Maryland Thoroughbred Operating Authority

The Week in Review: In the Good News Department, 2024 is Off to a Good Start

The year 2023 was a pretty rough one for the sport of horse racing, and there was little to suggest that this year would be any different. The sport seems to be caught in a downward spiral as we move from one crisis to another and are left to wonder “what next?”

So far this year, the answer to that question is that maybe things will be better in 2024 than we might have thought. There have been several recent positive developments for the sport, many of them having to do with state governments investing in the game's future.

We learned last week that the New Jersey Senate joined the state's Assembly in passing a bill that would extended a $10-million annual purse subsidy through 2029. Governor Phil Murphy is expected to sign the bill. New Jersey is one of only a handful of states where the racing industry does not receive revenue from gaming. Without the $10 million, Monmouth's purses wouldn't be large enough to compete with tracks in neighboring states. According to the Daily Racing Form, Monmouth distributed $31 million in purses over 56 live racing days, for an average of $553,000 a day, the highest in its history, with one-third of that money coming from the subsidy.

It wasn't that long ago that Monmouth was operated by the state and then Governor Chris Christie threatened to shut the track down. In 2011, he said that Monmouth would “disappear” if private management wasn't put in place at the state-owned facility.

The news out of New Jersey was just the latest example of a state government showing that it believes in the future of the sport. In Maryland, Governor Wes Moore endorsed a plan authored by the Maryland Thoroughbred Operating Authority that will overhaul racing in Maryland. The proposal, which is dubbed “Pimlico Plus,” would mean a re-envisioned Pimlico site, with a new clubhouse, stables for 700 horses, a 1,000-seat event space, 2,000-car parking garage, veterinary facilities, a possible hotel and other new amenities. Laurel will close once the new Pimlico is ready to open for business and a new training facility will be built at a site that has yet to be determined.

Pimlico Plus has a hefty price tag. According to the Baltimore Banner, the new Pimlico will cost between $274 million and $284 million, while the new training facility would cost about $113 million. In 2020, the Maryland General Assembly approved the sale of $375 million in bonds for capital improvements for Pimlico and Laurel. The projects that were on the table at the time stalled, but the $375 million is still available and, with legislative approval, can be used to rebuild Pimlico.

The deal would require 1/ST Racing and Gaming, which owns Pimlico Race Course and Laurel Park, to transfer ownership of Pimlico to the state, and for 1/ST Racing to cede control of its day-to-day Thoroughbred operations to a non-profit entity as of Jan. 1, 2025. The non-profit entity would be structured so that it is similar to the New York Racing Association. 1/ST Racing will retain the rights to the GI Preakness S. and the GII Black-Eyed Susan S., which it would license to the non-profit operating authority.

The Maryland deal was announced about eight months after New York Governor Kathy Hochul's budget included a $455- million loan to NYRA that it will use to build a new Belmont Park, which is expected to open in 2026. Hochul did so despite fierce criticism from some advocacy groups, including PETA, that questioned the move. Victor Matheson, a Holy Cross College professor and expert on sports economics told the New York Post, “Basically it looks like with this project, you're kind of hitching your wagon to an industry that is in long-term decline.”

Belmont was last refurbished in the sixties and is a mammoth structure built during an era when 35,000 people might show up to the track on a Saturday afternoon. It is also not winterized, the primary reason why the Breeders' Cup has not been run at Belmont since 2005. New York racing needed a new Belmont and needed to consolidate so that there was just one downstate track. Thanks to Hochul, it's going to happen.

In October, Keeneland announced a major capital investment project highlighted by the construction of a permanent paddock building. Once again, a state government came forward to help with the costs. Keeneland is working with state and local government to secure incentive funds to support the project, which is expected to cost nearly $93 million. Already, upon the recommendation of the Tourism, Arts and Heritage Cabinet, Keeneland received preliminary approval from the Kentucky Tourism Development Finance Authority for incentives to support the project totaling up to $23.2 million.

“Keeneland is a historic destination for our local families and travelers, and this exciting investment will create more opportunities for everyone to enjoy, while boosting our signature horse racing industry and Kentucky's $12.9 billion tourism industry,” said Gov. Andy Beshear. “The horse racing industry is as indispensable to our economy as it is to our culture, and after a record-breaking year for tourism in 2022, leaders like Keeneland are going to help ensure Kentucky's success continues for years to come.”

Last week, we also learned that the purse for the Kentucky Derby has been raised to $5 million. It was $3 million. In addition, the 2024 spring meet at Churchill will offer purses totaling more than $25 million or a 25% increase over 2023.

