Maryland Business

I spoke to Joseph De Francis last night regarding today’s story about his loss of gaming rights to Laurel Park, and the former owner of Maryland’s thoroughbred race tracks said while he was disappointed in the judge’s decision, he was not surprised.

He also added that what he thought was more significant was Magna Entertainment Corp.’s request for the delay of the auction of Maryland’s tracks by nearly two weeks.

“That’s what we’ve all been waiting for,” he said. Now it’s that much longer that the tracks “will be under the cloud of bankruptcy.”

When Magna’s attorney Brian Rosen told the judge on Tuesday they’d like to move the auction back to Jan. 21, I was disappointed (after all, we’ve been waiting for this thing for more than nine months) but not at all surprised. After all Magna has requested to move back just about every date related to the Maryland race tracks, it was only a matter of time before the auction got moved.

On a side note, the auction is closed to the press — which means we’ll get to tell you who the winning bidder is but won’t get to see and relay to you the auction day’s antics firsthand.

The reason for privacy given to me by the New York firm running the auction was that it was for the protection of the bidders — the auction had been advertised as a private affair. Also, the proceedings will be taking place on private grounds, so it’s sound reasoning.

Still, I think Marylanders who are following this story would be curious about how the new owner pulled it off and who came just a hair shy of beating him — a story we won’t get to really know if the auction is closed. Does that disappoint anyone?

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In today’s story about the people lining up to bid on Maryland’s race tracks next year, former track owner Joseph De Francis said he did not believe Cordish’s proposed slots parlor at Arundel Mills could be up and running within the next year.

As former president of the Maryland Jockey Club, which operates Laurel and Pimlico race tracks, De Francis said he spent years getting the additional permits needed to run a slots facility. He told The Daily Record that all Laurel needs now is a slots license to start building the gambling machines. Cordish’s site, he said, would still require more permits — some which took Laurel years to get.

Below is the list, along with when each was obtained. Take a look, especially if you know something about construction permits and the Arundel Mills area. Do you agree with De Francis that a slots parlor at the site could get bogged down in additional permits? If he’s wrong, tell us why.

Approved Master Sketch Plan: Anne Arundel County – 11/21/2008
Approved Wetlands and Floodplain Impact Permit: Maryland Department of the Environment – 1/9/2009
Approved Wetlands Impact Permit: US Army Corps of Engineers – 10/31/2008
Approved Road Network and New Main Entrance:State Highway Administration – 10/31/2008
Memorandum of Agreement for Improvements: Maryland Historical Trust – 7/7/2004
Confirmation of Historic Properties: Maryland Historical Trust – 4/9/2004
Confirmation of Jurisdictional Determination: Maryland Department of the Environment – 10/20/2003
Verification of Jurisdictional Determination and Delineation: US Army Corps of Engineers – 9/16/2003
Confirmation of No Threatened or Endangered Species: Department of Natural Resources- 8/19/2003
Confirmation of No Threatened or Endangered Species: US Department of the Interior – 8/12/2003
Verification of Road Dedication for Widening: renewed 1/6/2004
Grading Permit Approval and Wetlands Grading/Fill: Anne Arundel County – 9/25/2007
Reforestation Agreement and Bond – $278,784.56 – renewed 12/8/2008
Specimen Tree Agreement and Bond – $56,108.00 – renewed 12/8/2008
Grading Completion Agreement and Bond – $186,326.43 – amended 8/7/2008
Approved On-Site Water Usage and Appropriation: Maryland Department of the Environment – 1/1/2005
Approved Wetlands Impact Permit: Maryland Department of the Environment – 10/6/2004
Approved Wetlands Impact Permit: US Army Corps of Engineers – 9/22/2004
Grading Permit Approval and Floodplain Disturbance: Anne Arundel County – 6/21/2004
Approved Floodplain Impacts: Maryland Department of the Environment – 7/1/2004
Afforestation Agreement and Bond – $71,002.80

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A court filing by Joseph De Francis Tuesday painted an interesting analogy for his argument as to why he objects to Magna Entertainment’s attempt to negate a 2002 deal he made with the company when they bought Maryland’s thoroughbred race tracks from his family.

Pimlico Race Course in Baltimore

The deal is a profit-sharing agreement Magna agreed to when it bought controlling interest in Laurel and Pimlico in 2002. The agreement entitles De Francis and others to 65 percent of any pre-tax, future profits the company receives from slot machines if the games are ever approved for the tracks. The profit-sharing lasts for 20 years, with the sellers’ share dropping to 40 percent for the last 10.

The deal applies to any future owner of the track as well and Magna claims it is hindering the auction process for the track now because it has a chilling affect on bids for those properties. De Francis told The Daily Record the agreement was reached because a value could not be placed at the time on what kind of future slots profits his family was giving up by selling the tracks.

In an objection filed Tuesday, De Francis makes his point by comparing selling the intangible (future slots profits) to selling land (a tangible.)

What if, instead, Magna had bought land around Pimlico for a parking lot with the understanding it would obtain zoning licenses from the state before a parking lot was built?

“Under such a scenario [Magna] could not reclaim the tract of land they conveyed several years earlier (irrespective of whether the requisite zoning licenses were obtained),” the filing says. “This hypothetical scenario is conceptually identical to the current scenario — the only difference is that [this case constitutes] an intangible, rather than tangible, undeveloped property right.”

What do you think of this argument? Do you agree that Magna is in the wrong? Or does the reasoning just not fly?

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