NEWS
Maryland racing on brink of shutting down
Posted: Tuesday, December 21, 2010 10:35 PM
by John Scheinman
In a decision that effectively shuts down the Maryland
Thoroughbred racing industry and puts the Preakness Stakes (G1) in jeopardy,
the Maryland Racing Commission voted Tuesday to reject a heavily conditioned
proposal by the owners of Laurel Park and Pimlico Race Course to run 146 days
of live racing in 2011.
After a four-hour meeting, when it was clear before the
unanimous vote the commission would not support the plan, Maryland Jockey Club
President Tom Chuckas offered to conduct 77 days of live racing without the
conditions mentioned in the proposal, but the commission also rejected that
proposal.
The decision means that effective January 1, live racing,
simulcasting, and off-track betting will cease in the state. The Laurel fall
meeting concluded December 18 with the track’s winter meeting scheduled to
begin January 1, but that will not occur without an agreement.
It is unclear whether Ontario-based MI Developments Inc. and
Pennsylvania-based Penn National Gaming Corp.—which co-own the tracks—will
shutter Laurel Park and the Bowie Training Center and evict the 300-plus
backstretch workers and 1,541 horses living on the grounds.
The vote also threatens the future of the Preakness, the
second jewel of American Thoroughbred racing’s Triple Crown series. The race,
first contested in 1873, drew 95,760 fans in 2010 and has an estimated economic
impact on the state of Maryland of about $1.5-billion, according to a 2009
report.
Before a crowd of approximately 450 inside Laurel Park’s
carriage room, leaders of the Maryland Thoroughbred Horsemen’s Association and
Maryland Horse Breeders Association urged the commission to reject the proposal
and deny an operating license to the MID-Penn partnership even though that
would jeopardize their livelihoods.
“The agreement is unacceptable,” said Alan Foreman, general
counsel for the MTHA. “That means if there is no live racing on January 1,
we’re sorry for that, but it’s not a mess of our making.”
The commission voted 8-0 at its monthly meeting not to accept
plan and afterward members said it might be difficult to get a quorum together
for a possible emergency meeting because of the holidays if a new proposal was
put together.
Asked if he believed the Preakness would be run next year,
commission chairman Louis Ulman said, “I’d say no.”
On Monday, the track owners submitted a plan to the
commission that had previously been seen by leaders of the horsemen and
breeders offering to run 146 days of live racing in 2011 with a series of
conditions that included:
· Control
of simulcasting rights in the state;
· A
$1.7-million contribution toward daily operations from the Maryland
Thoroughbred Horsemen’s Association;
· The
horsemen’s commitment to lobby the state legislature for the approval to
shutter the Bowie Training Center as well as permission to redirect funds from
the Racetrack Facility Renewal Account toward daily operations; and
· The
right to raise the takeout and increase their share of the purse structure in
the state.
On top of the conditions, the owners wanted a guarantee they
would make money on racing operations or have the right to “cease racing
operations prior to the end of the 2011 race meet,” according to the documents
submitted to the commission.
“I want to plead with the horsemen and plead with the racing
commission, we alone can’t fix it,” MI Developments founder and Chairman Frank
Stronach said at the meeting. “I’ve never asked for government money, but for
management, it’s the right thing to do, but for year after year, we can’t lose
money.”
Stronach repeatedly reiterated his commitment to the sport
and pointed out that he had spent close to $40-million to remodel Laurel Park,
including both the track’s racing surfaces. However, he found only hostility
toward him and his stewardship of the Maryland tracks in the room and wound up
leaving before the commission had voted.
“I haven’t taken a single dollar out of Maryland racing,” he
said before he left. “I’ve only put money in and gotten beaten up.”
In a long presentation, Foreman detailed how Stronach had
overseen the decline of Maryland racing, culminating with his company’s failure
to put up $28.5-million required to bid on a slots license for Laurel Park in
2008.
“This is an insult to Maryland racing,” Foreman said. “Their
current ownership has brought Maryland racing to ruin.”
After MI Developments took control of its subsidiary Magna
Entertainment earlier this year in bankruptcy court, the company partnered with
Penn National Gaming, selling half ownership in the tracks for $26.3 million. A
failed bid via referendum to reopen the slots bidding in Anne Arundel County
was defeated by voters November 2.
On November 29, the MID-Penn partnership proposed a sharply
curtailed racing schedule of 47 days for 2011 but was rejected as was
recognition of Penn National’s right to be licensed in the state.
The track owners and racing stakeholders met repeatedly,
including with representatives from the office of Gov. Martin O’Malley, without
reaching consensus on a new deal before the latest proposal was presented and
defeated.
