Cordish, De Francis and sister among 6 bidders for tracks

Magna auctioning off Pimlico, Laurel, Preakness

December 15, 2009|By Andrea K. Walker and Laura Smitherman | Baltimore Sun reporters

The Cordish Cos., the prolific Baltimore developer that is trying to bring slot machines to Anne Arundel County, emerged Monday as one of six groups that want to buy Pimlico Race Course, Laurel Park and the Preakness from bankrupt Magna Entertainment Corp. in an auction next month.

Cordish is one of two groups that have said publicly they are interested in buying the tracks. The winner will play a crucial role in helping to shape the future of racing in Maryland and securing the fate of the Preakness, the second jewel of the Triple Crown horse racing event.

Joseph A. De Francis, the former owner of the racetracks, also put in a bid with his sister, Karin De Francis, through their family company Gainesville Associates, in an attempt to regain involvement in racing in Maryland. The Baltimore Sun reported their interest on Friday.

Neither Cordish nor the De Francis family gave details about their bids. An attorney running the auction procedures for Magna said the other bidders declined to have their bids publicly revealed.

"Each of them will be immediately recognizable to the constituents in Maryland," said Michael A. Wildish, managing director of Miller Buckfire & Co. LLC, the New York firm running the auction for Magna.

Cordish's bid fueled speculation that the developer could put slots at Laurel Park instead of Arundel Mills mall, where he has proposed a 4,750-slots emporium. Cordish has secured approval from a state slots commission but not the Anne Arundel County Council, which is set to vote on zoning for the project near the mall on Monday.

Some residents near the mall have balked at the proposal, and some state officials, including Gov. Martin O'Malley, have expressed a preference for slots at horse-racing tracks that already house gambling operations. The County Council also is considering zoning an area that includes Laurel Park - and not the mall - for slots.

But Cordish has remained steadfast in his desire to move forward with the Arundel Mills proposal. Jonathan Cordish, a vice president, said in an e-mail that any "phantom alternative" to the mall site would take years longer to develop and require the state to restart the bidding process.

"We have no intention of moving slots from Arundel Mills, as our site will maximize revenues for the state, county, horse-racing industry and ourselves," Cordish wrote.

The racetracks are being auctioned Jan. 8 by Magna, which entered bankruptcy proceedings in March. The company asked for a second round of bids, which were due last Friday, after it could not find a "stalking horse," or lead bid, last month.

The state, concerned about the future of the Preakness, has the right to review the bids and match any bid for the race. Under the auction procedures, any party submitting a bid must agree not to move the Preakness outside Maryland. The General Assembly this year approved emergency legislation, signed by O'Malley, giving the state authority to acquire the tracks and Preakness through eminent domain. State officials have until Dec. 28 to decide if they want to exercise their "right of first refusal," said Rick Abbruzzese, an O'Malley spokesman.

The interest from bidders heartened those in Maryland's storied and struggling horse-racing industry, though some industry representatives said that Laurel Park's future still depends on slots being there.

While a slice of any slots proceeds has been dedicated to augment racing purses, they point out that Maryland tracks face stiff competition from tracks that offer slots in neighboring states. And if slots were approved at Arundel Mills just a few miles away, Laurel Park would have to compete to lure gamblers from there.

"I'm cautiously optimistic that the response received shows there is a future for these racetracks," said Tom Chuckas, president of the Maryland Jockey Club, the umbrella organization for the tracks. But he added: "If the Mills got zoning approval, the future of Laurel racetrack would be very, very bleak. I'm not telling you it would close tomorrow morning, but the long-term survival would be nonexistent."

Chuckas and other industry observers speculated that Cordish's bid for Laurel might indicate that the developer is worried the county won't approve the mall zoning. "My view of the Cordish bid is it's a secondary strategy, that it's possible he may realize the Mills zoning is in serious jeopardy and he needs a fallback position," Chuckas said.

However, the Laurel site also is considered valuable for potential residential or commercial development. In fact, a mixed-use development has been proposed near the track that would include hundreds of homes as well as offices and shops.

Developer Carl Verstandig also would like to buy the land surrounding Pimlico and Laurel Park for $38 million and build mixed-use commercial centers. He said a California racetrack and gambling operator he has partnered with bid for the tracks. Verstandig declined to name the company because of confidentiality agreements.

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