About three years in the past there was pleasure and a deep sense of aid for the Thoroughbred business in Maryland when the State Legislature handed a invoice that referred to as for $375 million in bonds to rebuild the crumbling Maryland Jockey Membership amenities at Pimlico Race Course and Laurel Park.
It was a second in time when the business regarded previous years of missteps and authorized battles to embrace a vivid future with two fashionable amenities and a correct house for Pimlico’s Preakness Stakes (G1), the famed second jewel within the Triple Crown.
“That is really a defining second within the historical past of the Maryland Thoroughbred racing business and the state,” Alan Rifkin, counsel for the Maryland Jockey Membership (an arm of 1/ST Racing) and Preakness Stakes, mentioned on the time.
Now that second is gone.
The dying knell for these bold plans sounded April 10 when Maryland lawmakers overwhelmingly handed a invoice creating the Maryland Thoroughbred Racetrack Working Authority to work with the stakeholders to get rid of quite a few bottlenecks and produce a brand new imaginative and prescient for the business by Dec. 1.
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“This was the logical subsequent step. That is what was wanted to be executed,” mentioned Alan Foreman, counsel for the Maryland Thoroughbred Horsemen’s Affiliation. “There was nice frustration on the finish of final 12 months’s legislative session. The undertaking was manner behind and manner over finances.”
Whereas management of the undertaking has now shifted from the Maryland Stadium Authority to the MTROA, the change entails greater than acronyms. It comes amidst a brand new actuality for Maryland racing wherein having two new racing amenities is a longshot and probably the most viable choice is to consolidate racing at a renovated Pimlico and create a coaching middle—probably at Laurel—to accommodate the horse inhabitants.
“It is extra probably than ever that Pimlico will develop into the hub of Maryland racing,” Foreman mentioned in regards to the 153-year-old facility in Baltimore the place deterioration led to the closing of a piece of the grandstand in 2019. “When the stadium authority realized the price of rebuilding Laurel was prohibitive, we began trying on the penalties that there will not be a Laurel in the way forward for Maryland racing and we could must consolidate at Pimlico and construct a coaching middle at Laurel. We’d additionally want a brand new web site for a coaching middle if rebuilding Laurel shouldn’t be discovered to be a possible undertaking.”
What’s occurring now’s the most recent irritating chapter in a guide that many imagine begins in 2009 when The Stronach Group (1/ST Racing’s company title on the time) didn’t pay a required license deposit on time and its MJC misplaced all hope of bringing gaming to Laurel. With out the choice income stream that surrounding states possess, Maryland’s tracks missed out on the absolute best deal to make ends meet.
“What we have now now’s the accident that was ready to occur when the Stronach Group didn’t get entangled in gaming greater than 10 years in the past,” Foreman mentioned.
Whereas the 2020 laws was supposed to unravel the issue, its lack of ability to get began paints a stark image for the opportunity of rebuilding two racetracks. What doomed the earlier laws was a mix of COVID-19, inflation, elevated labor and materials prices, and an costly tax challenge for the MJC. Merely put, what was thought-about a $375 million undertaking in 2020, now has a price ticket of about $600 million. On the identical time, the 2020 bonds are value about $250 million now due to adjustments in rates of interest, making a shortfall that the MSA couldn’t plug.
Below the brand new laws, Invoice Cole, a lead negotiator for the Metropolis of Baltimore within the course of, says about $400 million-$410 million can be accessible. But that also leaves a deficit of about $200 million.
Whereas stakeholder representatives all stress that nothing has been determined but, and that every one choices are nonetheless on the desk, there is no getting round the truth that an enormous quantity of further cash can be wanted if the plan stays to rejuvenate each tracks. Nobody, particularly the state or the MJC, seems occupied with offering that money.
“Now we have a finite finances. That’s clear,” Cole mentioned. “The legislature has no urge for food for including extra money and we have been instructed the finances authorised a number of years in the past is our finances now. We’re working below the idea that we should dwell inside our means.”
That situation would appear to make rebuilding one observe the best choice, and since saving Pimlico and holding the Preakness in Baltimore was the spark that led to the 2020 laws, it appears probably that Pimlico would get the nod over Laurel on any one-track plan.
“We have heard very clearly that Pimlico stays the primary focus and I do not see any manner Pimlico shouldn’t be protected and preserved,” Cole mentioned.
