Companies in court over deal for Rosecroft

Whether they do business might depend on 1972 racketeering conviction

July 19, 2003|By Greg Garland | Greg Garland,SUN STAFF

BUFFALO, N.Y - A New York company accused yesterday its would-be partner in a deal to buy Rosecroft Raceway in Prince George's County of using a decades-old organized crime conviction as a "pretext" to back out of the agreement so it could negotiate with someone else.

Terry Conners, a lawyer for Buffalo-based Delaware North Companies, a privately held conglomerate that specializes in professional sports and food service concessions, leveled the accusation during a hearing in U.S. District Court.

Delaware North filed a breach of contract suit last month against Centaur Inc. of Indianapolis for backing out of a proposed deal in which the Buffalo-based company was to provide the financing to buy Rosecroft.

Centaur's attorneys argued that the Indiana company was justified in scrapping the proposed deal because company officials had serious concerns that the 1972 racketeering conviction, involving a Delaware North predecessor company, might cause Centaur licensing and regulatory problems.

"This could be fatal to our business," said Jackie M. Bennett, Jr., an attorney for Centaur.

A Centaur spokesman said after the hearing that company officials are talking to other potential partners and are looking for alternative ways to finance the purchase of Rosecroft.

"Yes there are discussions going on," said David Dawson, the Centaur spokesman. "No, we can't identify anyone we're talking to. We're not ruling any kind of arrangement out at the moment."

Centaur has exclusive rights to buy the track from its current owners, Cloverleaf Enterprises Inc., a group owned by harness racing horse owners, trainers and drivers.

The financially struggling track in Oxon Hill, just off the Capital Beltway, has the potential to become the site for a lucrative racetrack-casino venture if the General Assembly legalizes slot machine gambling. A bill killed last year would have allowed 3,500 slot machines at Rosecroft.

The proposed deal between Centaur and Delaware North would have given Delaware North 75 percent ownership of the track in exchange for the New York company financing the $55 million purchase of Rosecroft.

The court hearing yesterday before U.S. District Judge William M. Skretny was to consider Delaware North's request for an injunction barring Centaur from signing a deal with any other partner for Rosecroft until the breach-of-contract suit can be resolved.

Skretny said he would rule on the issue "expeditiously." In the meantime, a temporary restraining order prohibits Centaur from concluding a deal with another partner.

Bennett, the Centaur attorney, told Skretny that Centaur had serious concerns about the 1972 racketeering conviction of Delaware North's predecessor company, Emprise Corp.

He said Centaur was worried that the issue could create licensing and regulatory problems in Maryland and in other states where Centaur has gambling operations or hopes to be licensed.

In questioning Bennett, Skretny voiced skepticism that a decades-old racketeering conviction against a predecessor company of Delaware North could seriously threaten Centaur's ability to obtain or maintain a gambling license.

But Bennett said that regulatory experts advised Centaur that it was cause for concern, and said that Centaur could not afford to take the risk of going ahead with a partnership with Delaware North.

Conners noted that Delaware North has had no problems obtaining pari-mutuel racing licenses or contracts with the U.S. government to operate concessions at the U.S. Mint, national parks and other sites.

He said the organized crime issue was just being used as a "pretext" because Centaur apparently has decided it wants to sign up with a different partner.

"The contract doesn't allow them to back out no matter how good a deal they have with someone else or how badly they want to back out," Conners said.

Centaur officials say that they have an unequivocal right to terminate a preliminary agreement with Delaware North.

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