Baltimore suing Stronach Group over potential relocation of Preakness Stakes

[Al Gobbi]

Baltimore Mayor Catherine Pugh sued the owners of Pimlico Race Course in hopes of blocking them from moving the Preakness Stakesor using state bonds to fund improvements at Laurel Park.

In a lawsuit filed Tuesday in Baltimore Circuit Court, Pugh, on behalf of the city, also asks the court to grant ownership of the racetrack and the race to the city through condemnation.

https://www.baltimoresun.com/news/maryland/politics/bs-md-city-pimlico-lawsuit-20190319-story.html

[jocko699]

https://www.baltimoresun.com/news/maryland/politics/bs-md-city-pimlico-lawsuit-20190319-story.html

It could get very interesting.

[Suff]

What they want done at Pimlico I could do at Laurel for a $100 million , rather than $400 million it would cost to renovate pimlico

[GMB@BP]

https://www.baltimoresun.com/news/maryland/politics/bs-md-city-pimlico-lawsuit-20190319-story.html

Condemnation to take a race track....this ought to be entertaining. That would take 20 years to get through the courts.

[davew]

Condemnation to take a race track....this ought to be entertaining. That would take 20 years to get through the courts.

and watching the city of Baltimore owning and operating a race track also could be entertaining.

[jahura2]

and watching the city of Baltimore owning and operating a race track also could be entertaining.

If this ever came to fruition I would be shocked if the city went in to the racetrack business. I would suspect they might just sell the land off to the highest bidder.
I truly hope this never becomes a possibility.

[rastajenk]

Especially a city as dysfunctional as Baltimore. One bad stewards' decision, and....:eek:

[dilanesp]

It could get very interesting.

No it won't. This suit is a loser. They just want some leverage.

EDIT:To explain this more, Baltimore can sieze Pimlico, but they can't seize the Preakness. The Preakness is a trademark. The owner of the trademark can stage a race at 1 3/16th miles anywhere it wishes to in compliance with its contracts with Churchill, NYRA, and NBC. That race will be the Preakness.

Baltimore, if it succeeds, will end up with a racetrack, but will not end up with the contractual right to run a TC race.

[AlsoEligible]

No it won't. This suit is a loser. They just want some leverage.

EDIT:To explain this more, Baltimore can sieze Pimlico, but they can't seize the Preakness. The Preakness is a trademark. The owner of the trademark can stage a race at 1 3/16th miles anywhere it wishes to in compliance with its contracts with Churchill, NYRA, and NBC. That race will be the Preakness.

Baltimore, if it succeeds, will end up with a racetrack, but will not end up with the contractual right to run a TC race.

State law mandates that the Preakness has to be run at Pimlico, with the exception of a "disaster or emergency" that forces it to be run elsewhere. This was always going to be a sticking point with moving the race to Laurel. I think TSG was hoping that the legislature would work with them and just change that law, but that seems to be out the window now.

So if the city won control of the track, for all intents and purposes they would also own the Preakness, because TSG by law couldn't run that race (at least under that name) at Laurel.

But none of that would stop TSG from just setting up a new race in mid-May at Laurel called "The Frankness", and the rest of the industry agreeing that "yeah this is the second leg of the TC now".

[dilanesp]

State law mandates that the Preakness has to be run at Pimlico, with the exception of a "disaster or emergency" that forces it to be run elsewhere. This was always going to be a sticking point with moving the race to Laurel. I think TSG was hoping that the legislature would work with them and just change that law, but that seems to be out the window now.

So if the city won control of the track, for all intents and purposes they would also own the Preakness, because TSG by law couldn't run that race (at least under that name) at Laurel.

But none of that would stop TSG from just setting up a new race in mid-May at Laurel called "The Frankness", and the rest of the industry agreeing that "yeah this is the second leg of the TC now".

That "state law" is preempted by federal trademark law, which permits a trademark owner to use the mark in commerce anywhere in the geographic region of exclusive use. It also possibly violates the takings clause as well.

