Greg Avioli, who heads The Stronach Group's racing business, told state regulators Friday that the second leg of the Triple Crown isn't living up to its potential. The Preakness could make three times the $14 million in revenue it currently sees, he told members of the Maryland Racing Commission.
To make that happen, The Stronach Group wants to build a modernized facility — which could cost as much as $200 million. The company has identified some potential sites, including Pimlico and Laurel Park. Downtown Baltimore, which has been approved for a slots casino, is also a strong possibility, he said.
"We have something special in Preakness," Avioli told the commission. "But it is an underutilized asset."
The Stronach Group took control of the tracks last month when MID Developments bought out Penn National Gaming's minority stake in the Maryland Jockey Club, which owns Laurel Park, Pimlico and a training facility in Bowie.
The Stronach Group is owned by Canadian horse breeder and owner Frank Stronach. Stronach was also MI Development's chairman and chief executive, a position he gave up to run Maryland's racetracks.
The sale allowed Penn National to focus on bringing back live racing at another Maryland track, Rosecroft Raceway in Prince George's County. Penn National bought a 49 percent stake in the Jockey Club last year in hopes of securing a slots license at Laurel Park.
The racing commission on Friday approved a racing license for The Stronach Group on the condition that the company cover any losses at the track, something that it has agreed to do. Losses of $11.7 million are expected this year, not including subsidies.
The Stronach Group would also be required to operate 146 days of live racing at both tracks this year and next year under the commission's decision.
In an attempt to bring some stability to the state's racing industry, the Maryland General Assembly passed legislation this year requiring 146 days of live racing this year and in 2012. The state in turn would divert up to $6 million annually in slots revenue allocated for racetrack improvements to help support the day-to-day operations of the Maryland Jockey Club.
Avioli had requested during Friday's commission meeting that his company not be required to race so many days next year to focus on the future of the tracks and to reduce losses.
Horse breeders said during the hearing they needed all the days of racing they can get to keep the state's racing industry viable. The legislation was meant to help the industry buy time to come up with a plan to help make it profitable, the horse breeders have said.
"We are running on life support," said Cynthia McGinnes, a breeder and owner of the Thornmar Farm in Chestertown on the Eastern Shore. "We are on the last two oxygen tanks."
Commission Chairman Louis J. Ulman said the 146 days requirement was maintained to keep in line with the state legislation. He said The Stronach Group could potentially submit a new application next year that could ask the commission to modify the plan for fewer racing days. The commission would have to vote on such a request.
It led some in the industry to wonder if the same debate would occur next year.
"Conceivably, we're in no different place," said Alan Foreman, a lawyer for the Maryland Thoroughbred Horsemen's Association.
Some of the horse breeders questioned whether Stronach was the right person to run the tracks. He has been unable to turn the tracks around, despite having an ownership stake in them since 2002, they said.
Avioli also said Stronach will have more control under the new venture. Before there were internal conflicts on how much the company should invest in racing. He also said the 2009 bankruptcy of Magna Entertainment, which then owned the Maryland Jockey Club, limited what he could do in the past.
"He has a passion for Maryland racing," Avioli said. "He wants it to succeed. And he is willing to invest to make it succeed."
"We are in the position for a fresh start," he added.