PA group that includes Angelos attempts to make first bid on MD horse tracks

January 07, 2010 | Drew Forrester

As details emerge about the entities bidding for Maryland’s two horse tracks, WNST.net has learned that one group is attempting to become the leader in the auction process that is now scheduled to culminate on January 21.

Blow Horn Equity LLC – with Jeff Seder and Peter Angelos serving as the primary public connections – is looking to serve as the “stalking horse” in the auction, which means they’d make an offer to Magna Entertainment that Magna would accept if no other higher bids are made by the other five interested bidding parties.

One high-ranking Maryland racing official says no “formal agreement” has been signed yet between Magna Entertainment and Blow Horn Equity but both parties are in the process of discussing the final elements of the financial package that would put Blow Horn’s offer on the table as the one every other group would have to beat in the auction process.

This is significant for several reasons.  First, because Blow Horn doesn’t currently own a slots license in Maryland, they’ll be able to make the claim that their offer is being made in the best interest of horse racing and the racing industry in Maryland.  That should curry favor with both horse breeders and enthusiasts who might otherwise be inclined to not completely trust Blow Horn’s intentions based on their “out of state” ownership.  Blow Horn Equity LLC is based out of West Grove, PA.

However, WNST.net has learned that Blow Horn’s grand plan for racing in Maryland DOES include casino slots.  A Maryland horse racing insider tells WNST.net that Seder and Angelos were planning to file suit against the state of Maryland earlier this week in an attempt to have the Arundel Mills slots license – owned by David Cordish – terminated pending resolution of the bidding process for both Pimlico and Laurel.  Once the January 8 auction was postponed, their plans to file suit were put on hold.  That same source also tells WNST.net that the Seder-Angelos group is prepared to submit an application – complete with the $28 million fee – for the Baltimore City slots license that was recently revoked from a Canadian-based group based on their refusal to increase the amount of slots machines they were planning to own and operate at an Inner Harbor location.

The Seder-Angelos group is so serious about their intent to own the Baltimore City slots license that they currently have an order in place to buy nearly 700 machines from an Australian company.

And it’s not a surprise that Peter Angelos is interested in being involved with slots and gambling in Baltimore.  An ex-Maryland government official says Governor Martin O’Malley had all but promised Angelos that he would “pave the way” for Peter to own the license in the summer of 2009, but O’Malley eventually sided with Cordish in his (successful) attempt to become the slots license owner in Anne Arundel County.

“This entire process is going to turn out to be a battle between David Cordish and Peter Angelos,” says the source.  ”Joe DeFrancis and the Penn National group both have the horse racing experience and with slots as part of their track ownership, either of those people would be outstanding auction winners.  But they’re both going to get caught up in the Cordish-Angelos fight.  David has more reason than anyone to get involved in over-bidding because he has the license and the zoning in Anne Arundel County.  And Seder’s group has two angles in their favor.  They’re willing to fork over the $28 million for the Baltimore City slots license and they smartly added Angelos to their team and he’ll take care of the legal fight that they’ll have to go through to get slot machines on location at Pimlico.”

The ex-government employee notes: “If Martin called Seder’s group today and said, ‘I’ll make this happen for you, get me the $28 million check and I’ll promote you guys as good faith partners for the state and the racing industry’, that would be just about all they’d need to get the deal done as long as they have the money to actually buy the two tracks at the auction.”

O’Malley though, has clearly become a Cordish supporter.  In fact, the two dined in Little Italy on Sunday, December 13, eight days prior to the Anne Arundel County Council vote that approved Cordish’s group for zoning and permits at his proposed Arundel Mills location.

So, as is usually the case, the situation involving the Maryland horse racing tracks has become a battle between people who are not only interested in winning for their own sake, but making sure others lose as well.

“It’s safe to say that nearly everyone in this bidding process dislikes the other person,” says the government source.  ”Peter and David have butted heads on a number of occasions over downtown development projects.  David and Joe DeFrancis are naturally at odds because Cordish is planning to put slot machines at a location that’s clearly going to be harmful to Laurel Race track.  The Penn National people are looked at as out-of-towners who are trying to take Maryland money out of the pockets of Maryland business leaders.”

