Harness tracks go deeper in red

March 18, 1995|By Jon Morgan | Jon Morgan,Sun Staff Writer

Maryland's beleaguered harness racing tracks lost more than $6 million last year and will seek bankruptcy protection if an effort to sell to horse owners and trainers is not successful, according to the tracks' annual report to regulators.

Colt Enterprises Inc., corporate parent of Rosecroft in Prince George's County and Delmarva Downs on the Eastern Shore, posted a loss of $6.2 million in 1994.

The company's current liabilities exceed its assets by $15.8 million and its tracks have failed to make loan payments to its lender, First National Bank of Maryland, but have reached an agreement that provides for more time to do so, according to the report, filed this week with the Maryland Racing Commission and released yesterday.

"These factors . . . raise substantial doubt about its ability to continue as a going concern," the report said.

Colt's losses, which brought to about $12 million total losses posted by the tracks since 1990, included a onetime $4.8 million accounting charge related to the write-off of goodwill, and a $766,666 tax credit.

An association of harness horse owners and trainers, Cloverleaf Standardbred Owners Association, signed a letter of intent to buy the tracks in a deal worth $11 million, mostly debt assumption. The letter expires May 9, although the parties have said the talks could go past that date if there is progress.

"If this transaction is not consummated, Colt will seek bankruptcy protection," the company said in its report.

It would be the second time in five years the tracks have sought protection from their creditors in bankruptcy court. Former owner and Washington-area developer Mark Vogel filed for Chapter 11 bankruptcy protection for the tracks in 1991, and they were sold to Los Angeles-based entrepreneur and philanthropist Fred Weisman for $18.2 million later that year.

Weisman said he hoped to revive the sport, but a series of mishaps, including a grandstand fire, hampered his efforts, and he began seeking a buyer about two years ago. The tracks have lost $11 million since the purchase.

Weisman died in September, and his estate is continuing efforts to sell the tracks.

"We are moving forward to consummate the deal," said Alan Foreman, the attorney representing Cloverleaf.

Colt Enterprises missed a deadline for delivering the sale agreement to Cloverleaf, but has indicated the document will arrive soon, Foreman said. Meanwhile, the horsemen's association is considering seeking equity investors for the purchase.

Despite the bleak financial results, Foreman said the tracks can be viable with the cooperation of the horsemen because they would reinvest profits and would benefit both from the tracks' and horsemen's splits of the wagering pool.

Racing commission executive director Kenneth A. Schertle said the 1994 results, when onetime charges are deleted, were not as bad as first appears.

But, he said, a buyer must be found to keep the business going.

"Those who are racing in Maryland should be concerned," Schertle said. "We are not guaranteed an operator in Maryland."

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