Horse Racing / Sports

Maryland racing industry embraces new optimism as Preakness approaches

It's hard to overstate how bleak an outlook Maryland thoroughbred racing faced as recently as four years ago.

Magna Entertainment Corp., which owned Pimlico Race Course and Laurel Park, had declared bankruptcy and squandered a chance to bring lucrative slot machines to its facilities. The General Assembly had in turn asserted its right to seize the tracks to protect the future of the Preakness Stakes, Maryland's largest sporting event.

The state's breeding stock was in freefall. Horsemen were locked in ongoing battle with the Maryland Jockey Club, which owns and operates the tracks, over dwindling race dates. Predictions of imminent doom for the near-300-year-old industry were hardly uncommon.

"This wasn't Chicken Little, saying the sky is falling. The danger was real," says Bruce Quade, chairman of the Maryland Racing Commission, the government-appointed panel that regulates the sport.

Which is why the widespread optimism surrounding the industry seems so remarkable as Pimlico prepares to stage the 139th running of the Preakness on Saturday.

No longer does anyone talk of Maryland losing its signature race. Fueled by casino revenues, purses at Pimlico and Laurel are at all-time highs, with the Preakness set to award $1.5 million this year, up from $1 million in 2013. The state's breeding business is in the early stages of rejuvenation, bolstered by new bonuses awarded to Maryland-bred winners at Pimlico and Laurel. The horsemen and the Maryland Jockey Club are operating under a 10-year agreement that guarantees at least 100 race days a year and promises renovations at the tracks. More money is expected to flow in with the opening of casinos in downtown Baltimore and at National Harbor in Prince George's County.

"I think we're on the cusp of a true revitalization," says Alan Foreman, general counsel for the Maryland Thoroughbred Horsemen's Association. "The buzz around the industry is that Maryland is the place to be. Everywhere I go, they say, 'You guys have really got it together.'"

Factions that couldn't approach compromise four years ago now praise one another freely. Foreman describes Maryland Jockey Club chief Tom Chuckas as "smart, genuinely interested in the industry and honest as the day is long."

Chuckas talks of "parties working together for the greater good."

Cricket Goodall, executive director of the Maryland Horse Breeders Association, says Quade's commission has "accomplished far more than any other in recent memory."

For all the goodwill, however, questions remain.

The stakeholders agree Laurel and Pimlico need major renovations to become more inviting destinations, but it's not clear when such projects might occur or how the Stronach Group, which now owns the tracks, would pay for improvements. Despite robust attendance at the Preakness, overall crowds have continued to decline, with a 17-percent drop from 2010 to 2012, according to the racing commission's most recent annual report. Leaders across the industry worry their share of gaming revenues could be whittled away by a legislature eager to fund other programs.

Gov. Martin O'Malley has generally been friendly to thoroughbred interests, but gubernatorial candidate Doug Gansler, for example, has advocated shifting casino money from racing to early childhood education.

"The mindset of the legislature is going to be a crucial issue going forward," says Tim Capps, a former Maryland Jockey Club executive who analyzes the industry as a professor at the University Louisville. "The scenery in Maryland racing is certainly much sunnier than it was a few years ago. But there are some cautionary clouds where you still can't forecast the outcome."

'Credibility and stability'

The situation was so dire in 2009 and 2010 that it's difficult to pinpoint a nadir. For years, racing advocates had pinned their hopes on adding slot machines to the tracks. So when Magna, already in bankruptcy, failed to meet the application terms for a slots license at Laurel Park, disbelief and despair pervaded.

The next year, the Maryland Jockey Club and the horsemen were so far apart in negotiating a compromise on race dates -- the club hoped to trim operating expenses by reducing the days from 146 to 47 -- that it seemed possible the tracks would go dormant in 2011. O'Malley had to step in to help broker a last-minute deal.

A few factors helped the industry pull itself out of the abyss.

Despite Magna's slots flub, revenue from other casinos around the state began to flow in, with 7 percent of the slots money going to racing purses and 2.5 percent to track improvements. That helped to stabilize operating budgets at the tracks, which had lost more than $14 million in 2009 and almost $12 million in 2008. In 2012, the last year covered in state audits, Pimlico and Laurel lost less than $3 million.

Meanwhile, Quade became chairman of the racing commission in 2012 and made it his first mission to foster a long-term deal between the Jockey Club and the horsemen.

"Bruce is the most forceful chairman we've had in many years," Foreman says.

The 10-year pact, reached late in 2012, guaranteed a minimum of 100 racing dates a year and obligated the horsemen to subsidize the tracks to the tune of $70 million to $100 million over that span. It also contained promises of new barn construction at Laurel and Pimlico, essential for owners who train at the facilities.

No longer would brinkmanship and threats of imminent demise rule the end of each year. "It gave credibility and stability to the industry," Chuckas says.

