The Stronach Group has spent almost 90 percent of its state renovation subsidies to pay for improvements at Laurel Park rather than at Pimlico Race Course, state records show. (Kevin Richardson, Baltimore Sun video)
Over the past five years, the company that owns Maryland’s two largest horse racing tracks has spent almost 90 percent of its state renovation subsidies to pay for improvements at Laurel Park rather than at Baltimore’s rundown Pimlico Race Course, state records show.
Since 2013, The Stronach Group has received $22.5 million from Maryland’s Racetrack Facilities Renewal program. The company matched the subsidy, as required by law, using the program to pay for a total of $45 million in renovations.
Of that, $39 million went to clubhouse upgrades and stable repairs at Laurel Park, a Baltimore Sun review of state records found. Just $6 million was spent at Pimlico, where it paid for Wi-Fi, air-conditioning and electrical improvements.
City and state officials say the disparity helps to explain the dilapidated condition of the 149-year-old Pimlico, home each May to the Preakness, the second jewel in the Triple Crown.
“That’s a clear example of their disinvestment in Pimlico,” said Del. Sandy Rosenberg, a Baltimore Democrat who represents the neighborhoods around Pimlico.
While Baltimore political and business leaders are pushing for a major rebuilding of Pimlico, The Stronach Group is supporting legislation in Annapolis that would use state slot machine revenue to help pay for a “super track” at Laurel that would eventually host the Preakness.
Mayor Catherine Pugh has expressed frustration with Stronach’s lack of attention to Pimlico. In letters this month to Gov. Larry Hogan, Senate President Thomas V. Mike Miller and House Speaker Michael Busch, Pugh wrote that The Stronach Group has “allowed Pimlico to deteriorate even when they had state money to maintain and improve it.”
Pugh reiterated her position Monday, asking lawmakers to reject the Stronach-supported legislation, which asks the state to issue bonds to support an approximately $120 million investment at Laurel Park and a Bowie training facility. The bonds concept would replace the current racetrack renewal program and would require Stronach to pay part of the debt on the bonds.
“While [The Stronach Group] is vastly enriched, Stronach proposes nothing for Pimlico,” Pugh said in her latest letter to lawmakers.
The Maryland Racing Commission has approved Stronach’s use of its state funding, and Stronach officials say the company’s spending is fairly divided based on the number of racing days held at each track: 157 at Laurel, 12 at Pimlico.
Put another way, Stronach is investing 87 percent of its state subsidy at Laurel and 13 percent at Pimlico — even as the Baltimore track generated 43 percent of the combined $65 million of operating revenue of the two parks, according to 2017 records. That will fall to 40 percent of $66 million for 2018.
Nothing in state law dictates how much the company must invest at each track.
“The law is silent on that,” said Maryland Racing Commission Executive Director Mike Hopkins. “They’re allowed to spend it where they want.”
Baltimore lawmakers have introduced legislation to require Stronach officials to work with the city and state to move forward on an ambitious redevelopment proposal of Pimlico drawn up by the Maryland Stadium Authority. The stadium authority concept envisions a multi-use development at Pimlico — including the racetrack, but also other entertainment options, shops and homes — at a cost of more than $400 million.
Stronach officials have said Pimlico is no longer viable and that it’s not worth spending more than $400 million to rebuild a track that stages just 12 racing days a year.
“We have never tried to tank [Pimlico],” said Stronach Chief Operating Officer Tim Ritvo. “We have a business choice to determine where best to invest our dollars.”
Half of the $39 million spent at Laurel helped pay for new barns and stables that horse trainers, breeders and owners had been demanding, and half to modernize the clubhouse there. The $6 million at Pimlico went to interior renovations, new Wi-Fi infrastructure, upgrading televisions and wiring the infield to give those purchasing luxury boxes better internet service and air conditioning.
Due to outdated electrical, plumbing, and other infrastructure, more substantial renovations at Pimlico could not be undertaken without triggering the need to bring the entire building up to city codes. Even minor changes to the building could result in tens of millions of dollars of added costs, company officials said.
The Stronach Group issued a statement Monday night saying it was “compelled” to respond to what its officials say are Pugh’s “inaccurate and misleading” statements about the company’s management and financial condition.
The company “has never been stronger, both financially and in our commitment to Maryland racing, and to the communities surrounding Pimlico Race Course,” the company wrote.
The company's efforts aim to foster a “healthy, vibrant and thriving” thoroughbred racing industry in Maryland, according to the company statement. City and state officials should join with Stronach to make “urgent decisions” to help devise a plan for Pimlico “that go beyond a racetrack with two days of racing to alternatives that could provide an even greater benefit to the surrounding neighborhoods and its residents.”
The legislature established the racetrack facilities fund starting in 2011 to use a percentage of slots proceeds to improve racing facilities. A much larger slice of the slot machine revenues goes toward offering a bigger “purse” to pay the winners of horse races. In fiscal year 2018, $61 million went to the purse and $10 million went to the facilities renewal account.
From 2010 through Jan. 31, the horse racing industry overall — including breeders and the harness racing tracks — has received $415 million in gambling proceeds. Of that about $66 million million has gone to the facilities renewal fund.
Laurel and Pimlico have been operating with $8 million in losses over the five years through 2018. Officials with the Canadian company note that it has invested $13 million in improvements at its various Maryland operations, including off-track-betting facilities in Timonium and at the Horseshoe and MGM National Harbor casinos. Those expenses do not qualify for a state match.