Tuesday, January 5, 2010


By staff writer Sean R. Sedam

The move denies Laurel Park's new owner of revenue that could be invested in the ailing track, which is for sale as part of a bankruptcy auction slated for Jan. 8, said one of the bidders for the track.

Slots "could've made it easier and faster to make [Laurel Park] into something quite wonderful," said Jeffrey A. Seder, the managing director of Blow Horn Equity LLC, one of six bidders for the Maryland assets of Magna Entertainment Corp., a Canadian company that filed for Chapter 11 bankruptcy in March.

Besides Laurel Park, the assets include Pimlico Race Course in Baltimore — including its valuable Preakness Stakes, the second leg of racing's Triple Crown — and the Bowie Training Center.

Blow Horn's bid is backed by a private equity hedge fund with "a couple of very wealthy individuals" as investors, said Seder, who declined to name the investors, citing confidentiality.

The group would upgrade the tracks' facilities and technology to improve the organization of the racing and the betting, Seder said.

"We think we can make a profit," he added.

A month before filing for bankruptcy, Magna applied for a slots license for Laurel Park, but the slots commission rejected the bid after Magna failed to front the $28.5 million license fee.

Without slots at Laurel, a buyer won't be able to invest as much in upgrading the track, "but it won't be impossible" to make the venue profitable, Seder said.

The zoning approval was good news for another bidder for Magna's assets, Baltimore developer David Cordish. Earlier this month, the state slots commission awarded The Cordish Cos. a license to build a 4,750-machine slots parlor at Arundel Mills.

On Tuesday, the Baltimore Business Journal quoted Cordish as saying that he would like to bid on a Baltimore city slots site. The slots commission threw out a bid for the site last week and plans to reopen the process in early 2010.

State law would have to be rewritten in order for Cordish to hold more than one license.

The company has insisted that Arundel Mills would be a more profitable slots site than Laurel Park. Cordish officials have said that revenue from the Arundel Mills slots would go toward reviving Laurel Park.

Part of the revival efforts stem from legislation implementing the slots program. The law calls for up to $100 million annually to go toward horse racing purses.  For eight years, another portion of the revenue, up to $40 million annually, will go into a racetrack renewal fund that will distribute matching grants to Maryland tracks, with 80 percent going to Pimlico, Laurel Park and the track at the Timonium Fairgrounds used during the state fair.

"Our intention is to consolidate gaming revenues from Arundel Mills and other venues with the tracks, and to cause a renaissance in Maryland's horse racing future which, unfortunately, has fallen into decline under previous management," Jon Cordish, vice president of The Cordish Cos., said in a statement.

It is unclear how much the company would invest in Laurel Park above what is set aside for purses and the renewal fund under the law.

Laurel Park's current operator, the Maryland Jockey Club, struck a more pessimistic tone in a statement following Monday's Anne Arundel council vote.

Maryland Jockey Club President Tom Chuckas called it "a sad night for Maryland racing" that put the racing industry and 15,000 to 20,000 jobs "in peril."

Chuckas said the club, which is bidding on Magna's assets, will support a petition for a referendum asking Anne Arundel County voters whether slots should be allowed at the mall.

"We are going to continue to pursue all of our legal options and exhaust all means and measures to continue this fight," Chuckas said in the statement.

Seder said he too supports the referendum campaign, led by a group called Stop Slots at Arundel Mills, but stopped short of saying whether Blow Horn would contribute financially to the campaign.

"I don't know if it would be appropriate or not," said Seder, the founder and CEO of a Chester County, Pa., horse farm and EQB Inc, a thoroughbred ownership and consulting company of which Blow Horn is an affiliate.

Seder challenged Cordish's claim that revenue from slots near the mall would be pumped into track operations.

He called Cordish's argument that the Arundel Mills site would be the most profitable location "specious."

"It was not the intention of the legislation to siphon a third of the revenue to something that has nothing to do with slots," he said.

Indeed, as recently as last week Gov. Martin O'Malley (D), who backed the state slots program that voters approved last year, said he would have preferred that all slots be located at racetracks.

An analysis by PricewaterhouseCoopers presented to the slots commission found that when the Arundel Mills site is fully operational in 2016 it could generate $500.5 million per year, with each machine bringing in about $289 each day. At the time, commission Chairman Donald C. Fry said the numbers show Arundel Mills would be "a destination location," and approval of the site "is in the best interest of the state."

The uncertainty about the Anne Arundel slots site has put the bid for Magna's assets in limbo, said John B. Franzone, chairman of the Maryland Racing Commission.

It's not a coincidence that the progress of the bankruptcy proceeding has coincided with deliberations on the slots license, he said.

Franzone estimated that Laurel Park is worth $60 million to $80 million without slots. With slots, however, the track could be worth $200 million to $500 million, he said.

"So you're talking about a gi-normous difference in equity," he said.

With the bankruptcy auction ahead and many questions remaining about how Maryland gets to 15,000 slot machines, Franzone said he believes the saga of racing and slots is far from over.

"It could be like Aqueduct," he said, referring to the historic but ailing Queens, N.Y., track that was approved for slots in October 2001. Since then, New York lawmakers and the governor have wrangled over who should operate the track.

Meanwhile, Aqueduct still doesn't have slots, Franzone said.

With great interest, I note Jeffrey A. Seder, the managing director of Blow Horn Equity, was familiar to me through his ownership in EQB Inc. the Thoroughbred consulting company that selected the 2009 Breeder's Cup Filly and Mare Sprint winner, Informed Decision, for Augustin Stables.  Seder is a successful businessman and a true lover of horses and horse racing.  Could we get lucky?

Dear reader, your comments are welcome.  Scroll down and click the word “comments” below to open your comments form.” Thanks so much for reading!

No comments: