Laurel Park losses continue to mount

Its potential as a slots site is in question

April 23, 2008|By Hanah Cho | Hanah Cho,Sun reporter

Laurel Park continued to lose money last year, according to financial documents filed with the state racing commission, as questions linger about the racetrack's viability as a potential spot for slots.

The track's financial struggles underscore the intensifying battle over a November referendum to legalize slot-machine gambling in the state. The Laurel track could be granted slots under the measure, although its corporate parent has not committed to supporting a pro-slots campaign.

A portion of the slot revenue is slated to provide a boost to the state's flagging racing industry, which in recent years has struggled amid increasing competition from tracks in Delaware, West Virginia and Pennsylvania that permit slot-machine gambling.

Laurel Park's net loss widened to $4.3 million in the year ended Dec. 31, up from $3.6 million in 2006, according to audited financial reports recently submitted to the Maryland Racing Commission. The documents were submitted by Magna Entertainment Corp., parent of Laurel and Baltimore's Pimlico Race Course.

Pimlico reported a 35 percent increase in profit last year to $1.8 million, compared with $1.36 million in 2006.

Pimlico's net income, however, is almost entirely from the Preakness Stakes, the middle leg of racing's Triple Crown. Last year's event drew a record crowd of 121,263 and total wagering of more than $87 million, fourth highest for a Preakness Day, according to the Maryland Jockey Club, the umbrella organization for the two tracks. This year's Preakness is set for May 17.

In fact, Pimlico has provided financial assistance to Laurel by transferring cash so the racetrack could meet certain working capital needs during the past two years, according to the documents. Pimlico will continue to provide such aid as well as "additional cash infusions that are needed to support the continuing capital improvement projects at Laurel Park," the documents show.

Chris Dragone, president and general manager of the Jockey Club, said in an interview last week that it is working to bring fans to Laurel by putting more horses on the track and improving the field size as well as the customer experience.

Dragone said a sagging economy contributed to a 17 percent decline in average wagering at Laurel this winter meet, whose racing days were cut because of a lack of purse money. He also said drawing people to the track while competing with simulcast and out-of-state wagering spots, as well as electronic wagering options, is a constant challenge. He said the Jockey Club is focusing on other ways to reach the audience.

Tim Rice, managing partner at Louisiana investment firm Rice Voelker LLC, who follows the racing industry, said Laurel Park is also at a competitive disadvantage.

"With Maryland competing with Delaware, West Virginia and Pennsylvania for horses, Maryland is the only one without alternative gaming," said Rice, who also tracks Magna. "They're attempting to swim upstream, and the deck is stacked pretty much against them."

The financial struggles of Maryland tracks are contributing to deepening concerns about Magna's ability to stay in business. Magna lost $114 million last year and $87.4 million in 2006.

Such questions prompted the racing commission to ask Magna officials to detail its finances at a meeting last month. Scott P. Borgemenke, Magna's executive vice president for racing, reaffirmed the company's commitment to Maryland's thoroughbred racing in an interview at that time.

Still, Magna has not committed to the pro-slots campaign led by former Maryland Budget Secretary Frederick W. Puddester as foes ready to fight the measure. The company views the slots referendum as less than ideal because a license at Laurel would not be guaranteed.

Borgemenke could not be reached for comment yesterday.

hanah.cho@baltsun.com

Sun reporter Glenn Graham contributed to this article.

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