Preakness outlook bright in light of economy, end of bankruptcy

Corporate sponsors, tickets sales up

May 14, 2010|By Andrea K. Walker, The Baltimore Sun

For years, the Preakness has been run in Baltimore as if it might be the last time. Now, a rebounding economy, a new marketing strategy and its owner exiting bankruptcy appear to have solidified the race's future here.

Corporate sponsorships for today's Preakness Stakes are up, according to organizers, and include newcomers such as the horse racing broadcaster HRTV and Iberia Airlines. Ticket sales are brisk as fans who pinched pennies last year are heading back to the races and as the "Get Your Preak On" marketing campaign — controversial to some — seems to have lured back the younger crowd who stayed away last year because of new rules against bringing in alcoholic beverages.

And race organizers are counting on new enthusiasm to put fans in the mood to bet more.

"To be quite frank, last year the economy really had a negative impact and the ownership problems did not help on any level," said Tom Chuckas, president of the Maryland Jockey Club, which operates Maryland's racetracks. "Things are definitely better this year."

But the Maryland racing industry, which is desperate for new revenue sources, is still faced with underlying problems. While Maryland voters legalized slot machine gambling in a 2008 referendum, with part of the proceeds dedicated to bolstering the racing industry, parlors are still months from opening.

"There seems to be a bit more buzz around Preakness this year," said James Karmel, a gambling analyst and associate professor of history at Harford Community College. "But overall, horse racing is still in trouble; it is still an industry that is in a dire situation, and it really needs gaming to support it."

The Preakness makes money from a combination of revenue generators, including corporate sponsorships, ticket sales and a percentage of the bets made on races. The race brings in up to $10 million profit in any given year, with last year's earnings about $6 million, Chuckas said. He did not offer a projection for this year.

As Maryland's biggest event, it is often described as the state's Super Bowl or Mardi Gras. State officials have long used it to woo businesses and show off Maryland's assets. It is as much a networking and social event as a day of sports.

For years, the fate of the Preakness at Pimlico Race Course had been in question. Canadian parent company Magna Entertainment Corp. had considered selling the second leg of the Triple Crown along with Pimlico and Laurel Park to raise capital. But the company emerged from bankruptcy protection last month, having brokered a deal with the General Assembly to keep the Preakness in Maryland.

Under the bankruptcy proceedings, Magna sold the racetracks and the Preakness to its real estate arm, MI Developments. MID has made it clear that it needs slots or other forms of gambling to turn the tracks around. The company announced recently that it is joining with Penn National Gaming, which runs casinos across the country. But MID acknowledges that prospects for getting other forms of gambling at its tracks are uncertain.

Magna, which failed to pay a state fee to compete for a slots license, is now banking on the failure of a plan by a Baltimore developer, the Cordish Cos., to put slots at Arundel Mills mall. Opponents have gathered signatures for a petition to put the issue to a referendum in November, but Cordish is challenging the validity of the signatures in court. It could be months before the issue is resolved.

At the same time, several bills to allow table games did not make it out of committee during this year's Maryland legislative session.

"There is not an opportunity at this precise moment," said MID's chief executive, Dennis Mills. "Should that opportunity come along, our board gave us direction that we needed to have a world-class gaming partner. Should, if and when that happens, we're good to go because of Penn's expertise.

"We can't predict the outcome," he said. "We're no prophets."

For now, Mills said he is focused on the success of the Preakness and expects the event to attract bigger crowds this year. He has declined to provide details about the partnership with Penn National.

Corporate sponsorships for the Preakness have increased over last year, according to Chuckas, with new companies joining incumbents such as Budweiser, Grey Goose and Pepsi.

California-based HRTV, a network dedicated to horse racing, became a Preakness sponsor for the first time. The young company is looking to attract more customers. It will have a booth and run commercials on the Jumbotron at the track and on television stations that cover the race for viewers at home.

"This is a place where we can build our brand and associate our brand with a major sporting event," said Jim Bates, executive vice president and general manager of HRTV, which is broadcasting live from the Preakness.

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