Racing in Md.: Now what?

Preakness owner's bankruptcy leaves all parties waiting for answers

March 06, 2009|By Bill Ordine and Brent Jones | Bill Ordine and Brent Jones, and

Maryland horse racing interests pondered an uncertain future yesterday as horsemen, breeders, regulators, employees and fans absorbed the news that the biggest player in the state's thoroughbred industry, Magna Entertainment, had filed for Chapter 11 bankruptcy-law protection.

The owner of Laurel Park, Pimlico Race Course, the Bowie training facility and the Preakness Stakes, Magna has been struggling to repay debt as revenues sag, and though it will be business as usual for the time being at Laurel, which is running its winter meet, longer-term prospects for Maryland racing are murky.

"This could be a good thing," Maryland Racing Commission Chairman John Franzone said of Magna's attempt to reorganize under Chapter 11, "or it could be a very bad thing."

What may be at stake is the very existence of horse racing here, which is essentially tied to the Preakness Stakes, the second jewel in racing's Triple Crown. The Preakness, the one immensely profitable day in Maryland racing, supports the sport the rest of the year.

"Worst case, a carpetbagger gobbles up Pimlico, Laurel and the Preakness and is averse to what we're trying to do here with racing," said Franzone, whose group has its next public meeting on March 17 at Laurel Park.

In its filing, Magna said it intended to enter into a $195 million bid arrangement with creditor MI Developments for a handful of assets, including Gulfstream Park in Florida and Lone Star Park in Texas. The Maryland tracks and the Preakness were not part of that bid, but Franzone noted everything in the Magna portfolio could be up for sale.

Magna Chairman and CEO Frank Stronach told The Baltimore Sun his company would sell Pimlico and Laurel Park for the right price.

"The highest bidder would win," Franzone said, "and you could have an operator that has other plans for Maryland racing. ... He might say, 'This Preakness looks like a good deal. We'll run [a meet] for three weeks and that's it.' "

There are legal impediments to moving the Preakness out of Maryland, and the state has the right of first refusal if an owner wanted to sell the rights to the race. But some complex scenarios, such as a company's selling its Maryland tracks and moving the Preakness out of state and then selling the rights to still another party, have even state officials wondering.

"It's not very clear-cut," said the racing commission's executive director, Mike Hopkins.

Joe De Francis, former owner of the Maryland tracks, who sold majority interest to Magna in 2002, said the Preakness is protected, but only under certain conditions.

"The protectionist measures that kick in only apply if [the Preakness owners] continue to operate horse racing here. [For instance,] the tax rate goes up."

But if the tracks are sold, De Francis said, there's little effective impediment to moving the Preakness "and basically killing off the industry."

Meanwhile, those in the horse business can only watch helplessly as the bankruptcy plays out.

"There's not a lot we can do," Maryland Horse Breeders Association President Jim Steele said. "We're standing on the sidelines and watching like everyone else."

Maryland Thoroughbred Horsemen's Association attorney Alan Foreman said the bankruptcy had not been a matter of "if" but "when."

"This is going to force us to look at the future of Maryland horse racing - what it should look like and how we're going to make it happen," Foreman said.

At Laurel Park yesterday, word of the Chapter 11 filing came as no surprise. Still, Joanne Dobson, a teller at the track for 31 years, said the news rattled many of her co-workers.

"It's a scary thing. You're walking on eggshells," Dobson said.

George Neal, 80, of Columbia, regularly attends the Laurel races and worried the track will close.

"I don't drink, don't smoke and I'm single. So this is something for me to do every day," Neal said. "I put myself on a budget, about $20 a day, and sometimes I win, sometimes I lose."

"I don't think this company is going to survive," Neal added, "and I'll go back to shooting pool, I guess, or go out to Vegas and just play poker."

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