BALTIMORE-Magna Entertainment Corp. has exercised its option to acquire the remaining 49% stake in locally based Maryland Jockey Club, which operates Pimlico Race Course here and the Laurel Park racetrack in Laurel, MD. Under the agreement struck with MJC's previous owners, entities of the De Francis family, in November 2002, Ontario-based Magna paid $18.3 million plus interest for the remaining portion of the company.
Its assets include Pimlico, best known for hosting the Preakness, which is the second leg of horseracing's Triple Crown; Laurel Park, which is located midway between Baltimore and Washington, DC, and a training center in Bowie, MD. In 2002, Magna acquired 51% of MJC and its assets in a series of complex transactions with various De Francis entities. The buy represented an aggregate value of approximately $117 million and included a payment of $51 million in cash.
The option on the remaining stake was scheduled to expire this November. In accordance with the initial acquisition agreement, Joseph De Francis and Karin De Francis will eventually leave MJC, but Joseph De Francis will remain a director of Magna under the agreement struck in 2002.
Magna recently announced a debt elimination plan that calls for focusing on its core strategic racetracks. Frank Stronach, the company's chairman and interim CEO, says this transaction reflects that intent. In a statement, he says, “while thoroughbred racing in Maryland is currently facing many difficult obstacles, we remain optimistic that, with the assistance of other stakeholders, horseracing in the state can have a bright future.” A call to Magna was not returned by deadline.
Racetrack revenues in Maryland have been on the decline. At the same time this deal closed, Gov. Martin O'Malley issued a statement outlining his “support for slot machines in Maryland to preserve Maryland horseracing and breeding industries.” It calls for state-owned slots and will be taken up by the General Assembly in November.
In the statement from the governor's office, Tom Perez, secretary of Maryland's Department of Labor, Licensing and Regulation, says, “Horseracing and breeding in Maryland are suffering, a fact bad enough on its own, but made worse by the news across our borders. The industries in West Virginia, Delaware and Pennsylvania are galloping past ours, mostly as a result of slots.” He estimates that people in Maryland spend $400 million a year playing slots in neighboring states.
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