Posted: 4:13 pm Thu, April 29, 2010
By Liz Farmer
Daily Record Business Writer
MI Developments consultant Ed Hannah (left), CEO Dennis Mills (center) and Chief Financial Officer Rocco Liscio testify Thursday before the Maryland Racing Commission.
The Maryland Racing Commission Thursday approved the transfer of Laurel and Pimlico race tracks to MI Developments Inc., whose CEO committed to bringing the businesses to a break-even status within two years.
The approval was issued three days after a bankruptcy judge gave approval of Ontario-based Magna Entertainment Corp.’s reorganization plan that includes the transfer of five of its tracks and other assets to MID, its parent company, in exchange for the payment of debts and settlements.
CEO Dennis Mills said after the commission meeting, which was held at the Pimlico Race Course clubhouse and overlooked preparations being made for the 135th Preakness Stakes, he hoped to bring the properties to financial solvency quickly.
“Two years is the max, but we want to get [them] to break-even within months,” he said.
He said MID’s first order of business after the May 15 Preakness would be to meet with all the industry stakeholders, including horsemen and customers. The goal of those meetings would be to get feedback on how to make racing a financially viable proposition once again.
During the bankruptcy proceedings in Delaware, testimony revealed that while the property value of many of Magna’s assets were high, the businesses themselves were generally losing propositions.
Mills added MID would take suggestions sent through its website and could consider having meetings open to the public.
“The second thing is, after we get those ideas, we execute them,” he said.
But MID’s executives held back when asked by commission members about their plans for Laurel Park and Pimlico. They said MID had about $130 million in cash and capital from its real estate ventures, and noted their investment in improving Laurel’s turf track, now considered one of the best in the country.
But as far as improving the real estate itself, Mills would not elaborate for the commission.
“It is too early for us to be specific today as to what we’re going to do here,” he said. “We are looking at zoning and improvements at Laurel now, and we will look for ways to maximize opportunity there.”
Commission Chair John Franzone said after the meeting he understood why MID was holding back.
“I think they’re very gun-shy right now,” he said. “When [Magna] bought the tracks in 2002, they made all these grandiose statements like they were going to be the best and brightest. I think, like everybody else, they’re banking on whether they get slots at Laurel.”
That proposition depends on a vote this fall in Anne Arundel County, where voters will decide whether to allow a slots casino planned by Baltimore developer David Cordish near the Arundel Mills mall. MID has said in bankruptcy court that if the casino’s zoning is revoked by the voters it would apply for a gaming license at Laurel.
Franzone said without slots at Laurel, MID would have to severely cut down on racing days in order to keep its break-even goal for its Maryland properties, which also includes Bowie Training Center.
In 2009, the Maryland Jockey Club, which operates the track, lost roughly $11 million — even with the approximately $8 million it made from the Preakness.
MID, which is primarily a real estate development company, said Tuesday that MI Developments Investments Inc. would be the entity operating its horse racing properties. Tom Chuckas, president of the Maryland Jockey Club, will stay on under MID, and Mills said Chuckas would play a key role in bringing the tracks out of the red.
In Maryland, the deal must still be approved by the General Assembly’s legislative policy committee, and MID executives must pass a background check. Florida officials must also approve MID’s application for a racing license to operate Gulfstream Park.