Racetrack bidders jockey for position
Pimlico, Laurel Park at stake
With the future of horse racing in Maryland at stake, the stalking horse bid for Magna Entertainment Corp.'s Pimlico Race Course, Laurel Park and Bowie Training Center could come from one of two Baltimore developers.
Carl Verstandig, a shopping center developer, said Thursday that he is talking to two large companies from the West Coast who are "well-known and well-heeled" in the horse-racing industry about a joint bid for Magna's assets.
Another Baltimore-based developer, David S. Cordish, is also considering a bid.
Initial bids, which will set the bar for a Jan. 8 bankruptcy auction of Magna's assets, are due Monday.
Observers say the Baltimore developers could wind up chasing MI Developments Inc., the parent company of Ontario, Canada-based Magna, which filed for Chapter 11 bankruptcy in March. MI Developments might be interested in bidding for the tracks owned by its subsidiary, according to reports.
Verstandig, who owns America's Realty LLC of Pikesville, made headlines earlier this year when he said he wanted to bid on Pimlico and Laurel Park but would continue racing only at Laurel while developing Pimlico.
Now, Verstandig says he wants to develop "excess land at Pimlico" into a mix of office, medical and retail space, while keeping to the current schedule of racing there and ensuring year-round racing at Laurel Park.
He also would keep the Preakness Stakes in Maryland, he said.
Earlier this month, Magna said in a federal bankruptcy court filing that it would not entertain bids that seek to move the second leg of the Triple Crown out of Maryland. The court approved that decision.
The General Assembly passed a law this year that gave the state the right to use eminent domain to seize assets connected to the Preakness in order to keep the race in Maryland. It also gave the state the right of first refusal over the sale of Magna's properties.
"My main objective is to see that the Preakness stays in Maryland and to see that the tracks would be upgraded and appropriately run," Verstandig said.
He has no interest in the Bowie Training Center, he said.
Teaming with racing interests is a way of "hedging my bets," Verstandig said, adding, "Since the state government got involved in the process it really made it difficult to bid."
The state law gives Maryland 60 days from Nov. 9 to reject the bids and become a participant in the Jan. 8 auction.
The Cordish Cos. intend to continue racing at both tracks.
"We would look to improve the racing product and develop appropriate mixed use," said Joseph Weinberg, a partner in Cordish Cos., which has applied for a license to put 4,750 slot machines at Arundel Mills mall in Hanover.
That plan remains in limbo as the Anne Arundel County Council deliberates over whether to grant a zoning change.
The uncertainty of the plan has some wondering if Laurel Park could one day see slots. Magna applied for a slots license for the track, but failed to include the $28.5 million application fee with its bid.
As for potential bidder MI Developments, the company reportedly is considering developing a 64-acre property near Laurel Park that it purchased from its bankrupt subsidiary in 2007.
If the Arundel Mills slots bid were to collapse, "you're going to have people falling all over themselves to be bidding on Laurel again," said John B. Franzone, the chairman of the Maryland Racing Commission.
Last week, Magna Entertainment Corp. filed a court motion to terminate an agreement to share in profits with the tracks' former owners should Laurel ever get slot machines.
Bringing slots to Laurel is key to keeping year-round racing there and at Pimlico, he said.
The state constitution permits slots operators to hold only one license each.
Should it acquire Laurel Park, Cordish would keep its slots operation at Arundel Mills, where the company believes it would be most profitable.
"There is zero correlation between having slots at a [track] and its ability to support or not support year-round racing," Weinberg said.
Revenue from the Arundel Mills slots would go to capital improvements for the tracks, he said. Under state law, up to $100 million of slots revenue a year also would go to horse-racing purses.
Neither holder of the first two slots licenses awarded by the state plans to bid on the Magna assets.
Penn National Gaming is considering other assets around the country, both racetracks and property, but does not plan on bidding on the Maryland properties, spokeswoman Karen Bailey said. The company, which owns Charles Town Races & Slots in West Virginia, is building a 1,500-machine facility in Cecil County.
"I'm just not that interested in all the politics associated with the racetracks and the future of slots in Anne Arundel County," said Potomac developer William M. Rickman Jr., the owner of Ocean Downs Racetrack in Berlin, which has been approved for 800 slot machines.
The value of Magna's assets "is going to be affected greatly by whether or not the [Arundel Mills] license is awarded or not," he said.
Staff Writer Alan Brody
contributed to this report.