The state Wednesday approved a short-term fix to keep thoroughbred racing and the Preakness Stakes alive in Maryland in 2011 by subsidizing operations at struggling Laurel Park and Pimlico Race Course.
The state will contribute up to $4 million, and the Maryland Thoroughbred Horsemen’s Association will contribute $1.7 million as part of the agreement that will have the Maryland Jockey Club running 146 live racing days next year, the same number it ran this year.
“I’m thrilled. We have a full calendar of live racing for 2011, which was the goal from the start,” said Alan Foreman, counsel to the horsemen’s association. “We have the breathing room to reposition the industry. And I’m thrilled for the 10,000 people that work in this industry.”
On Tuesday, however, it appeared as though racing and the Preakness were in greater peril than ever before. The Maryland Racing Commission had for the second time in a month rejected a jockey club plan for an abbreviated racing calendar in 2011, and commissioners publicly said the tracks would be better off under new ownership.
In a hastily assembled meeting Wednesday, however, the tone was guardedly optimistic.
“In the short term, the ownership has been very dysfunctional, and hopefully they can get their act together,” said commission Chairman Louis J. Ulman.
Penn National Gaming Inc. and MI Developments Inc. entered a joint venture in June to run the jockey club. And much of the uncertainty surrounding the tracks appears to have stemmed from the companies’ disparate visions of horse racing’s future in the state. Penn National has been steadfast in its assertion that racing will not survive without slot machines or other casino-style gaming, while MID has not taken such a hard line.
The two corporate parents of horse racing, and the rest of the industry, now have a year to find common ground after the deal brokered by Gov. Martin O’Malley’s staff staunched the jockey club’s losses.
Jockey club President Tom Chuckas laughed when asked if he truly thought there would not be a Preakness held next year.
“I’m a cautiously optimistic person, but I have to tell you after [Tuesday] night, I had some real doubts,” he said.
O’Malley called the deal “critically important” to saving thousands of jobs.
“There are still problems,” he said. “This is a one-year fix that allows us to keep working on a long-term solution.”
Members of the industry, track ownership and administration hashed out the deal Wednesday morning to assure MID and Penn National would see the string of losses of up to $7 million at Laurel shrink next year.
The plan would send up to $4 million from the Maryland Economic Development Corp. to the tracks. MEDCO would then be reimbursed with slots revenues earmarked for matching funds for racetrack improvements. That change will require legislation that will likely be included in the package of bills that will make up the governor’s budget proposal in January.
The MEDCO component of the deal offers the owners of the track more certainty than if their subsidy came directly from the slots revenue because it puts more of the risk on the state. MEDCO’s board still has to approve the deal.
In a statement, Penn National said it hoped the compromise will “serve as a building block” as it seeks to rebuild racing in Maryland. The company has long asserted the only way for horse tracks to survive is with the direct support of revenue from casinos.
“This compromise gives us additional breathing room to work together with the horsemen to seek potential legislative changes and refashion the business model, with the ultimate goal of hopefully securing slots at the racetracks in Maryland,” the company said.
State officials will be keeping a close eye on Penn National, and indeed the rest of the jockey club. Chuckas said the club would update the administration regularly on its attempt to craft a sustainable plan for the future.
Speaker of the House Michael E. Busch, D-Anne Arundel, applauded the deal, but said lawmakers will be watching closely for signs of progress. The cash-strapped state has obligated 9.5 percent of slot machine revenues to the racing industry, a sum that could be more than $100 million if all the 15,000 terminals allowed by law were up and running.
“As long as there is division and bickering among the horse racing industry, that lends to the ability of legislators to say ‘Look, we could use this money for scholarships or education,’” Busch said.