Rosecroft Raceway's owner files for bankruptcy in Md.

Daily Record, The (Baltimore), Jun 4, 2009 by Ben Mook

In yet another blow to the state's horse racing industry, the parent company of Rosecroft Raceway filed for bankruptcy Wednesday, a move the struggling company has been planning to take since the end of April.

Cloverleaf Enterprises Inc., of Fort Washington, filed for Chapter 11 reorganization in the U.S. Bankruptcy Court for the District of Maryland. The company did not give a reason for the filing, and calls to Cloverleaf were not returned late Wednesday.

Magna Entertainment Corp., owner of Pimlico Race Course, Laurel Park and the rights to the Preakness Stakes, filed for Chapter 11 bankruptcy in March.

The Maryland Jockey Club of Baltimore City is listed in the bankruptcy filing as being the largest unsecured creditor. Cloverleaf said it is disputing the $1.24 million it owes under a 2006 memorandum of understanding.

The bankruptcy petition did not give specific asset and debt figures. Cloverleaf gave an assets estimate of between $10 million and $50 million, compared to debts ranging between $1 million and $10 million. In the court filing, the Cloverleaf stockholders authorized the bankruptcy in an April 27 vote.

However, in a filing with the IRS, Cloverleaf reported income of $16.06 million and assets of $10.06 million for the tax year ending Oct. 31, 2008.

The company had an issue this year regarding its right to simulcast the Kentucky Derby. The Maryland Racing Commission had voted to shut off Rosecroft's signal after it refused to pay a $5.9 million fee this year for the right to carry the thoroughbred racing signal. Since last year, Rosecroft has been unable to afford live harness racing, and the simulcast wagering is its only source of betting income.

In 2006, Rosecroft and the thoroughbred industry (the Maryland Jockey Club, the Maryland Horse Breeders Association and the Maryland Thoroughbred Horsemen's Association) struck a 15-year deal that required Rosecroft pay $5.6 million annually for the right to simulcast and take bets on thoroughbred racing.

The deal was approximately $2 million less than the previous agreement, according to the horsemen's association's general counsel.

Kelley Rogers, president of Cloverleaf Enterprises, has said Rosecroft could no longer afford that deal. When the agreement was made and approved by the commission, Rosecroft's handle was $110 million, with the raceway making an $18.7 million profit, he said.

Rosecroft is projected to make an $11.7 million profit from a $69 million handle in 2009, meaning it would have to hand over nearly half that profit to the thoroughbred industry.