Magna Liquidating Everything

[km]

Magna in worse shape than we thought - now considering selling it's prime jewel Santa Anita and even Gulfstream. We already knew they were dumping the smaller tracks.

There is no threat of Santa Anita closing however - new owner must continue with horse racing as mandated by city zoning. City of Arcadia where Santa Anita sits loves their beautiful track and it is an important American landmark and historic venue that will never be shut down despite the hefty millions the real estate could be sold for.

http://www.latimes.com/business/printedition/la-fi-magna14sep14,1,3423151.story?coll=la-headlines-pe-business

So now it is obvious that Magna and Stronach never cared about horse racing - they thought they could corner the market on racinos, home betting, or something else that would make them billions in a hurry. I wonder how their new partner Churcnill will take this - perhaps Magna was sinister and joined up with CD so they wouldn't have to ride the sinking ship down alone!

[BillW]

Rick Hammerly was on At the Races today and suggested the Times went a little overboard with their story and dispelled the rumor they started. Of course management would say that regardless of their intent.

[Paladin]

Santa Anita is my home track. I'm glad to hear that Arcadia won't let it be destroyed.
Actually when you think about it: Santa Anita stays - Owner Changed , at first glance it sounds not too bad !
I do have to say though, Santa Anita is just such a beautiful track.
I can remember days in the infield, reading the form, sitting next to a fountain, mountains in the background, waiting for my next race. Picture Perfect.

[km]

nice deja vu Paladin, those were the days, SA had lots of space and plenty of shady spots for a pleasant afternoon

as it says in the article, if Santa Anita were to close, it would be a major disaster for horse racing in this country

[Justralph]

I have a friend who works across the street from Santa Anita (at least I think it is across the street) at the mall and he tells me that the rumor of the mall buying Santa Anita race course pops up every couple of years..............but this week it was going around hot and heavy........with many more people talking about "it being a done deal" than ever before..................my friend says he doesn't think the mall could afford the purchase........but you never know..........

[Ron Tiller]

Well, I'm going to do the unfashionable and defend Frank Stronach against at least one of the charges made by Ken, namely...
So now it is obvious that Magna and Stronach never cared about horse racing - they thought they could corner the market on racinos, home betting, or something else that would make them billions in a hurry.
I'll not defend Magna's acquisition, management, operation or bottom line losses of any of their race tracks; there's pleny of fodder there for public discussion. What I do take exception to is that "...Stronach never cared about horse racing..." What we sometimes forget is that Frank Stronach is one of the most successful owners and breeders in modern history.

1. Breeder - Check the list of Eclipse Award winning breeders - http://en.wikipedia.org/wiki/Eclipse_Award_for_Outstanding_Breeder - I count 4 Eclipse Awards for Stronach and/or Adena Springs.

2. Owner - Check the list of Eclispe Award winning owners - http://en.wikipedia.org/wiki/Eclipse_Award_for_Outstanding_Owner - I count 3 awards.

3. Owner - Check the list of Sovereign Award winners for outstanding owners in Canada - http://en.wikipedia.org/wiki/Sovereign_Award_for_Outstanding_Owner - I count Stronach and or Stronach Stables 9 times. That's nine!

4. Owner - Ghostzapper - Frank Stronach was both the owner and breeder.

Perhaps it's better said that his tremendous success as a breeder and owner did not translate into owning and managing race tracks. Why not? Maybe for many of the reasons others have discussed, but NOT because "...Stronach never cared about horse racing..." Love him or hate him, this is an unfair statement.

Ron Tiller
HDW

[dehere]

Sorry, i'm only thinking about myself and my self-tinterests, but i'm hoping that somehow, maybe, i'll be able to watch SA and GP on TVG this winter (fingers crossed).

[tommyc]

Ron....well put and well said....but a little bit out of context.

Seems to me Ken was talking about "racing" as a part of Stronach's track aquisition strategy.
In THAT context, I agree w/Ken...especially as viewed in the past from within Lone Star.

tommyc

[MikeDee]

I think this is a pretty good article about what is going on with Magna. You have to have a user id and pswd word to read it. If you don't have one there is no charge to get one.

http://www.drf.com/news/article/88487.html

I think that saying he does not care about racing is a little strong. I believe he cares, but like the others in this business (i.e. TVG, NYRA and CD inc.) he is trying to control and monopolize it and it is not working for him.

