May 15 (Bloomberg) -- A law keeping the Preakness Stakes in Maryland forever has offered relief in a state still traumatized by the midnight flight of the National Football League’s Baltimore Colts 26 years ago.
Pimlico Race Course has struggled as horsemen moved to tracks in neighboring states where gaming revenue contributed to fatter purses. Magna Entertainment Corp., Pimlico’s owner, filed for bankruptcy and the state’s racing facilities lost their bid for slot machines.
A year ago, Hall of Fame trainer Bob Baffert talked at the second event in thoroughbred racing’s Triple Crown of the chances that the Preakness and its $1 million Woodlawn Vase would leave Maryland. Then the state stepped in and the race will be run as usual today, with Kentucky Derby winner Super Saver favored, a quarter century after another set of horseshoes left town.
“The whole situation with the Colts leaving in the middle of the night still resonates with all the citizens,” said Tom Chuckas Jr., president and chief operating officer of the Maryland Jockey Club, founded in 1743 and the oldest sports organization in North America.
Moving vans pulled into the Colts’ practice facility after dark on March 29, 1984, and hauled the team to Indianapolis. Baltimore woke up heartbroken at the end of a 30-year love affair with a franchise that produced three NFL championships, a romance chronicled in the 1982 movie “Diner.”
The Preakness and its more than $40 million in economic benefits for the state will stay, even if Pimlico ceases to exist and the competitors have to run elsewhere in Maryland.
“Maryland owns the Preakness,” said Raquel Guillory, a spokeswoman for state Attorney General Doug Gansler.
When Magna entered bankruptcy, Gansler drafted emergency legislation giving the state condemnation authority over the company’s Maryland assets, including the Preakness. Now that Pimlico is slated to have new owners, MI Developments Inc. and Penn National Gaming Inc., the state is secure in its ownership of the name and event.
“That law, in conjunction with the state’s existing right of first refusal over any transfer of Pimlico, gave Maryland the hammer we needed to work out an agreement with new owner MID,” Gansler said in a statement.
The state waived its statutory right of first refusal to buy the Preakness Stakes and Aurora, Ontario-based MI Developments agreed it wouldn’t move the race from Maryland. The agreement also is binding on MI Developments’ successors.
“The Preakness Covenant will ensure that people of Maryland continue to enjoy this time-honored tradition, and that the state of Maryland and city of Baltimore will continue to realize the economic benefits of this annual event,” Governor Martin O’Malley said in an e-mailed statement.
The economic impact of the Preakness translates to $40 million to $60 million for the city and state annually, Chuckas said.
Super Saver is the top betting choice at 5-2 in the Preakness, with Derby favorite Lookin At Lucky as the second pick at 3-1. Paddy O’Prado, who ran third in the Derby, was given 9-2 odds. The $1 million race will pay $600,000 to the winner in the 12-horse field.
“Not only is it a financial windfall for the city, it’s what makes or breaks us for the year,” Chuckas said.
Since the Preakness Covenant was signed, MI Developments and Wyomissing, Pennsylvania-based Penn National proposed a joint venture to take control of Pimlico and Laurel race tracks in Maryland. The transaction, contingent on approval by the Maryland Racing Commission, is expected to close in mid-July to August, Chuckas said.
Real Estate, Gambling
Penn National operates 19 facilities with more than 26,300 gaming machines, 400 table games, more than 2,000 hotel rooms and 959,000 square feet of gaming floor space. It expects to open the first video lottery terminal facility in Cecil County in Maryland. MID is a real estate operating company.
“They have deep pockets; they have solid balance sheets and solid liquidity,” Chuckas said. “MI wants to grow it, enhance it and look at what’s good, bad and ugly and maintain the good and get rid of the bad and ugly. This brings strength to the Jockey Club.”
Under the joint venture, Penn National and MID would try to maximize the use and value of the Maryland Jockey Club’s real estate assets and pursue gaming.
“This transaction is consistent with our plan to enhance the returns of our racing and real estate assets and pursue other opportunities, including the potential for gaming, to benefit the value of the Maryland Jockey Club,” Dennis Mills, vice chairman and chief executive officer of MID, said in a statement.
Peter Carlino, chief executive officer of Penn National, said the acquisition of a share of the Maryland Jockey Club “is consistent with Penn National’s strategy of expanding and diversifying our portfolio of pari-mutuel operations and presence in key markets.”
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