Nothing Will Ever Be The Same Again After Preakness

And perhaps that will be good.

May 2009

 

by Timothy Capps
Timothy Capps is the former executive director of the Maryland Horse Breeders Association, former publisher of the Mid-Atlantic Thoroughbred and a former executive vice president of the Maryland Jockey Club, which owns Laurel Park and Pimlico Race Track. The Maryland Jockey Club is owned by Magna Entertainment Corporation. During his tenure in Maryland, he lobbied actively for the establishment of slots at the tracks. Now, Tim Capps is the "Executivein- Resident" in the College of Business, Equine Program at the University of Louisville and a frequent contributor to The Equiery. Read his earlier editorials, please visit equiery.com.


Suffice it to say that things in the Free State are, racing-wise, as uncertain as they've ever been, what with the Magna Entertainment's bankruptcy, immediate reduction in race days at Pimlico, uncertainty beyond Pimlico's spring meet, and the frantic efforts of the O'Malley administration and state legislature to cobble together some sort of "fail-safe" means of keeping the Maryland Jockey Club tracks alive and the Preakness in Maryland.

Magna Chairman Frank Stronach seems determined to "game" the system if possible by trying to hold onto whatever assets he thinks are most valuable and rid himself of all others with the goal of emerging from bankruptcy with a newer, leaner, presumably more viable business entity. Magna's creditors seem equally determined to keep that from happening.

Ultimately, as we have suggested in earlier columns, it is evident that the Preakness is the linchpin that will preserve Maryland racing as we have known it. Almost certainly, the Governor and legislature would not have acted as they did, no matter how futile those efforts may end up being, had there been no Preakness. Of course, without the race, Maryland racing would be of much slimmer proportions already, and concerns over keeping the three MJC facilities open and operating as they have would be moot.

It strikes us, having read the legislation that would possibly interject the state into the business of acquiring the tracks, that the administration and legislature did what they did in order to have a last-ditch, Hail Mary means of trying to avoid Armageddon, which would be the sale of the track properties for development and the sale of the Preakness to an out-ofstate entity. For that, you can't criticize them, even if the legal questions pertaining to the state's authority to condemn/ purchase the properties when they are subject to federal bankruptcy proceedings is - at best - murky.

At the end of the day, they have done about all they could amid such huge uncertainties, but it is regrettable that the slots law wasn't written with more foresight in terms of making it attractive to potential investors, including racing interests. The poor design of the statute, coupled with Magna's stumbles, including its ludicrous deal with the former owners of MJC, left both Magna and Maryland racing in a horrific place, and the many good people involved in Maryland racing didn't deserve that.

Trainers Take More, Breeders Get Less
A little noticed footnote to the legislative session was the passage of a bill that would change the distribution of slots revenues---if there ever are any---between the Thoroughbred and Standardbred purses and their respective breeders' incentive funds.

Historically, the pari-mutuel "net" revenues---after state and local taxes and other entitlements came o u t --- w e r e split 53%-47% between the purses and breeders' funds (53%) and the tracks (47%). Of the portion dedicated to the purses & breeders, the purses got 89% with the breeders getting 11%. The slots legislation, thanks to a floor amendment to the slots bill, would have allocated the purse/breeders' portion of the slots monies 85% to purses and 15% to breeders funds, something about which the Maryland Thoroughbred Horsemen's Association (the trainers, who benefit from the purses) was livid and determined to change, which they did, thanks to some serious lobbying expenditures.

Both sides have their arguments, with the breeders feeling that even with slots monies the Maryland breeders fund will still be well behind those in New York and Pennsylvania, where slots revenues will be much higher, while the horse owners and trainers saying that they need every nickel possible for purses.

Sadly, though, what should have been something that could have been worked out by compromise among the groups and brought to the legislature as a jointly agreed upon arrangement giving both parties something, instead was a continuing---and glaring---example of the internecine strife that plagues Maryland racing.

What Does The Future Of Maryland Racing Look Like?

While it is too early to predict outcomes with great certainty, it seems unlikely that even a Cordish--- Woodbine (or whomever) partnership will be able to run Laurel and Pimlico as they have been, which means running 220 or more race days as envisioned in the slots legislation and in the minds of many Maryland horsemen, who aren't concerned about the track's profitability because they are dazzled by the prospects of slots purses.

The point, and the most important one for the moment, is that all of the stakeholders in Maryland racing have to be prepared for a racing model that isn't going to look like the old one. The Changing Face of Maryland Racing, continued... To read recently published commentaries about the State's legislative attempt to seize the Preakness, visit equiery.com and sign up for The Equiery's new News Feed!

 

 

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