The Maryland Racing Commission has embraced Magna Entertainment Corp. as majority owner of Pimlico and Laurel Park, turning the spotlight on Magna to begin fulfilling its promise for Maryland racing.
Yesterday, the nine-member commission unanimously approved Magna's agreement to buy 51 percent of the Maryland Jockey Club in a deal valued at $117.5 million. Lou Ulman, chairman of the commission, proclaimed it "the dawn of a new era in Maryland racing."
The Canadian-based Magna, the largest owner of racetracks in North America, has vowed to revitalize Maryland racing by transforming tracks into entertainment centers, upgrading stable areas, providing friendly service and offering a wide distribution of Maryland races for betting via telephone, TV and computer.
Although Magna owns or has deals pending to buy 14 racetracks - and is building a track in Austria - Jim McAlpine, president and CEO of Magna, told commissioners that Maryland and the Preakness will be Magna priorities.
"We're purchasing a majority interest in the Maryland Jockey Club because of the Preakness," McAlpine said. "It will become the crown jewel of Magna Entertainment. We plan to continue running it at Pimlico. ... Maryland and the Preakness will be a very, very important piece of our game plan."
After hearing Magna's commitment, John Franzone, a commission member, said: "Let's just rock 'n' roll. Let's go."
The Magna-Maryland Jockey Club deal must be approved by the Virginia Racing Commission at its meeting Nov. 20. Virginia commissioners must approve it because the Maryland-Virginia Racing Circuit, Inc., which manages Colonial Downs and its off-track-betting centers, is a subsidiary of the Maryland Jockey Club.
McAlpine said he expects the deal to be closed late this month or early next month.
During an interview this summer at Saratoga, Frank Stronach, chairman of Magna, said he plans on tearing down Pimlico after next year's Preakness and rebuilding it from the ground up. Stronach didn't attend yesterday's meeting, but McAlpine said Magna still plans on rebuilding Pimlico, but not for at least three years.
In the meantime, he said, Magna will spend at least $10 million in each of the next three years on upgrades at Pimlico, Laurel Park and the Bowie Training Center. He declined to offer specifics about what will be upgraded.
McAlpine acknowledged that the possible legalization of slot machines in the coming legislative session complicates efforts to devise specific plans now. If the legislature approves slots at racetracks as Gov.-elect Robert L. Ehrlich Jr. wants, then Magna would have to incorporate slots casinos into its plan for Pimlico and Laurel Park.
McAlpine said he views slots as a "short-term consideration" that would help Maryland racing keep pace with tracks in neighboring states that have them. In the long term, he said, racing needs to expand its fan base and improve the distribution of its races so it can stand on its own.
Alan Foreman, lawyer for the Maryland Thoroughbred Horsemen's Association and member of national racing organizations, serves on boards with McAlpine. Foreman praised McAlpine's and Magna's vision for the sport and commitment to live racing.
"It's obviously a moment of great promise for Maryland racing," Foreman said after the commission's enthusiastic vote for Magna. "I'm looking forward to their implementing the vision they've articulated. I believe they are going to deliver on their commitments here."
Joe De Francis, president and CEO of the Maryland Jockey Club, will continue to head day-to-day operations. He and his sister Karin, a Maryland Jockey Club executive vice president, will retain 49 percent ownership of the tracks.
Joe De Francis said that MJC and Magna officials are working on plans that "I think everybody will be really excited about." He said the alliance with Magna "gives us the opportunity to take racing to a whole new level. We are absolutely thrilled and excited. The future couldn't be brighter."
Magna will pay Karin and Joe De Francis a total of $1.6 million at closing as well as $9.2 million each for the right to buy them out in four years. If Magna exercises that option, it would pay the De Francises an additional $18.3 million at that time.
Magna will pay $49 million to the tracks' minority owners - Martin Jacobs, the Laurel Guida Group and Leucadia National Corp. Then, those three minority owners and Karin and Joe De Francis will become partners in a venture that would reap a percentage of slots proceeds if the machines are installed at Pimlico and Laurel Park.
Although Stronach didn't attend the meeting because of a commitment in Europe, he is Magna's leader and force behind its racing operation. A native Austrian, Stronach, 70, a tool-and-die maker by trade, opened a one-man shop in a Toronto garage in 1954 and built it into one of the leading manufacturers of auto parts and vehicles in the world.