Magna pins some hopes on Md. slots

Analyst: Firm unlikely to sell local tracks

March 29, 2007|By Childs Walker | Childs Walker,SUN REPORTER

Magna Entertainment Corp., the Canadian-based company that owns Pimlico Race Course and Laurel Park, continues to sell its assets in hopes of reducing debt.

The Maryland tracks aren't for sale yet, but that could change if the state doesn't legalize slot machines, Magna officials said.

"We won't wait forever," said Magna chief executive officer Michael Neuman in a conference call this week. "But we're not going to draw a line in the sand as regards to Maryland today."

Neuman said racing's future in Maryland is hardly guaranteed given that horsemen are fleeing to neighboring states such as Pennsylvania, Delaware and West Virginia, all of which allow slots. He added that with "alternative gaming" in place, the Maryland tracks would become "extremely core" assets for the company.

Senate President Thomas V. Mike Miller continues to push for legalization of slot machines, which could be taxed. Miller has said the revenue could be used to close a projected $1.5 billion shortfall.

But House Speaker Michael E. Busch, who has been a staunch opponent of slots, said yesterday that the state has already provided help to the industry, such as tax breaks and permitting off-track betting. Just last week, the House of Delegates approved legislation that would allocate $15 million from the state lottery to supplement purses, but the Senate has not acted on the bill.

Ryan Worst, a senior analyst at New York-based investment bank Brean Murray, Carret & Co., said the Maryland tracks are unlikely sale candidates, in part because of the state's deep roots in horse racing. Magna is "looking for legislative solutions in Maryland to improve the profitability of those racetracks," Worst said, noting much of the profit comes from the Preakness Stakes.

"I don't think they would sell either of those racetracks any time in the near future," he said.

Magna, one of the nation's largest racetrack operators, has faced financial peril for more than a year. A recent audit by Ernst & Young found that Magna's combination of losses and existing debt raises doubts about its ability to stay in business.

Sun reporters Kelly Brewington, Hanah Cho and Laura Smitherman contributed to this article.

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