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At Pimlico, Laurel, Redevelopment Still a Year Away

Tax concerns stalling start of work at both TSG Maryland racetracks.

Horses race in the 2021 Preakness Stakes at Pimlico Race Course

Horses race in the 2021 Preakness Stakes at Pimlico Race Course

Bill Denver/Maryland Jockey Club

Those visitors who were fortunate enough to attend the 2021 Preakness Stakes (G1) will not find startling changes at Pimlico Race Course when they arrive for the May 21 edition of the second jewel of the Triple Crown.

There's a fresh coat of white paint on the front of the building and some new, upscale hospitality areas in the infield. A significantly larger crowd will be on hand for the 147th Preakness after attendance was limited to 10,000 a year ago and only horsemen were allowed when it was contested in October 2020. The Infield Fest will return Saturday with musical performances by Marshmello, The Chainsmokers, DJ Frank Walker, and rapper Moneybagg Yo—though bringing in someone to sing "Heat Wave" with Preakness Day temperatures expected to be in the mid 90s. On Friday, Megan Thee Stallion, Lauryn Hill, and Toni Braxton will headline Preakness Live, which will offer live performances, a cook-off, and an art garden. 

It should be a festive, though sultry, weekend.

Yet if anyone is looking for concrete signs of the redevelopment of Pimlico—and Laurel Park as well—they will have to wait, like Brooklyn Dodgers fans of long ago, until next year.

"We're hoping to see shovels in the ground at Pimlico after the 2023 Preakness," said Bill Cole, a lead negotiator for the City of Baltimore in the development project and a former head of the city's Economic Development Agency. "We have about a year of design and engineering ahead of us and there's a lot of utility work that has to get done."

It was back in 2019 that the City of Baltimore and The Stronach Group first announced a $375 million redevelopment deal for Pimlico and Laurel Park that included The Stronach Group turning over ownership of the now 152-year-old Pimlico facility to the city of Baltimore.

A year later, the Racing and Community Development Act of 2020 was passed by the Maryland legislature, paving the way for the Maryland Stadium Authority to become involved and for the project to begin.

But since then a variety of issues, some related to the pandemic, others to rising costs and supply chain issues, have delayed the start of the construction work.

Craig Fravel. Line of Duty (IRE) with William Buick wins the Breeders' Cup Juvenile Turf (G1T) at Churchill Downs on November 2, 2018.
Photo: Anne M. Eberhardt
Craig Fravel

"We're a little behind schedule in terms of the commencement of the full-scale design work that was due partly to COVID and factors that were out of everyone's control," said Craig Fravel, CEO of 1/ST Racing. "Everything costs dramatically more these days than it did three years ago when this project first started. So I think we are all looking forward to the design process working and finding some solutions to cost issues."

Yet the biggest roadblock has been a thorny tax issue for The Stronach Group, the parent group of 1/ST Racing and the Maryland Jockey Club which owns and operates Pimlico and Laurel Park. Since it will continue to own Laurel Park, the state funds it will receive for the construction project will generate a massive tax hit for the company.

"There was a provision in the 2017 tax law changes that basically said if there were to be publicly funded improvements on private property it eliminated tax breaks with respect to the capital gains tax on those improvements," Fravel said. "Since it's a fairly significant tax in a challenging environment, it has to be figured out."

According to Cole, that could cost TSG "tens of millions" of dollars which has stalled the Laurel Park development and by association the Pimlico work as well.

"There's an imputed tax liability based on private property for sports facilities that would have a rather dramatic impact on The Stronach Group in the tens of millions of dollars. We had to work through it and the city even engaged tax counsel to help come up with creative solutions. That definitely slowed us down since the two tracks have to be done together," Cole said. "If you close Pimlico to daily training you need to improve facilities elsewhere to maintain an active Thoroughbred population. COVID played a role, not a huge one, but the lion's share of the delay is trying to get through the tax issue at Laurel Park."

To that end, the legislature recently directed the Maryland Stadium Authority to move forward with the Pimlico work and gave the parties until September to work with the Maryland Economic Development Corporation to find a solution to the tax dilemma.

