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                                       The Houston Chronicle

                    May  12, 1993, Wednesday, 2 STAR Edition

SECTION: A; Pg. 1

LENGTH: 714 words

HEADLINE: Firm makes a heavy bet on racetrack

BYLINE: JULIE MASON; Staff

KEYWORD: Horse Racing Houston

 BODY:    Major horse racing appears back on track for Houston through a 
deal engineered by Maxxam Inc. to finance construction and operation of 
the troubled Sam Houston Race Park.

   Former Gov. John Connally, a  director  of the Houston-based 
conglomerate, said  Maxxam  plans to arrange for $ 75 million in

private financing to build the racetrack.

   ""I've agreed to head up the group that has made arrangements to 
become the general partner,'' Connally said Tuesday.  ""In short terms, 
we bought the John McMullen interest. ''

   McMullen, former owner of the Astros and head of the now-defunct 
Houston Sports Association, is selling his racetrack interest for an 
undisclosed sum to Maxxam, giving it the largest single block of 
partnership interest.

   Maxxam's chairman is financier Charles Hurwitz, who unsuccessfully bid 
earlier this year to buy Continental Airlines.

   The arrangement is a reprieve for the proposed track, which has 
foundered through more than one unsuccessful financing plan since the Sam 
Houston partners obtained their Class I license from the Texas Racing 
Commission in 1991.

   Connally, making the announcement in Mayor Bob Lanier's proclamation 
room, said he anticipates that construction of the track will begin ""in 
a few months'' and be completed in one year.

   Details were not immediately disclosed, but the financing plan must be 
approved by the racing commission.  Commissioner Pat Pangburn said she 
anticipates no trouble in approving it.

   ""This kind of development is what we have all seen and envisioned 
with racing in Texas, and I think 1993 is going to make a big impact on 
racing in this state,'' she said.

   The commission already has issued licenses for Class I tracks in San 
Antonio and the Dallas-Fort Worth area, in addition

                                                                       
PAGE   71                       The Houston Chronicle, May 12, 1993                       


to smaller tracks throughout the state.

   Physical plans for the local track are identical to those submitted to 
the commission by the original Sam Houston partnership group.  The 
facility is planned for 220 acres next to the Sam Houston Tollway between 
Gessner and Fairbanks-North Houston.

   The 190,000-square-foot, fully enclosed, air-conditioned grandstand 
would hold 13,000 patrons on three levels and include an 800-seat dining 
area, jockey club and sky boxes.

   The partnership includes more than 30 individuals and groups.  
Excluding the exchange between McMullen and Maxxam, the original 
consortium remains unchanged.

   Lanier, who counts Hurwitz among his major campaign contributors, 
praised the deal that could make first-class horse racing a reality in 
Houston.

   ""It will be the first Class I racing track in the state,'' Lanier 
said.  ""We expect it will have some 660 permanent jobs, some 700 
construction jobs and 1,000 support jobs. ''

   After the partnership obtained the license in 1991, it was unable to 
develop private financing to build the track.

   At the time, the infancy of the Texas racing industry, the uncertain 
economy and potential risk in investing in a pari-mutuel facility 
dissuaded substantial would-be investors.

   The partnership last year developed a plan to obtain public financing 
through Harris County.  A nonprofit corporation would be created to issue 
$ 198 million in revenue bonds to build and operate the facility.

   Although the partners invested only an estimated $ 2 million 
collectively to obtain the license, the public financing plan would have 
earned them more than $ 400 million over 25 years.

   When that plan collapsed, the fate of horse racing here appeared 
doomed, along with the future of an interconnected Texas Class I racing 
circuit and expansion of the horse breeding and training industry 
statewide.

   Hurwitz was among the minor partners in the public financing deal.  
The general partners said at the time that Hurwitz and others were 
brought in to add credibility to their pitch to the county for tax-exempt 
bond financing.

   Connally said he is a personal investor in the Sam Houston deal in 
addition to his role on the Maxxam board.  The multibillion-dollar Maxxam 
is a conglomeration of aluminum, lumber and real estate companies.



                                                                       
PAGE   72                       The Houston Chronicle, May 12, 1993                       


   Asked how the current proposed investment plan could succeed when 
others have failed, Connally said he is confident of Maxxam's ability to 
put together substantial financing deals.

GRAPHIC: Photo: Former Gov. John Connally is joined by Mayor Bob Lanier 
at Tuesday's Maxxam announcement (p. 12); Richard Carson/Chronicle

                                                                       
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