The horses in this year’s Preakness Stakes will be 3 years old — born the same year as a state law to spend $375 million in public financing to keep the cherished race in Baltimore and buoy the racing industry in Maryland.
Since 2020, those thoroughbreds have been winning races, maturing and rising to the top of their sport. Meanwhile, the aging Pimlico and Laurel Park racetracks have only gotten older.
Rising construction costs and interest rates, much costlier than anticipated renovations, and a question of who eventually will own Laurel Park in Anne Arundel County have stalled progress on the complex projects.
The path forward remains unclear, as the cost estimate to improve both tracks keeps growing. The construction start date has disappeared around the bend and out of sight; it’s unscheduled, but won’t be this year.
The original proposal was part of an effort to resolve a lawsuit the city of Baltimore brought against The Stronach Group, the owner of the racetracks. A plan was conceived in 2019 to improve both tracks and the General Assembly passed a bill in 2020 to carry it out. Construction was to be completed in three or four years. But nearly three years later, no dirt has been moved.
“This was an effort to solve a lot of problems,” said Alan Foreman, general counsel for the Maryland Thoroughbred Horsemen’s Association. “Unfortunately, it’s gotten very complicated.”
“It’s a big puzzle is what it is,” said Bill Cole, the former Baltimore Development Corp. president who represents the city in the track negotiations.
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The legislature passed a follow-up bill last year to encourage the demolition of Pimlico Race Course’s decrepit Old Grandstand and construction at Pimlico was expected to begin in summer 2023. But the demolition hasn’t happened and construction won’t this summer. The Maryland Stadium Authority wrote in a January report to the legislature that it will “develop a revised schedule following the resolution” of several outstanding agreements between the parties.
“Based on the prolonged program confirmation process, current agreement execution status, and level of design effort still required prior to advancing to the construction phase, this timetable is no longer realistic,” the report stated.
Furthermore, it’s increasingly clear that $375 million — the amount in bonds the legislature authorized the stadium authority to issue for improvements at both tracks — is insufficient.
The stadium authority, which heads the projects and has collaborated since 2020 with The Stronach Group, the horsemen’s association and the city of Baltimore, estimated in its Jan. 1 report that the “project budget deficiency” is between $160 million and $350 million.
The involved parties have explored several concepts to shrink that gap. However, “each of the concepts results in a budget shortfall,” the stadium authority’s report stated.
Stakeholders are left pursuing cost savings, a seemingly Sisyphean task when it comes to a budget gap that numbers in the hundreds of millions.
“It is reasonable to assume that the projected budget shortfall will continue to grow as time continues to pass as a result of the prolonged agreement negotiations and the protracted programming confirmation process,” the report continued.
Stadium authority spokesperson Rachelina Bonacci declined a recent interview request, noting in an email that the “report speaks for itself.”
The allotted $375 million has been devalued by more than $100 million due to rising interest rates while inflation has increased the costs of supplies and labor.
“The headwinds haven’t abated,” said Alan Rifkin, the attorney for the Maryland Jockey Club, which is owned by Canada-based Stronach Group and operates the company’s tracks in the state.
From the outset, the plan called for transforming historic yet ramshackle Pimlico into a multipurpose site that hosts one meet each year, the nearly 150-year-old Preakness. The Stronach Group would convey the property to Baltimore City, which would lease it back to Stronach annually for the lucrative Preakness meet.
The old oval would be removed, with a new one placed in a similar spot, but shifted 30 degrees. That would free up land for development in the under-resourced Park Heights community.
Simultaneously, Laurel Park — also in a state of disrepair — would be augmented to become the Maryland racing industry’s year-round center, with stables to accommodate at least 1,400 horses.
The Pimlico portion of the plan has remained largely intact, if unrealized. But the Laurel Park outline has changed significantly, complicating the future of both projects. That’s because demolition at Pimlico cannot begin until a solid plan is in place for Laurel Park, as horses and horsemen displaced by Pimlico’s reconstruction will need a place to go.
A September report from the Maryland Economic Development Corp. found there are “environmental violations” at Laurel Park and wetlands “pose significant constraints on development of the property.”
And though those problems are not a large impediment, Foreman said, little of the facility’s shoddy infrastructure is salvageable and it too will require demolition and rebuild, rather than simple improvement. The economic development corporation’s report deemed much of the property in “bad” condition with “major deficiencies which place them beyond repair.”
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The original plan did not call for Laurel Park to have a training track, but stakeholders say they’ve realized one is needed. That expanded the land necessary. Replacing the dirt and turf courses also was not anticipated. Now, that’s been added to the program.
