They Bet On One Horse To Win And I Bet On Another To Blow

Jeff Winkler | April 17, 2009

Save the auto industry! Save the banks! Save the...horse track?

On Tuesday, Maryland governor Martin O'Malley signed legislation that gave the state eminent domain over the Preakness Stakes horse race franchise, "hours after the fast-tracked bill passed in the General Assembly."

From H.L. Mencken's old writing pad:

Lawmakers, some of whom donned "Save the Preakness" badges on the session's last day, quickly rallied around the bill that authorizes the state to acquire racing assets of bankrupt Magna Entertainment Corp., including Laurel Park, Pimlico Race Course and rights associated with the second leg of the Triple Crown and its trophy, the Woodlawn Vase.  

Maryland legislators, facing huge short falls in the state's budget, apparently agreed that "it's better to have the power and not need it than to need it and not have it." The Baltimore Sun also came out in support of the bill, citing the oh-so-terrible loss of the Colts franchise in 1984. Maryland tried to pull the eminent domain card to keep the football team from rushing to Indianapolis but–alas–was a day behind with its intervention.

The new legislation shouldn't really be a big surprise, though. Discussing other stud-filled venues –sports stadiums–Reason Contributor Daniel McGraw reported in 2005:

[T]he use of eminent domain has mushroomed. The Institute for Justice, the nonprofit law firm that is arguing the [Kelo v. City of New London] case before the Supreme Court, has documented more than 10,000 cases between 1998 and 2002 in which local governments have transferred or threatened to transfer property from one private party to another. Blight is no longer the issue; the question now is simply whether the deal helps the local economy in some way.

...During the last 15 years, economists such as Stanford's Roger Noll, Smith College's Andrew Zimbalist, and Cleveland State University's Mark Rosentraub repeatedly have shot down the claim that new stadiums benefit local economies. "There is no dispute in the economic community about who gets the primary benefit from the subsidy," says Raymond J. Keating, chief economist for the Washington-based Small Business & Entrepreneurship Council and an expert on sports facility financing.

In case you were curious:

In Kelo v. City of New London (2005), the U.S. Supreme Court allowed the government to condemn property and transfer it to other private owners in the name of "economic development." Upholding the forced transfer of land in New London, Connecticut, to private developers, the Court ruled that virtually any potential public benefit satisfies the Fifth Amendment's requirement that the authorities can take property only for a "public use."

Superfluous Mencken quote:

In the United States, doing good has come to be, like patriotism, a favorite device of persons with something to sell.

...It's also a favorite device of states with poor purchasing histories and a penchant for power grabs.

More Reason coverage of Kelo case here. Jack Shafer on Mencken here. Senior Editor Brian Doherty on what Mencken believed.  

High Five: Open Market

Comments

Xeones|4.17.09 @ 12:07PM|#

If Mencken were alive today, he'd kill himself.

|4.17.09 @ 12:28PM|#

Magna's creditors will *love* that. Wonder what % of their assets Pimlico constitutes and what they're going to offer the creditors.

Hopefully the bankruptcy judge will nail them to a cross on the asset valuation.

|4.17.09 @ 12:34PM|#

There's no such thing as a superfluous Mencken quite.

Lester Hunt|4.17.09 @ 12:35PM|#

If Henry were alive today, he'd laugh himself to death.

|4.17.09 @ 12:37PM|#

Let me guess: the Maryland State Legislature think they (unlike the previous management and owners) can run those tracks profitably?

|4.17.09 @ 12:38PM|#

-or "quote", for that matter

|4.17.09 @ 12:39PM|#

I heard that Robbie wrote "Up on Cripple Creek" with Mencken in mind. Just substitute "H.L." for Bessie." Seriously. It'll blow your mind.

~Baubles

|4.17.09 @ 12:49PM|#

Let me guess: the Maryland State Legislature think they (unlike the previous management and owners) can run those tracks profitably?

Nope. They think, rightly, that their threat of ED abuse will just screw over Magna to the point where they can't sell.

Note: House speaker Mike Busch in 2003: "If the Preakness wasn't here, would anybody care?' he asked. Then he answered, 'I think the amount of people who care is next to none. The age of the player who bets on horse racing is deceased.'"

Busch in 2009:
"We just want to see the Preakness stay in Maryland. That's something the assembly agrees with," he said."

Yes, he is a loathsome piece of shit, along with the rest of the assembly.

JP|4.17.09 @ 1:23PM|#

I'm having trouble sussing out the state's strategy here. Is there any real doubt that whoever acquires Pimlico will continue to run the Preakness there? It sounds like all the bidders are entertainment companies. It's not as if the Preakness would be worth more if it were run outside Maryland.

Does the state really want to own the track? Maybe they think this eminent-domain move will chill the bidding enough that they can get it really cheap and then get a positive return from running it?

Or is this a personal thing against Magna? Or "we love Maryland" grandstanding?

|4.17.09 @ 1:31PM|#

Since moving to Maryland, I've been impressed by the legislature's stupidity and bold-faced corruption. Here we have a case of these scum using legalized theft to steal a failed business.