Indeed, if that law WERE enforceable, Baltimore wouldn't be trying to seize the track. They would just seek an injunction.

And it isn't the industry that matters here. It's the contracts with the other TC tracks and NBC. They define the TC. And the City of Baltimore cannot make itself a party to those agreements, and they can't seize the Preakness trademark either.

[mike_123_ca]

But none of that would stop TSG from just setting up a new race in mid-May at Laurel called "The Frankness", and the rest of the industry agreeing that "yeah this is the second leg of the TC now".

I love the name "The Frankness" but "The Freakness" may be more appropriate. :D

[dilanesp]

I love the name "The Frankness" but "The Freakness" may be more appropriate. :D

It will be the Preakness, and I am actually rooting for Stronach to just go ahead and move it. I have a particular distaste for grandstanding local politicians. They are misleading their constituents about this issue and deserve to get egg on their face.

[Robert Fischer]

Don't know the details, or the behind-the-scenes workings here.

If I wanted to make an uneducated guess - This is negotiation tactics, and the Preakness will move to Laurel 2022.

[jay68802]

State law mandates that the Preakness has to be run at Pimlico, with the exception of a "disaster or emergency" that forces it to be run elsewhere. This was always going to be a sticking point with moving the race to Laurel. I think TSG was hoping that the legislature would work with them and just change that law, but that seems to be out the window now.

So if the city won control of the track, for all intents and purposes they would also own the Preakness, because TSG by law couldn't run that race (at least under that name) at Laurel.

But none of that would stop TSG from just setting up a new race in mid-May at Laurel called "The Frankness", and the rest of the industry agreeing that "yeah this is the second leg of the TC now".

The track is already a disaster, so they are half way there.

[Saratoga_Mike]

That "state law" is preempted by federal trademark law, which permits a trademark owner to use the mark in commerce anywhere in the geographic region of exclusive use. It also possibly violates the takings clause as well.



The law was passed in 1987. I believe the bill was part of a package that expanded Maryland racing to include Sundays. Sunday racing was the consideration, so no takings?

[dilanesp]

The law was passed in 1987. I believe the bill was part of a package that expanded Maryland racing to include Sundays. Sunday racing was the consideration, so no takings?

Possibly. As I said, takings is the weaker of the two arguments. (Having said that, this wasn't a contract between Pimlico and the City of Baltimore. It's an ordinance. Absent an agreement between the track and the city, the track doesn't face a legal impediment to arguing the Sunday racing provision was legal and the prohibition on moving the Preakness isn't.)

The federal preemption argument is EXTREMELY strong. States simply do not have the power to tell businesses that they cannot use their federally recognized trademarks. For instance, the State of Georgia or City of Atlanta can't tell Coca-Cola that they can't sell their soft drinks in Los Angeles.

And Baltimore knows this. Otherwise, they would just seek to enforce their city law.

[Saratoga_Mike]

The federal preemption argument is EXTREMELY strong. States simply do not have the power to tell businesses that they cannot use their federally recognized trademarks. For instance, the State of Georgia or City of Atlanta can't tell Coca-Cola that they can't sell their soft drinks in Los Angeles.

And Baltimore knows this. Otherwise, they would just seek to enforce their city law.

I understand your point (it's interesting), but let's assume Georgia provided Coca-Cola with a $3 billion incentive package to build a new plant in 1987. As part of that deal, Coca-Cola agreed not to sell under their brand into Cali? Isn't that the legal parallel?

[dilanesp]

I understand your point (it's interesting), but let's assume Georgia provided Coca-Cola with a $3 billion incentive package to build a new plant in 1987. As part of that deal, Coca-Cola agreed not to sell under their brand into Cali? Isn't that the legal parallel?

Only if there is a signed agreement from Coca-Cola specifically limiting the right to exploit its trademark. Such an agreement would be enforceable but the statute wouldn't be.

