Racing stumbles down the stretch

The man who came to town nearly a decade ago promising to be the horse racing industry's salvation has lately become its frustrating nemesis. Franck Stronach, a Canadian billionaire and racing enthusiast who has exerted an erratic will since buying the Maryland Jockey Club in 2002, has single-handedly upended a deal that was supposed to give horse and track owners and others involved in the industry time to develop a new business plan. He is now proposing an unworkable plan to lease Laurel Park to the horsemen and to run a mere 40 days a year at Pimlico — not nearly enough to sustain the industry. Unless he exhibits another unexpected change of heart — always a possibility — the horsemen will have to start playing hardball with the one thing Mr. Stronach appears to really care about: the Preakness.

The present situation echoes last year's crisis for racing, though matters are in some ways better and in some ways worse. Then, the jockey club was jointly owned by a corporation Mr. Stronach controlled and the gambling giant Penn National Gaming. Penn National, whose sole interest in Maryland is and always has been slot machines, responded to its failure to derail slots at Arundel Mills Mall by proposing an extremely limited schedule for Maryland's thoroughbred tracks — just 47 live racing days. The state racing commission, quite rightly, rejected that proposal, concluding that approval would have been the death knell of the industry.

The governor and legislature stepped in and passed a bill that diverted a portion of slots proceeds meant for track improvements to cover the tracks' operating losses. The deal was supposed to run for three years, and it was conditioned on resolving two lingering issues: the lack of an agreement for simulcasting at Rosecroft, a harness track in Prince George's County; and the failure of the industry to develop a business plan that does not rely on slots at the track. Racing ran on a normal schedule this year, 146 days.

In the meantime, Mr. Stronach bought out Penn National's interest in the Jockey Club, the owner of Maryland's Laurel Park and Pimlico. In theory, that should have made it easier for the industry to move forward. Mr. Stronach, for all his quirks, clearly cares about racing; last year, he tried to overrule the Penn National-led effort to limit racing days. The previous ownership agreement, in which either he or Penn National could effectively block the other, had made for an impossible negotiating partner for horsemen and the state.

But Mr. Stronach has only recently entered into discussions with the horsemen about developing a long-term plan for the industry, despite a Dec. 1 deadline for a report to the governor, without which the industry is not eligible for the subsidies from this year's legislation. Also complicating matters is the fact that Penn National has bought Rosecroft. Given that the purchase of the track was predicated on the hopes that it could become a site for slots or other gambling, not as a moneymaker in and of itself, Penn National has had little incentive to work toward an agreement on simulcasting. That long-running dispute is now headed to binding arbitration, and there's no timetable yet for its resolution.

There's not much the state can or should do at this point to try to save horse racing from itself. The governor and legislature crafted a deal that's good enough for the industry to work out a plan for its future, provided Mr. Stronach is interested in doing so. Based on his recent actions, it appears that his real focus is on the Preakness, not the broader needs of the Maryland racing industry. He has shown little interest in Laurel, although it is the nicer of the jockey club's two tracks, and seems just as willing to let it be torn down and turned into townhouses as to invest in making it viable. His offer to lease Laurel to the horsemen for $1 a year isn't serious; the terms call for the rent to increase into the millions over the course of a 10-year lease and for him to keep off-track betting and advance wagering revenue, the most lucrative parts of the business.

But the horsemen do have a trump card. By law, they control the simulcast signal from Maryland races, including the Preakness. If they choose to withhold it, the second jewel of the Triple Crown would be broadcast on television but not simulcast for wagering at tracks and off-track betting parlors around the nation, thus sapping much of the revenue and excitement from the event. That's a dangerous game for the horsemen to play, since the Preakness is the only thing holding the industry together. But the threat of it should be enough to keep Mr. Stronach at the bargaining table.


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