2002 - Harness Tracks of America, Inc.

HARNESS TRACKS OF AMERICA
Executive Newsletter
A daily fax and e-mail report on racing and gaming developments in North America and beyond
Stanley F. Bergstein, Editor
MICHIGAN GOV ACTS QUICKLY
Annette Bacola’s resignation as Michigan racing
commissioner may have surprised many, but John
Engler, the governor of Michigan, apparently was
not one of them. Within 24 hours after her announcement
at the Racing Symposium in Tucson
last week, Engler replaced Bacola with R. Robert
Geake, a practicing consulting psychologist who
has been serving as Michigan’s Children’s Ombudsman
for the last year. Geake was appointed
for a two-year term beginning this coming Saturday.
ANOTHER SLOT FUSS IN MD
Baltimore and Washington newspapers were in a
tizzy today, buzzing about the revelation that Joe
DeFrancis, his sister Karin, and other former minority
owners of Pimlico and Laurel in a group
called Maryland Ventures were to get 65% of
pretax earnings from slot operations at Maryland
thoroughbred tracks for the first five years of slot
operations, if approved. The percentage, according
to an SEC filing, would drop to 50% after five
years, to 40% after ten years, and would cease
after slots had been at the tracks for twenty years.
The Washington Post quoted “several of
Maryland’s legislative leaders” as saying that “if
too much money lands in the pockets of a small
collection of wealthy track owners, public support
for slots could evaporate.” Incoming House
Speaker Michael Busch, a Democrat and an opponent
of slots, said, “The idea of creating bonanzas
for individuals out there is not something
that we as elected officials should be entertaining.”
Republican legislators who previously opposed
the idea of slots at tracks now say they are
ready to go along with the idea, but the DeFrancis
slot sharing could lead to them making the state’s
share so high, or the tax so oppressive, that
Maryland would face the same situation
as New York, where tracks can’t build on
a 12% share or with a five-year sunset provision.
December 16, 2002
The DeFrancis/Maryland Ventures story was not
part of the original news stories about the sale of
the Maryland Jockey Club to Magna Entertainment.
It broke after a DeFrancis announcement
of the arrangement, and after the SEC filing by
Magna Entertainment revealed the details, which
also showed that Joe and Karin received $18.4 million
from Magna for an option to buy their remaining
49% stake in the Maryland Jockey Club in
2006 or 2007. If Magna exercised the option, Joe
and Karin would get another $18.3 million. As for
the split of the 65% of pretax slots profits, the
SEC filing shows approximate pro rata shares for
the first five years of 35% to the Maryland Jockey
Club; 19% to LUK-Flats LLC; 16% to the Laurel
Guida Group, controlled by former harness racing
owner Lou Guida; 13% to FJN LLC; 12% to Joe
DeFrancis; and 5% to counsel Martin Jacobs. The
dollar value of those percentages depends, of
course, on how Maryland decides to divvy up slots
revenues between the states and the tracks. This
latest revelation clearly could affect those percentages.
A STRANGE AND WEIRD REPORT
Thoroughbred Times reports that Magna Entertainment
has purchased a 271-acre site in suburban
Detroit for more than $100 million to build a
mixed-breed track. The report is bizarre, since
Magna International bought the site two years ago
this month for $17 million, and it seems unlikely it
would sell to MEC for an $83 million profit. Michigan
deputy racing commissioner Jim Bowes was
quoted in the story, but he says his quote and the
story were from two years ago, and that Salem
township, where the property is located, opposes
any racetrack there.
GELLER INTRODUCES VLT BILLS
Senator Steve Geller has introduced a bill -- S64 -
- that would provide VLTs at Florida’s parimutuel
facilities, racing and jai alai.