2005 - Harness Tracks of America, Inc.

HARNESS TRACKS OF AMERICAExecutive NewsletterA daily fax and e-mail report on racing and gaming developments in North America and beyondStanley F. Bergstein, EditorNO TICKEE, NO LAUNDRYThat was one of the earliest business slogans theeditor remembers as a kid, and it is the same messagethat Magna Entertainment sent to Marylandyesterday. Jim McAlpine, now vice chairman forcorporate development of Magna, let Marylandknow that without slots there is little likelihood ofany further improvements at Laurel and Pimlico.“We’re weighing very carefully what’s happenedin Maryland, and we could, frankly, stopinvesting any significant sums at this stagebecause we’ve done the most important piece,which was to get the racing assets of Laurelfixed up,” McAlpine said in a conference calldiscussing Magna’s first quarter results, whichshowed a $4.1 million loss. McAlpine saidMagna hopes to build a racino at The Meadows,and in discussing plans he said -- withoutmentioning Pimlico or Laurel -- that options forraising cash included the sale of real estate andother assets. The Baltimore Sun reported thatone member of the Maryland Racing Commission,Terry Saxon, has said he is part of a grouplooking into the feasibility of making an offerto buy the two tracks. Saxon was quoted assaying that his group wants to look at the financialdata and “perhaps a few weeks afterthe Preakness, make an offer.” Magna executiveJim Gagliano said the company has spentsome $38 million since buying controlling interestin the Maryland Jockey Club in 2002,$20 million of that spent rebuilding the dirt andturf tracks at Laurel, and the rest spent on improvementsat Pimlico including dining roomupgrades, landscaping and a brick column perimeterfence. The Magna announcement yesterdaycame as no surprise to Gov. RobertEhrlich Jr. A spokeswoman said, “It’s saddeningnews, but not surprising, as this is the resultof inaction. The governor has foryears warned of dire consequences andramifications of not passing a slots bill,May 4, 2005and today those warnings came to fruition.”One anti-slots legislator, Baltimore DemocratCurtis S. Anderson, called the Magna announcementan “empty threat.” He may think Magna isbluffing, but we don’t, and it’s that kind of legislativethinking that has brought racing in a state thatonce prided itself of a great racing tradition to thesad state in which it now finds itself.PENNSYLVANIA THINKS BIGWhile Gov. Ehrlich faces the diminution of the racingindustry in his state, Gov. Ed Rendell in neighboringPennsylvania is talking very big dollars. Hepredicts that when slots are fully operational inthe Keystone state, they will produce $1 billion ayear for the commonwealth. His projections, however,are being challenged by academics and others,who point out that no state -- Nevada included-- reaps that large a bounty on slots. While Nevadacasinos made $10.6 billion last year, the statecollected $887 million, and that was the highestanywhere. Illinois picked up $802 million on $1.7billion of wagering, by taxing its casinos as high as70%. There may be skepticism, but it certainly isnot evident in Gov. Rendell’s office. His presssecretary, Kate Phillips, says “We are confidentthat we’ll not only reach $1 billion, but that we couldreach more than that.”JUNE START FOR YONKERS?With the legal obstacles now cleared away, YonkersRaceway is finalizing its financing and expectsto close on its loans next month, and possiblyeven start on construction before June is over.General manager Bob Galterio says racing will besuspended for five months for construction, andanother five months will be required to completeconstruction of the $175 million Empire City racinoat the track. The plan includes 5,500 VLTs, newrestaurants and entertainment facilities. One remaininghurdle is how much the city of Yonkerswill get.