Joseph A. De Francis, whose family has been synonymous with Maryland's thoroughbred racing for two generations, said he will resign Monday from the board of directors of the Canadian company that owns Laurel Park and Pimlico Race Course.
The surprise announcement yesterday underscored the tumult of the state's racing industry and clouded the chances of a November referendum to legalize slot-machine gambling.
The move came several hours after Magna Entertainment Corp. Chairman Frank Stronach told investors in a conference call that De Francis would not remain as a director this year.
Stronach was responding to a question about the need for money-losing Magna to renegotiate a slots profit-sharing agreement with De Francis, whose board role posed conflict-of-interest concerns.
De Francis and other previous owners would benefit financially if slots are legalized at Magna's Maryland tracks.
"We've talked to Joe that he is excluded when we talk about some strategic plans for the simple reason he would have a conflict of interest," Stronach said.
De Francis declined to comment on either the existence or status of such negotiations. Stronach and other Magna executives could not be reached for additional comment yesterday.
In Annapolis, some slots supporters worried that De Francis' departure and severe financial difficulties at Magna would damage efforts to pass the referendum and put in jeopardy the $650 million or more the state is poised to collect from slots annually.
Indeed, several lawmakers and state officials raised the specter of giving a slots license slated for the Laurel area to another bidder.
Magna faces concerns about its ability to stay in business because its plan to sell numerous racetracks and other property to reduce its hefty debt and generate cash isn't progressing fast enough amid slumping real estate and credit markets.
Financing needed
The company said yesterday that it likely needs to find other sources of financing and seek extensions on loan payments due in the next few months to stay afloat.
Magna's shares face delisting from Nasdaq. The stock lost 9 cents to close at 79 cents yesterday.
House Speaker Michael E. Busch, who for years held up proposals to legalize slot machines in part because he believed it was unseemly for De Francis to rake in so much money, called his departure "unfortunate."
