WILMINGTON, Del. - - A federal bankruptcy judge approved Wednesday a plan to auction Pimlico Race Course and Laurel Park early next year, over objections from the tracks' former owners, who opposed the speed of the sale.
Meanwhile, two potential Maryland buyers - developers David S. Cordish and Carl Verstandig - reiterated their interest in bidding on the tracks and the Preakness Stakes.
FOR THE RECORD - Because of conflicting information, The Sun reported that the auction of the Maryland Jockey Club assets is expected to take place in mid-January. In fact, the auction is scheduled for Jan. 8 as reported earlier on the Sun's Web site. The Baltimore Sun regrets the errors.
Magna Entertainment Corp., the Canadian firm that owns the racetracks and the Preakness Stakes and filed for bankruptcy protection in March, said the auction should be held quickly because Maryland law gives the state 60 days to review a deal and the right to match any bid.
The sale procedures also would require potential buyers to keep the Preakness, the middle leg of racing's Triple Crown, in Maryland, satisfying concerns of the state and others in the horse industry who had feared losing the state's single largest sporting event.
But Benjamin Feder, a lawyer representing Joseph De Francis and other former owners, argued that the sale procedures do not consider the group's rights to slots and other alternative gambling at the racetracks, particularly at Laurel Park. When the former owners sold their controlling interest in the Maryland Jockey Club, the umbrella organization for the two tracks, they entered into a deal with Magna to split the proceeds from any alternative gambling development.
Feder also revealed in court that De Francis and other former owners have engaged in talks with Magna about the Jockey Club assets.
De Francis said the group has submitted several proposals on "how they might recapitalize the Maryland assets and allow them to emerge from bankruptcy."
Asked whether any of the plans include the group buying back the tracks, De Francis said he could not discuss the details.
"We continue to be very disappointed that the Maryland assets are in bankruptcy and very interested in any plan that might bring them out of bankruptcy and restore them to viability," he said.
Magna, which filed for Chapter 11 bankruptcy protection in March, withdrew a proposal to auction the Maryland tracks last spring, in part because of objections by the state. That plan did not take into account the state's "right of first refusal" for the Preakness, which has a "chilling effect" on Magna's sale efforts, according to court papers filed by the company last week.
To ensure that the Preakness would stay in Baltimore, Maryland lawmakers passed a law this year granting the state the right to seize the event under eminent domain.
After the hearing before Judge Mary F. Walrath in federal bankruptcy court in Delaware, Gregory Cross, a Venable LLP bankruptcy attorney retained by the state of Maryland, said, "We have agreement that the Preakness will remain in the state, the state's matching right to the Preakness is taken into account in the sale, and the state will be afforded the opportunity to review all prospective purchasers in advance.
"We didn't have any of that in the spring. Our position has significantly improved. Most importantly, the Preakness is staying in the state," Cross said.
The auction procedure for the tracks has several steps.
Potential bidders have until Nov. 2 to submit proposals to Magna. They must provide a 10 percent deposit, as well as evidence that they have the money to complete the deal.
On Nov. 9, Magna is to give the court a lead, or "stalking horse," bid for the Maryland assets. The state is to receive the names of the other bidders on Dec. 7, but they won't be released to the public.
The auction of the Maryland assets is to be held in mid-January.
Besides reviewing bids, the state has preserved its right to request that it be allowed to match the winning bid from the auction.
Cordish, whose Cordish Cos. is being considered for Anne Arundel County's sole license to operate slot machines, said this week that the company is "very excited about the prospect of buying the tracks and the Preakness."
The Anne Arundel County Council has not approved a zoning change needed for the Cordish slots project to proceed. Cordish said his proposal for a casino at Arundel Mills will not change.
"We will be sending over $60 million a year to the tracks from slots revenues at [Arundel] Mills," he said. "It makes sense for us to own the tracks. We will have the resources to revitalize the horse industry in Maryland and return it to its former glory."
Verstandig, whose America's Realty LLC in Pikesville often invests in distressed urban shopping centers, said he and a partner with experience in horse racing would upgrade the two racetracks and attract other entertainment venues. They also would build office and retail space on land around the tracks.
"Since they came into play again, we want to try again," he said.
Auction timeline
Nov. 2: Bids due.
Nov. 9: Magna will provide to the court a lead, or "stalking horse," bid for the Maryland assets.
Dec. 7: The state will be given names of other bidders.
Mid-January: Auction
