Judge approves sale of Rosecroft to Penn National for $11M

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GREENBELT — After a losing bidder renewed its effort to buy Rosecroft Raceway, a federal bankruptcy judge Wednesday approved the sale of the Prince George’s County harness track to Penn National Gaming Inc. for $11 million in cash.

Penn National had won Friday’s auction with a bid of $10.25 million, but sweetened its offer Wednesday after Landow Partners LLC contested the auction results.

Landow Partners had bid $10.05 million in cash at the auction, plus $3 million for a bond to be approved for the General Assembly to help finance the track’s operations. The group also offered an additional $3 million if slots were approved for Rosecroft.

Penn National’s winning bid included a similar bond and a $2 million premium if Rosecroft got slots.

Landow Partners’ attorney told Judge Paul Mannes that the race track’s trustee did not consider the premium for slots well enough, especially since his client had an agreement with horse owners and trainers to ensure that live racing would resume at Rosecroft.

Before the hearing, Landow Partners offered to increase its cash offer to $10.25 million, matching Penn National. In response, Penn National increased its offer to $6 million if slots were approved for Rosecroft.

At the hearing, State Sen. C. Anthony Muse, who represents the district in which Rosecroft lies, testified in favor of Landow Partners. He said Landow was more likely to have community support and the backing of state lawmakers. Muse told the judge he does not support slots and would not sponsor a bill for a bond if Penn National owned Rosecroft.

“We’re looking at not just the highest, but the best offer,” Muse said. “This is not the best offer.”

Richard G. Mason, an attorney representing Penn National, said Muse’s testimony and arguing about the fate of slots and the bond in the General Assembly were too speculative to be considered.

“This has to stop now,” Mason said. “[Landow Partners] have turned out to be sore losers, so let us move forward.”

During a recess after the morning testimony, Penn National revised its bid to include $11 million in cash and drop the bond and slots contingencies. Mannes awarded the track to Penn National.

“Money talks,” said Michael J. Lichtenstein, the attorney representing Rosecroft trustee James J. Murphy. “If you talk to the creditors, the bottom is line is that this deal is more money for the creditors.”

The Maryland Jockey Club and other racing associations were the largest creditors in the case, with more than $1.7 million owed. The jockey club’s attorney, Lawrence D. Coppel, of Gordon, Feinblatt, Rothman, Hoffberger and Hollander LLC, said the $11 million offer upfront was the most reassuring option. Having money contingent on bonds and a slots referendum was too speculative for paying back the club, he said.

“No one would know what would happen,” Coppel said. “Especially since our claim will grow significantly in the future.”

Mannes said that it was the support of the Maryland Jockey Club and other racing associations that weighed most heavily on determining his decision.

“They supported [Penn National]’s $6 million of pie in the sky,” Mannes said. “And it supports more of the $11 million in cash, rather than the Landow bid.”

Mannes ordered that Landow and other bidders have 14 days to file an appeal. Penn National will be able to close on the sale after Feb. 25.

Penn National co-owns Laurel Park and Pimlico Race Course, home of the Preakness Stakes, racing’s second leg of the Triple Crown. The company also owns the Hollywood Casino in Cecil County.

Saul M. Schwartzbach, an attorney for Landow Partners, said the group has not decided if it will file an appeal.