Landow may bid for share of tracks Cooke's estate selling possible lucrative interest

January 08, 1998|By Jon Morgan | Jon Morgan,SUN STAFF Sun staff writer Tom Keyser contributed to this article.

Montgomery County developer Nathan Landow says he is considering buying an interest in the state's major thoroughbred racetracks from the estate of the late Washington Redskins owner Jack Kent Cooke, something that could provide a beachhead for potential casino or slot machine gaming.

Cooke acquired an interest in the tracks in 1993 when he was shopping for a site to build a new football stadium. Cooke received an option on land at the Laurel Park racetrack in exchange for financial assistance to the track's principal owner, Joe De Francis.

Blocked from Laurel in 1994, Cooke eventually built his stadium at Landover.

The terms of Cooke's deal with De Francis have never been made public, but sources familiar with the arrangement said Cooke gave both a loan and letter of credit to De Francis and his co-owners. The notes give the holder the right, in the event De Francis does not keep up with payments, to claim 47 percent of the stock in Pimlico, 25 percent of Laurel and a portion of a training center at Bowie.

Landow said De Francis acknowledged in writing to Cooke in September 1996 that he was in default on the loan -- although there is some dispute about whether he remains in arrears. In either case, Cooke did not exercise his right to take over the tracks, and so far the estate hasn't triggered that clause either. Cooke died last April, and his estate is selling his interest in the tracks.

The deal could prove lucrative in the event casinos or expanded gaming is legalized in the state and the tracks were sold. The racetracks would be a likely place for slot machines or other gaming to begin.

"It is an interesting opportunity," Landow said. "We're very, very carefully evaluating the numbers. But we're moving in a positive direction."

De Francis was unavailable for comment yesterday. The Maryland Jockey Club released a short statement saying it was "concerned and surprised" to have read unspecified "inaccurate statements" by Cooke representatives in a story on the possible sale in yesterday's Washington Post.

The statement did not address the alleged default on the Cooke loan, or say if De Francis has become current on the debt.

"The stockholders of the Maryland Jockey Club will respect the confidentiality of their loan document and, consequently, will not comment further on the matter," the statement said.

On Tuesday, Maryland Jockey Club executive vice president Martin Jacobs said the agreement with Cooke gave De Francis and his group the right to oppose a transfer and that a sale is not a sure thing.

"We have rights with respect to it," Jacobs said.

A source familiar with the Cooke estate's dealings confirmed that it has put up for sale its interest in the tracks, and that bidders have come forward, including Landow. But there is no urgency to the sale. The trustees have by law at least five years to sell assets beyond the date the will is settled, an event that could be three or more years off.

Under the terms of Cooke's will, most of the money raised by selling assets is to be turned over to a charitable foundation and used for scholarships.

The loan agreement between Cooke and De Francis gave Cooke 50 percent of the votes in operating the tracks in the event the ownership claim is triggered by a default. The other 50 percent would be held by De Francis, his sister Karin Van Dyke, and Jacobs.

The trustees do not believe a buyer of the notes would have the same enhanced voting strength. That means the buyer would be putting up millions of dollars and getting little control and likely no dividend income; the investment would be a bet on casinos eventually coming to the state and the track's value rapidly rising.

De Francis used Cooke's financial assistance to buy out two estranged partners in the track, the brothers Robert and John "Tommy" Manfuso, for $8.2 million in 1993. The arrangement called for a five-year payment schedule, during which the Manfusos hold all the track's stock as collateral.

Tommy Manfuso said they have been receiving payments and have not been notified of any potential purchase or payoff. A buyer of the Cooke notes would be getting the potential right to the stock owned by the Manfusos prior to the buyout.

Manfuso said De Francis should not have been allowed to buy out his partners with borrowed money, and without demonstrating greater financial resources.

"If they didn't have $8.2 million to accomplish our buyout I didn't think they had the economic wherewithal to run the tracks," said Manfuso, a critic of De Francis' management.

Other industry representatives expressed concerns yesterday that partial control of the tracks would fall into the hands of non-racing interests.

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