It’s fair to note, though, that only three $28 million checks were written for Maryland’s five slots license applications.  And the “out of towners” from Penn National were one of the check writers, along with David Cordish (AA County) and Bill Rickman (Ocean City).  So while people are leery of Penn National’s angle, it’s worth mentioning they’ve already ponied up – no pun intended – a lot of money to the state of Maryland.

One other subject that has made the entire process unsettling is a report that the Penn National group would potentially be interested in moving the Preakness out of Baltimore after a 10-year contractual obligation to keep the event in Maryland.

“That’s one of the reasons why the auction was postponed on January 8,” the horse racing insider tells WNST.net.  ”They want language in any purchase agreement that says ONLY the state of Maryland can authorize the transfer of the Preakness to a track other than Pimlico and the folks at Penn National were not willing to sign off on that.  And because they (Penn National) already own the Cecil County slots license, it’s quite obvious they’re serious about moving into the Maryland racing industry at an expensive and legitimate level.”

The Kevin Plank group figures to be nothing more than an interested bystander at this stage of the proceedings.  Plank, the founder of athletic apparel giant Under Armour, purchased a Baltimore County horse farm five years ago and has hinted within his social circle that he’d like to be part of “saving horse racing” in Maryland, but most people doubt he has the financial capacity to get involved in a bidding process that will likely end up near the $100 million mark.

WNST.net is hearing that Plank’s main interest would be in owning Pimlico only, a fact that could eventually be appealing to David Cordish if he, in fact, winds up winning the January 21 auction and owns both Laurel and Pimlico.

“David’s obvious interest is in Laurel because of his slots license,” a Maryland racing enthusiast says.  ”And honestly, Kevin’s group would be in over their head if they were running both facilities.  So it would make sense if David winds up winning that he’d bring Plank on board, make him a partner in the group, and allow him to own and operate Pimlico.”

Interestingly, during a radio interview on The Comcast Morning Show in December, Cordish brought up Plank’s name when discussing the merits of building a new, state-of-the-art track in downtown Baltimore.  ”Maybe someone like Kevin Plank would like to be involved in the development of a new track near the two stadiums,” Cordish offered at the time.

The parent group of Magna Entertainment, M.I.D. of Canada, will also be a bidding group on January 21, but no one is giving them much consideration in the process due to their lack of political and government glout in Maryland.

And Joe DeFrancis remains an interesting underdog in all of this.  A source says DeFrancis has “more money behind him than anyone realizes” and that a lot of Maryland racing people hope DeFrancis winds up winning just to create a stir between O’Malley, Cordish and Angelos.

“Joe’s the one guy who’s been totally screwed over by O’Malley,” the insider says.  ”And Joe is aware he’s being pushed to the background in this process because the Governor has aligned himself with someone else (Cordish).”

If this process is David and Goliath, DeFrancis is definitely the little guy going up against the big boys.

The government source predicts David Cordish will wind up winning the auction because that’s the way the state of Maryland wants it and that’s the way they’ve positioned it by granting Cordish the zoning and permits for his Arundel Mills location.  ”For better or worse, Maryland racing is going to be turned over to the Cordish group.  David will put his casino in at Arundel Mills and he’ll take over ownership of Laurel and Pimlico. Eventually, when no one wants to put slots at an Inner Harbor location, David will put up the fee and application to own the Baltimore license as well.  He’ll have a legal fight on his hands to do that because of the legislature about slots locations and ownership of licenses in multiple jurisdictions, but he won’t get much opposition in the end because no one will want to own the Baltimore City license and effectively contribute to the profit-making effort of David Cordish at Pimlico.”

“Bet on this.  David Cordish will win the auction and own the tracks,” predicts the ex-Maryland government official.

Blow Horn Equity LLC – with Jeff Seder and Peter Angelos in joint-effort – might have something to say about that on January 21.

All we need now are some odds…after all, we have six horses in the race.

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