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Feb 23 2009

A modest proposal

In the “you can’t make this up” department, we have this: at the exact moment when Maryland racing’s future seems the brightest it’s been in years — because of the impending arrival of slots — it’s also distinctly possible that Maryland racing has no future at all.

As has been amply documented seemingly just about everywhere, the financial house of cards that is Magna Entertainment — the owner of the two full-sized flat tracks in Maryland — appears to be collapsing.  Magna’s controlling shareholder, MI Development — another Frank Stronach-run company — has pulled the plug on the loans it made to MEC for that company’s reorganization.   The board members have begun to leave.  Will the last guy out turn off the lights?

The value of the stock of MEC — which also owns racing jewels Gulfstream and Santa Anita, as well as other tracks around the nation — is measured in pennies.  And its future may be measured in weeks.

Magna, clearly, will need to shed debt — by shedding assets — if it is to survive.  Those assets are primarily racetracks and the land which the tracks occupy.  In many cases, the tracks are worth more as houses and shopping malls than they are as racing strips, which means that the future of racing in many parts of the country is very much up in the air.

Here in Maryland, it’s a safe bet that both Pimlico — in Baltimore with ready access to the interstate — and Laurel Park — midway between Baltimore and Washington — are at risk.  Both are aging facilities in need of work, and both occupy large and valuable tracts of land.  The sour economy may keep them free from developers for now, but for how long?

It’s no secret that many legislators don’t care about horse racing.  For all of its distinguished history in the state, and despite all of the economic and other benefits its existence brings, it nevertheless took a decade-and-a-half for slots to arrive here.  Many legislators simply don’t get it.

Whether they understand the benefits of racing or not, however, you’d have to be blind and stupid not to see the benefits of hosting the Preakness.  One hundred thousand fans fill a lot of Baltimore hotel rooms and plenty of Little Italy and Inner Harbor restaurants.  All that money wagered supports a lot of Maryland jobs.

And all of it is at significant risk right now.   While legislators generally discounted the possibility of Magna (or any other track owner) moving the Preakness — probably rightly so — it’ll be awfully hard to run the race around the parking lot of a strip mall, or down a tidy new cul-de-sac.

Now may be the time for something different.  Track officials often make decisions that leave horsemen scratching their heads; and horsemen often want what’s not financially feasible.  That’s because of racing’s odd split governance structure, in which those who own the venues have, often, as much or more power over what happens in the sport as the horsemen who actually put on the show.

Perhaps now’s the time to end the split.  A nonprofit consortium of horsemen — owners and trainers — could be formed to own the tracks.  The state could facilitate this process by encouraging the creation of the group and by allowing some of the slots money currently earmarked for purses and other awards to be reprogrammed towards paying for the facilities.

Because it would operate as a nonprofit, the consortium would (at least theoretically) be able to up purses, since there would be no profit motive per se.   The changes would place the horsemen in charge of their own destiny — rather than at the tender (or not so tender) mercies of Magna Entertainment and its increasingly unhappy creditors.  Moreover, they would allow horsemen to run the tracks the way they see fit, rather than battling with Magna or the Racing Commission over dates and closures and many other issues.  Our success, or failure, would be entirely our own.

Political processes — and, with a private track owner, horsemen’s groups, jockeys, and a racing commission, all decisions in Maryland racing result from a political process — most often lead to compromise, “least bad” decisions.

But for Maryland racing, “least bad” is no longer good enough.  If the horsemen take the reins, the risks are huge.  But so are the rewards, and perhaps it’s time to embrace them.

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6 comments

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  1. Steve Zorn

    A terrific idea, Frank. As an old anarcho-syndicalist, anything that smacks of worker (well, horse owner) control makes by heart beat just that much faster.

    Beware what you ask for, though. If you recall, NYRA was originally supposed to be of, by and for horsemen when it was set up back in 1955 — or at least of, by and for those horsemen who happened to be old, rich and members of the Jockey Club. And recently, NYRA’s not-for-profit status hasn’t seemed to do much good in generating extra money for purses, although we’re at least holding steady up here, compared to purse declines elsewhere.