This happened because Kentucky racing has never been healthier. Revenue from Historical Horse Racing Machines has created huge purses in the state. Maiden special weight races at Churchill Downs went for $120,000 and allowance races were worth $141,000 last fall.

“These record purse increases are a symbol of the health of horse racing in Kentucky,” Bill Carstanjen, CEO of Churchill Downs Incorporated said when announcing the Derby purse increase. “Churchill Downs Incorporated's over $1-billion investment into live and historical horse racing in Kentucky over the last five years has meaningfully strengthened the entire Kentucky Derby Week and year-round racing program. It's important to acknowledge the state legislature for its commitment to working closely with private enterprise in a truly collaborative partnership to support the continued growth of Kentucky's signature industry.”

None of this means that 2024 will be perfect or that we shouldn't brace ourselves for the next set of problems. But this sport is resilient, as the recent developments have shown. Let's hope for more of the same in 2024.

Triple Crown Purses

Churchill Downs was not the only track to raise the purse for its Triple Crown event. The purse for the GI Belmont S. has been increased to $2 million from $1.5 million. That's a step in the right direction, but it's not enough. Along with the Breeders' Cup, the Triple Crown races are supposed to be the sport's most important events. Their purses should reflect that. All three races should have purses of $5 million. As of now, there is a gap between the Derby and the $1.5-million Preakness and the Belmont, which isn't good for the Triple Crown. There should be enough money out there to have three $5-million races.

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Latest Version of Maryland Remake: Pimlico Sole Track under Non-Profit Control, with 1/ST Racing out of Daily Ops

This story is a deeper dive into the joint press release issued earlier Jan. 5 by The Stronach Group, the Maryland Jockey Club, and the Maryland Thoroughbred Racetrack Operating Authority.

The latest recommendation in a years-long attempt by multiple stakeholders to consolidate Maryland racing at a single, reimagined racetrack now calls for a project dubbed “Pimlico Plus,” with racing centered in Baltimore and supported by the construction of a new training facility elsewhere in the state, according to a report issued by the Maryland Thoroughbred Racetrack Operating Authority (MTROA) Jan. 5.

The ambitious remake of the sport's infrastructure in Maryland hinges upon legislative approval, although the report did come with the endorsement of Maryland's governor, Wes Moore.

Another key to the deal would require 1/ST Racing and Gaming, which owns Pimlico Race Course and Laurel Park, to transfer ownership of Pimlico to the state, and for 1/ST Racing to cede control of its day-to-day Thoroughbred operations to a to-be-created, non-profit entity as of Jan. 1, 2025.

The report stated that 1/ST Racing is amenable to “a framework for an agreement in principle” for those transfers to happen.

In addition, the state would negotiate a licensing agreement with 1/ST Racing to operate and promote the GI Preakness S. and the GI Black-Eyed Susan S., Maryland's two signature races.

Laurel Park would be maintained as “a transitional facility for live racing and training during the expected four-year construction and transition period,” the report stated.

The Washington Post reported that if all went according to plan, Pimlico would be shut down after this year's Preakness on May 18, with the 2025 and 2026 editions of the race temporarily shifting to Laurel.

After that, the MTROA report stated, Laurel will likely be redeveloped.

Complementing the rebuilt Pimlico's projected 700-horse stabling capacity would be the construction of a new training facility at a to-be-determined location that can house 650 horses “in reasonable proximity to Pimlico that would also be acquired and developed under a non-private ownership structure,” the report stated.

The report stated that the cost for the entire project would be “significantly below” previous concepts proposed in recent years that involved keeping both Pimlico and Laurel running “and within the range of General Assembly allocations.”

A story in the Baltimore Banner gave a more specific breakdown: “The new Pimlico comes with a price tag of $274 million to $284 million, while the training facility would cost about $113 million–in line with $400 million in state subsidies previously set aside for the renovation of Pimlico and Laurel.”

The concept of consolidation in Maryland has been openly discussed for the better part of a decade. 1/ST Racing (known as The Stronach Group when it took over in Maryland in 2002) has been on the record for years as acknowledging the sub-optimal conditions at outmoded Pimlico, which as recently as 2018 raced only 12 dates for an abbreviated meet surrounding the Preakness.

Initially, The Stronach Group invested tens of millions of dollars in upgrades at Laurel while publicly stating that the company did not foresee putting any of its own funds into an overhaul of Pimlico.

