Magna Entertainment Corp., the troubled owner of Maryland's thoroughbred tracks, filed for bankruptcy protection yesterday and essentially put all of its racetracks up for sale, including Laurel Park and Pimlico Race Course, home of the Preakness Stakes.
Asked whether Magna would sell Pimlico, Laurel and California's storied Santa Anita Park, Magna Chairman and CEO Frank Stronach said in a brief telephone interview, "If the price is right."
The filing was expected after the company defaulted on a bank loan tied to Pimlico, Laurel and the Maryland Jockey Club while it also faced a $40 million loan payment due yesterday. Still, the looming auction process for Magna's assets heightens concerns about the future of thoroughbred racing in Maryland and about the Preakness, the second jewel of the Triple Crown and the state's biggest one-day sporting event.
Slot machine gambling was legalized in Maryland in large part to save the state's horse racing industry and raise prospects for keeping the Preakness in Baltimore. But Laurel Park's bid for slots was disqualified last month because Magna failed to pay a mandatory licensing fee. Magna has sued the state, and a judge's decision is expected soon.
Magna has lost $638 million since 2002, heavily burdened with debt payments as track attendance fell and newer casino and slots venues siphoned off much of its wagering revenue.
Some critics say that mismanagement and bad timing also played a part in Magna's financial struggles.
Stronach, among the top breeders and owners in thoroughbred racing, built his racing empire by buying up tracks at top prices and spending hundreds of millions of dollars on projects that did not meet expectations.
"It's an unfortunate and sad circumstance," said Timothy Capps, a former Maryland Jockey Club official who is now executive in residence at the University of Louisville's Equine Industry Program. "At least it's out there and we'll see how it unfolds. The marketplace will have its say."
Magna said that day-to-day operations at its tracks would continue while it seeks to sell assets and restructure. The company plans to borrow up to $62.5 million from its controlling shareholder, MI Developments, to fund its operations while under Chapter 11 bankruptcy protection. Magna also has agreed to a deal under which it would receive $44 million in cash by selling many of its properties to MID, including AmTote International Inc., the Hunt Valley-based company that pioneered electronic bet-processing systems, and the Gulfstream Park track in South Florida.
