De Francis Family Selling Its Remaining Stake in Maryland Tracks

Racing executive Joe De Francis, who sold controlling interest in Laurel Park and Pimlico to Magna Entertainment in 2002, said yesterday he would relinquish his rights to proceeds from slot machines at the tracks if it would help the prospects of alternative-gaming bills favorable to racing in the state legislature.

"Sure, absolutely," De Francis said. "I can't speak for my partners, but I can speak for me. In order for [the Maryland racetracks] to be viable, the playing field has got to be leveled and slots have to come to Maryland to allow the Maryland Jockey Club to be competitive with Delaware Park, Charles Town and Philadelphia Park."

De Francis made his statement the same day that Ontario, Canada-based Magna announced it had exercised its option to buy out the remaining 49 percent interest in the Maryland tracks by paying De Francis and his sister, Karin De Francis, approximately $18.3 million plus interest.

The buyout effectively ends the De Francis family era at Laurel Park and Pimlico, which began when Joe and Karin De Francis's father, Frank J. De Francis, purchased Pimlico in 1986.

Joe De Francis, 52, also will step down from his position as executive vice president at Magna, while remaining on the board of directors. He recently helped spearhead the launch of TrackNet Media, an online wagering joint venture with Churchill Downs Inc.

Magna purchased control of Laurel Park and Pimlico in November 2002 with an option, enforceable by De Francis, to pay for the remaining interest within five years. The buyout announced yesterday, however, does not affect a deal between De Francis and Magna that entitles him and several partners to 18 percent of any future profits Magna receives from slot machines.

"That was part of an inducement to sell [the tracks] back in 2002," De Francis said yesterday. "It doesn't come out of the horsemen's share, the state government's share or anybody else's share. It's a percentage of what [Magna] would make, and it decreases over time."

The size of the share of slots revenue received by racetrack operators has been a principal stumbling block to alternative gaming legislation for Maryland House Speaker Michael E. Busch (D-Anne Arundel).

Busch, who could not be reached to comment, repeatedly has said he would not support any bill that provides "unjust enrichment" to stakeholders.

The buyout of De Francis and his sister, executive vice president of the Maryland Jockey Club, comes at a time of severe financial turmoil for Magna. The company, which lost $288.3 million between 2004 and 2006, announced earlier this month it would sell at least two of its racetracks and numerous real estate holdings in an effort to erase more than $600 million in debt by the end of next year. The company recently received an $80 million loan from its primary shareholder.

"The acquisition of this remaining interest in MJC was specifically contemplated in our recently announced Debt Elimination Plan, and reflects our intent to focus the business of MEC on our core strategic racetracks," Magna Chairman Frank Stronach said in a statement. "MJC is a core asset of MEC, and while thoroughbred racing in Maryland is currently facing many difficult obstacles, we remain optimistic that with the assistance of other stakeholders horse racing in the state can have a bright future."

The departure of De Francis brought a muted response from the Maryland racing community, mostly because Maryland Jockey Club President Lou Raffetto has been in charge of day-to-day operations at the tracks for more than two years.

"I don't think it changes one thing because the project we're working on is called slot machines," said Wayne Wright, executive secretary of the Maryland Thoroughbred Horsemen's Association. "Other than his financial stake, he hasn't been involved."

Trainer Dale Capuano said that with or without De Francis, the slots issue will be addressed. "The fact that the state is broke again makes all the difference," Capuano said. "We're just along for the ride."

De Francis said he expects Raffetto to continue running the two tracks.