    A real horseman-controlled track is a wonderful idea. Let’s make it happen!

  2. admin

    Thanks for checking in, Steve.

    While I don’t know the history of NYRA, especially not as well as you do, your point is well taken (though your purses are nothing to sneeze at!) I think that’s long been one of racing’s problems, that it’s a sort of closed loop where the leadership never changes. I’m not encouraging a “round up the usual suspects” leadership but something new, a new group with fresh ideas and vision…

  3. Tom

    With all due respect, I couldn’t disagree more with the horsemen owning the tracks in MD. Part of the big reason we are in the mess we are in is because of the horsemen. Their reluctance to concede on some issues, the biggest being year-round racing, has been a contributor to MD’s decline.

    While those elected to lead the horsemens’ group led the fight against reduced days, those same leaders are now hardly even running in the state. They gutted our racing and now they have scrammed.

    MD horsemen should be making every effort they can to produce and participate in a racing circuit with Delaware Park, and maybe one other track. Or has the MD horsemen’s shortsightedness made it way too late for that?

  4. Brian

    Didn’t a consortium of horsemen (Cloverleaf Standardbred Owners’ Association) buy and operate Rosecroft, the Harness track in Maryland? I don’t think that worked out so well. While there are a great many things that need fixing in Maryland Racing, I’m not sure horsemen (of which I’m one) being in charge is the answer. A strong well funded visionary with an eye toward Maryland racing would be a much better option. One who can convice state government that basing a middle of the state slot facility would be much better connected to an existing transit rail line than burying it at a mall where only other Maryland residents can have easy access. Also, someone who can convice the state to pony up some of the the funds to build a new Pimlico right next to the public funded Camden Yards & M&T Bank Stadium with a full slots facility and run a six week spring meet. If you think the downtown Baltimore hotels & restaurants get filled by the 100,000 fans 20 minutes away, think of the bump in the business when that group is within walking distance.

  5. Mike H

    Sadly, Pimlico has to go. Even with its long history and races that became the stuff of legend, it can no longer justify it’s existence. Let’s get real and not squander any more resources on Pimlico or a new track in downtown Baltimore. Laurel Park has new and updated dirt and turf surfaces that can support future racing in Maryland without another $20 million investment. Yes, the aging Laurel grandstand and clubhouse need to be replaced. Making Laurel Park a fan friendly place again is also critical for this facility. We should continue to update Laurel and develop outdoor seating and grandstands that can accommodate … large crowds. Then…move The Preakness to Laurel Park. Not only can fans arrive by car, but there is the rail stop right across the street from the Laurel grandstand entrance. Let’s remember that Laurel is between Baltimore and DC. And the survival of Maryland Racing will depend on still being able to draw fans from these two major Metro areas.

  6. admin

    Thanks, folks, for checking in and for the thoughtful comments. I appreciate ‘em.

    Couple thoughts: 1) I’m not proposing that “horsemen” — as in, the currently organized major horsemen’s groups — take over the track so much as suggesting that a group of horsemen, truly acting for the best interests of the game, do so. Yes, I’ve heard all the folks bemoaning the current leadership, and my proposal is not to empower them but a new group;

    2) You raise the issue of demanding year-round racing, etc. In part, I think, that stems from the separation between horsemen and the tracks; for horsemen, wanting more days amounts almost to spending other people’s money, and we know how good we all are at doing that. My thought is that, faced with the realities of owning the track, we’d either gain the discipline to do it right or disappear (which, at that point, would be our own fault).

    3) Yes, Cloverleaf failed, but all that proves is that one group of horsemen in one specific circumstance failed. This would be a different group, at a different time, in different circumstances.

    4) A visionary with deep pockets and extensive political connections would be nice, but they don’t grow on trees. A sustainable structure is a better long-term solution.

    Thanks again.

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