Harness horsemen from the Cloverleaf Standardbred Owners' Association received a warm but wary reception from the Maryland Racing Commission in Timonium yesterday when the horsemen presented the board with their plans to purchase Rosecroft and Delmarva raceways.
There seem to be few obstacles in the way as the board and a legislative review committee go through an expedited examination process over the next 15 days to assist Cloverleaf in purchasing the tracks by June 29. That's the date the current owner, Colt Enterprises, has scheduled to file for bankruptcy and close the tracks unless the deal is completed.
Commissioners praised the horsemen's ingenuity for coming up with a plan to purchase Rosecroft and Delmarva, partly with money lent to them from the Bally Entertainment Corp. But some members raised concerns about the group's ties to a casino gaming company and the horsemen organization's overall financing package.
"I'm optimistic," said commission chairman John McDaniel. "It's a ground-breaking move by the horsemen."
But commissioner Carol McGowan questioned Bally's commitment to harness racing.
"I find it hard to believe that Bally just doesn't see this as a foot in the gaming door," she said. "I would have preferred seeing the state step in and somehow save the tracks instead of relying on casino money."
The sale is being financed by $10.6 million in loans -- $4 million from Bally and $6.6 million from First National Bank of Maryland, the current mortgage holder.
The debt load, said Cloverleaf executive vice president Charles Lockhart, falls within acceptable guidelines that the association can afford based on current wagering figures.
But commission member Jimmy D'Orta said the bank is charging high closing costs and demanding a balloon payment of $850,000 at the end of the seven-year term of the loan because lending money to the organization is considered such a risky proposition.
"The bank is exacting a tough levy," D'Orta said. "I don't like us [the commission] having to examine something like this with an eleventh-hour deadline. It's a complex deal. . . The future of an industry is at stake."
Commissioner Eric Frederick voiced similar worries. "The biggest headache is the debt and the high interest fees that are being charged," he said, referring to the 10 percent interest rate charged by the bank and 9 percent from Bally. "It also seems Cloverleaf is paying an exorbitant price for tracks that are near bankruptcy. Colt hasn't put any money into the facilities in the last two years. Where is money going to come from for improvements?"
Lockhart said management of the facilities will be up to Bally, although no agreement has been forged.
McDaniel said other than inspecting the loan agreement, no background check will be necessary for Bally. "They [Cloverleaf] might just as well have gotten the money from Disney," he said. "[Bally] is publicly traded and reputable."
Background checks on the Cloverleaf interim team and examination of the organization's business plan and loan agreements will be scrutinized by the commission and legislature before Cloverleaf is granted a license. Final licensing approval is expected to be granted at a commission meeting set for 1 p.m. June 29 at Rosecroft.
NOTE: By a vote of 3-2, the commission reversed a stewards' ruling and said that the filly Norstep should not have been disqualified from first and placed second March 11 in the Politely Stakes at Laurel Park.
The stewards contended that Norstep had significantly carried out runner-up Oh Summer near the finish line. But the commissioners ruled that Oh Summer had instigated initial bumping at the head of the stretch and was also at fault.