Pimlico, Laurel racetracks lost $849,058, commission told Rising expenses, debt factors in tracks' losses.

THE BALTIMORE EVENING SUN

Saddled with rising expenses and long-term debt, the state's two major thoroughbred tracks, Pimlico and Laurel, lost $849,058 in 1990, the Maryland Racing Commission has been told.

Audited financial reports filed with the commission Friday for all horse tracks in the state also show how the transactions of one man, Mark R. Vogel, caused the fiscal downfall of harness racing in Maryland.

The two harness tracks, Rosecroft in Oxon Hill and Delmarva Downs near Ocean City, are in bankruptcy proceedings and are operating under a court-appointed trustee.

The tracks were seized by the state last fall after the racing commission found that Vogel, owner of both tracks, had borrowed millions from the operations. Vogel subsequently put his enterprises into Chapter 11 bankruptcy.

As for Maryland's fifth track, Timonium in Baltimore County, it had a loss of $20,072 in 1990 compared with a profit of $225,989 in 1989. The track is run by the Maryland State Fair and Agriculture Society Inc.

But the biggest surprise in the annual reports required by the racing commission was that Pimlico Race Course in Baltimore lost $483,972 last year and Laurel Race Course in Laurel lost $365,086.

Moreover, 1991 has been disappointing for them so far. At the Laurel winter meet, betting and attendance were off about 5 percent from last year. And business during the first days at Pimlico shows a decline of about 8 percent from 1990.

Both tracks are headed by Joseph A. De Francis, who said in an interview that the long-term survival of Pimlico and Laurel may depend on the eventual approval of off-track betting by the General Assembly. The legislature, though, has tabled the issue for this year.

Alan M. Foreman, the lawyer for horse-owner associations covering both thoroughbred and harness racing in Maryland, cautions against a gloom-and-doom view of the future of racing because the picture can change greatly from year to year.

"The health of the industry is very much tied to attendance and the amount wagered," says Foreman, who represents both the Maryland Thoroughbred Horsemen's Association and the Cloverleaf Horsemen's Association, the harness-racing group.

According to the financial reports, the Laurel racetrack had a long-term debt of $15.7 million at the end of 1990 and Pimlico had a long-term debt of $24.2 million. The debts are from the purchase of Laurel in December 1984 and Pimlico in December 1986.

De Francis said the losses at Laurel and Pimlico point to the need for the "major structural change" of an off-track betting system. "We hope to survive over the short run, but not over the long run," he said about the outlook for racing.

The two tracks have tried to trim costs by working more efficiently, De Francis said, but the operations are restricted in how much they can cut without hurting the entertainment value of the tracks.

"We are not in the kind of business where you can lay off people without impacting the fan experience," he said. Together, the Laurel and Pimlico operations directly employ about 500 people.

Robert T. Manfuso, a part-owner of Laurel and Pimlico, said, "You have to be concerned about the way things are going." He was particularly puzzled because business was good at the tracks for the first half of the year. However, he said he has not had a chance to study the financial reports.

A shared expense for the two tracks is the Bowie Training Center in Prince George's County, which cost $2.3 million to operate in 1990. The training center has stabling for 1,000 horses, which run at Laurel and Pimlico.

A higher expense for the tracks is the money paid to winners of the races. Stakes and purses at the two tracks increased by 4 percent from $42.8 million in 1989 to $44.5 million in 1990.

Even though Laurel raced 16 fewer days last year than in 1989, the track showed an increase in attendance. But there was a drop in the amount of money wagered. A total of 1,646,607 fans bet $201,802,265 at Laurel during 1990, compared with 1,490,965 fans who wagered $232,336,871 in 1989.

Pimlico showed increases in both attendance and wagers: A total of 1,235,691 fans bet $234,071,757 in 1990, compared with 1,091,837 fans who bet $193,533,273 in 1989.

The Laurel track alone lost $365,086 in 1990, reducing the owner's equity at the track from $449,580 at the beginning of 1990 to $84,494 -- only 0.4 percent of the total assets of an $18.6 million operation. Last year's red ink follows a similar loss in 1989 of $370,312.

The track is run by the Laurel Racing Association Limited Partnership. The owners include the estate of the late Frank J. De Francis, Robert T. Manfuso, John A. Manfuso Jr., Martin Jacobs and a limited partnership of 15 people that is headed by Louis P. Guida.

One major expense at Laurel during 1990 was payment of $1.9 million in principal and interest on long-term debt.

At Pimlico, the 1990 loss was $483,972, compared to a small profit of $35,949 in 1989. The 1990 loss reduced the track's capital to $2.5 million, or 8.7 percent of the $29.1 million total assets of the Pimlico track operation.

The group that owns Pimlico includes the same people who own Laurel except the limited partnership headed by Guida.

Unlike Laurel, at Pimlico the amount of money bet in 1990 increased by 20.9 percent compared with the previous year, from $193.5 million to $234.1 million. However, expenses at the track jumped by 20 percent.

Last year Pimlico made payments of $2.7 million in principal and interest on long-term debt.

The tracks with the greatest financial turmoil last year were the harness tracks, Rosecroft and Delmarva Downs, both owned by Mark Vogel Productions Inc., which is wholly owned by Vogel.

The reports for the two tracks were audited by Reznick Fedder & Silverman, an accounting firm based in Bethesda. Normally, if the financial statements follow generally accepted accounting principles, an accounting firm will include a statement that the report accurately reflects the finances of the company.

But in its statement about the Rosecroft and Delmarva reports, Reznick said it could not give such a statement because the reports did not consolidate the results of the various Vogel operations and the company's legal counsel had not furnished information concerning litigation.

The Rosecroft track had an income for the fiscal year that ended Sept. 30 of $132,287 before a change in accounting for taxes and equity loss in a subsidiary. The report also showed stockholders equity of $6 million.

However Vogel borrowed $3.5 million from the track, personally and through his company. These loans to Vogel are recorded as accounts receivable in the balance sheet. Counterbalancing Vogel's loans is $1.5 million that Vogel's company put into Rosecroft during the year. This is listed as a liability.

Delmarva Downs lost $56,886 for the year that ended Sept. 30 and showed a negative stockholders equity of $260,567 as of Sept. 30.

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