Maryland's racing future uncertain

Maryland's thoroughbred owners, trainers and breeders have long worried that their industry is on the brink of collapse, issuing dire warnings about the potential loss of the Preakness Stakes, the state's biggest annual entertainment and sporting event.

Gov. Martin O'Malley's office is trying once again to break a logjam endangering the Maryland tradition. Only this time, industry infighting has escalated. Racing boosters are increasingly calling for new ownership for Laurel Park and Pimlico Race Course, as one owner has been accused of bungling the business and the other of being more interested in slot machine proceeds that never materialized than horse racing.

"If they're not prepared to come up with a business plan that's reasonable and addresses the concerns of horsemen and the public, it's time to exert any type of public or private pressure to get new ownership," said Dr. Tom Bowman, a veterinarian and president of the Maryland Horse Breeders Association. "There are statements out there calling for their heads. I don't disagree with that."

O'Malley's legislative director, Joseph C. Bryce, and Maryland Labor Secretary Alexander Sanchez have convened a meeting Monday with representatives of the tracks' majority owner, MI Developments, minority owner Penn National Gaming, and groups representing horsemen and breeders to consider options that would salvage live racing next year and ensure the future of the Preakness.

"Where we are right now is not acceptable," Bryce said. "It's not good and wise for the industry or the state to … [have] that level of uncertainty."

There is no live racing schedule set for next year after the Maryland Racing Commission unanimously rejected last week a proposal to slash the season at the two tracks to 47 days, or about one-third of this year's schedule. Though supported by many horsemen and breeders, the move has put the nearly 10,000 jobs associated with the racing and breeding industry in jeopardy.

The decision also threatens the Preakness, whose future has been uncertain many times before. The annual race, which had been scheduled for May 21, is the middle leg of racing's Triple Crown and often described as the state's Super Bowl for its festivities and economic impact, estimated to be more than $40 million.

State officials have pushed efforts over the years to save the Preakness and the racing industry. Last year, the General Assembly passed a law granting the state authority to seize the Preakness and the two tracks in the wake of the bankruptcy of Magna Entertainment Corp., which then owned the tracks' operator, the Maryland Jockey Club.

Maryland's horse racing industry has been on shaky ground amid the sport's decline across the country. Making matters worse, racetracks in neighboring states began allowing slot machine gambling years ago, which racing supporters say siphoned gamblers, horse owners and breeders away from Maryland.

And harness racing has declined since Rosecroft Raceway in Prince George's County went bankrupt and closed in July. Ocean Downs, near Ocean City, remains the state's sole harness track.

Now horsemen, breeders and trainers, along with others who work at Pimlico and Laurel Park, are re-evaluating their future in Maryland.

"Some people have left. Some people are preparing to leave," said Richard Hoffberger, president of the Maryland Thoroughbred Horsemen's Association. "Some people are hoping that the situation gets resolved on Monday."

Racing industry officials and supporters say the various stakeholders have to resolve their differences quickly before the situation worsens.

Some fear that state lawmakers, who must deal with another huge budget shortfall, might raid the slots revenue now allocated for horse racing purses when the General Assembly reconvenes next month. Others have suggested redirecting some of that revenue to the financially strapped Jockey Club, now owned by the joint venture between Penn National and MI Developments. Still others are clamoring for the state to consider its eminent-domain authority, given how the situation has deteriorated.

Under the law, 7 percent of the slots revenue, or at least $100 million, is dedicated to augmenting purses for winning horses and a fund to help the breeding industry. Another 2.5 percent is allotted for a fund to improve the state's tracks.

Senate President Thomas V. Mike Miller, a longtime supporter of the state's racing interests, said it would be better to have one owner dictating the future of the thoroughbred tracks instead of two partners who cannot seem to agree on how to save racing in Maryland.

"The problem is, the owners are not speaking with one voice," Miller said, suggesting that MI Developments should buy out Penn National "and tell them to go back to Pennsylvania, West Virginia or wherever."

Miller said Maryland will not "let the Preakness go," though he added that invoking the eminent-domain law should be the state's last resort.

Officials with Penn National, the Wyomissing, Pa.-based company that also operates Hollywood Casino at Charles Town Races in West Virginia, said last week that they have no intention of abandoning their investment. And the Jockey Club has said repeatedly that Laurel Park and Pimlico are not for sale.

Nonetheless, waiting in the wings are several potential bidders. Baltimore developer David Cordish reaffirmed last week that he would buy the tracks if they were available. Cordish was one of several bidders vying for the Jockey Club at a bankruptcy auction before then-owner Magna agreed to sell its racetrack assets to MI Developments.

"If I were governor, I would immediately condemn [the] tracks and resell to [the] highest bidder," Cordish said in an e-mail. "Our team of Marylanders has the resources and know-how and would definitely be a bidder."

The situation facing the racing industry has deteriorated quickly. Earlier this year, new owners took over the Jockey Club with grand plans to transform the tracks into profitable enterprises and make the Preakness even bigger.

MI Developments, a Canadian real estate company, bought the tracks in March from bankrupt Magna, which it controlled through a majority ownership stake. In turn, MI Developments partnered with casino operator Penn National to own and operate the Jockey Club, hoping to position Laurel Park as a future site for slots, even though the racetrack was disqualified as a bidder for not paying the license application fee.

In recent weeks, the two owners have been at odds over the Jockey Club's future after voters in Anne Arundel County approved a ballot measure allowing a slots parlor at nearby Arundel Mills mall. Only one slots license is allowed in the county.

At one point, Frank Stronach, the chairman and chief executive of MI Developments, said he would keep next year's racing schedule at 146 days, which surprised Penn National. The Jockey Club had announced plans days earlier to significantly curtail the racing season. They seemed to contradict each other even though the joint venture between the two companies calls for the Jockey Club's board to unanimously approve decisions on racing operations.

Last week, the two owners presented a unified front, asking the state racing commission to approve 17 days of live racing at Laurel Park and 30 days around the Preakness at Pimlico. The commission rejected the short schedule, saying it would effectively kill the Maryland horse racing industry.

The panel, which criticized the owners for not having a viable plan, also revoked its preliminary approval of the joint venture between MI Developments and Penn National, raising questions about the casino operator's standing as a racing operator. MID owns 51 percent of the Jockey Club, while Penn National holds the remaining stake.

Penn National officials said they hope to reach a resolution to continue live racing at the tracks. And Stronach has said he plans to come to Maryland this week to broker a deal for racing next year.

Despite such uncertainty, racing officials and supporters say they cannot imagine that the Jockey Club owners and the racing industry won't reach a compromise, especially with the Preakness at stake. The owners could submit a new proposed racing schedule for approval at the next commission meeting later this month.

"I'm hoping they're able to work something out," said Martha Nathanson, vice president for government relations and advocacy at LifeBridge Health, whose Sinai Hospital has been a corporate sponsor of the Preakness for many years. "The importance of the Preakness to Baltimore cannot be overstated. I think everyone realizes that."

hanah.cho@baltsun.com

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