Rosecroft sale OK'd

Penn Md. to buy ailing track for $20M

October 24, 2007|By Sandra McKee | Sandra McKee,SUN REPORTER

The Maryland Racing Commission yesterday approved the application for the sale of Rosecroft Raceway and issued a license to Penn Maryland LLC to conduct racing at the track once the sales contract is final. That's expected to happen shortly after Nov. 18.

"This is the culmination of a lot of effort," said John Finamore, senior vice president of regional operations for Penn National Gaming, which will oversee the Rosecroft operation.

Penn Maryland, a wholly owned subsidiary of Penn National Gaming Inc., has agreed to purchase Rosecroft for $20 million from Cloverleaf Enterprises Inc.

The commission approved the purchase after hearing from assistant attorney general Bruce Spizler, who reviewed the deal; from Mike Hopkins, the Commission's executive director, who sought comments from 14 other commissions that supervise Penn National operations elsewhere; and from Craig Gegorek, a CPA for Gegorek & Vardavas Chartered who gave a positive report.

Penn Maryland has agreed to maintain purses of at least $6.5 million through the first three years of the contract and at least $5.5 million for years four through six.

The agreement also spells out how pari-mutuel revenue will be divided at the track and how revenue from alternate gaming at the track should be divided, should slot legislation pass.

When it was announced that Penn National was seeking to buy Rosecroft, there was much speculation that the company was trying to hedge its bets should slot machine legislation be approved and negatively impact the revenue stream at Charles Town Races and Slots (also a Penn National-owned facility). Up to 40 percent of customers at the West Virginia slots facility come from Maryland.

"Slots is a business we're very familiar with, and we would enjoy participating in Maryland should the legislation pass," Finamore said. "But, this deal is not contingent on slots being passed. We work in areas where there are slots and where there are no slots. We're comfortable in either situation."

John Franzone, chairman of the Maryland Racing Commission, said the standardbred track was decimated before the sale.

"They've been hanging on by a hangnail," he said. "This investment is a Band-Aid, but very good for them. It gives them some room to operate."

Asked about Finamore's statement that Penn National and its subsidiary, Penn Maryland, will be comfortable operating here without slots, Franzone was rueful.

"They're comfortable without slots," he said, "because they have other places generating a fortune for them with slots."

Charles Town, alone, has 5,050 slot machines, more than any facility in Atlantic City or Las Vegas, and is the fourth-largest slot machine casino in the country.

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