"Bond rates were going up and the longer we wait the less money we have to spend. So, the legislature said  let's get the design and engineering done and get the shovels ready for Pimlico, since there's nothing complicated about it, while we work through the Laurel issues," Cole said. 

As for solutions at Laurel, some creativity will be needed.

"It's a law and there is no way around the tax issue," Cole said. "So, during the last year we have been looking at alternative solutions."

The hope is to have the project completed by 2026 while continuing to conduct the Preakness at Pimlico with no interruptions.

"There's a provision in the negotiated agreement with the city and The Stronach Group that we would never hold the Preakness somewhere else," Cole said. "In an ideal world I think the construction can be done without missing a Preakness. The turf track might be an issue but the dirt track should be ready and the intent is to run the Preakness at Pimlico throughout the redevelopment process even if we are using temporary facilities for a few years. We built that into the budget for the time when they rebuild the clubhouse, which will take more than a year to build. You may have to use more extravagant tents in those years. These type of facilities are becoming nicer and nicer all the time."

For Fravel, the delays have been disappointing but understandable.

"It's been a process. It sounds easier in the conceptual stages than when you get down to the nitty gritty and the complexity of doing two large venues at the same time using the same design team," he said. "Finding a way to continue with the kind of training that horsemen are comfortable with while replacing track surfaces at Pimlico and Laurel is a very complicated matter. Every project is frustrating which is why people call it work rather than play time. This has had its challenges, but in general people have worked together well."

While working toward a better future for Maryland racing, 1/ST Racing and the MJC have also been absorbed with the demands of everyday racing on a year-round basis.

Pimlico; Preakness Stakes; Scene;
Photo: Jim McCue/Maryland Jockey Club
Pimlico Race Course

Laurel Park, with 147 dates over four meets in 2022, is the main venue but it has endured issues with its main track. Though the situation has improved, nine dates have been cancelled so far this year as well as most of another card.

"We had a few hiccups at the start of the year at Laurel," Fravel said. "There were some transitional matters in respect to the track we put in. It was unfortunate but I think we have a really positive relationship with the Maryland Thoroughbred Horsemen's Association as well as the Maryland Racing Commission. The communication is really good. We brought in a lot of folks for the work that needed to get done and we got things sorted out. 

"I think it's been in an upward trajectory since then. Overall It's been a positive situation for Maryland racing with good purse generation."

Trainer Tim Keefe, president of the MTHA, said he's been receiving positive reports lately about the Laurel surface.

"From everything I'm hearing, the surfaces are good and things are going well," he said. "They've put several tons of different materials on it and you just can't snap your fingers and get a mile-and-an-eighth racetrack done. It's an enormous undertaking."

The problems at Laurel stemmed from a new cushion that was ill-equipped to handle all of the different weather conditions on a year-round basis in Maryland.

"(MJC acting president and general manager) Mike Rogers really got on top of those issues at Laurel, working with the experts. It was more a problem of working with the material that was delivered instead of what was ordered," Fravel said. "It shouldn't have been put in in the first place and it didn't adapt well to freezing conditions and moisture. So, we got what we needed in there and things have been going well since then. I think the guys have put in heroic efforts to get it right."

An added complication during the repairs was the need to keep Laurel open for training.

"We run 365 days a year so there's no down time," Keefe said. "And it's not like we have a big barn area at Pimlico. People just ship there and then go back to Laurel. It's hard to get serious maintenance done when the place never closes."

As the MJC tries to put the surface woes at Pimlico in the rearview mirror, both the immediate and long-term future appear bright. After two years marred by the pandemic, Pimlico will once again be bustling May 20 for Black-Eyed Susan Day and then jammed the following day for the Preakness. 

"We're very excited about this weekend," Fravel said. 

Down the road, instead of the ancient, crumbling Old Hilltop facility with its shuttered grandstand, there will be sparkling new facilities at Pimlico and Laurel, each with a sportsbook to provide alternative revenue.

The future is indeed bright. It's just a matter of when there will finally be some highly visible signs of it.