Updated on 09/17/2011 10:17AM

Magna still bullish on Maryland


WASHINGTON - Almost everyone connected to Thoroughbred racing in Maryland - track employees, horsemen, breeders, and fans - was disheartened after a House of Delegates committee killed a bill that would have authorized slot machines at the state's tracks. The industry had expected the measure to pass, and saw slots as the only plausible remedy for problems that have beset the sport for years. There was no Plan B.

Yet the Magna Entertainment Corp., which bought a controlling interest in Pimlico and Laurel last year, doesn't necessarily share the prevailing sense of gloom and doom. "Magna is as optimistic about Maryland racing as we've ever been," the company's president, Jim McAlpine, declared earlier this week.

As the horse industry campaigned for slots, it repeatedly made this argument: The sport's woes stem largely from the competition from Charles Town and Delaware Park, whose large, slot-fueled purses have lured horses from Maryland and hurt the quality of the product. Slots at the Maryland tracks could generate more than $50 million a year for purses, not only making the state competitive with its neighbors but restoring it to a position of national prominence. Nothing but slots could produce such a dramatic turnaround.

All of these contentions are true. But people in the sport who prayed for slots should not conclude that the sport's immediate future is hopeless without them. Despite the impact of slots in West Virginia and Delaware, racing at Pimlico and Laurel has remained a viable product in the national simulcasting market. In 2000, a total of $384 million was wagered on races from Maryland; in 2001, the figure was $389 million; and last year the betting reached $424 million. This is not the profile of a moribund business. Even without slots, Maryland racing is not dead.

Magna seems to understand this better than most of the downcast folks in Maryland. Its founder and chairman, Frank Stronach, loves horse racing and believes in its future; he may sometimes be unrealistic - he talked about making Pimlico an "entertainment center" that would appeal to the whole family - but his enthusiasm is genuine. While some cynics assumed that Magna's purchase of the Maryland Jockey Club was a gamble on the legalization of slots, this has not been the company's history. Its major racetrack acquisitions have been in states where the prospects for slots are either slim or nonexistent. Of course, Magna would have been delighted with an infusion of slot money, but it wanted Laurel and Pimlico because it is committed to horse racing.

Magna certainly didn't deserve the rude treatment that it received in the slot debate, which turned on the perception that "greedy track owners" would make an unconscionable windfall from the legalization of slots.

"Track owners were wrongly portrayed," McAlpine said, employing considerable restraint. "We're business people. The proposals [in the slots bill] were the amounts required to get the facilities where they had to be. The gaming business is incredibly competitive and you've got to have tremendous facilities. You've also got to spend a lot of money on marketing."

The anti-slot forces blurred the distinction between the profit the greedy track owners would make and the money they would need to operate the business. People in racing rue the distorted arguments against slots as well as the costly political miscalculations by Gov. Robert Ehrlich, but the prospects for slots are dead for a year or two at least, and the industry has to deal with that reality. So where does racing go from here?

"What we are going to do," McAlpine said, "is live up to the commitment we made to the racing commission and rehabilitate the facilities." When it bought the tracks, the company pledged to spend $15 million over 18 months to improve the dismal conditions of the stable areas in the state. Lou Raffetto Jr., the tracks' chief operation officer, said that the existing Laurel stable area would be razed and a new one built on a nearby parcel of land the track owns.

The other pressing issue the sport must address is purse money. A purse supplement granted by the state is about to run out, and politicians are in no mood to give a nickel to horse racing. "We're going to face a severe purse crunch in 2004," Raffetto said. "It's not pretty."

McAlpine expressed the hope that Maryland can generate more revenue for purses in the old-fashioned way - by increasing the betting on its races. Part of Magna's vision is to assemble a network of racetracks that can promote each other's simulcasts and thus help each other's business. The Maryland races have received much greater exposure in California this winter, because Magna owns Santa Anita.

When Magna purchased Laurel and Pimlico, many of us were skeptical that the Canadian company's involvement would benefit the sport. In the wake of the slot bill's defeat, Magna's presence here seems a blessing. The company is prepared to invest millions of dollars in the tracks - something that the old regime could never have afforded. And it seemingly remains committed to Maryland racing even though it won't be getting a slot-machine windfall.

(c) 2003 The Washington Post