Greg Avioli is not new to thoroughbred racing.
But the former chief executive of the Breeders' Cup race still faces a difficult task in running The Stronach Group's racing business, which took full control of the financially ailing Maryland Jockey Club last week.
The Jockey Club, which owns and operates Laurel Park and Pimlico Race Course, has suffered through a succession of corporate owners in recent years. And in a sport that has seen attendance and wagering fall, it has struggled to make money even with the Preakness Stakes, the second jewel of the Triple Crown.
Maryland thoroughbred racing averted a near collapse last year when Gov. Martin O'Malley brokered a deal that provided a loan funded by slots revenue to the Jockey Club. The General Assembly also passed legislation that would provide slots subsidies to help pay for the track's operations until 2013.
Under a complicated deal that closed last week, the Jockey Club's majority owner, MI Developments, transferred its racing assets to Frank Stronach, who agreed to give up control of the Canadian real estate company in exchange. Casino operator Penn National Gaming, meanwhile, agreed to sell its minority stake in the Jockey Club to Stronach.
Stronach hired Avioli in April to lead the private company's racing and gaming business, which also includes racetracks in Florida and California and AmTote International, an electronic bet-processing company based in Hunt Valley.
Despite challenges and industry infighting, Avioli, 46, remains optimistic about the future of racing in Maryland.
Freed from MI Developments, some of whose shareholders objected to the racing business because it had become a drain on the company's finances, the new company can be more entrepreneurial, Avioli said.
"More importantly, it allows Frank, who is a lover of thoroughbred racing in North America, to be more directly involved," Avioli said. "He truly loves the sport of racing and the reason he's doing this particular deal is because he personally wants to see racing improve and thrive."
Avioli, who is based in Lexington, Ky., spoke recently with The Baltimore Sun about the new company, challenges facing Maryland racing and the industry's future.
How will The Stronach Group operate the racing business differently from previous owners Magna Entertainment [which filed for bankruptcy] and MI Developments?
I believe first and foremost that quality sells. If we're going to turn around this business, we're going to have to do so based on quality. That means in terms of core horse racing and the quality of horses. That means facilities that are worthwhile … and we have to put out a first-quality experience and a top-quality product on the track. …
I generally believe in emphasizing the quality of racing days than number of racing days. I think that's been borne out. I think fans would rather see 45 days of fantastic racing than 90 days of commodity racing. And I'm talking around the country. That's the first part.
The second approach that I'm taking with some degree of success is a collaborative approach. This business is essentially about people and how you get along with people. The horse industry has suffered for a long time from a lack of open communication, a willingness to compromise and understanding of the broader picture.
The good news is right now — with industry handle and wagering and overall economics in decline for five straight years nationwide — I'm seeing a change in that general behavior throughout the industry. People realize that it's time to set aside our differences and find common ground. If we don't, things are not going to get better.
But given the discord in Maryland racing, how will you approach dealings with the horsemen, politicians and other stakeholders?
I have known the leadership of the Maryland [Thoroughbred Horsemen's Association] for more than a decade, and have good relationships throughout that organization. I understand their perspective, what has happened and what hasn't happened over the last decade.
I have worked closely with the Maryland Racing Commission throughout my career on various projects. I have a lot of respect [for the commission]. There are a lot of quality people working there.
With the recently announced agreement that we'll be closing in the next 30 days with Penn National, you'll have less division within the Maryland Jockey Club than you've seen.
The most important piece of this puzzle is the [Maryland] legislature. They understand there are going to be legislative fixes required to get racing back to where it needs to be. That's not unique to Maryland.
You can't make big substantive changes in the business without them being enacted or approved or having some form of support of the governor and the legislature.
Besides the recent legislation that provides slots funds for the Jockey Club's operations for several years, what other legislative fixes are required?
It's really premature to talk about anything legislative other than to say that it's clear that the legislation that was passed back in April was really meant as a stopgap for a couple of years. I think everyone understands that … whatever the long-term structure will be is not the structure we currently have.
Are you optimistic about the future of Maryland's racing?
I am optimistic about Maryland's racing future for the primary reason that it has a racing culture. …
Maryland has a racing and breeding history that rivals that of Kentucky or New York. It's one of the true racing states in the United States.
The legislature and the governor really care that we get this resolved. If you don't have that, it makes it very difficult to be optimistic about racing in a state.
Some of MID's racetracks, including the Jockey Club, have been losing money for many years. How is The Stronach Group financially?
The Stronach Group will be very well-capitalized. We also expect that for all of those assets, we will be cash-flow-positive from the first day.
You have to keep in mind that those particular assets were hand-selected on the quality of assets and profitability.
As part of the transaction with MID, all the debt that's been on the assets is staying on the MID side of the transaction. We have the assets that are coming debt-free.
Frank Stronach has consistently said he believes Laurel Park and Pimlico don't need slot machines to survive, so does that mean alternative gaming is off the table for the Maryland tracks?
I think there are two different points there. Slot machines throughout the country generally provide significant additional resources to purses and to the quality of the facilities. Those are positives for any racing business to have extra capital you could put back to the facilities and to have the highest amount of purses that makes racing competitive.
On the other side of the coin, where you have slots or casinos within a market where you have tracks, racetracks that don't have the same gaming, they're in a competitive disadvantage in terms of marketing the product, the amenities you could offer customers.
Any way I look at it, it's a benefit to racing to be allowed to participate in whatever type of gaming activities that state legislatures chose to allow racing's competitors.
Obviously, we do not currently have a direct alternative-gaming relationship at the Maryland Jockey Club. There is a percentage of the funds from slots at other facilities that go to purses and I think that's important and we support that.
But I think down the road, we would definitely like to be a part of discussions within Maryland that may or may not occur in regards to improving upon the slots legislation that was passed a few years ago.
If those discussions are going forward, we would like to make the case on how both racing and breeding and the state of Maryland can be better off if the Maryland Jockey Club could be a part of that.
See more business leaders interviewed by The Baltimore Sun Copyright © 2015, The Baltimore Sun