Legalizing slots would benefit Cooke's estate

Action by 2006 to trigger a $6 million payment

January 08, 2003|By Greg Garland | Greg Garland,SUN STAFF

The estate of Jack Kent Cooke, late owner of the Washington Redskins, will reap $6 million if Maryland legalizes slot machines at its horse tracks, according to records released yesterday.

The money was part of an agreement to settle an $8.2 million loan that Maryland racetrack executive Joseph A. De Francis got from Cooke in 1994 to buy out two estranged partners.

Details of the required payment were disclosed in documents the Maryland Racing Commission released in response to a request by The Sun under the state's public records act.

The $6 million is due to the Cooke estate "if at least 1,250 slots are approved for Laurel Park and/or Pimlico by June 2006," according to the documents.

"My reaction to that is, who's next?" Sen. Thomas M. Middleton, a Charles County Democrat and slots opponent, said of the payment. "Nothing would surprise me about how many fingers and how big this web of interests in slots machines might be."

The $6 million would have to be paid by a subsidiary of Leucadia National Corp., a New York-based investment firm that bought the note from Cooke's estate in 1998 and acquired a stake in the two racetracks. The multimillionaire football team owner died in 1997.

The Leucadia subsidiary, LUK-Flats, paid about $15 million to the estate when it bought the note, according to two sources familiar with the deal. The agreement called for a further $6 million payment in the event slots are approved by 2006.

The revelation that Cooke's estate stands to profit from slots comes after another recent disclosure that De Francis could receive millions of dollars in slot machine profits every year for two decades even if he sells his minority interest in the Pimlico and Laurel Park racetracks.

Some legislators reacted angrily to that and suggested it could spur stronger opposition to Gov.-elect Robert L. Ehrlich Jr.'s proposal to allow slots at Maryland tracks.

De Francis said yesterday that the public shouldn't be concerned about any payment to the Cooke estate because it stems from an agreement between private parties.

"The important point is that the money will come from LUK-Flats - not from the state or from the horse racing industry," De Francis said. "It has nothing to do with how much money ultimately will be available for the state or to help the racing industry or any other public purpose."

But Maryland House Speaker Michael E. Busch, an Anne Arundel Democrat who opposes slots, said some people won't be happy that money would go to a seemingly unrelated party if slots are approved: "The more people see of this, the less attractive it's going to look."

De Francis and his sister, Karin, sold their majority stake in the Maryland Jockey Club, an owner of the two thoroughbred tracks, to Magna Entertainment of Canada late last year.

However, they set up a subsidiary company that would allow 65 percent of pretax earnings from slots to go to the De Francises and to former minority owners for the first five years of slot machine operations. That percentage would decline to 50 percent after five years and 40 percent after 10.

Officials with Leucadia National Corp. declined to comment on terms of their agreement with the Cooke estate.

Stuart A. Haney, a director of Jack Kent Cooke Inc., the company formed to manage Cooke's estate, said that under the terms of his will, 90 percent of the $6 million would go to charity. It would be distributed through the nonprofit Jack Kent Cooke Foundation for student scholarships, Haney said.

The foundation, funded by $200 million from the sale of the Redskins, began making its first grants a year ago.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.