New plan calls for state-created nonprofit to run Preakness, operate Maryland’s racing industry

Discussion of Maryland thoroughbred racing in recent years has been full of glum realities and grim predictions, but the saga added a hopeful chapter Friday: sweeping changes and a proposed new path forward.

In a report filed to the General Assembly, the newly formed Maryland Thoroughbred Racetrack Operating Authority made several recommendations that seek to stabilize a long-troubled industry. Under the plan, a nonprofit created by the state would take over day-to-day racing operations from The Stronach Group — the Canadian company that owns Baltimore’s Pimlico racetrack, the Preakness and currently operates thoroughbred racing in the state — and Stronach would donate Pimlico to the state. The track would be renovated after years of delays and become the hub of Maryland racing.

Stronach, also known as 1/ST Racing, would largely exit the Maryland racing scene, but continue to own the Preakness Stakes. The company would license to the state-created nonprofit, for an undisclosed fee, the rights to the prized event. The nonprofit would operate the meet, which dates to 1873.

With more than $375 million in state funds already earmarked for racetrack improvement from a 2020 law, the state would renovate Pimlico and add an off-site training facility.

The plan, as outlined in a 16-page report by the racing authority, is far from finalized and will require legal approvals and action by the General Assembly. But representatives of the state, 1/ST and Maryland horsemen projected confidence in the framework.

In statements, 1/ST Chairwoman Belinda Stronach said the plan is “an important first step” to “reinvigorating” racing in the state and Democratic Gov. Wes Moore said he looked forward to finalizing “an agreement that ensures this important industry continues to create jobs and drive economic growth for years to come.”

Greg Cross, the racing authority’s chairman, said the current expectation, subject to the timing of approvals, is for Pimlico to be renovated by the 2027 Preakness. The 149th Preakness will take place at Pimlico on May 18, but as Old Hilltop is upgraded, day-to-day racing and the Preakness would move to Anne Arundel County’s Laurel Park track in 2025 and 2026. It’s undecided what would become afterwards of Laurel, which is owned by 1/ST, but it would no longer host thoroughbred racing.

“We don’t have specific plans for it, so that will remain to be seen,” 1/ST CEO Craig Fravel told The Baltimore Sun.

Anne Arundel County Executive Steuart Pittman, a Democrat, said in a statement: “We look forward to engaging the community in the process of envisioning the future of the track. It’s a valuable site that could generate important community benefits.”

The proposal seeks to direct Maryland racing toward a sustainable future — and out of a challenging and contentious decade, during which 1/ST threatened to move the Preakness out of Baltimore and a large-scale plan to revitalize the state’s ailing racetracks failed.

In 2019, the city of Baltimore sued The Stronach Group to block a relocation of the Preakness to Laurel. That lawsuit prompted an agreement between the parties, which led to a 2020 law approving $375 million in state funds for improvements to both Pimlico and Laurel.

But those aspirations ended with a whimper, as a thorny tax issue, rising construction costs and a changing vision complicated the the project, leaving it hundreds of millions of dollars over budget and sending decision-makers back to the drawing board. Last year, the General Assembly created the racing authority and tasked it with finding a solution to the quagmire.

The authority, which first met in August, was asked to provide its findings on the future of the racing industry to the General Assembly by Dec. 1, but postponed its report until Friday. Its plan — billed as the “Pimlico Plus” model in the report — hopes to provide a beacon to the storied Maryland horse racing industry, which has been blighted by declining interest and deteriorating facilities.

“This is the first time in 40 years [that] there’s a path,” Cross told The Sun.

Perhaps the biggest shakeup proposed is a change in operator. 1/ST, which has owned both Laurel and Pimlico since 2002, would cease to own an active racetrack and would no longer operate racing in the state. Instead, Maryland would install a model similar to one employed in New York: The state would lease operations of Pimlico to a nonprofit, composed of industry professionals hired by the authority.

Operating racing in the state has not been profitable recently and 1/ST has said it annually loses roughly $10 million. Even the Preakness, which is typically lucrative, lost millions over the past two years. For racing to be sustainable in Maryland, a nonprofit operator would seek to at least break even.

In a report to the authority analyzing potential operating models, Crossroads Consulting identified potential cost-saving steps an operator could take.

“Operating efficiencies can be achieved through consolidation of racing operations at Pimlico and improved operations of the Preakness present significant opportunities for increased profitability,” that report stated.

Pimlico would host 140 to 160 racing days a year, per the report. That would be a slight decrease from the state’s total in years past, but far more than the 80 or 90 days 1/ST previously pitched.

Under the framework, 1/ST would continue to own the Preakness, but the state-created nonprofit would pay Stronach a licensing fee for the right to operate the second jewel of the Triple Crown, Cross said. (Neither Cross nor Fravel said how much that fee would be, nor was that figure included in the report.) The nonprofit would, in turn, retain revenue from the meet.

Essential to the plan is a training facility. Pimlico is not large enough to sustain all of Maryland’s racing. A separate facility — including a track, space for veterinarian facilities, dormitories, and barns for 650 horses — would be added elsewhere.

Populous, a consulting firm, presented a report to the authority analyzing eight potential training facility sites for proximity to Pimlico, topography, size and the cost of acquisition and development. The old Bowie Racetrack, which will soon be owned by the city of Bowie, was ranked as the third most viable option, while Mitchell Farm, a 97-acre site in Aberdeen, and Shamrock Farm, 150 acres in Woodbine, tied as the top candidates.

Crucially, the acquisition and development of a training facility would be paid for with state funds already approved in the 2020 law. Renovating Pimlico would cost between $275 million and $283 million, per Populous, while the training facility is expected to be $113 million to $116 million.

That sum — under $400 million — is “significantly less than options previously studied and is affordable within the range of the financial commitment made by the State,” the authority’s report stated.

The new plan would, however, mean an end to Laurel Park and a consolidation at Pimlico, leaving Maryland with only a single mile-long oval for the first time in memory. But improving both tracks with the allocated funds was simply not feasible, as all such scenarios “far exceeded available project funding,” the report said.

For casual racing fans, the most overt results of this plan would be noticed on future Preakness Days. A renovated Pimlico would be smaller, with a capacity of roughly 70,000, and the track would be “rebuilt as a best-in-class facility to serve as the hub of the Maryland racing industry and as a source of year-round economic activity that includes a hotel, event space, development parcels and parking that can be shared with the neighboring community,” according to the report.

The 2020 law sought to benefit the Park Heights neighborhood in Northwest Baltimore, home to Pimlico, and the proposal maintains those goals.

“This is a very, very positive step for the racing industry and the Pimlico community,” Del. Sandy Rosenberg, a Democrat who represents the area, told The Sun.

The report includes a bulleted list of eight “next steps” for the authority, including finalizing agreements with 1/ST and identifying or creating a nonprofit operator.

Legislative action will be required to provide a roadmap for the plan. For example, under a 1987 law, the Preakness can be held outside of Pimlico “only as a result of a disaster or emergency.” The General Assembly would need to approve the Preakness temporarily relocating to Laurel during the transition years of 2025 and 2026.

In a statement, Democratic Speaker of the House Adrienne A. Jones said: “I look forward to the legislature having the opportunity to weigh in on this process. It is important that we get this right and hear from all stakeholders.”

Given the recent stalled plans and a pattern of impeded progress, skeptical Marylanders will wait to celebrate this proposed plan until it’s formalized. But while in recent years the racing industry looked to be running in circles, Friday seemed to mark a stride toward the starting gate.

Baltimore Sun reporter Sam Janesch contributed to this article