If they are lucky, some of the legislative leadership will be bribed by the mob to launder money through track's books. Someone has to figure out how to make a profit.

|4.17.09 @ 1:32PM|#

The Baltimore Sun also came out in support of the bill, citing the oh-so-terrible loss of the Colts franchise in 1984. Maryland tried to pull the eminent domain card to keep the football team from rushing to Indianapolis but-alas-was a day behind with its intervention.

Most histories of the move note that this is an ass-backwards way of putting it. Irsay was negotiating with the city of Baltimore about keeping the Colts (though certainly there were no guarantees) there when Maryland passed the law. He moved the Colts suddenly that night by moving van the day that the Maryland Senate passed the law. (But before it was passed by the House and signed.)

It was "too late by a day" precisely because he moved them as soon as the bill looked like it would pass and Maryland would seize his property.

Perhaps the Colts would've moved anyway. But the eminent domain bill certainly hastened the decision.

|4.17.09 @ 1:44PM|#

So that's what they mean by ridin bareback.

|4.17.09 @ 1:59PM|#

Interesting, John. Makes Irsay kind a John Galt hero, in my book.

Paul|4.17.09 @ 2:15PM|#

Let me guess: the Maryland State Legislature think they (unlike the previous management and owners) can run those tracks profitably?

The government has a great record running "tracks". Take Amtrak, for instance...

ChrisO|4.17.09 @ 2:19PM|#

Pimlico has been losing money for years, long before Magna bought it, as I understand it. It's a dump that needs a total renovation but doesn't generate the cash flow to make that happen.

Magna operates tracks in a number of states, and they originally came in as something of a white knight when the previous owner crapped out.

Apart from the extremely bad policy the Md. government is engaging in, they obviously have no business sense. Not surprising in a state where the largest city is a cesspool and the largest county is an upscale Washington suburb that never met a dollar it couldn't spend.

Kolohe|4.17.09 @ 3:00PM|#

This doesn't strike me much like the Kelo situation. This does strike me as a similar situation in Hawaii where the North Shore Turtle Bay resort went bankrupt and the State wound up buying it up.

It makes somewhat more sense than the Pilimco though. The state's going to resell a portion of the land back to a resort operator for a smaller resort and will keep the rest as conservation (i.e. undeveloped) land.

|4.17.09 @ 3:23PM|#

Bear Jockeys!

We Need them Now!

WE can do this!

|4.17.09 @ 3:42PM|#

Maryland doesn't want to go through what Michigan did. We were *gasp* without thoroughbred racing for a while. The ripple effects of that shutdown on the "industry" are still being felt. The loss of the vital horse racing industry really is what drove unemployment so high.
_________________________________________________________

A bunch of wealthy folks wish to have their hobby subsidized as it's no longer as profitable as it once was. Fuck them.

|4.17.09 @ 3:42PM|#

Screwed up the tags.

Oh well.

|4.17.09 @ 3:50PM|#

If we can Sugarfree our links, can we J sub our tags?

|4.17.09 @ 4:49PM|#

I can understand the rationale for eminent domain when it comes to real estate. Sometimes there's just no substitute for a particular piece of land that's needed for a legitimate public use.

But taking other sorts of property, like a football team? I don't see how you justify that.

Statist Shill|4.17.09 @ 5:11PM|#

"But taking other sorts of property, like a football team? I don't see how you justify that."
The democratically-elected representatives of TEH PEOPLE can do no wrong. Just ask them.

|4.17.09 @ 5:29PM|#

But taking other sorts of property, like a football team? I don't see how you justify that.

I love how the average sports fan will bitch about how much athletes make and then support building a new stadium with taxpayer money. Americans are a very stupid people.

economist|4.17.09 @ 5:54PM|#

J sub D,
Collectivism again. I'm an American, and I'm not stupid. At least not when I'm sober. Then I'm a genious.

ceconomistss|4.17.09 @ 5:54PM|#

YessI'm drunk. Blame it on the damn Godwiners.

|4.17.09 @ 6:08PM|#

Then I'm a genious.

Ah, yes. A very rare example of the double reverse joe'z Memorial Law/RC'z Law. Bravo, sir!

economist|4.17.09 @ 6:16PM|#

R.C.,
I'm afraid I am not terribly with RC's law. And how was it double-reverse?

|4.18.09 @ 3:55PM|#

J sub D,
Collectivism again. I'm an American, and I'm not stupid. At least not when I'm sober. Then I'm a genious.

A general statement that is true in the aggregate does not infer that all memebers of a group possess the trait.

Women are short people.
Sailors are thieving bastards who would fuck barnyard fowl is presented the opportunity.
Americans are a stupid people.

All true statements that exceptions be found for. 'Cept maybe the middle one.

economist|4.18.09 @ 8:52PM|#

J sub D,
I can't really disagree with you on the middle one either.

|4.20.09 @ 12:11AM|#

Mencken might be more disposed to point out the benefits of Maryland adopting a merger strategy in immanent domain, to add value by pairing copyright seizures with horse races .


Who'll give me odds on the Maryland Hunt For Red October Cup?