And note, Baltimore is not alleging breach of contract here.

[Saratoga_Mike]

Only if there is a signed agreement from Coca-Cola specifically limiting the right to exploit its trademark. Such an agreement would be enforceable but the statute wouldn't be.

And note, Baltimore is not alleging breach of contract here.

Putting the legal issues aside, the race should be moved to LRL. Putting $400 mm into PIM would be as productive as burning the money.

[dilanesp]

Putting the legal issues aside, the race should be moved to LRL. Putting $400 mm into PIM would be as productive as burning the money.

Absolutely. The economics of a renovation of Pimlico do not make sense, because the track only gets the huge crowds for two days a year. (On the other hand, I guess you can say that NFL teams get publicly financed palatial stadiums for 10 games a year, and LA built a theater for the Academy Awards, which is one night a year. Still, those are bad uses of public money too.)

So in the end, Baltimore has got to decide if they want to support the race going to Laurel, which at least allows the City to still claim some of the benefits of the race (the same way that NFL games in East Rutherford, NJ help New York City), or whether they fight Stronach, which effectively puts the issue in Stronach's hands. The latter is very dangerous because Stronach owns other tracks, including tracks in California, Texas, and Florida that could theoretically host the Preakness. He also could make bank by licensing the Preakness to someone else's track to put on (there would be several bidders I am sure).

[ubercapper]

That "state law" is preempted by federal trademark law, which permits a trademark owner to use the mark in commerce anywhere in the geographic region of exclusive use. It also possibly violates the takings clause as well.

Indeed, if that law WERE enforceable, Baltimore wouldn't be trying to seize the track. They would just seek an injunction.

And it isn't the industry that matters here. It's the contracts with the other TC tracks and NBC. They define the TC. And the City of Baltimore cannot make itself a party to those agreements, and they can't seize the Preakness trademark either.


I read a really interesting article on this issue yesterday but it was more about use of Eminent Domain:


http://www.ownerscounsel.com/marylands-governor-signed-emergency-eminent-domain-legislation/


It states the law may be constitutionally flawed. I also don't think the law was ever tested in court. It would seem this suit by Baltimore may result in the law being tested.

[Thomas Roulston]

With the Preakness at Laurel, its distance could be lengthened to 1 3/8 miles - creating a logical progression between the 1 1/4 miles of the Derby and the 1 1/2 miles of the Belmont (the second finish line would be used).

[AlsoEligible]

Absolutely. The economics of a renovation of Pimlico do not make sense, because the track only gets the huge crowds for two days a year. (On the other hand, I guess you can say that NFL teams get publicly financed palatial stadiums for 10 games a year, and LA built a theater for the Academy Awards, which is one night a year. Still, those are bad uses of public money too.)

To be fair, NFL stadiums get used throughout the off-season for concerts, festivals, job fairs, other sports (World Cup 2026 will utilize 16 different stadiums around the country). So there's a lot of ways for those cities to recoup their investment besides football.

To your point, Pimlico doesn't do any of that. There's Preakness weekend, and that's it. There used to be an annual concert festival in the infield (usually in Sep/Oct), but that stopped a few years ago. Truth is, no one wants to be caught dead in that part of town unless there's 100,000 people and a heavy police presence with them. Spending $400m to polish a turd that will still only see a big crowd two days a year is a ridiculous waste of money.

[dilanesp]

To be fair, NFL stadiums get used throughout the off-season for concerts, festivals, job fairs, other sports (World Cup 2026 will utilize 16 different stadiums around the country). So there's a lot of ways for those cities to recoup their investment besides football.

To your point, Pimlico doesn't do any of that. There's Preakness weekend, and that's it. There used to be an annual concert festival in the infield (usually in Sep/Oct), but that stopped a few years ago. Truth is, no one wants to be caught dead in that part of town unless there's 100,000 people and a heavy police presence with them. Spending $400m to polish a turd that will still only see a big crowd two days a year is a ridiculous waste of money.