Such changes add up. The projected cost of renovating Laurel Park now far exceeds the initial estimate.
“Things started to multiply,” Foreman said.
Said Cole: “Laurel has been more vexing than we imagined.”
Alternative concepts, outlined in the stadium authority’s report, sought to alleviate the budgetary problems. They are more affordable than other proposals (while still $160 million over budget), but in a departure from the original idea, call for year-round racing at both venues.
Doing so likely would decrease the land available for development in Park Heights. Cole said the reduction in land size would be one or two acres out of the more than 30 slotted for development.
Pastor Troy Randall, a Park Heights resident and chairman of the Pimlico Community Compact Committee, frequently meets with the stadium authority. The committee is still discussing what may be built on those parcels, he said, noting that event spaces and retailers have been discussed as options.
Randall said “we would all be a little disappointed” if the footprint available for development shrinks. But he said the stadium authority and others have been “transparent” in discussions with the community.
“It does concern me,” he said of the lack of physical progress, “but I’m understanding in the delay.”
He also noted that the committee hopes the infield during the Preakness, traditionally a raucous party, will become “family friendly.”
“One of the things we want is [for it to] be family friendly and that our neighbors and our residents will be able to partake and bring their families to it — and it’s not just a gambling, drinking event for the elite,” he said.
Once a plan is finalized — or if a plan is finalized — there remains another complication: Laurel Park would need a new owner.
The Stronach Group would incur tens of millions of dollars in federal taxes if it receives state money for improvements, which it is not willing to pay, Rifkin said. So, the property would need to be sold to another entity; the economic development corporation report suggested a state-run authority, similar to a stadium authority and to a model in place at California’s Del Mar Racetrack.
That would require the state buy the property. The governor and state Senate then would select members for the authority’s board.
Sen. Guy Guzzone, a Howard County Democrat who chairs the Senate Budget and Taxation Committee and sponsored the 2020 bill, said he’s “open to having” such discussions.
“I think everything’s on the table,” he said.
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Dennis Coates, an economist at University of Maryland, Baltimore County, is skeptical of the state potentially buying Laurel Park. He’s skeptical, too, of the renovation itself, calling the amount that it’s over budget “astounding.” He worries the state will “end up footing this enormous bill.”
He predicted that, if the state bought the property, it would not produce a return on investment that justifies spending the money.
“There is nothing about the state owning a racetrack that is an essential government function,” he said.
At the beginning of the pandemic in May 2020, Republican Gov. Larry Hogan vetoed pieces of legislation that required substantial spending — like an overhaul of the state’s public schools — citing COVID-19’s effects on the economy. However, he allowed the bill to renovate Pimlico and Laurel Park to become law.
And the bill had plenty of support, easily passing through the General Assembly. Then-City Council President Brandon Scott, a Park Heights native, was among the dozens who voiced support for the legislation in 2020.
“As a son of Park Heights, I understand the significance of the Pimlico redevelopment project for revitalizing Northwest Baltimore,” said Scott, now the Democratic mayor of Baltimore, in a statement. “Although the project may face delays, I have faith in [the Maryland Stadium Authority’s] ability to successfully secure significant public and private funding for the surrounding area.”
The plan’s creators have said they are not yet sure where additional funding might come from. The stadium authority’s report stated it will “look for direction from the legislature on a desired path forward regarding programming, funding and long-term ownership and operations for both facilities.”
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Maryland Policy & Politics
Del. Vanessa Atterbeary, a Howard County Democrat who chairs the House Ways and Means Committee, said in November “we put significant money towards the project.”
“I understand inflation and things have happened since then. I don’t know, at this juncture, if it makes sense to put more money into the project,” she said. “I don’t have the answer to that question,” she said.
As the delays and barriers to progress stack up and months and years tick by without construction, some observers’ hope has eroded.
But Cole and others dismiss the gloomy outlook with optimism that the projects will proceed.
Perhaps, Cole said, construction will begin at Pimlico in 2024. Asked if by the end of this decade, the Preakness will be run at a new Pimlico, he said: “Absolutely. No question in my mind.”
Rifkin said the stakeholders have an equal feeling of “hope, pragmatism and concern.” They’re hopeful they can produce a plan that will “secure the industry and the Preakness for generations to come,” he said, and are pragmatic in that they are facing challenging “inflationary and interest rate” issues.
“And then the concern is,” he said, “if we’re unsuccessful, what does it mean for the industry? What does it mean for the Preakness? Those things do concern us.”