Shifting Landscape Presents Unique Opportunities

by Ross Peddicord
May 2009 

A former Thoroughbred breeder, Ross Peddicord, is a co-founder and publisher of Maryland Life; in his prior life, he was the Baltimore Sun’s race writer and was a frequent feature writer for the Maryland Horse (now Mid-Atlantic Thoroughbred) and The Equiery.

I was standing in the shedrow of a farm manager, trying to sell him an ad in the May/June Preakness Souvenir edition of our Maryland Life magazine, and we were joking, “What should we use as a tagline?”

“How about,” the manager suggested, “Maryland Racing: Not As Bad As It Seems!”

To read news reports, particularly Washington Post editorials, hear commentary and to engage in casual, and sometimes heated, conversation, the general consensus seems to be that Maryland’s foray into slots gambling is a dismal failure and that the state’s racing and breeding industry has all but collapsed.

To be brief, and to the point, here are just a few reasons/observations for a less pessimistic view:

$40 Million Already On The Table – In THIS Economy?!
In this economy (and to most anyone out there in the trenches working for a living) it seems almost a miracle that four bona fide companies actually bid on four of the five available slots licenses–and wrote checks totaling $40M to the state’s Education Trust Fund just for starters’ fees! Maybe that’s chump change to a Wall Street CEO, but $40M is still a significant amount of money and $40M more than already sitting in that account.

Three of those four companies (The Cordish Cos., Penn National Gaming and Delaware Park Slots) are well-known locally, have excellent reputations, already run successful gaming companies–and now–in the worst economy since the Great Depression–want to invest in starting new businesses in Maryland. To me, that’s impressive. If they were biotech firms, some agency or politician would be taking major credit for attracting these businesses to Maryland.

Right now, less is known about the fourth company that bid on the license in Baltimore City, but the organization seems to be making headway in its talks with Mayor Dixon and the City Council. So, full speed ahead!

Don Fry, from the Greater Baltimore Committee, is in charge of the slots licensing process and he is a top person. Under his leadership, the rules will be adhered to and decisions made in a calm, deliberative, fair and transparent way.

Even though, as it looks right now, slots will not be located at the major tracks, the racing industry still receives 10 percent of the revenues for purses, breeders awards and track improvements–and doesn’t have to lift a finger! I wish the magazine publishing business were eligible for such a subsidy.

Actively Investing in Maryland’s Racing Future
Sometimes, it is not the institutions, government, or big corporations that save an industry. Sometimes, it is the small business owners, the individual operators who see an opportunity and grab it.

Have you been over to Sagamore Farm lately? If not, stop by. If there is a heaven, it is at 3510 Belmont Avenue. The amount of time, money, thought and care put into the recent restoration of this legendary Maryland landmark is extraordinary. To see Sagamore, you would think Maryland is in a “Golden Age of Horse Racing & Breeding.” (To learn more about the storied history of Sagamore, visit the archives at equiery.com, scroll down to “Stallions of Distinction” and click on the article by Ross Peddicord about Native Dancer.)

Have you been to George & Marilyn Doetsch’s new 100-acre Marama Farm yet in Clarksville? They just bought four Thoroughbred broodmares after completely renovating the farm and plan to breed, race and sell in Maryland. The farm is so beautiful that Howard Community College is moving the Columbia Grand Prix to its grounds in September.

The state legislature thinks so much of Maryland racing and the Preakness, that it actually passed a bill to be ready to pounce if someone buys the tracks and wants to level them or move the Preakness. The fact that this state so treasurers the Preakness has to have some meaning for a future owner, even if that meaning is not immediately discernible or logical.

A number of buyers have indicated they are interested in purchasing the tracks as Magna Entertainment Company (MEC), Pimlico & Laurel’s parent company, works its way through bankruptcy proceedings. One of these people is David Cordish, and maybe he is the one who has the smarts, marketing prowess and wherewithal to be the next Great Rejuvenator of the Maryland horse racing scene. In a March column in The Gazette, respected State House columnist (and a former Baltimore Sun colleague of mine) Barry Rascovar noted, “The bankruptcy filing by Magna Entertainment, operators of Pimlico and Laurel race tracks, could actually lead to a revival of thoroughbred racing in this state.

In This Economy, Maryland Has It Good
Yes, the economy is horrible right now, but Maryland is better off than just about any other place on the planet. We are actually growing jobs in the knowledge worker segment and the D.C. area is now virtually the center of the universe, not only in government, but also in finance, sustainability, regulatory agencies, etc.

In the next 15 years, another 1.5 million people are expected to move into Maryland. In the next couple of years, 10,000 more new jobs are being added at Fort Meade (where there are already 40,000 jobs). All of these people need to spend their leisure time, de-stressing from these jobs, and enjoying all the great activities, cultural institutions, sports teams and facilities and entertainment complexes that Maryland has to offer. Why not horse racing?