The necessity for a brand new redevelopment plan additionally casts some quantity of doubt on 1/ST Racing’s future in Maryland. In the meanwhile the MJC owns each Pimlico and Laurel, however as a part of the 2020 deal, it agreed to show Pimlico over to public management by town and state whereas retaining possession of Laurel, which additionally wants vital enhancements.
“Laurel must be rebuilt. It’s in worse form than Pimlico,” Foreman mentioned. “You’ll be able to gussy up the grandstand, however the truth of the matter is that there are structural issues with the constructing. There are all types of points with the backstretch, water points, issues with the racing floor. The turf course needs to be changed. All of that was apparent when the (MSA) studied it.”
Having the state pay for the redevelopment of Laurel seemed like an awesome deal for the MJC, till it turned identified that Maryland legislation stipulates that when public funds are used for a personal entity, the proprietor turns into answerable for capital beneficial properties taxes. Within the case of the MJC that tax invoice might be someplace between $10 million-$40 million relying on the scope of the undertaking. When confronted with that prospect, the MJC understandably utilized the brakes to transferring ahead on the plan whereas a solution to that roadblock may discovered. Up to now, nobody has provided one and since it is a state legislation, there’s little to no wiggle room round it.
With that tax challenge hovering overhead, insiders marvel if MJC and 1/ST Racing may transfer to the function of observe operator with out an possession stake?
Requested about that chance, Rifkin mentioned, “It might be untimely for me to touch upon anyone specific permutation. What I can say is: TSG/MJC continues to debate in good religion and in the very best pursuits of Maryland’s historic racing business all affordable concepts and operational constructions that might make sure the long-term viability, profitability, and sustainability of all stakeholders.”
Including to questions on the way forward for 1/ST Racing in Maryland, the MTROA has the ability to herald a brand new operator. Foreman mentioned a provision of Maryland legislation permits the state to grab possession of the tracks and work out truthful compensation for the previous proprietor.
“We’d want a extra versatile working mannequin in Maryland,” Cole mentioned.
Nevertheless, discovering an entity prepared to be merely an operator, be it the MJC or one other group, might be one other in a collection of problematic points going through the MTROA.
“State legislation consists of the flexibility to step in and basically take over and discover a new operator if wanted,” Foreman mentioned, “however I do not know who could be occupied with doing that with out the gaming part. As a part of the method, we have now been all of the working fashions, corresponding to Del Mar, (the New York Racing Affiliation), New Jersey, within the occasion we have now to face that chance if wanted. We started hiring consultants to take a look at operations and so they filed a report Sept. 30. It indicated that Del Mar is most aligned with Maryland’s pursuits going ahead. Del Mar is owned by the state and there’s an authority that has management and oversees the property. After which there’s the Del Mar Thoroughbred Membership which is the working entity. They’re tax-exempt and that is the sort of the mannequin we’d be .”
With out a plan in place in the intervening time, tensions have been rising. Compounding the state of affairs, there have been expensive points with the amenities, corresponding to issues with the racing floor circumstances at Laurel, a lingering downside that compelled cancellation of racing April 8.
Foreman mentioned that when a 10-year settlement between the horsemen, breeders, and the MJC ended late final 12 months, a brand new settlement couldn’t be reached among the many MJC, MTHA, and the Maryland Horse Breeders’ Affiliation. As a substitute a six-month extension for continued negotiations was agreed upon. The ten-year settlement had assured 100 racing days and created a “revenue-sharing” contract with the horsemen for extra dates.
“Our assumption was the 10-year settlement could be prolonged, however in November the (MJC, 1/ST Racing) got here in and mentioned that except the horsemen are prepared to pay considerably extra money than they’re at the moment paying, due to (MJC’s) losses, they’d not lengthen the settlement,” Foreman mentioned.
It is absolutely a posh and irritating state of affairs going through the Maryland racing business with no easy solutions, however these carefully concerned within the course of are optimistic that there is nonetheless a fervent want among the many stakeholders to search out options and constructions that may finally brighten the game’s future within the Outdated Line State.
“We nonetheless have a whole lot of work to do with the MJC and the horsemen,” Cole mentioned, “however I imagine there’s the widespread aim of preserving Maryland racing. Now we have a finite period of time to give you a world resolution however we have now a mutual curiosity in developing with an answer.”