The stewardship of Maryland thoroughbred racing passed yesterday from the Maryland Jockey Club into the hands of Magna Entertainment Corp. when officials of both companies signed documents finalizing their $117.5 million deal.
The closing took place in downtown Baltimore at the law offices of Venable, Baetjer and Howard, the firm that represents the Maryland Jockey Club. Magna Entertainment Corp., the Canadian-based conglomerate that owns or operates 14 racetracks in North America, now owns a majority interest in Pimlico, Laurel Park and the Bowie Training Center.
Magna officials declined to comment or were unavailable to comment. Frank Stronach, Magna's chairman, and Jim McAlpine, Magna's president and CEO, were in Europe.
Joe De Francis, president and CEO of the Maryland Jockey Club, said the closing was attended mainly by lawyers with some documents signed in advance and some signed by fax.
"It's a great day for Maryland racing," De Francis said. "As I said when we announced the deal in July, this transaction with Magna is going to allow us to take Maryland racing to heights heretofore undreamed of."
De Francis declined to offer new specifics about what the Magna-MJC alliance planned on doing for Maryland racing. He said when plans were completed they would be announced.
Stronach, the outspoken visionary, has said he wants to tear down and rebuild Pimlico so that it will be Magna's showcase track. He has said he also wants eventually to rebuild Laurel Park.
McAlpine, whose role in part seems to be tempering Stronach's statements, has said that Pimlico will be rebuilt but not for at least three years. He has said the Preakness will become the "crown jewel of Magna Entertainment."
Magna has pledged to spend at least $30 million in the next three years on upgrades at Pimlico, Laurel Park and the training center at Bowie. McAlpine and De Francis have declined to specify what those upgrades will be.
Complicating planning is the pending debate over slot machines that will take place in the General Assembly, which convenes in January. If slots are legalized at Maryland tracks, as Gov.-elect Robert L. Ehrlich Jr. wants, then Pimlico and Laurel Park might have to be redesigned quickly for the machines by the end of next year.
The deal consummated yesterday places 51 percent - majority control - of the Maryland Jockey Club in Magna's hands. De Francis and his sister, Karin, an MJC executive vice president, retain a 49 percent stake.
Magna assumed $30.2 million in MJC debt; paid $49 million to buy out MJC minority owners Martin Jacobs, the Laurel Guida Group and Leucadia National Corp; and paid $1.6 million to Karin and Joe De Francis.
Magna also paid the De Francises $9.2 million each for the right to buy them out in four years. If Magna exercises that option, then it will pay them an additional $18.3 million.
The De Francises can sell their interest to Magna at any time during the next five years. For now, Joe De Francis remains in charge of day-to-day operations.
Tracks' ownership
Pimlico time line
1870:Annapolis-based Maryland Jockey Club opens track
1904:Purchased by William R. Hammond
1938:Purchased by Alfred G. Vanderbilt
1952:Purchased by Ben and Herman Cohen in association with Louis Pondfeld
1986:Purchased by Frank J. De Francis
1989:Inherited by son, Joseph A. De Francis, and daughter, Karin De Francis.
2002:Majority stake acquired by Magna Entertainment Corp.Laurel time line
1911:Opened as county fair
1914:Purchased by James Butler of New York
1947:Purchased by Alfred G. Vanderbilt
1950:Purchased by Morris Schapiro of Baltimore, who named his son, John D., president.
1984:Purchased by Frank J. De Francis and partners.
1989:Inherited by Joseph A. De Francis and Karin De Francis
2002:Majority stake acquired by Magna Entertainment Corp.