TSG suggests contraction, redistribution of revenue needed in MD racing

Wednesday, October 18, 2023

The Stronach Group (1/ST Racing), in a Sept. 29 presentation before the Maryland Thoroughbred Racetrack Operating Authority, offered its vision for the future of racing in the state: a rebuilt Pimlico Race Course; a "state-of-the-art" training center at a yet-to-be determined location; equine safety protocols that exceed those the company has in California; a condensed calendar that would greatly reduce dates; and a redistribution of the share of video lottery terminal revenue that goes to purses in Maryland.

The meeting was one of several planned as the MTROA, created this spring by the state General Assembly, prepares to submit a report to lawmakers by Dec. 1 of this year. The Maryland Thoroughbred Horsemen's Association, which advocates for year-round continuity for any redevelopment plan, will make its presentation at the Oct. 8 meeting of the authority.

Craig Fravel, Chief Executive Officer of 1/ST Racing, said the Preakness Stakes is a "critical and valuable component" of any redevelopment plan, as is a new Pimlico. "Day-to-day" racing must be "reimagined" to make it economically sustainable, said Fravel, who floated a schedule 80 or 90 days a year rather than the about 150 currently offered at Laurel Park and Pimlico to maximize daily average purses.

Fravel, who is based in California, also suggested a realignment of Mid-Atlantic racing dates and coordination by racetracks. He said there were discussions with horsemen about suspending live racing in Maryland during part or all of the Colonial Downs summer meet, and also suggested that winter racing is not ideal.

"There are conversations we need to have and figure out what the calendar will look like," Fravel said. "The calendar must adapt to the horse population. Pimlico is perfectly sized for a ship-in race meet with a certain number of days."

1/ST officials offered no specifics on a year-round training center, which is currently being studied by the MTROA and its consultants. Fravel did say it costs $7 million to $8 million a year to operate a training center; that the company is willing to do a "transition operation" at Laurel while Pimlico is under construction; and if the shuttered Bowie Training Center, which it still owns, is identified as the best option, the company would be willing to have discussions with the MTROA and the city to see if local government would support a training center on the 200-plus acre property.

At an earlier MTROA meeting, architects noted that a redesigned Pimlico could accommodate no more than 350 stalls. The MTHA and others believe another facility that can house about 1,200 horses is necessary to ensure the future of the Maryland racing and breeding industry.

According to financial information provided to the MTROA, the Maryland Jockey Club in 2022 generated $36.5 million in revenue (excluding Preakness day and its Standardbred meets at Rosecroft Raceway) and had expenses of $46.5 million. Preakness day, which in 2016 produced a profit of $8.9 million, lost close to $2 million in 2022, according to the financial information.

The Maryland Purse Dedication Account receives 6% of gross VLT revenue from the state's six casinos, with 80% set aside for Thoroughbred racing. Another 1% goes to the Racetrack Facilities Renewal Account for capital improvements, but Fravel said an issue is that no money goes to the racetracks from alternative gaming for operations unlike New York, Virginia and Kentucky.

The MTHA and Maryland Horse Breeders Association have noted that as part of their 10-year agreement with the MJC, they have contributed more than $90 million to the company to support operations and additional racing dates. The next deadline for an extension of the live racing agreement with the MJC is Dec. 31, 2023.

"It is a massively expensive day-to-day operation," Fravel said. "Day-to-day racing must be reimagined to make it economically sustainable. We've been in some form of transition in Maryland for the past eight years and we still find ourselves looking for a viable solution."

The MTROA was created in part to move along the stalled racing redevelopment plan outlined in 2020 legislation, but it also was granted the power to actually oversee racing operations if necessary.

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