Civic and state officials, fearful of Baltimore losing the Preakness to Laurel, helped to push for the years-long commissioning of several years of studies for a publicly funded solution led by the Maryland Stadium Authority (MSA). In 2019, Baltimore's mayor even tried to sue Pimlico's ownership in an attempt to force a city takeover.

As the MTROA report explained, “After many iterations, an agreed-upon program was finalized in late 2021 and estimates were generated. The estimates were significantly over the available bonding capacity for the project.”

The Maryland General Assembly then called for additional input and yet more studies in 2022, and that year, the Maryland Thoroughbred Horsemen's Association (MTHA), the Maryland Horse Breeders Association, and others proposed an alternative scenario that would maintain year-round training and racing at both facilities.

“In total, six scenarios have been analyzed by the MSA [and] all of them significantly exceeded available project funding,” the MTROA report stated. It also concluded that “given the level of State investment required to rehabilitate and sustain the industry, a public ownership structure for the tracks and subsequent lease of them to a nonprofit entity led by Maryland industry professionals is the best path forward.”

The report stated at least one significant reason why 1/ST Racing would agree to give up Pimlico: The company would be on the hook for huge taxes if the state provided any funding for the rehab of a privately owned track.

“An additional issue complicates any public investment at either Pimlico or Laurel Park under the current ownership structure,” the report stated. “Under Section 118 of the Federal Tax Code, expenditures made by a government unit to construct improvements at a facility owned by a for-profit entity will constitute taxable income to that entity. Tax advisors have concluded that MSA expenditures at either racetrack may be treated as taxable income to any private owner.”

Belinda Stronach, the chairwoman, chief executive and president of The Stronach Group, stated in a press release that “The Stronach Group and [its subsidiary] the Maryland Jockey Club remain deeply committed to reinvigorating Thoroughbred racing in Maryland, and this framework agreement represents an important first step in that process.”

MTHA president Tim Keefe echoed those sentiments in a separate press release that stated “The Maryland racing industry is one of the most storied in the nation and [Friday's] announcement is an important step forward for a sustainable and bright future.”

TDN had follow-up questions for Keefe about the horsemen's perspective on the project, but a voicemail message left for him did not yield a return call prior to deadline for this story.

However, the MTHA press release did state that a “town hall” webinar for members to discuss and ask questions about the project would be scheduled for the near future.

So what might the reimagined Pimlico look like? The MTROA report outlined the following basic concepts for what would be one of the nation's few remaining tracks nestled within an urban neighborhood.

A new Pimlico would be a “best-in-class facility” featuring both a “right-sized” grandstand and clubhouse “with overlays that could be activated for the Preakness and other large events,” the report stated.

The report also envisioned the creation of a 1,000-seat event space, development parcels, a hotel built by a private partner, and “state-of-the-art equine diagnostic health facility with space for veterinary services.”

Housing for backstretch workers would not be in the stable area, but instead “constructed in the Park Heights community” near Pimlico.

Two parking facilities would be constructed. One would be part of the hotel. A second garage could be shared by both racetrack patrons and patients and staff at Sinai Hospital, which is adjacent to Pimlico.

As for the new training facility, the report stated that MTROA identified eight potential locations within a 50-mile radius of Pimlico to be examined for suitability.

Ranked on a scoring mechanism that evaluated nine criteria, the top three were Shamrock Farm in Woodbine, Mitchell Farm in Aberdeen, and the former Bowie Race Track in Bowie that last hosted racing in 1985 but had functioned as a training facility until 2015.

The report stated that “it is the recommendation and conclusion of the [MTROA] that those three locations move to a next stage for final consideration and subsequent acquisition. The [MTROA], however, will continue to evaluate and consider additional suitable properties if and when they become known.”

A footnote within the report disclosed that during the investigation of possible sites, “the [MTROA] learned through industry sources that Shamrock Farm, which is currently owned by the family of [MTROA] Authority member [and National Thoroughbred Racing Association president and chief executive] Tom Rooney, may be for sale. Those members leading the search reached out to Mr. Rooney about its availability, and he confirmed that a sale may be possible.”

With regard to the fundamental change of the state's operating model for racing, the report stated that it is seeking a system that “mirrors that in use by the New York Racing Association. Facilities would be owned by the State and leased to a professional not-for-profit operator. This structure will better align operations with the needs of the horse racing industry and the State's significant financial investments.”

The MTROA, the report stated, would be in charge of coming up with a recommended operator.

