Preakness infield's upside

Restraint: The economic slump has only slightly dented the considerable amount of money corporations spend entertaining at Preakness.

127th Preakness

May 18, 2002|By Robert Little | Robert Little,SUN STAFF

Despite some boardroom soul-searching, the dampened economy seems to have done little to restrain spending at one of Baltimore's most lavish and expensive executive parties - the corporate village at the Preakness infield.

Local businesses have been pressured more than ever this year to justify the sometimes six-figure cost of throwing an invitation-only fete at Pimlico Race Course during the Preakness Stakes.

The one-day binge can cost more than the annual salary of an employee or two - an awkward check to write at a time when earnings are down and companies are cutting employees and slashing costs.

But the annual extravagance will go on largely as before - the tables in linen, the ladies in hats, the crab cakes and tenderloin, as ever, in abundance.

And corporate participants are largely unapologetic. As a social, political and promotional affair, they say, Preakness Day is simply too momentous to pass up.

"This would be the worst time to cut back," said David S. Iannucci, secretary of the Maryland Department of Business and Economic Development.

The state of Maryland will have one of its largest parties ever at the Preakness - eight tents, costing $190,000. The bill will be footed by taxpayers, although they are not invited to the state's bash.

"It's at a time like this that I, in fact, feel the greatest pressure to market ourselves and show key decision makers what Maryland has to offer," Iannucci said.

The fenced-off corporate village will have 39 tents this year, down from 45 last year. This is the first year since 1988 - when the first infield hospitality tent was erected - that the corporate village has been smaller than the year before.

Constellation Energy Group Inc. concluded it could not justify the costs of throwing an expensive party while in the midst of a broad cost-cutting campaign and early retirement program, and backed out of the corporate village.

The Sun, which has frozen management salaries and reduced its staff through voluntary buyouts, will rent two tents instead of four.

But racetrack officials and sports marketing experts call the decline a one-time stumble - and a modest one.

Much of the lost tent-rental revenue has been offset by sales in two new exclusive seating areas near the finish line, track officials say.

"There's no substitute for the face-to-face contact we get out of this," said Dennis Laux, vice president of corporate marketing for Aegon USA Inc., which has a major corporate office in Baltimore. The giant insurer has rented five tents to entertain more than 200 of its top clients.

"Typically we'll have meetings throughout the day on Friday, and the Preakness is sort of the reward," Laux said.

PHH, a Hunt Valley company that leases and manages automotive fleets for large corporate and government clients, will be the host of an entire hospitality weekend around the Preakness - including a golf outing, hotel accommodations and catered dinners for more than 100 top clients and spouses. The combined event costs roughly $100,000, and company officials say it is worth the price.

"Can you quantify it? No. But we don't really look to see measurable results," said Bill McDade, senior vice president of client relations at PHH.

"It's more of a `thank you' for clients and suppliers, and now it's become kind of a tradition. Even if we were cutting back, this would be on our short list of things we would keep. It's the Preakness - a premier Baltimore event. There's nothing else like it."

Some corporate watchdogs think that such expensive entertaining could backfire at a time when earnings, stock prices and economic growth are depressed.

Shareholders of some publicly traded companies have recently gone so far as to restrain executive salaries, expressing an indignation that has long simmered but is now frothing to the surface, they say.

"I think this kind of thing is an outrage," said Bill Patterson, director of the Office of Investment for the AFL-CIO.

"You have the stock market falling way below shareholder expectations, an economy that's really shaky, and these companies don't seem to have gotten the message yet.

"It's the corporate culture of the '90s. And shareholders and employees and the public at large won't tolerate these kind of symbols of excess anymore."

Far from discouraging the image of excess, Preakness planners work hard to perpetuate it.

In contrast to the rowdy sea of beer and sweat on the other side of the infield, the corporate village is unreservedly prim.

Attendees have their own bathrooms, betting windows, televisions and parking spaces. Musicians stroll across the fake grass. Caricature artists, handicappers and palm readers staff the gazebos.

And the food certainly ranks among the finest ever served so close to a barn. Glazed duck, watercress salad, strawberries injected with Grand Marnier, all served in silver. In the corporate village, they eat tenderloin. Outside the village, the best cut of beef you can get is prime rib.

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