Joe De Francis will be celebrating the arrival of the new millennium in earnest. For the past two years, the president of Laurel and Pimlico has staunchly advocated a revenue-sharing arrangement between Maryland's thoroughbred and harness tracks. The unprecedented deal will go into effect Jan. 1, and De Francis believes it will herald a bright new era of growth for the sport. "Everything that we're doing," he said, "is built upon this foundation."
The harness industry is similarly upbeat. "We're ecstatic," said Gregg Boehmer, Rosecroft Raceway's director of corporate communications. "It's fitting that this starts with the new millennium."
The agreement's terms couldn't be more straightforward. Of all the revenue from wagering in the state of Maryland--whether it is bet on thoroughbreds or standards; on live races or simulcasts; at Laurel, Rosecroft or an off-track facility--80 percent will go to the Maryland Jockey Club, which owns Laurel and Pimlico; 20 percent will go to Cloverleaf Enterprises, which runs Rosecroft Raceway. It is a simple resolution to an exceptionally complex set of issues and conflicts that have arisen from full-card simulcasting.
The thoroughbred and harness tracks used to rule their own fiefdoms, until they realized it would be in their interest to offer wagering on each other's races. (A thoroughbred fan who lived in Virginia might find it much more convenient to watch televised races at Rosecroft rather than drive to Laurel.) Under the agreement they forged in 1993, the Maryland Jockey Club operated Rosecroft's facility in the afternoon. At night, Rosecroft's management ran Laurel and Pimlico.
But the advent of full-card simulcasting confused the relationship between the thoroughbred and standardbred industries. Maryland started receiving nighttime thoroughbred signals, from tracks such as Penn National and the Meadowlands. Simulcasts from California bridged the afternoon and evening.
"We battled over who was entitled to the bulk of revenues from nighttime thoroughbred simulcasts," De Francis said. "We just weren't going to agree." The result was a patchwork arrangement; some signals were split 50-50, some 70-30. Thoroughbreds got all the revenue from the California signals.
While the managements were battling, customers were fuming. A bettor at Laurel might be playing Santa Anita and waiting for the feature race. But at 7:30, Santa Anita would disappear from the TV screen and be replaced by Pompano Park--because Rosecroft was then operating the track and had no financial stake in the Santa Anita signal. It didn't matter that the many customers wanted to bet Santa Anita. And the operation of the TV signals was the least of the problems. The evening crowds at Laurel frequently were vulgar and unruly, and no security personnel attempted to enforce even a minimal level of civility.
At all of the tracks, Boehmer said, "The level of customer service was bad. If customers had a problem, they didn't know where to go to solve it. They'd be told, 'It's not Laurel's problem' or 'It's not Rosecroft's problem.' "
More than two years ago, De Francis proposed the revolutionary concept of sharing revenue. "The purpose," he argued, "would be to give all the managers the same incentive: to give the customers what they want and maximize the revenue from parimutuel wagering." If customers wanted Santa Anita, Rosecroft would give it to them--instead of trying to force Pompano down their throats. Yet even though both managements saw the virtues of the plan, horsemen were skeptical. Many thoroughbred horsemen regarded the standardbreds as their rivals and could not embrace the idea of a partnership. It took two years to break down the distrust and the resistance to change.
When the agreement goes into effect Jan. 1, it will end some of the inefficiencies and annoyances that resulted from Rosecroft's operation of Laurel at night. But the major impact of the deal--and the reason everyone is so optimistic about it--is the potential for developing off-track betting outlets in the state.
Maryland law allows the tracks to develop such facilities, and the potential in downtown Baltimore or the Washington suburbs is self-evident. But the Maryland Jockey Club couldn't develop OTBs because of its tangled relationship with the harness industry. Why spend the money to build an OTB when much of its nighttime revenue would go to Rosecroft? "We were permanently paralyzed," De Francis said.
But now the thoroughbred and harness interests have agreed to become partners in the development of any off-track facility, also on an 80-20 basis. Maryland can develop a network of OTBs similar to the ones in Pennsylvania that have spurred the growth of racing in that state. For both the thoroughbreds and standardbreds, this could be the key to prosperity in the next millennium.