The MTROA has been meeting regularly since first convening in August 2023, while also conducting research and receiving testimony from a wide variety of stakeholders. It was created to meet twin objectives mandated by legislation: Reimagining the state's horse racing infrastructure to better align with budget realities, and conducting a review of Maryland horse racing operations in order to recommend the best path forward.

The MTROA is composed of appointees of the governor and legislative leaders and representatives of horse industry organizations, plus the MSA, the Maryland Economic Development Corporation, and others who have a stake in the areas surrounding Pimlico, Laurel, and Bowie.

The report that came out Friday was required by the General Assembly to be issued by that date.

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Framework in Place to Enable MTROA to Rebuild Pimlico, Conduct Maryland Racing

Edited Press Release

The Stronach Group, the Maryland Jockey Club, and the Maryland Thoroughbred Racetrack Operating Authority (“MTROA”) today announced they have reached the framework of an agreement in principle to preserve and enhance the Thoroughbred racing industry in Maryland.

The understanding, subject to the negotiation of definitive agreements, legislative authorization, and all required governmental approvals, will enable the MTROA to design and build an iconic racing venue at Pimlico and take over day-to-day racing and training in Maryland.

“The Authority's report represents an important next step for the industry, and I look forward to working with the General Assembly and the Maryland Thoroughbred Racetrack Operating Authority to finalize an agreement that ensures this important industry continues to create jobs and drive economic growth for years to come,” said Governor Wes Moore, whose office issued the release.

The Stronach Group and the Maryland Jockey Club, as the owners of the real property assets located at Laurel Park and Pimlico Race Course and the intellectual property assets comprising the GI Preakness S., the GII Black-Eyed Susan S. and related festivals, will be working with the MTROA to implement terms for the use of these assets in the short and long term.

“The Stronach Group and the Maryland Jockey Club remain deeply committed to reinvigorating Thoroughbred racing in Maryland, and this framework agreement represents an important first step in that process,” said Belinda Stronach, Chairwoman, Chief Executive Officer and President, The Stronach Group.

The agreement will allow a fluid transition from The Stronach Group and the Maryland Jockey Club as operators to the MTROA in 2025, as well as allow the time needed to develop a new training facility and modernize Pimlico Race Course. The Stronach Group and the Maryland Jockey Club will retain ownership of the intellectual property associated with the Preakness S. under a license to MTROA.

“On behalf of the MTROA, I'm delighted that we were able to chart a course forward for Maryland racing that will ensure the industry continues to thrive for decades to come,” said Greg Cross, Chairman of the Maryland Thoroughbred Racetrack Operating Authority.

Click here to access the MTROA report.

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Maryland Racetrack Authority Bill Passes House, Heads to Governor’s Desk

Legislation which will create the Maryland Thoroughbred Racetrack Operating Authority (MTROA) was passed by the state's House of Representatives by a vote of 132-2 on Apr. 10, the last day of the state's 2023 General Assembly session. Previously Senate Bill 720 , which is designed to participate in the development of racing and training facilities in the state and operate in the best interests of Thoroughbred racing, passed the state Senate by a 47-0 vote Apr. 6.

The bill also states that, “If necessary, the authority will manage and oversee day-to-day racing operations and live racing days and, in coordination with the Maryland Economic Development Corp., acquire property for operations; enter into any agreements, leases, partnerships or contracts needed for pari-mutuel wagering and compliance with rules and regulations.”

The bill also would, “prop up a new ownership group for racing and training,” should the The Stronach Group (1/ST Racing), the owner/operator of the Maryland Jockey Club's Laurel Race Course and Pimlico, exits racing in the state.

Five members of the MTROA will be appointed by the governor–one of two nominated by the Maryland Thoroughbred Horsemen's Association (MTHA), one of two nominated by the Maryland Horse Breeders Association (MHBA), and three other members who possess relevant industry, business or government experience, including one in real estate or finance. Other members are the Chair or Executive Director of the both the Maryland State Archives (MSA) and the Maryland Economic Division (MEDCO), one who is not an elected official appointed by the Senate President and one who is not an elected official appointed by the Speaker of the House. Additionally, three non-voting ex-officio members will be appointed by the governor–one who resides near Laurel, one who resides near Pimlico, and one who resides near the old Bowie Training Center, which is being given to the city of Bowie and University of Bowie. The other non-voting ex-officio member will come from the Maryland Racing Commission.

The MTROA will be in place for four years and one month but could be extended through statutory changes if necessary. The bill, which is set to take effect on Jun. 1, now heads to the desk of Governor Wes More, who is expected to sign it.

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