“It’s disappointing the parties involved could not reach an
agreement,” O’Malley said in a statement after the commission vote. “We are
prepared to aggressively protect the state’s interests, as we did two years ago
when presented with the threat of losing Maryland’s treasured Preakness Stakes.
We will continue to explore the legal options available to us.”
One of those options is the right to exercise eminent domain
and seize the tracks and auction them to the highest bidder. In recent weeks,
the governor had said that option was not under consideration.
Several people who testified before the commission at the
meeting urged the commissioners to recommend the state act.
Tom Bowman, president of the Maryland Stallion Station in
Chesapeake City, said it is impossible to know even who to negotiate with among
the owners of the tracks.
“It’s like trying to get a hold of an eel,” Bowman said.
“Every time you try to get a hold of it, it slips away. We don’t ever know who,
exactly, we’re negotiating with.”
Breeder Cynthia McGinnes, of Thormar Farm, in Chestertown,
charged that Penn National has no desire to see Maryland racing succeed because
its two “flagship” properties, Hollywood Casino at Charles Town Races in West
Virginia and Penn National Race Course in the Capital Region of Pennsylvania,
are in neighboring states.
Penn National Chairman Peter Carlino responded, “Our motives
are to build a great future in Maryland. What we’ve asked you to approve is a
short racing schedule that allows us to break even, and allows us to get to a
better solution. Our motives are sincere … but we’re not going to commit a
public suicide.”
MI Developments and Penn National said the Maryland Jockey
Club lost $7-million last year.
In recent meetings, the MTHA agreed to contribute the
$1.7-million toward operational costs but refused to give up their simulcasting
rights. Horsemen and breeders control the export signal from the host track by
federal law.
What happens next is unclear. Foreman said the horsemen would
accept a guarantee of 146 days of live racing in 2011 without conditions, save
for the call to contribute to operating expenses. Asked about the possibility of reaching a deal under those
conditions, Penn National Vice President of Public Affairs Eric Schippers said,
“We hope to digest what happened today, which was a harsh outcome.”
Both Stronach and Schippers said neither side in the
partnership has considered exercising a “buy-sell trigger” written into the
contract arrangement.
Commission member Mary Louise Pries said, “I still see a
glimmer of hope around here. I am probably the one who worries most about
continuity. I urge those who have power to continue to talk about it.”
John Scheinman is a Thoroughbred Times correspondent based in Washington, D.C.
READER COMMENTS
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Posted by: Robert, Hollywood, FL on December 24, 2010 at 11:38 AM
Big Willy H
You bring up a valid point concerning the albatross's [F Stronach] roots in Austria. Next time you watch "The Sound of Music" check out the BOOTS on the messenger boy who was a memember of the Third Reich Youth Force, I believe you'll notice 'STRUFLEX' sticking out from his soles
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Posted by: Guido, Bronx, NY on December 23, 2010 at 07:59 PM
I just hope when MI and Stronach are finally destroyed the powers too be TAKE back our Preakness Trophy by force if neccesary. That SOB doesnt deserve and never did deserve to have it.
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Posted by: Robert, Hollywood, FL on December 22, 2010 at 12:21 PM
Where has 'Frank Stronach" taken any dollar out of any of his dysfuntional racing enterprises? Perhaps if you you hired competent qualified people to operate your tracks, stopped micro-managing and developed some continuity you eventually might turn a profit
EX: [Gulfstream - 4 different Racing Secretaries last 5 yrs, 3 different Presidents of Racing the last four years - currently with a former 'Jockey / Trainer' with NO formal business educational credentials [college], or general business acumen, to lead Gulfstream out of the $325g dept over-run left by last years clown.
The only way Thoroughbred Racing will ever grow and flourish again, is when Stronach and MI. is bought out and removed from the industry. I believe that won't happen in the near future, for just as a child won't stop playing even though he's aware of the mess he's carring in his diapers, Stronach can't smell the 'stink' he's brought upon a once great game.He is the albatross straddling Thoroughbred Racing.
Good luck to the Maryland Horsemen, you have all of Florida Horsemen's sympathy
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Posted by: bill, covington, LA on December 22, 2010 at 11:47 AM
Good piece on a sad topic, John. I haven't seen anything from Josh Pons on this situation. I'd like his take on it. I can't believe we may not have a Preakness this year.
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Posted by: Bill, Silver Spring, MD on December 22, 2010 at 09:48 AM
Maryland used to be a great place to do business. Cars, trucks, tires, steel, airplanes and a multitude of other products used to be manufactured here. Now, we manufacture government workers and welfare cases. The Democrats who run this State have now killed racing, too, though they'll attempt to blame everyone else.
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