With the deal in place, the racing commission moved on to other matters, such as bringing Maryland in line with unified drug testing standards for the Mid-Atlantic and greatly increasing the bonuses for Maryland breeders and owners whose horses win, place or show (finish first, second or third) on the state's tracks.

The flood of reforms, combined with the new stream of slots cash, lifted spirits in each faction of the industry.

Competing with casinos

The next great hope centers on physical improvements to the tracks. Talk to racing lovers from other states, and Pimlico's dilapidated condition invariably comes up.

"The facilities are just not places people want to go," Foreman says.

Maryland stakeholders remain wary of Frank Stronach, chairman of the Jockey Club's parent company, because he has promised bold improvements for years without following through. But Chuckas says he believes his boss, Stronach, still plans to modernize the tracks.

"I've had multiple meetings with him on this issue," says the Stronach Group's top representative in Maryland. "I think the commitment is there."

Quade says he has no reason to doubt those intentions.

The state's slots deal includes matching funds that could exceed $100 million over the next 15 years to help the Jockey Club with capital projects. But analysts say Stronach would likely have to secure hefty bank loans to pay for any significant construction, no easy task with the industry's revenue streams still uncertain.

"There's a real money issue on the racetrack side," Capps says. "If I were in Stronach's shoes, I'd be hard-pressed to do much more than maintenance. I can't borrow $20 million just to get $20 million in matching funds. So I don't think you're going to see a plan to tear down Pimlico. It's going to be more modest stuff."

The first planned project is for new barns at Laurel Park, and industry officials will watch carefully to see if construction begins as anticipated this summer.

Chuckas says his dream vision for the tracks would include upscale restaurants, sports bars and updated technological trimmings to woo the younger fan. Stadiums have those amenities, as do the casinos, which act as double-edged swords for the racetracks, because they provide revenue while creating competition for the attention of gamblers.

"It's a very difficult task, because the casinos deliver a multi-faceted experience," Chuckas says. "Our facilities are old and dated. They have to become modern."

He takes solace from his experience updating the Preakness Day experience. Chuckas took wide criticism in 2009, when attendance at the state's signature event plummeted to a 25-year low, in part because of a new policy prohibiting fans from bringing their own alcohol.

But he was intent on refashioning the Preakness by adding high-end musical acts to the infield and moderating the drink-til-you-drop atmosphere. Attendance in 2013 was back up to 117,203, fourth highest in history. And this year's event promises performances from Grammy winner Lorde and rapper Nas in addition to the race, featuring Kentucky Derby winner California Chrome.

Given the Preakness success, Chuckas and others envision a series of smaller events combining racing and entertainment that could bolster annual attendance at the tracks. Though much of the wagering now occurs online, they haven't given up on attracting a new generation to the actual races.

"Maybe you have a son of Preakness and a son of son of Preakness at other times of the year," Quade says. "We can't use the old model and say, 'We'll have racing Monday through Friday, see you there.' But I don't think it's hopeless."

Making more hay

Far from the sprawling stage of the Preakness, Maryland racing is experiencing a smaller renaissance in its breeding barns.

Over a 20-year period, the state dropped from producing more than 1,000 foals a year to about 400. "There was a time there when Pennsylvania seemed ready to eat us up," Goodall says.

But the trend began to reverse last year, with gambling revenues pumping up purses and bonuses for breeders and owners. Stronach brought four of his stallions to the state. A new breeding operation, Heritage Stallions, opened in Chesapeake City. Though the foal numbers aren't in, Goodall projects an additional 50 for 2013 and another 50 on top of that for 2014.

At Safely Home, a quiet 70-acre farm in Upperco, breeders David and JoAnn Hayden said the slots windfall and the ensuing increases to purses and bonuses have changed everything for owner-breeders. They stand to receive an additional 60 percent of winnings whenever one of their Maryland-bred horse wins, places or shows.

"That 60 percent pays a lot of bills," David Hayden said. It also spurs growth as more confident breeders improve their properties, buy more hay and hire more hands.

The results are already evident at Safely Home, where the Haydens are building a new two-story 14,400-square-foot barn, Safely Kept, that will house an office, seven stalls and hay storage.

A few yards away, they've also staked out a plot for a new house with the same sandstone exterior as the barn. The revenue boost made both improvements possible, JoAnn Hayden said.

At Dark Hollow, their nearby sister property, the Haydens showed off two fillies they describe as living proof of the breeder program's effects.

Plum, a 6-year-old who won a major juvenile race in 2010, walked a hillside, nuzzling a foal she birthed three months ago. Silver Ashlee, 8, tended a filly of her own.

The Haydens said they'd never have bred the mares were it not for the new revenues.

"Now, you're not just wondering, 'Are we going to be able to keep doing this?' You're thinking about ways to improve your business, your industry," David Hayden said.

"Five years ago, people were walking around like this," he added, stooping over as though carrying a heavy saddle. "Now they're dancing in the streets."

The Baltimore Sun's Jonathan Pitts contributed to this article.

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