In theory your point about football stadiums is true, but in practice most of them sit empty for most of the year or just host one or two concerts.

But you are completely right that Pimlico gets little non-horse racing use.

[Saratoga_Mike]

This is a great article on Baltimore's attempt to use eminent domain to keep the Preak in Baltimore. I'm not even sure Justice Souder would have sided with Baltimore, but maybe.

https://reason.com/volokh/2019/03/26/baltimore-tries-to-use-eminent-domain-to

[rastajenk]

That was an interesting read. :ThmbUp: The idea of "condemning" something in order to appropriate (steal) its value is a twisty line of logic that us non-legal mortals would never suggest as good policy. I didn't realize the Raiders went through similar battles. And that is just one of several legal issues the city would have to overcome.

[devilsbag]

Please correct me if I'm wrong. Have I missed something and is the case being brought in such a way so it's all (the track and the race) or nothing?

Otherwise, it seems there is some chance Baltimore could win half of the case and own Pimlico, but lose regarding intellectual property (the Preakness itself). For Stronach, wouldn't that outcome and "fair market value" from the city arguably be a win?

Stronach then unloads Pimlico and can concentrate on Laurel once and for all. Even if the city low balls the offer, on the open market, how much is Pimlico worth?

In the very unlikely scenario that Baltimore did become owner of the Preakness, my gut feeling is that racing fans (especially those who have visited Pimlico) would accept a Preakness substitute at Laurel. A drawn out court case may even generate more sympathy than if they simply planned the move.

If state law were enforced and Maryland really wanted to spite themselves, I think moving the race to Gulfstream is not a far fetched idea. Monmouth would be a popular choice, but I don't know why Stronach wouldn't keep it at one of their facilities. Also, NJ is so close to NY that you would be attracting a lot of the same attendees.

Neither facility is designed to handle 150,000 people, but I think that Stronach might figure out some sort of option for Gulfstream in the near future to accommodate that one day if the Preakness was going to be permanent fixture. Simultaneously, some kind of expansion may get them back in the running for a Breeders' Cup in the event that things don't go well at Santa Anita.

[Fager Fan]

The idea of stealing someone's property through eminent domain has always been a sore spot with me. So you can guess whose side I'm on regarding this.

[dilanesp]

Please correct me if I'm wrong. Have I missed something and is the case being brought in such a way so it's all (the track and the race) or nothing?

Otherwise, it seems there is some chance Baltimore could win half of the case and own Pimlico, but lose regarding intellectual property (the Preakness itself). For Stronach, wouldn't that outcome and "fair market value" from the city arguably be a win?

Stronach then unloads Pimlico and can concentrate on Laurel once and for all. Even if the city low balls the offer, on the open market, how much is Pimlico worth?

In the very unlikely scenario that Baltimore did become owner of the Preakness, my gut feeling is that racing fans (especially those who have visited Pimlico) would accept a Preakness substitute at Laurel. A drawn out court case may even generate more sympathy than if they simply planned the move.

If state law were enforced and Maryland really wanted to spite themselves, I think moving the race to Gulfstream is not a far fetched idea. Monmouth would be a popular choice, but I don't know why Stronach wouldn't keep it at one of their facilities. Also, NJ is so close to NY that you would be attracting a lot of the same attendees.

Neither facility is designed to handle 150,000 people, but I think that Stronach might figure out some sort of option for Gulfstream in the near future to accommodate that one day if the Preakness was going to be permanent fixture. Simultaneously, some kind of expansion may get them back in the running for a Breeders' Cup in the event that things don't go well at Santa Anita.

Whatever the TC people and NBC call the second leg of the TC will be the race. It doesn't matter if the name changes.

[Saratoga_Mike]

The idea of stealing someone's property through eminent domain has always been a sore spot with me. So you can guess whose side I'm on regarding this.

It is outrageous.

Edit to my earlier post: Souter (just noticed I misspelled).