ANNAPOLIS – The Senate gave preliminary approval Friday to a Preakness rescue bill backed by Gov. Martin O’Malley authorizing the state to purchase or use eminent domain to take over Pimlico Race Course, Laurel Park and the rights to the storied Triple Crown race.
The full Senate is scheduled to take a final vote on the bill Saturday morning. A House committee is also likely to vote on the bill Saturday morning.
Both chambers would have to pass the bill before Monday, the final day of the 2009 legislative session.
Senate President Thomas V. Mike Miller Jr., D-Calvert, and House Speaker Michael Busch, D-Anne Arundel, support the legislation. Miller characterized the bill’s chances in his chamber as “excellent.”
The bill is a result of state leaders’ concerns over the fate of the storied second jewel in horse racing’s Triple Crown. Canada-based Magna Entertainment Corp, which owns the racetracks and the rights to the Preakness, filed for bankruptcy in early March and has asked a judge for permission to auction off its assets.
State leaders are worried Maryland could lose the Preakness in a bankruptcy auction, either through a direct sale or from the sale of Pimlico to an owner not interested in hosting the race.
The bill also authorizes the Maryland Economic Development Corporation to issue bonds to purchase the rights to the Preakness and the racetracks.
The Senate advanced the legislation despite opposition from lawmakers who questioned the wisdom and scope of the bill, which also authorizes eminent domain for additional Magna assets, including Bowie Race Course Training Center.
Leading Republicans expressed concerns over the absence of a plan for the racetracks if the state was able to take control over them and the Preakness.
State leaders have said it’s too early to project the state’s role, but it could legally lease or sell the tracks to an owner who protects state interests.
Sen. Delores Kelley, D-Baltimore County, struggled with the concept of supporting horseracing at a time when the popularity of the sport seems to be waning.
“Why would we want, in the middle of this recession, to commit ourselves to something that’s a dying industry?” Kelley asked.
Minority Whip Nancy Jacobs, R-Cecil, mentioned a possible conflict of interest involving the state’s plan to use revenues from slot machines to aid the horseracing industry.
“We decide where slots go, yet we own the racetracks,” Jacobs said.
In a House committee hearing on the bill, delegates questioned a top O’Malley aide over whether the state would be on the hook if the Maryland Economic Development Corporation faltered in its financing.
“I’m very, very concerned about any guarantees that the state would put on the MEDCO bonds,” said Delegate Pamela Beidle, D-Anne Arundel.
State leaders have repeatedly touted the economic and cultural importance of keeping the Preakness in Maryland. Several lawmakers have compared the possibility of losing the Preakness to the NFL’s Baltimore Colts departure for Indianapolis in 1984.
Without the bill, the state is worried that bidders, potentially seeking to use the racetracks for other purposes, could effectively undercut the state’s ability to use its right of first refusal to match a high bid for the Preakness. In such a situation, a bidder could place low offers for Magna’s other assets, like Pimlico or Laurel Park and an inflated offer for the Preakness, forcing the state to decide whether it wants to pay such a high price for the race.
Even if the bill is passed, questions remain surrounding the state’s role in preserving the Preakness.
Complex legal issues stemming from Magna’s bankruptcy filings might limit the eminent domain power given to the state in the bill. A bankruptcy court has placed an automatic “stay” on Magna’s assets, a common practice in bankruptcy proceedings.
Thus far, neither Magna nor the court has recognized the state’s existing right of first refusal concerning the Preakness.
In a separate move, the state has filed a motion with the U.S. Bankruptcy Court in Delaware, where Magna filed for Chapter 11 protection, asking it to affirm the provision.
State lawyers say they are working with Magna attorneys to come to a deal regarding Maryland’s right of first refusal.
Magna has opposed the bill.
Capital News Service Staff Writer Michael Frost contributed to this report.