Maryland's thoroughbred tracks show doubling of profit in 2001

Most of rise to $1.5M credited to Preakness

Senate OKs aid measure

Horse Racing

March 16, 2002|By Jon Morgan | Jon Morgan,SUN STAFF

Maryland's major thoroughbred racetracks doubled their combined profit last year, thanks to a record Preakness Stakes, according to financial statements released yesterday.

Pimlico Race Course in Baltimore posted a profit of $3.9 million, double that of the year before, because of strong Preakness attendance and wagering, as well as troubles at sister track Laurel Park.

Pimlico's gain was, however, Laurel's loss: the Anne Arundel County track reported a loss of $2.4 million, nearly twice the $1.3 million loss posted the year before.

Combined results for the tracks, which share overlapping ownership, still showed strong improvement, with a profit of $1.5 million in 2001, twice the net income of $670,955.

"Being in the black is always better than being in the red," said Joe De Francis, president and majority owner of the tracks, known collectively as the Maryland Jockey Club. "We were really pleased we were able to increase our bottom line. I just hope we can sustain that."

Record Preakness attendance of 104,454 and betting of $36.4 million was a "major factor" in the turnaround, De Francis said. The second leg of thoroughbred racing's Triple Crown, held May 19, was won by Point Given.

Results for the 2000 Preakness were affected by reduced attendance due to rain and reduced betting due to a prohibitive favorite, Fusaichi Pegasus. However, Red Bullet won the race.

Other factors in the tracks' profitable year included a concerted effort to reduce expenses, increased simulcast wagering and growth in the revenue from the export of Maryland race signals to out-of-state outlets.

Throughout 2001, attendance at the tracks for live racing continued to decline, dropping 16 percent from the year before to 1.7 million.

Last spring, the General Assembly cut $10 million in purse supplements from the budget year that began July 1. The money, which was shared with the state's harness tracks, is distributed to top-finishing horses in each race.

The impact of those cuts began to be felt last year, when the thoroughbred tracks eliminated 22 stakes races, including the Laurel Futurity, and canceled Sunday racing for nine weeks.

Despite that, De Francis said there was a reversal last fall in what had been a long-term migration of wagering away from live racing to the less-profitable simulcasts. By fall, the jockey club had cut back on races to increase the number of horses in each. Bettors prefer races that have good-sized fields.

In 2001, an average of 8.6 horses started per race, compared with 7.9 the year before.

Lawmakers in Annapolis yesterday took a step toward boosting purses during the fiscal year that begins next July. The state Senate passed a measure that includes a diversion of $4.5 million in accumulated funds to purses.

Whether the House of Delegates will agree to the budget proposal is unclear.

De Francis said he was surprised by yesterday's Senate action and pleased. "That money is the industry's money and we definitely should use it to improve the industry," he said.

The money designated by the Senate is in a special account funded by a portion of wagers and uncashed winning bets that was set up to pay for track improvements. The tracks have canceled those plans, saying they didn't receive enough money to sell the bonds they hoped to use.

The jockey club said it spent $4.3 million on physical improvements to Pimlico and Laurel and on other capital expenditures in 2001.

In a statement yesterday, the jockey club said that last year it continued a policy of reinvesting all profits in its physical assets, primarily at Laurel and Pimlico, and of declining to issue dividends, profit distributions or other returns on equity to the tracks' equity owners.

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