People love horses. Just access the April 21 edition of the New York Times. The exploits of a racehorse named Overdose, who is undefeated in Hungary, is profiled on Page One and is lifting the spirits of the whole nation. He is Hungary’s version of Seabiscuit. And that’s in Hungary!! How about Maryland, where there are more horses per square mile than just about any place on earth?

Why isn’t there a Maryland horse park? OK, the state and counties can’t afford it. Then why doesn’t someone open their own private horse park on their own farm and charge admission? Look what Martha Clark did in Ellicott City at her family’s Clark’s Elioak Farm. She opened the front field, started a petting farm, and collects admissions fees from 80,000 people annually–and she’s only been in business a few years. Horses are part of agri-tourism, too!

Laurel Park sits in the middle of the BWI corridor, the “golden” corridor between Baltimore and Washington. Ever been to a BWI Corridor Business meeting? I’d suggest attending and hear all of the economic development opportunities either being started or in the pipeline. With the right marketing, the right promoter, the right entertainment mix, Laurel Park is in the center of what? 5 million people! A Hard Rock Café with Live Horse Racing at Laurel–maybe that’s what David Cordish is thinking about doing when he says he’s interested in buying the tracks.

To be sure, the next few months will be a cliffhanger. Probably most every day will bring some new revelation, some new twist and turn in the on-going “Maryland Racing Reality Show” as the Magna bankruptcy proceedings unfold, a new track buyer perhaps emerges, the slots licenses are awarded and we find out the fate of next year’s 135th Preakness.

One thing is for sure, it’s not going to be dull, and it doesn’t mean we are all not going to be here next year, and hopefully, thriving!

Preakness – No Triple Crown Guarantees

by Alison L. Asti, Esq
Alison Asti is a sports and economic development consultant with Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC in Baltimore; in her prior life, she was the head of the Maryland Stadium Authority and took an active interest in the economic feasibility study for a Maryland Horse Park. She is also currently president of the Pasadena Horse and Pony Association, and has a piece appearing in the trails section of this issue of The Equiery.) 

The Maryland Legislature, in its zeal to make a political statement about the importance of the horse racing industry in Maryland, may have inadvertently doomed it to extinction. The recent bill authorizing the “condemnation” of the Preakness by the State brings back memories of a similar condemnation bill– permitting the State to condemn the Baltimore Colts NFL team. Those in the know say that bill was the straw that broke the proverbial camel’s back: the Colts quickly packed their moving vans left town under the cover of darkness, on a cold, snowy night – an indelible memory for anyone living in Maryland at that time. Is history doomed to repeat itself?

If you were a businessman owning a valuable sports franchise, or the prospective purchaser of a nationally based horse racing business, would you want to keep your most valuable race in Maryland, knowing that the Legislature could summarily decide to take it from you? I would think not. Perhaps consideration should have been given instead to creating incentives to keep the race here?

Consider that there is no legal document committing that the Preakness will forever be the second leg of the Triple Crown, or that even if the Preakness remains the middle jewel, that it must be held in Maryland. Triple Crown Productions, which owns the “Triple Crown” trademark, could reconfigure the races in any way it wishes, with or without a Preakness, with or without a Maryland race.

Consider also that, in light of the pending Federal bankruptcy proceeding, it is unlikely that the contemplated condemnation action by the State would even have jurisdiction. Triple Crown Productions will have a business meeting in Kentucky on May 2, after the Kentucky Derby.

It is only history and tradition which protects Maryland’s interest in the Preakness. But there are economic considerations, such as the location of the best television markets, which dictate the value of the sponsorship dollars available for the Triple Crown, and could very well trump history and tradition–particularly in these challenging economic times. Hopefully, the strongarmed approach of our Legislature will not run the few remaining racing interests out of town!

Magna Divorces Branding Images for Preakness & Pimlico

A few days after we received Alison’s commentary, on April 21, Pimlico unveiled a “new and improved website for the 2009 Preakness® Stakes, the middle jewel of thoroughbred racing’s Triple Crown” For a link, please visit equiery.com. We found the new website notable for the lack of presence of Pimlico Race Track. Pimlico is mentioned in the upper right hand corner for “current track conditions,” and again in the title of a few press releases, however, there is no primary navigation button dedicated to Pimlico. In order to find any information on Pimlico, a visitor navigate to the section “Preakness Tradition” and then select “The History of Pimlico.” It is clear from the design of this new website that MEC is beginning the process of divorcing the brand and image of The Preakness (notably bearing a registered trademark symbol) from the brand and image of Pimlico (notably not carrying a trademark symbol). This is probably a smart business move, but it is bittersweet and a ruefully melancholy for Maryland horse people.
-Editor