Minutes after Baltimore Mayor Martin O'Malley announced last week that he would not run for governor, Republican Robert L. Ehrlich Jr.'s spin machine lurched into motion, moving from the idea that a Democratic primary would help him to confidence that the decision would generate big money for the congressman's campaign.

Ehrlich, the 2nd District representative, faces a huge challenge in trying to become the first Republican elected governor since 1966.

His best chance at victory, observers agreed, would have come from a bitter and divisive Democratic primary that left Lt. Gov. Kathleen Kennedy Townsend barely standing after a fight with O'Malley.

Now that primary has evaporated. But there was Ehrlich, claiming that O'Malley's decision to forgo a race was good news.

Not only were voters' choices now clarified, the congressman asserted, but political donors who had been sitting on their checkbooks while the mayor played Hamlet would now send their money his way.

"The big impact with us is dollars," he said. "Democratic business people who would like to support me, but also like O'Malley -- now that money is coming to me. She's [Townsend] viewed as anti-business, and she comes from an anti-business administration."

This was not the first time that Ehrlich had talked about the role still-uncommitted donors will play in this year's race for governor.

The congressman decided to enter the contest against long odds, he said, after noting the absence of prominent names from Townsend's donor list.

He concluded that the lieutenant governor's base of support was thin, and that he could capitalize on the apparent ambivalence of Baltimore-area business leaders.

Others, however, aren't sure that the reservoir Ehrlich talks about exists. If it does, they say, there's no guarantee that he will be the chief beneficiary.

Many city business leaders would have been willing to help their mayor. Without O'Malley in the race, many say, corporate interests will hedge their bets and contribute to both candidates.

Edwin F. Hale Sr., a banker, developer and supporter of O'Malley's, said he is "going to be supportive of both" Ehrlich and Townsend.

"Everybody will watch the polls," Hale said, to see which candidate is the better bet as the campaign progresses. "My opinion about money coming off the sidelines right now is, it's not entirely true. Bobby's not going to like that, but I think it's true."

Still, some of Baltimore's most prominent entrepreneurs have not yet invested heavily in the race to succeed Gov. Parris N. Glendening, who is prevented from seeking a third term.

Many point to bakery king John Paterakis, an important waterfront development player, as an example.

"Johnny Paterakis, he has to make a decision," said state Comptroller William Donald Schaefer, the former governor and mayor. But Schaefer said that neither Ehrlich nor Townsend would monopolize business-related donations that awaited O'Malley's decision.

"I think they'll both benefit from this," Schaefer said.

Richard E. Hug, Ehrlich's campaign finance chief, agreed that both candidates stand to gain.

"I don't think there is any doubt that there is a lot of parked money in Baltimore, and it has to find a home," Hug said. "We're going to get some of it. We'd just like to get some of the crumbs, that's all."

Ehrlich will need more than crumbs, however, to challenge Townsend, who is embarking on what is certain to be the costliest race for governor in Maryland history.

Townsend has raised close to the $6.2 million spent by Glendening in 1998, and Ellen R. Sauerbrey, Glendening's GOP opponent in that race, outspent him by $200,000.

Ehrlich supporters say they will need $6 million to $8 million for a competitive contest. They have raised less than half of Townsend's bankroll.

Michael Morrill, a spokesman for Townsend, said the notion that the lieutenant governor is unfriendly to business interests is misguided.

Townsend oversaw the state Department of Business and Economic Development during her second term, Morrill said. She has also been involved in promoting growth at Baltimore-Washington International Airport and its surrounding commercial areas, and has headed a group that has looked to position Maryland as a leading national biotechnology center.

"You can call business leaders in every part of this state, and they will tell you how closely they have worked with her," Morrill said. "We have had incredible job growth. We have a very good business climate."

Business contributions

Morrill also rejects Ehrlich's claim that significant additional business-related contributions will flow to the Republican candidate.

"Frankly, most of the money that was on the sidelines would have gone to the Democrat candidate, but was waiting until it was clear who the Democratic candidate would be," he said, adding that he doesn't think there's much more money out there.

"Most of the people who have historically given in Maryland races have already given in this campaign," Morrill said.

As a Republican, Ehrlich enjoys a built-in advantage in courting business support, said Kathleen T. Snyder, president and chief executive officer of the Maryland Chamber of Commerce.

"The Republican Party, in general, has more of a pro-business bent," Snyder said. "There are a lot of business people who admire Congressman Ehrlich. ... He is charismatic. He's a smart guy."

She said Townsend would have to work hard to overcome ill feelings in the business community caused by Glendening.

Highway issue

Among his transgressions, in the eyes of chamber members: changing positions on whether a long-studied highway known as the Intercounty Connector should be built in the Washington suburbs.

The governor supported the road at first, and later tried to kill it.

Both Townsend and Ehrlich said they would build the highway.

"I think the lieutenant governor is a bit of an unknown to the business community," Snyder said. "She has been part of an administration that has changed its direction over the past couple of years."

The slots factor

Ehrlich could capitalize in another notable area. He and O'Malley have said they favor slot machines at the state's race tracks as a way to help an ailing industry and raise revenue for Maryland.

With O'Malley's exit, Ehrlich becomes the lone pro-slots candidate in the contest. He says the money is needed to help pay for a school funding plan approved by the General Assembly this year.

Townsend, like Glendening, says she opposes expanded gambling.

Corporate dollars from gaming industry interests -- slots advocates, track interests, horse breeders and other groups -- could now gallop to Ehrlich.