Propping up the ponies at Pimlico is a bad bet
A decade ago, President Barack Obama revealed one of the chief tenets of his foreign policy: “Don’t do stupid stuff.” He really didn’t say “stuff,” but he was spot on. Obviously, stupidity has limited appeal (the ratings of some TV reality shows notwithstanding).
The hard part is seeing which actions are stupid before we engage in them. Is there a human alive who hasn’t muttered “it seemed like a good idea at the time” while dealing with heaps of regret? Sometimes the culprit is “mission creep.” The phrase comes from the military, where students of strategy warn that initial success often tempts leaders to expand the scope of an operation beyond a force’s capabilities, sometimes leading to mission failure (occasionally with terrible consequences).
We see this regularly in the policy sphere, too — and we may see it again soon. Though Gov. Wes Moore has warned about multi-billion dollar structural deficits for months now, and state government revenue forecasts are revised downward on the regular, many legislators seem not only eager to shovel $400 million at a dying industry — the ponies! — but also to enter that industry just in time for its slide into oblivion. This is mission creep on steroids.
The “success element” in this case is the Maryland Stadium Authority, created back in 1986 to snag an NFL team and build a new park for the Orioles. Though reasonable people will differ about whether outsized taxpayer subsidies for sports palaces are justified, the general consensus is that the MSA accomplished both its key missions. So it was given more to do — though even some legislators have long wondered why.
Now the MSA may be authorized to oversee the next step in the state’s long-running bailout of the moribund horse-racing industry in Maryland. The selling point is that “we need to save the Preakness!” The cost of preserving that single profitable day of horse racing in Maryland will not only be the aforementioned hundreds of millions to rebuild the dilapidated Pimlico facility. The current owner of that facility will “donate” that crumbling ruin to the state, which will create a “nonprofit” (you can say that again) to operate the rebuilt track — and which will pay the “donor” Stronach Group for the right to run the Preakness Stakes so Marylanders can enjoy that one-day party at Old Hilltop.
When the insiders operating a business are not only eager to run away from it but to hand you the keys to the building on their way out, that’s a good sign you’re doomed. Stronach loses about $10 million annually on its Maryland tracks — even after the generous subsidies they’re pocketing from their cut of casino revenues.
Such consistent and sizeable losses are nature’s way of telling you that people value what you’re selling far less than it costs to produce — so it’s time to re-deploy your assets in something people value more. And it’s going to get worse. More than 40 U.S. tracks have closed since 2000; less than half as many races are run today as in the ’90s. Many young people refuse to watch a sport they consider cruel.
But the red ink this business will generate is just the visible part of the problem. The invisible part is the opportunity cost of the investment. Capital is scarce and valuable. Gov. Moore is taking heat because of a planned $3.3 billion cut in transportation spending over the next six years. Baltimoreans fantasize over a revival of the Red Line (despite the fact that the Purple Line is five years overdue and $4.1 billion over budget. The city’s mayor has hand-picked a developer for a controversial Harborplace renewal plan that also might require $400 million in taxpayer money.
And there are, of course, many more and better uses for $400 million than a nicer place to bet on the ponies. When state and local governments get involved in horse racing or hotels or property management, they’re straying from their core missions. Most of us would say that Job No. 1 for them is to police our neighborhoods and assure our safety and Job No. 2 is to provide an education system that will allow our children to flourish.
So, here’s a suggestion for Maryland’s political leaders: Get back to those basics and do them better before you allocate your time, energy, and our money to — well, President Obama had the best description.