Days after a self-imposed July 1 deadline passed, negotiators for the Maryland Jockey Club (MJC) and the state’s racing interests — including the Maryland Thoroughbred Horsemen’s Association (MTHA) and Maryland Horse Breeders Association (MHBA) — remain at odds over numerous issues regarding the future of Maryland racing. But the profile of the slow-moving negotiations may be about change, as state racing commissioners are set to embark on a round of one-on-one “shuttle diplomacy” meetings with the various parties, according to numerous sources.
In each of the last two years, these negotiations have gone down to the wire, with high-level intervention from state officials finally helping to craft an agreement. The Maryland Racing Commission has convened this year’s discussions among the parties for the last several months to avoid such an outcome. Without an agreement in place, there may be no or very limited racing in Maryland in 2013 and beyond.
But a proposal advanced months ago by the Jockey Club has not significantly moved the ball. That, said several people I spoke with who have knowledge of the negotiations, is the result of two issues: first is the fate of the Bowie training center, which has roiled the state for years; and second is the MJC’s desire for racing interests to present a written counter-proposal, which they have not yet done.
There is little doubt that the MJC’s initial offer is closer to a wishlist than to something the racing community would ultimately accept. At the same time, however, it is not an unrealistic starting place for a negotiation and suggests that the two sides could be able to reach accord without the blood-letting seen in previous years.
The proposal, as it has been outlined to me, includes the following components:
- Two 40-day racing meets, one in the fall and one in the spring;
- The ability for the state’s horsemen to “buy” additional racing days at an unspecified price, to be negotiated, but expected by many to settle in the neighborhood of $100,000 per day;
- The closure of the Bowie training center and the construction of all-new barns and dorms at Laurel, with a total of 1408 stalls, which would be open for training year-round. The estimated $14 million in costs would be split three ways: 50 percent of the money coming from slots revenues dedicated to racetrack capital improvements; 25 percent from the MJC; and 25 percent from the horsemen.
- A three-point shift in the split of parimutuel revenue, which would give the MJC 50 percent of takeout (up from 47), purses 44 percent (down from 47), and leave the state’s bred fund unchanged;
- A shift of 0.25 percent of slots revenues to cover the MJC’s unfunded pension liability;
- The ability for the MJC in its sole discretion, to construct new off-track betting facilities, where the revenue split from wagers would be 80 percent to the MJC and 20 percent to purses;
- A $60 million investment by the MJC in unspecified improvements to the racetracks, conditioned on the receipt of a similar amount from state funds dedicated to such activities;
- The agreement by the MTHA to consent to the import and export of simulcast signals for the life of the agreement, revocable if the MJC breached the agreement;
- The 10-year agreement could be renewed, at the option of the MJC, for an additional five years.
Taken as a whole, the proposals would mean that a 146-day racing meet would “cost” the state’s racing interests an estimated $15 million annually. The agreement among the tracks and the state’s racing interests governing racing in 2012 includes about $10 million in subsidies to the MJC: $4.4 million from the MTHA and the MHBA and the remainder from certain slots revenues originally intended for capital expenditures. The $10 million in subsidies are anticipated to enable the MJC to break even this year — but the agreement expires at year-end and there is every likelihood that state subsides will not continue ad infinitum.
No question, there’s much work to be done. Some of the MJC proposals will be non-starters with the horsemen; some will involve legislative changes unlikely to occur; and some require further work to iron out details that will be critical. For example, how the closure of Bowie and the construction at Laurel are handled are tricky, important matters; the horsemen aren’t likely to agree to a one-way option or to a dilution of their control of simulcast signals.
But in a big-picture sense, the task is simpler. The MTHA and MHBA provided $4.4 million to the Jockey Club this year (and other state sources boosted that amount to $10 million). Going forward, the MJC is seeking various actions and changes that will shift about $15 million annually into their coffers. The sides appear to agree that, absent subsidies, the tracks would lose about $10 million this year. So those are the big numbers: a current subsidy of $4.4 million, an estimated annual loss of $10 million, and requested revenue shifts (excluding the one-time capital investment in the new stabling) totaling $15 million.
Two questions for the state’s breeders and horsemen: What’s it worth to us to maintain a 146-day racing schedule? And, philosophically, should the breeders and horsemen agree to make the money-losing MJC profitable, enable it to break even, or merely help it to close the gap on the theory that it ought to be able to get itself to profitability?
The answers to those questions are what’s critical now, because those ultimately represent our bottom line. The details — important as they are — should depend on the ultimate goal and not the other way around.
Wherever we end up on these questions, one thing’s certain: the clock is ticking, and everyone in racing can surely see that another bloody, 11th-hour fight would be another black eye for a sport eager to turn the page on the bad old days.
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NOTE: I attended an MTHA meeting at which the proposal outlined above was discussed but did not publish this post until I had spoken with several additional sources who were, off the record, able to confirm what I had heard, fill in additional details, and/or provide additional and differing perspectives.