Tracks show profit of $1.9M Pimlico and Laurel post 10 percent gain

Virginia impact felt

March 17, 1998|By Jon Morgan | Jon Morgan,SUN STAFF

In a sign of continued healing at Maryland's major racetracks, the owners of Pimlico Racecourse and Laurel Park yesterday reported a profit of $1.9 million for 1997, up 10 percent from the year before despite shutting down live racing for six weeks.

The Maryland Jockey Club's annual financial statement to state regulators offers the first glimpse of the financial impact of the tracks' partnership with Virginia's nascent thoroughbred racing industry.

Maryland shut down its tracks for six weeks last fall while horses raced at a partner track near Richmond. The local tracks remained open for electronic, or "simulcast," betting.

The results showed a predictable drop in betting and admission revenue at Pimlico, which lost 18 live racing days and $24 million in wagers. But there was an offsetting doubling in the management fees paid to the Maryland tracks by Virginia's Colonial Downs: to $1.5 million.

The bottom line: The number of live racing days fell by 7 percent, racing-related expenses fell by 4 percent, but total wagering for the year was reduced by only 2 percent. Meanwhile, purse money was stockpiled for the resumption of live racing.

"I think overall the Virginia racing circuit has worked out well for the industry. It has certainly gained advantages for us," said Martin Jacobs, treasurer and part-owner of the tracks.

Overall, however, Jacobs said of the yearly financial results "I'm not encouraged. We did about the same as the year before."

The Baltimore track posted a profit of $1.2 million, down 37 percent from the prior year. Laurel Park showed a profit of $707,545, compared with a loss of $205,574 in 1996, a year that saw severe winter weather shut down the track for nine days.

The combined operations of the tracks, which share ownership, showed the fourth year in a row of profits. Profits since 1994 total $8.94 million, nearly making up for the $10 million in losses suffered during the disastrous, five-year slide of 1989-1993.

But Jacobs said the cushion is too little to take for granted. The levels of profits now are slim enough that they could easily be reversed by a streak of bad weather or a poorly attended Preakness, he said. That signature race generated $4 million in pre-tax profits for the tracks last year.

The tracks have gone about as far as they can with the cost-cutting that has helped them return to profitability, he said.

While race-related expenses fell with the six-week shutdown last year, administrative costs at the tracks -- such as office salaries, insurance, attorney and consultant fees -- increased by a like amount, $1.4 million, to $7.1 million.

Jacobs said the benefits of off-track betting and full-card simulcasting, innovations added in recent years, have peaked. Meanwhile, the tracks face new competition from tracks in Delaware and West Virginia, which have added slot machines.

"We've tried as hard as the dickens to turn the business around. But this can't continue," Jacobs said.

Maryland's tracks have lobbied unsuccessfully for permission to operate slot machines. So far, Gov. Parris N. Glendening has refused, but he has gone along with a number of other reforms, including a temporary reduction in state taxes taken from wagers, and the diversion of some lottery money, to boost purses.

The state also took over late last year the costs of some track workers, which should pare expenses at the thoroughbred tracks by about $1 million this year.

Track president Joseph A. De Francis, whose $700,000-a-year salary drew criticism when the tracks were losing money, paid himself $396,000 last year, up 24 percent from 1996.

Red and black

H

Recent combined profits or losses at Laurel and Pimlico:

Year, Amount

1989, -$334,363

1990, -$849,058

1991, -$859,000

1992, -$750,000

1993, -$7,226,000

1994, +$1,168,000

1995, +$4,156,000

1996, +$1,720,074

1997, +$1,896,639

Pub Date: 3/17/98

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