro, who resigned in February out of frustration with management. Trigeiro was first vice president of finance for the Maryland Jockey Club, Pimlico/Laurel's corporate parent.

The new financial officer is O. J. "Jim" Peterson III, recently retired senior vice president and chief financial officer of Dominion Resources, Inc., a $12 billion energy and natural resources company. Its subsidiaries include Virginia Electric and Power Co.

"Jim is a blue-chip executive who is a terrific addition to this organization," De Francis said.

He emphasized the significance of Peterson's appointment. "Unequivocally, there is no one in the industry nationwide that has a stronger financial background than Jim Peterson," De Francis said.

He also announced that in conjunction with the track employees' union, a motivational-type consultant will be hired to train management and other employees in implementing customer-service policies.

This move apparently is being made to halt declining attendance. Last year, track attendance dropped to 2.4 million from 2.6 million the previous year.

"We want these tracks to be customer friendly and turn around the perception that they are not," said Tom Russow, president of Local 27 of the United Food and Commercial Workers Union.

De Francis was generally upbeat about track finances: "I'm encouraged that net revenue rose by 19.6 percent [during the first three months of 1994], and that gross handle during that fTC period, despite the horrible weather, grew by $26 million. The trend is continuing at the current Pimlico spring meet."

He said that losses incurred last year "resulted from the first half of the year before we implemented the fundamental changes in our business [initiation of full-card simulcasting and off-track betting]. The burden of those losses fell primarily on me and my partners."

* De Francis plans to curb California and New York full-card simulcasts. The fees, he said, charged by the tracks in those jurisdictions for the televised signal of their races is too high.

"There is a limit to how many dollars we can ship out of state," De Francis said. "After a year of full-card simulcasting, we have found we can't be held hostage to tracks that want to charge a premium for their races. Signal fees are one of our largest expenses. We have to set economic policies and stay within those guidelines."

* The thoroughbred tracks also have reached an agreement with Rosecroft/Delmarva harness management to allow the nighttime card from a thoroughbred track to be simulcast on an experimental basis at all Maryland betting outlets.

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