Despite predictions of a bleak future for Maryland's harness ++ industry, the Maryland Racing Commission voted unanimously yesterday to allow Cloverleaf Enterprises Inc. to operate the financially troubled Rosecroft Raceway.
The commission voted to issue Cloverleaf a license, but ordered its leaders to submit quarterly financial reports beginning April 15. Cloverleaf's financial prospects are less than golden, its own leaders acknowledged. But those leaders and members of the commission agreed that they're brighter since last week's deal with Bally's Maryland Inc., a subsidiary of the casino and hotel giant.
"That makes it a lot easier for them to operate," said E. William Furey, chairman of the commission. "It's a step in the right direction."
But financial stability is more than a few steps away. Maryland's standardbred industry has struggled for years. And this year, competing harness tracks in Delaware, bolstered by soaring profits from slot machines, lured horses and gamblers from Maryland tracks, prompting them to cut back race days and brace for bankruptcy.
"The standardbred industry in the state of Maryland is in desperate condition," said Cloverleaf executive Charles Lockhart. "We all know the impact Delaware is having on our business."
In Delaware, owners and trainers of harness racers compete for $100,000 in daily purses, compared to $37,000 at Rosecroft. A top-class race in Delaware offers a purse of $20,000, compared to $8,400 at Rosecroft.
Cloverleaf, a subsidiary of the standardbred horsemen's association, owns Rosecroft, situated near Washington in Prince George's County, as well as Ocean Downs, Maryland's other harness track near Ocean City. Cloverleaf bought the tracks a year and a half ago with loans of $10.6 million from Bally's.
In return, Bally's assumed management of the tracks and an option to buy 50 percent of them if additional gaming, such as slot machines, was approved in Maryland.
But last week Cloverleaf, on the verge of bankruptcy, hammered out a new agreement with Bally's. Cloverleaf agreed to sell Ocean Downs, which lost $800,000 last year, to Bally's for $2 million: $1 million in debt reduction and $1 million in working capital.
Also, Bally's agreed to waive $1.4 million in interest payments in exchange for the option of buying an additional 15 percent (for a total of 65 percent) of Rosecroft if additional gaming is approved. Finally, Bally's agreed to withdraw its management team and allow Cloverleaf to take over.
Gerald Brittingham, president of both Cloverleaf Enterprises and the Cloverleaf Standardbred Owners Association, is leader of the new management team. He told commissioners the deal with Bally's is "a reasonable solution to allow us to guarantee harness racing in the state."
But in a letter to Furey, Brittingham wrote: "Attempting to own and operate a track during a time when handle is continuing to decline is very difficult. It is even more difficult when neighboring states are permitting slot machine revenue to double and quadruple purses, weakening our industry and threatening to eliminate thousands of jobs."
He and Lockhart stressed that long-term financial security cannot be achieved unless the state legislature and Gov. Parris N. Glendening grant some form of relief.
Although Brittingham has described slot machines as "the golden egg," he and Lockhart were reluctant to mention "slots," which Glendening has pledged to veto as long as he's in office. But they did mention the possibility of the state exempting harness tracks from paying the 0.5-percent state tax on money bet, allowing Ocean Downs to run fewer than the required 65 days annually and providing financial assistance through a lottery game.
Pub Date: 12/20/96