Gov. Martin O’Malley

Gov. Martin O'Malley (second from right) listens as Austin Schlick (left), chief of litigation in the attorney general's office, talks about attempts to keep the Preakness Stakes in Maryland. (Baltimore Sun photo by Monica Lopossay / April 8, 2009)

Magna Entertainment Corp. and its bankruptcy attorneys criticized Gov. Martin O'Malley's bid Wednesday to assert eminent domain powers over the Preakness Stakes, saying passage of the legislation could lead to more litigation.

The governor and lawyers for the state said the proposed law - which has the backing of legislative leaders - is necessary to ensure that the Preakness does not go the way of the Baltimore Colts in the wake of bankruptcy proceedings that began in Delaware last month. Hearings on the emergency bill are scheduled for Thursday morning.

"We are disappointed by the introduction of the legislation and the threat to our assets," Greg Rayburn, Magna's interim chief, said in a statement. Brian S. Rosen, a New York bankruptcy attorney representing the company, sent O'Malley and legislative leaders a letter asking them to "cease and desist all activity" with respect to the bill "immediately."

Maryland officials, meanwhile, emphasized that the measure - which would authorize the state to acquire the Preakness, Pimlico Race Course, Laurel Park and the Bowie Race Course Training Center by eminent domain - is to be employed only if necessary.

"Our hope is that we might not have to resort to these powers," O'Malley said.

The governor and other Democratic leaders repeatedly invoked the Colts' abrupt 1984 move to Indianapolis as a cautionary tale they are determined not to repeat with the second jewel of the Triple Crown.

"This is a very bold step," said Senate President Thomas V. Mike Miller. "The state is stepping in almost heavy-handed and saying, 'Look, we don't care how much money you've got or where you want to go with these properties. The state of Maryland has an interest.' "

Under the bill, the state could seize the tracks, the Woodlawn Vase and Preakness-related trademarks, copyrights and contracts, if doing so prevents "the loss of the historically, culturally and economically important" horse racing legacy.

Legal experts say the bankruptcy filing by the tracks' owner could prevent the state from exercising that power.

The last-minute legislation was prompted in part by reports that Pikesville developer Carl Verstandig was interested in razing Pimlico and turning the Northwest Baltimore property into a shopping center. He has since said he would prefer to keep the Preakness at Pimlico, as have other potential bidders.

Despite the interest from bidders, O'Malley said, "It wouldn't be proper to presume there will be a private market solution to this."

John C. Murphy, a Baltimore attorney who specializes in eminent domain issues, said the passage of the legislation could lower the value of Magna's Maryland assets.

But Gregory A. Cross, a Venable LLP bankruptcy attorney retained by the state, said he didn't think the bill would decrease the tracks' value or make their auction less likely.

Also Wednesday, the state's highest court agreed to hear an appeal by Magna-owned Laurel Park over the disqualification of the track's slot-machine gambling license bid.

Baltimore Sun reporter Laura Smitherman contributed to this article.


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