Maryland Business

With lots of news in Maryland’s slots and horse racing industries this week, stories from The Daily Record’s government reporter Nicholas Sohr dominated our staff business content. The Daily Record also made news as our publisher, Chris Eddings, was promoted within the Dolan Company and our associate publisher, Suzanne Fischer-Huettner, was selected to take his place.

1. Racing panel rejects Maryland Jockey Club plan by Nicholas Sohr

The state rejected on Monday a “stop-gap” plan for Maryland thoroughbred racing that featured a drastically reduced racing schedule, a decision that fractures the ownership of Pimlico Race Course and Laurel Park and injects more uncertainty into the future of the industry.

The corporate parents of the Maryland Jockey Club were expected to present a comprehensive business plan as the final step in gaining Maryland Racing Commission approval of the partnership. But, commissioners said what the club offered lacked details and members of the horse industry called for them to vote it down.

2. Fischer-Huettner named Daily Record publisher by Daily Record Staff

Suzanne Fischer-Huettner has been named publisher of The Daily Record.

A 37-year-old Maryland native who has been the newspaper’s associate publisher and vice president, Fischer-Huettner is the first woman publisher in the company’s 122-year history.

The announcement was made Thursday night at The Daily Record’s Leading Women event, which recognizes the achievements of Maryland women under 40, by Christopher A. Eddings, who is stepping down as publisher.

3. $12.4M spent on Anne Arundel slots referendum by Nicholas Sohr

The high-stakes battle over the right to build a casino in Anne Arundel County cost $12.4 million, according to a report published Wednesday by the state.

The Maryland Jockey Club spent $7.5 million on its failed referendum campaign to derail development of a casino at the Arundel Mills shopping mall. Subsidiaries of The Cordish Cos. — the casino’s developer — and the mall owners spent $4.9 million.

4. Eddings named publishing director for Dolan by Daily Record Staff

Christopher A. Eddings, publisher and president of The Daily Record, has been named director of publishing operations for The Dolan Company, owner of The Daily Record.

In his new role, Eddings will oversee the company’s business and legal newspaper and electronic publishing platforms throughout the country. He will continue to be headquartered in Baltimore with The Daily Record.

5. Racing plan for Laurel Park, Pimlico stuck at the starting gate by Nicholas Sohr

With Maryland thoroughbred racing and the Preakness Stakes in jeopardy, Penn National Gaming Inc. said Tuesday it will continue to work with its corporate partner to develop a plan for Laurel Park and Pimlico Race Course in 2011.

Penn National and MI Developments Inc. were dealt a setback Monday evening when the Maryland Racing Commission threw out their plan to slash live racing, opting to send the companies back to the drawing board rather than settle for an option the state’s horsemen said would spell doom for the industry.

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In 2010, Maryland will only have two Grade I stakes races. In another display of how the state’s quality of racing has declined in recent years (thanks to better competition and bigger purses from our slots-wielding neighbors), the annual Frank J. De Francis Memorial Dash has been downgraded to a Grade II race.

Now the Preakness Stakes, the middle jewel of racing’s Triple Crown, and the historic Pimlico Special are the only remaining Grade I races in Maryland. Both races are run at Baltimore’s Pimlico Race Course in May.

“It is disappointing,” said Maryland Jockey Club racing secretary Georganne Hale in a statement. “They look at the races over a four-year period with the number of Grade I winners in the race. Our average was 1.4 but with so few Grade I sprints, how many Grade I winners can we attract?”

The De Francis Dash, named for the Laurel and Pimlico track owner who died in 1989, debuted in 1990 and was first graded in 1992. It became a Grade I event in 1998.

It was one of five races downgraded from Grade I to Grade II. Of the 723 unrestricted U.S. stakes races with a purse of at least $75,000, 487 of them were assigned a graded status this year by the American Graded Stakes Committee.

Fifteen graded races were upgraded and 23 were downgraded, including the De Francis Dash and Pimlico’s Miss Preakness Stakes, which went from a Grade III to ungraded.

Seem pretty clear to me — this is a message from the committee that the only thing really holding up horse racing in Maryland at this point is the Preakness Stakes. This year wagering on Preakness Day made up just over HALF the total wagering done for the spring meet at Pimlico. That’s pretty lop-sided if you ask me.

Also, the Pimlico Special was canceled in 2009 for the third time this decade because of (yet again) a purse shortage. Seems like the only thing going for the race at this point is having the distinction of holding the “Race of the Century” between Seabiscuit and War Admiral more than 70 years ago.

Will Maryland horse racing in the eye of the general public ever again be more than just Preakness?

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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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I suppose I should have been surprised that it had taken PETA this long to issue a statement about what’s going on with Pimlico Race Course here in Baltimore. Yet, I still had that gut, “Are you kidding me?!?” reaction when I saw the letter the group sent to Gov. Martin O’Malley this morning.

If Baltimore ends up seizing Pimlico through eminent domain (as the state’s lawmakers have approved), People for the Ethical Treatment of Animals is suggesting the state turn Pimlico into a “Horse Empathy Park.” (You know, because it’s not like the state approved that legislation to keep a certain horse race running there or anything…)

From the letter signed by Executive Vice President Tracy Reiman:

The Horse Empathy Park would feature educational displays highlighting interesting facts about horses and how almost every aspect of their nature is thwarted by the abuse inherent in the horse racing industry. It would feature a memorial to well-known horses who were raced to death, such as Barbaro and Eight Belles, and an exhibit of whips, bits, clamps, toe grabs, and spurs. And children could play games in which they race around the Pimlico track wearing a “jockey pack” that would simulate the weight and pressure a horse feels with a jockey on their backs. Each person entering the museum will be given a blinker — a hood that restricts horses’ vision when they are forced to race — to wear for the duration of their visit, and they will also receive a few lashes with a whip.

Wow, sounds like fun for the entire family!

I really wonder what would happen if PETA actually came up with a thoughtful suggestion for the ethical treatment of animals instead of wasting its time drafting letters that will make headlines for one day because of their ridiculousness, then be forgotten about 24 hours later. Who knows — people might actually take the group seriously and I might have to find something else to blog about.

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Pimlico Race Course and Laurel Park dropped in value last year according to a Securities and Exchange Commission filing this week.

The filing by bankrupt owner Magna Entertainment Corp. said that the company’s audit committee approved a $136 million write-down in the value of the company’s assets including the Maryland Jockey Club (which operates Laurel and Pimlico for Magna), Golden Gate Fields, Lone Star Park and The Meadows.

The properties “experienced lower average daily attendance and decreased wagering activity compared to previous years,” the filing said. “In addition, the 2009 business plans for these operations reflected reductions in estimated future cash flows based on lower expectations for growth and profitability resulting primarily from the significant downturn in the U.S. economy.”

In its bankruptcy filings, Magna has not assigned a dollar value to each of its assets up for auction, but the news that they have dropped in value could affect the offers. Do you think this news could attract people looking for a bargain or steer potential track owners away?

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