Suffolk Downs racetrack vows to stay for casino

Suffolk Downs, the struggling East Boston racetrack, has committed in writing to continue horse racing for at least 15 years if Mohegan Sun opens a casino on track property in Revere, but suggests that racing will end if the Greater Boston resort casino license goes to a rival applicant.

The track’s commitment, offered in a letter this week to the state gambling commission, is an attempt to address lingering concerns that the Mohegan Sun casino proposal at Suffolk Downs does not legally require racing to continue at the last thoroughbred track in New England, which lost an estimated $11.6 million on racing operations last year and about $47 million since 2007, according to figures in the letter.

“The revenue that we receive as a result of our lease with Mohegan Sun Massachusetts will allow us, in turn, to make the substantial investment required to fulfill our longstanding commitment and give racing its best chance to succeed in the Commonwealth,” the track’s chairman, William J. Mulrow, wrote in a Jan. 6 letter obtained by the Globe.

An earlier casino plan at the 163-acre racetrack property on the East Boston-Revere city line would have legally obligated Suffolk Downs to continue horse racing under a clause in the state casino law.

East Boston voters rejected the earlier casino proposal in a stunning vote in November, and Suffolk Downs quickly struck a deal to lease about 42 acres in Revere to Mohegan Sun for a gambling resort.

Under the new arrangement, Suffolk Downs would be the casino’s landlord, not the license holder, meaning the track would not be obligated to continue racing if a casino is developed on its property.

The preservation of racing and the jobs the industry provides have been major selling points in the track’s pursuit of a casino, and any doubts about the future of the 78-year-old racetrack could become a political liability. The Mohegan Sun project faces a life-or-death referendum in Revere next month.

Chip Tuttle, the track’s chief operating officer, said Suffolk Downs’ owners recognized that the lease deal with Mohegan Sun “raised some questions about the future of racing.”

“We wanted to unequivocally answer those questions and offer our commitment,” Tuttle said in an interview. Carl Jenkins, managing director at the financial firm Duff & Phelps who has studied the state’s gambling market, said the track’s commitment to racing carries less weight than a legal requirement, but should help in the referendum campaign.

“It would be well worth taking the continued loss [on racing] if they think it will help them get a casino on the property,” said Jenkins.

If Revere voters endorse the casino plan in February, Mohegan Sun will compete with a proposal by Wynn Resorts, planned for the Mystic River waterfront in Everett. The commission is expected to choose the winner in May.

Mulrow’s letter is clear about the consequences if Mohegan Sun fails to win: “We have said repeatedly over the last several years that the future of racing at Suffolk Downs is in doubt absent gaming development on the property.”

The letter lays out recent losses suffered by Suffolk Downs ownership, dating to 2007. In that year, the track’s revenue was $17.9 million and expenses were $21.6 million, a $3.7 million loss. Revenue declined steadily, and though the track has cut expenses, losses increased to $7.1 million in 2011 and $9.2 million in 2012, the document said.

The land Mohegan Sun intends to lease contains about 24 acres of horse barns, which would be relocated if Mohegan Sun wins the license.

In its letter to the commission, Suffolk Downs raises the possibility of relocating the horse stables to the East Boston side of the racetrack property, possibly within the existing grandstands. The track’s architects are reviewing ways to renovate the first floor and mezzanine within the grandstands to hold as many as 750 horses.

“This has several advantages,” says the track’s letter to the commission, “including utilizing the decommissioned portion of the existing building and minimal impact for our neighbors in East Boston.”

Remaking the grandstands into stables would take 12 to 15 months. The track is also investigating options to develop barns off the track’s property but “within a reasonable distance of Suffolk Downs.”

Suffolk Downs will hold races in 2014, regardless of the outcome of the battle for the casino license, Tuttle said.