O'Malley, eminent domain could make Preakness go way of the Colts: Out of Maryland

April 9, 4:36 PMBaltimore History ExaminerMark Newgent

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The Preakness could go the way of the Baltimore Colts. That is out of Maryland. The Baltimore Sun is reporting that Governor Martin O’Malley has introduced legislation to allow the state to use its power of eminent domain to keep the Preakness Stakes, the second jewel of the Triple Crown in the state.

Magna Entertainment the owner of the Preakness and its home track Pimlico, is currently in federal bankruptcy. Legal issues and a lot of politics remain to be worked out, specifically the General Assembly Session ends next week, and a federal judge must rule on whether the state can legally do what O’Malley wants to do.

Both O’Malley and the Baltimore Sun’s editorial board have invoked the stinging memory of losing the Baltimore Colts to Indianapolis as justification for using eminent domain to keep the Preakness in Maryland.

The Sun editorial opined:

The state's investment in the Preakness and the economic windfall it brings are reasons enough for the General Assembly to approve this legislation. The state learned a harsh lesson in 1984 when it acted a day late to stop the Baltimore Colts from leaving. The city exercised its eminent domain authority to reclaim the sports franchise, but a federal judge rejected it because it was filed a day after the team relocated to Indianapolis.

But that amounts to reading the wrong book backwards. Last summer I wrote about how Baltimore City and the General Assembly—and their threatened use of eminent domain—in fact, played a large role in the flight of the Baltimore Colts. Again it is worth citing at length from Stephen Walters and Louis Miserendino’s report, Baltimore’s Flawed Renaissance: The Failure of Plan-Control-Subsidize Redevelopment, regarding the state’s role in the loss of the Colts.

…But Irsay did not feel triumphant. The problem was that while some Baltimore pols were offering him gifts, others were threatening to take the Colts away from him. On March 26, 1984 (the day after Mayor Schaefer pitched the city's improved offer to Irsay), two bills were introduced for study in the Maryland legislature. One called for the state to buy the team and sell it to local investors for $40 million—about $83 million in today’s dollars, or less than a tenth of the franchise’s current estimated value. The other authorized the state to use eminent domain proceedings to condemn the team and operate it “in the public interest.” Such proposals would have made any property owner nervous, but they should not have been a surprise. Over the previous couple of decades, Baltimore’s habit of taking private property—often on the cheap—had taken firm root. Invoking a public interest in seizing a football team (which, after three consecutive last place finishes, was clearly a “blighted” property!) struck few leaders or pundits as outrageous or even an unusual exercise of government power. On March 27, Maryland’s Senate passed the second bill. It was like a gun to Irsay’s head.

The Colts were unlike previous targets of eminent domain seizures, however. Owners of bricks-and-mortar properties could only complain and litigate when confronted with condemnation threats; the Colts could get their assets out of town. And so they did. The very next day after the Senate voted, on the evening of March 28—Irsay had worried that if the move began during business hours officials would hurriedly finalize the legislation and obtain a court order to padlock the team’s rented offices—moving vans arrived and staffers packed up contracts, medical files, uniforms and other equipment. Under cover of darkness and with snowflakes swirling among a few somber onlookers, 22 vans rumbled away from the Colts’ rented facilities; by dawn, everything associated with the team was well down the highway to Indianapolis.

Baltimore hurriedly played its eminent domain trump card, but it was too late. On March 29, Maryland’s House of Delegates passed and Governor Harry Hughes signed the pending seizure legislation and city officials wired a $40 million purchase “offer” to Irsay. On March 30, the city filed a formal condemnation suit. A year and a half and $500,000 in legal fees later, U.S. District Court Judge Walter E. Black, Jr. ruled that the Colts had moved beyond Baltimore’s legal reach by the time the city had formally begun its seizure proceedings. Ever since, the Irsay name has been an expletive among Baltimore football fans. A local treasure had been stolen under cover of darkness, and anger was directed almost entirely at the thief. Little thought was given—then or now— to the repulsive power of eminent domain and other threats to the security of private property rights in the city. In the view of most policy- and opinion-makers, the episode was a tragic anomaly. Because the targets of such seizures are almost always immobile, their assets can be taken without much controversy and converted to “better” uses—case closed.

To be sure Magna’s bankruptcy status does not make it an exactly similar case to the Colts. And as the Sun’s Andy Green noted the Preakness may not be in danger as there are several interested parties, including Orioles owner Peter Angelos, Pikesville-based America’s Realty, David Cordish, and tech guru Halsey Minor. However, Green leaves out the real danger of eminent domain. Should Magna sell off its assets, be it Pimlico, Laurel Park, or The Preakness, O’Malley’s eminent domain saber rattling has to be disconcerting to any of those interested parties. What’s to stop the state from using the maneuver to take the Preakness away from them once they purchased it from Magna?

O’Malley and the General Assembly already botched slots. They claimed their “plan” would save Maryland’s thoroughbred industry and the Preakness. Only their scheme fell woefully short of their rosy predictions.

Given their failure with slots, and the unheeded lesson of the winter of 1984, Governor O’Malley and the legislature’s threat of eminent domain could lead to the loss of the very thing they seek to keep.  Its a short trip from strong arms to ham fists.