MID, Penn National to form joint venture

Owner of Pimlico, Laurel Park will work with Penn to enhance racing

May 07, 2010|By Lorraine Mirabella, The Baltimore Sun

MI Developments Inc., the new owner of Maryland's most prominent horse-racing tracks, has brought in Penn National Gaming as co-owner, hoping to position Laurel Park as a future site for slots while sending a message that they intend to make the Preakness at Pimlico Race Course even bigger.

Penn National and MID, the real estate conglomerate that bought the Maryland tracks from bankrupt Magna Entertainment Corp., have agreed to a joint venture that would own and operate the Maryland Jockey Club, which runs the tracks.

The deal, which is expected to close midyear, requires approval of the Maryland Racing Commission. The companies did not disclose the ownership structure.

Officials said they rushed to iron out details and complete the agreement before the Preakness to convey to fans and industry observers their long-term dedication to bolstering the second leg of racing's Triple Crown.

The agreement also means that Penn National will get behind lobbying efforts to defeat slots at Arundel Mills mall through a November voter referendum — which could then open the door for gambling at Laurel to be expanded to include slots.

"If we are going to produce revenue streams as big or bigger than the Kentucky Derby, we had to let the world know that the Preakness and the Maryland Jockey Club were … on a firm footing with two great partners who are committed to Maryland racing," MID Chief Executive Dennis Mills said.

Mills said the goal is to boost attendance this year at the race, one of the biggest annual events in Baltimore, by as many as 50,000. "We've moved Preakness from Chapter 11 to Chapter 1," he said.

The companies said they intend to strengthen racing programs at Pimlico and Laurel, redevelop surplus real estate controlled by the jockey club and pursue bringing slot machine gambling to Laurel — if opposition to a previously licensed slots site at Arundel Mills mall prevails at the ballot box and the state reopens the bidding process.

Baltimore-based Cordish Co. plans to build a $1 billion slots and entertainment complex at Arundel Mills. David Cordish, chairman of Cordish Co., was traveling and could not be reached late Friday.

A Penn National spokesman said the company intends to work to defeat slots at Arundel Mills, though he declined to provide details. Penn National runs so-called racinos — racetracks with gaming — in Pennsylvania and West Virginia. "We will work with our new partner in opposition to that zoning approval because we would prefer to see slots come to Laurel as a means to ensure the viability of Maryland horseracing," said Joe Jaffoni, the spokesman.

Magna had operated the tracks as they neared financial ruin, and analysts said a Penn National partnership would help MID — Magna's parent company. James Karmel, a gaming analyst who is also an associate professor of history at Harford Community College, called Penn National "one of the better-capitalized gaming companies right now."

"It's a good move for MID," Karmel said. "Penn National is a strong firm, one of the leaders in regional gaming operations, and they've got a strong history in the horse racing field."

MID, headed by horse-racing magnate Frank Stronach, brokered an agreement in March to buy the Maryland tracks from bankrupt Magna, which had planned to sell the tracks at auction. MID officials said they envisioned transforming the tracks into profitable enterprises with bigger betting pots and retail and entertainment developments on surplus land.

After taking over the Magna assets, MID's board decided it wanted the company to find a partner "because gaming is not MID's strength," Mills said.

"Even though there is not gaming at this moment [at Laurel], the point was there could be a possibility in the future, and if that possibility came about, our board felt we should have a partner that has world-class gaming expertise," he said.

MID had been approached by several companies interested in owning a stake in the Maryland tracks, Mills said. Of all those expressing interest, "the people that showed the most commitment to Maryland was the Penn National team," Mills said. He said if slots gambling became a possibility down the road at the Laurel track, "the quarterback of that journey will be Penn National."

Penn National operates gambling and racing facilities, many of which include slots gambling, in 14 states. It owns racetracks in Charles Town, W.Va., and Toledo, Ohio, and has agreed to acquire another racetrack outside Columbus, Ohio.

In Maryland, Penn National was awarded a slots license for Cecil County, one of five gambling sites approved by voters in November 2008, and expects to open a 1,500-machine facility in Perryville this fall. Jaffoni said that if there is a chance to bid on a slots license in the future, the company would seek a change to the law governing the state's slots program prohibiting ownership of more than one license.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.