Md. tracks show $1.7M profit, less than '95 Weather, simulcasts contribute to drop

March 15, 1997|By Jon Morgan | Jon Morgan,SUN STAFF

Maryland's major thoroughbred racetracks earned a profit of $1.7 million last year, among the best showings in recent years but down sharply from 1995 because of weather-related shutdowns, higher taxes and a growing preference of fans to bet on televised instead of live races.

The profit was off 59 percent from the record $4.2 million earned in 1995. The tracks raced 14 fewer live days in 1996 and one fewer simulcast day, largely due to the harsh winter storms of early 1996.

Total wagering at Laurel Park, Pimlico Race Course and affiliated satellite wagering parlors was $459 million, down about 3 percent from the $475 million posted the prior year.

The average daily handle, however, was steady, suggesting the winter shutdowns were largely to blame -- perhaps shaving $20 million or more off the handle.

"You'd like to see a bottom line better than the year before. But there are 14 days less -- that's $20 million right there. It's not 'Oh my God, the sky is falling,' but I need to study the results more to comment," said Kenneth Schertle, executive director of the Maryland Racing Commission.

As required by law, the tracks provided their financial results to the commission yesterday and made them public. The results are much better than a slide earlier in the decade, when the tracks bled more than $8 million of red ink in three years.

The tracks' pre-tax, operating profit was down 28 percent for 1996, to $4.35 million.

Looming ominously is a precipitous shift among fans toward betting on the "simulcast" races rather than live ones. The tracks, which once spoke hopefully of keeping a 50-50 ratio in that business, passed that mark in 1995 and last year saw 65 percent of the wagering go to simulcasts. Gambling on live races at the tracks declined 15 percent last year alone.

That hurts the tracks in a number of ways. Simulcast races contribute a lesser percentage of bets to profits and purses than does live racing. They even cut down on concession revenue because fans concentrating on the dizzying array of races eat less food.

"It has hurt us badly. We certainly do better on live racing but simulcasting helps us retain patronage we might otherwise have lost," said Martin Jacobs, a co-owner and treasurer of the Maryland Jockey Club, corporate parent of the two tracks.

He termed the overall results "bleak," and noted that the company spent $3.3 million last year to maintain the aging tracks -- a number that continues to rise. The tracks employ about 1,000 workers.

Jacobs said the company would have to look at ways to cut expenses, especially in the face of a challenge from Delaware Park. That competitor, enriched with slot machine revenue, has boosted its purses and may take business from Maryland.

The money raised for purses last year in Maryland declined 5.6 percent. The purse account is funded by a percentage of wagering.

Attendance, too, continued to fall as fans opted for off-track parlors or simply gave up on the sport. The two tracks and associated inter-track wagering sites -- Rosecroft and Ocean Downs -- suffered a 9 percent decline in total attendance, to 2.1 million. The tracks' advertising spending dropped 6 percent last year.

At the peak, in 1988, the tracks drew 2.8 million fans.

A number of accounting devices that reduced taxes have also run out for the tracks. Last year the tracks paid $1.1 million in state and federal corporate income taxes, up four-fold from $265,364 the year before.

On the bright side, the tracks have been winnowing down what had been a staggering debt load. And the fees earned by selling telecasts of Maryland races to tracks around the country nearly doubled last year, topping $4 million.

As part of their agreement to operate a track under construction in Virginia, Maryland tracks received $689,495 in management fees -- actually a percentage of the handle bet at Virginia's off-track betting parlors. That number should increase this year when the Virginia track opens for business.

Joe De Francis, whose $700,000-plus salary was a point of contention a few years ago, paid himself $319,364 last year, 21 percent less than the year before. He owns a majority of the stock of the Maryland Jockey Club.

Pub Date: 3/15/97

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