03/04/2008 12:00AM

Racing no healthier up north

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TUCSON, Ariz. - Crisis has turned to chaos.

In one day's e-mail came word that two of the key leaders of Maryland Thoroughbred and harness racing - Joe De Francis of Pimlico and Laurel and CEO Tom Chuckas Jr. of Rosecroft Raceway - are leaving their jobs.

But there was more. Frank Stronach's Magna Entertainment announced a fourth-quarter loss of almost $43 million, bringing total long-term debt to $879.9 million, $209.4 million of that due this year. The

company reported in its financial statement that its "ability to continue as a going concern is in substantial doubt." Its stock dropped to 79 cents a share, and it faces delisting by Nasdaq if it somehow cannot get it back to a dollar or more by summer.

Stronach issued an unprecedented public call for resumes, trying to find new executives to help him out of the morass.

Things grew so bad in Maryland last week that racing officials were providing sound bites as fodder for the media. The chairman of the Maryland Racing Commission, John Franzone, was quoted in the Washington Post as asking Magna execs, "It's almost inconceivable how Magna can lose that much money. Are you making mistakes at the window and paying people incorrectly?"

Magna is not worrying about who becomes president in November. It is worrying whether Maryland's voters will approve slots, and Franzone used that possibility for another one-liner: "If you get the slots and run them properly, this ship - the Titanic now - will change into the Queen Elizabeth."

Maybe.

Looming behind all of this grief, in Maryland and elsewhere, is a

question many have asked, and another larger one they undoubtedly have considered.

The one asked is, "What happens to the Preakness - a part of Maryland - and the Maryland Million and all of Maryland racing if Magna departs?"

The larger question is, "What happens to American racing, and Magna's critical mass of tracks, if the company were to go under?"

Unfortunately, the problem is not unique to Magna, nor to the United States, nor to tracks without slots. Or even some with them. The base of patronage has eroded.

In Quebec, the hugely successful business and financial investor and political power Paul J. Massicotte, who bought all four of the province's Standardbred tracks two years ago, has been forced to retrench sharply.

His company Attractions Hippiques - which he hoped would revitalize racing in Quebec with investments of close to $40 million in Quebec City and Trois-Rivieres, and plans to build a new track just north of Montreal - announced major cutbacks. The retreat had to be harsh medicine for Massicotte, who had convened a meeting of architects, advertising executives, racing officials, and contractors in his sumptuous Montreal offices two years ago to discuss how to build a network of state-of-the-art tracks stretching from Montreal to Quebec City.

Last week he said, "This is a decision that I bitterly regret when I think back to the hopes raised throughout the Quebec horse racing industry when we signed the agreement late in 2006 with the government of Quebec."

Massicotte has slots, or more accurately the government of Quebec has them, next door to his tracks. They are called Ludoplexes, and were created by the government of Quebec in conjunction with its Loto-Quebec operation. They were aimed specifically at revitalizing the racing industry while reducing the number of video lottery terminals in Quebec bars. Massicotte's tracks get 22 percent of their take, with 60 percent of that mandated for purses.

So what is the problem?

Like the VLTs at Gulfstream in Florida, those in Quebec have underperformed, and Massicotte, like his counterparts in New York and New Jersey, has turned to government.

"We were enthusiastic and excited about this plan to relaunch the industry," he says. "We invested $15 million more than the initial $23 million committed under the agreement with the Quebec government. Moreover, we increased purse money by 40 percent, as soon as possible, in order to support the thousands of jobs that depend on this industry in the province."

The entire Quebec enterprise was based on projections of anticipated revenues made by the government's Loto-Quebec.

They were wrong.

Echoing a refrain of American complaints, including those in New York City aimed at the state legislature in Albany by Mayor Michael Bloomberg, Massicotte says, "It is imperative that the Quebec government and Loto-Quebec review their business model in light of these results, so they can deliver on their promises to the horse racing industry. I hope there is a political will to act. The survival of a whole industry depends on it."

Boundaries do not necessarily create differences.

In racing these days, they create sameness.