The pendulum for Maryland horse racing has swung again, and Maryland Jockey Club owner Frank Stronach has agreed to a full schedule of live racing for 2012, provided the horsemen and state pony up millions in subsidies to cover losses at the track. This is progress; less than two months ago, Mr. Stronach was insisting on a paltry 40 days of racing at Pimlico Race Course and none at Laurel Park, and he was rejecting the idea of the state subsidies that the Jockey Club had demanded from the legislature seven months before. It was wise for the state and the horsemen to act fast to lock him in before he changes his mind again.
With the Maryland Racing Commission's unanimous approval of a 146-day racing schedule in 2012, the industry has bought itself another year on life support at a steep price. The state will divert $6 million in slots money that was supposed to go to capital improvements at the tracks — the very sorts of things that might have helped make racing viable on its own — into covering operating losses. The horsemen will kick in $4 million of their own. That's up from the 2011 subsidies of a $3.6 million state loan and $1.7 million from the horsemen. Neither the state nor the horsemen can or should keep that up forever.
That's why the most encouraging development out of this agreement between the Jockey Club and the horsemen is a concrete commitment to working on a new business model for the industry. Such an effort was supposed to be part of the subsidy deal the legislature approved in the spring, but Mr. Stronach had displayed no interest in following through. Now representatives of the Jockey Club and horsemen are scheduled to meet every two weeks with members of the Racing Commission to hash out a plan for making the tracks viable on their own.
Such a plan will not be easy to devise — if it were, it would have happened by now. In most states, the answer has been to combine racetracks with slots parlors, a strategy that does not actually make racing viable but simply makes its maintenance part of the price of landing a lucrative casino license. Maryland chose not to earmark its slots licenses to the track operators, and in part because of the Jockey Club's failure to include a licensing fee with its application, only one of Maryland's five casinos will be at a track: Ocean Downs, which runs harness races.
Ultimately, the key for racing is to find a way to appeal to a new generation by building excitement for the sport and making the wagering that is at the core of its business more user-friendly to those who didn't grow up with racing forms in their hands. Maryland horse racing is a great tradition and spectacle, and the industry should be able to capitalize on that. Ideas like night racing and creating a coordinated schedule with regional tracks are promising. With the state's largest casino due to come on line next summer, the industry will soon have access to more purse subsidies and capital improvement assistance than ever.
But in order to buy enough time for a new business model to take hold, the racing industry is going to have to make some hard decisions. Among other things, the Jockey Club and horsemen may have to agree to closing or finding new ownership for the money-losing Bowie Training Center, or reducing race days during a period of retrenchment. Given how erratic the track owners have been in recent years, and the extent to which they have focused their energy on slots to the exclusion of the racing business, it's understandable that the horsemen have been reluctant to give up any more than they already have. They need to know that they have a reliable partner who is as vested in improving the racing business as they are.
That's why what happens in the next few months will be crucial. An arbitrator will soon resolve a dispute among the Jockey Club, horsemen and Rosecroft Raceway over simulcast payments. That has the potential of injecting additional revenue back into the sport or of locking the thoroughbred industry into a deal that cannibalizes its core business and robs it of scheduling flexibility. And the work group tasked with devising a long-term business plan will start meeting next month, with a report due by July 1. Of course, the industry was originally supposed to file such a report with the governor by Dec. 1. It can't afford to fail again.