The Maryland Jockey Club will take over day-to-day operation of the Colonial Downs horse track in southern Virginia under terms of an agreement to be revealed today at a meeting of the Virginia Racing Commission.
If accepted by the commission at its meeting in Richmond, the deal would ensure the continuation of racing at Colonial Downs -- and a corresponding shutdown of thoroughbred racing in Maryland. Maryland Jockey Club officials would become even more immersed in Virginia, managing not only the Colonial Downs racetrack, which has struggled since opening in 1997, but also its off-track betting network.
Joe De Francis, president and CEO of the Maryland Jockey Club, said yesterday that the agreement would save Colonial Downs from bankruptcy, give his Maryland Jockey Club the opportunity to make it profitable and keep Virginia racing out of the hands of competitors.
"There would have been racing in Virginia," De Francis said. "Somebody would have come in and done it. It was absolutely essential that Maryland be a partner in that racing."
During negotiations with Jeffrey P. Jacobs, Colonial Downs' chairman, the Maryland Jockey Club agreed to a restructuring of its management fee. Up to now, the Maryland Jockey Club for managing the thoroughbred meeting was to have received 2 percent of most money wagered in Virginia. But Jacobs has not paid the fee for more than a year.
Under the new agreement, the Maryland Jockey Club would receive 1 percent of the first $75 million wagered and 2 percent after that. It would also share in profits in the event Colonial Downs ever became profitable. The operation lost about $6 million last year.
Maryland officials would also manage Virginia's four off-track betting facilities and seek to have one built in the lucrative counties of northern Virginia. John E. Mooney, chief operations officer for the Maryland Jockey Club, would head the Virginia operation.
"We get less money and get to do more work," De Francis said, laughing. "It was brilliant negotiating."
As for the $3 million Jacobs owes the Maryland Jockey Club in unpaid management fees, $1.5 million would be paid over seven years. That, De Francis said, would be better than not receiving anything.
"If we had taken a harder line," he said, "we would have driven them into bankruptcy. Two percent of nothing is nothing."
De Francis said he couldn't say when or how long Colonial Downs would race this year. Those discussions would include thoroughbred and standardbred horsemen and perhaps commence at today's racing commission meeting, he said.
The most curious feature of the agreement calls for Jacobs, while abandoning his management role, to handle all financial aspects of the operation, including funding purses, capital improvements and marketing. De Francis said that wasn't ideal, "but it's the best alternative on the table."
He said that in coming weeks his and Jacobs' representatives would sit down and try to hammer out a budget for 1999.
"We have to make sure they commit enough money so we can run the operation properly," De Francis said. "If we can't come to an agreement on that, then we'll be back in a pickle again."
Pub Date: 1/20/99