October 13, 2009|By Robert Little | Robert Little,robert.little@baltsun.com
Magna Entertainment Corp., owner of Pimlico Race Course and Laurel Park, has asked a bankruptcy judge for permission to auction its Maryland racetracks early next year, under the condition that potential buyers promise not to move the cherished Preakness out of the state.
The prospect of Maryland's marquee horse-racing event being ripped away by out-of-state buyers prompted state lawmakers to pass a law earlier this year granting the government rights to seize the Preakness under eminent domain - and Magna alleged in court papers last week that state intervention is unconstitutional and creates a "chilling effect" on its efforts to sell the Maryland tracks.
But with Magna's request that bidders pledge to leave the race in Maryland, government leaders were optimistic that Maryland will keep its Triple Crown jewel without a fight.
"I am pleased that Magna recognizes the importance of keeping the Preakness here in Maryland, where it belongs and has been for over 100 years," Gov. Martin O'Malley said in a statement.
"Maryland has a rich tradition of horse racing and horse breeding," he continued, "and these industries generate thousands of jobs and millions of dollars for our local economy each year."
Magna, which is incorporated in Delaware but whose main office is in Ontario, Canada, filed for bankruptcy-law protection in March, and a sale of its Maryland racetracks has been contemplated since.
The company withdrew a proposal to auction the tracks this summer, and documents filed with the bankruptcy court Friday offered a new timeline for a potential sale.
In asking for a Jan. 8 auction date Magna also asked for a Nov. 2 deadline for potential buyers to submit bids. That would allow any potential sale to comply with the contested state law, which gives the government 60 days to review a deal and step in with its own purchase of the Preakness. In its court papers, Magna said it reserves the right to contest the law but proposed the time frame in the spirit of compliance.
Calls to Magna and the Maryland Jockey Club, which manages the local tracks, were not returned late yesterday. Magna's request could be considered by the bankruptcy judge as early as Wednesday.
The second race in horse racing's Triple Crown, the Preakness has been run at Pimlico, on the third Saturday in May, since 1909. Attendance at this year's race was the lowest in more than 25 years - a drop attributed largely to a new rule prohibiting fans from bringing alcoholic beverages - but the event is nonetheless regarded as an economic and marketing boon for the state.
After Magna's bankruptcy filing, state officials scrambled for strategies to protect the race and the company's tracks, huddling with local business leaders.
Baltimore developer David S. Cordish has said his company is interested in the assets. Baltimore Orioles owner Peter G. Angelos also has said he and his family want to help Maryland keep the Preakness.
The eminent domain legislation was prompted, in part, by a Pikesville developer's plan to buy the Pimlico racetrack and replace it with a shopping center. The developer, Carl Verstandig, has since scrapped the plan and talked of bidding for the track and the Preakness.
It is unclear who might place a bid for Pimlico, Laurel and the Preakness. Magna's plan requires bidders to post a 10 percent deposit and provide evidence that they have the money to complete the deal.
During recent efforts to bring slot machine gambling to Maryland, many expected Laurel Park to be a leading contender for a slots license.
Magna, which lobbied for years to brings slots to the state, submitted a bid for a slots license but was disqualified because it failed to submit the required $28.5 million fee on time. The bankruptcy filing was made shortly thereafter.
