Race On To Buy Magna's Assets

Preakness, Tracks Likely To Have New Owner By End Of Bankruptcy

May 15, 2009|By Hanah Cho | Hanah Cho,hanah.cho@baltsun.com

When the Preakness Stakes runs its 134th race Saturday, it could be the last one under its bankrupt owner.

While Pimlico Race Course and Laurel Park are no longer among assets that Magna Entertainment Corp. will auction off in September, state and industry leaders believe it is a real possibility that Maryland's thoroughbred tracks will have a new owner when bankruptcy proceedings end.

So far, the state has had discussions with at least a dozen potential buyers, including local, national and international parties, who know of Maryland's interest in keeping the second leg of racing's Triple Crown here. The linchpin of Maryland's thoroughbred industry, the Preakness is profitable enough to support racing the rest of the year.

A Pikesville developer, who had previously expressed interest in the tracks, said this week that he and three undisclosed partners with racing experience plan to submit a bid to buy Pimlico, Laurel Park and the rights to the Preakness. And technology entrepreneur Halsey Minor said in an interview Thursday that he, too, is still pursuing the Maryland tracks, along with other Magna properties, including Santa Anita Park in Southern California.

"When all of this shakes out, there will be interested parties in [the Maryland] assets. Our objective is that the Preakness stays right here in Baltimore and horse racing remains a vibrant part of Maryland's culture, history and tradition," said Christian S. Johansson, secretary of the Maryland Department of Business and Economic Development, whose agency has been charged with maintaining Maryland's single largest sporting event.

Johansson said he has personally met with several potential bidders to make the state's interests clear and what "we've done is encourage them all to look at bidding on the tracks."

Johansson declined to identify the potential bidders.

"And our position has been pretty consistent that we favor a private sector solution," he added.

Gov. Martin O'Malley has said that the state is "agnostic on ownership" as long as the Preakness stays in Maryland. To that end, the General Assembly recently passed legislation authorizing the state to seize the tracks and the Preakness, though that authority may not hold up in bankruptcy court.

The eminent domain legislation was prompted in part by Pikesville developer Carl Verstandig's initial plans to buy Pimlico and replace the Northwest Baltimore property with a shopping center before changing his mind. Verstandig said he and his partners plan to submit to Magna's creditors a bid for the tracks and the Preakness and maintain racing at both properties.

Verstandig said his first task would be to renovate Pimlico's aging facilities and bring other entertainment venues to attract more fans before building shopping centers on excess land around both tracks.

"Without the upgrades, it's very difficult to compete in an industry that's hurting," he said.

Meanwhile, Minor, who founded CNET Networks, said Thursday that he has had discussions with Magna's creditors and others to craft a proposal that would maintain the integrity and value of Magna's racetracks as opposed to a "fire sale."

"Maryland is in the portfolio and my No. 1 priority," Minor said, noting he would keep the Preakness in Maryland, where some of his family resides. "It's an emotional interest in Maryland, and second, there is so much potential in Maryland that is being wasted today."

Magna officials did not return phone calls for comment.

Other potential buyers have expressed interest in the Maryland tracks, including Baltimore developer David S. Cordish, who did not return messages for comment.

Joseph De Francis, the former owner of the Maryland Jockey Club who sold his controlling interest to Magna, said this week that he does not plan to bid on the tracks but he said he would not "rule out" getting involved if "it would be helpful in solving some of the problems in the industry."

John Franzone, chairman of the Maryland Racing Commission, said Magna chairman auto parts magnate Frank Stronach also could be interested in the Maryland tracks, particularly since slot machine parlors are on their way here. Stronach controls MI Developments, Magna's largest secured creditor.

Cordish's company has bid for a slots license at Arundel Mills, but its efforts have stalled as Anne Arundel County officials have delayed voting on necessary zoning changes.

Laurel's bid for slots was disqualified after Magna failed to pay the mandatory application fee. But the state's highest court is scheduled on June 9 to hear an appeal by Laurel.

"We're going to have a very qualified owner when the smoke clears whether it's Stronach or another when this [bankruptcy] is situated," Franzone said. "Slots are coming and the Preakness will stay in Maryland. We're on the dawn of a new day."

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