In the article it said the Stronach will buy 20 mil in stock and his company Magna Developments will loan Magna $80 million. This will keep the company from going for a while as they sell off assets. Stronach would stand to loose a boat load of money if they go chapter 11 so I don't think he will let that happen if he can figure a way to turn things around. It appears that everything is for sale as he attempts to get his expenses in line with revenues.

Over the last few years he has made a number of bad decisions that have put him in his current situation. He bought tracks in anticipation of of slots, but never expected the uphill political battles to get them approved by state governments. He attempted to compete with TVG and the Old gang of three "TVG, CD Inc and NYRA, by building his own ADW and HRTV. Now he is looking to sell them which most probably means that these are not performing well either. After a huge re-development of GP the article says that the slot-machine casino at Gulfstream Park, has failed to generate the expected revenues. This has to be a huge disappointment.

[Snagaltooth]

Based on what I've read, seen, experienced, and know, Stronach is a "good" owner and breeder. However, IMHO, he can not run the business that markets his work. This is akin to a racecar driver owning and trying run a car dealership.

[Ron Tiller]

This is akin to a racecar driver owning and trying run a car dealership.
Yeah, success in one phase of the business does not translate to success in another. Look at the major components in this industry:

1. Breeders
2. Owners
3. Trainers (incl grooms, hotwalkers, etc.)
4. Jockeys
5. Tracks
6. Tote companies
7. Wagering facilitators (ADWs, OTBs, TVG, HRTV, Youbet, etc.)
8. Data gatherers/providers (Equibase, DRF, BRIS, HDW, Jerry Brown, etc.)
8a. Handicap program providers (HTR, etc.)
9. The huddled masses of bettors.

(Just as an interesting aside, people at the top of this list (breeders and owners) probably have a completely different perspective on this industry than those at the bottom end, the data/program and huddled masses end. There is of course a completely different view of which end is the tail and which is the dog.)

Breeders are often owners. Trainers are sometimes owners. Tom Worth's TIPS includes the trainer = owner = breeder angle. I remember seeing a trainer as the jockey at Calder. Jerry Brown advises owners and owns horses. Youbet now owns a tote company. BRIS owned an ADW. Churchill Downs now does ADW and owns BRIS. Stronach and his assorted companies breed and own horses, own and run tracks, own a tote company and have an ADW and a TV channel. That's very spread out. And EVERYBODY wants a piece of the parimutuel booty.

Has anybody ever wondered if there will someday be www.PletcherBet.com, where you can bet on Pletcher's horses at Pletcher Downs, based on the Pletcher Performance Ratings (TM)?

Ron Tiller
HDW
Struggling with just one tiny aspect of the horse racing industry, thank you

[DanG]

Good points Ron and let’s not leave out the 300lbs gorilla…State and sometimes federal legislators.

[Editorial]

When generations in a neighborhood grow up with the same little league field it becomes more than just a gathering venue, it becomes part of the community. When party “A” purchases said enterprise and makes brash statements of improvements and a seemingly long term commitment we take them at their word and check back later.

Well, the little league field did not get their anticipated additional deep fryer and the concession stand cannot add French fries to their menu. The new owner proclaims without this additional revenue stream the field will be sold to a developer and the games will be moved to a 2nd rate facility.

The community feels outraged and returns to the original speech the new owner made on the acceptance podium.

When racing purist review Frank Stronach’s original statements after purchasing Santa Anita / Gulfstream the more cynical among them said beware of the wolf in sheep’s clothing. Huge expansion ideas in a sport where live attendance is in a freefall. Now…one could say…what a noble effort and that may well be the case. But, these are two of the few prize jewels in our sport. The original plans were at best reckless and without a safety net.

The very fact that SA and GP are even in a paragraph that includes “closure and / or relocation” is just disgusting imo.

Idealistic…Juvenile analogy’s…sure, its what I’m best at, but as with any major policy be it political or entrepreneurial if you doubt the messenger at the outset it leaves a human less willing to forgive if their worst fears are realized. :(

[delayjf]

Given the Cities position on Maintaining SA as a racing facility (thank God) I'm not as worried about it's survival as I am about GP - I can't help but wonder if this might mean the resurrection of Hialeah.

[MikeDee]

A good read about Curchill, Magna and FL racing.

http://paulmoranattheraces.blogspot.com/2007/11/empire-eyes-gulfstream.html

From the above link

With Magna Entertainment bleeding money from every pore, plausible rumors have begun to circulate that suggest Churchill Downs is considering the purchase Gulfstream Park

[Huguenot]

Maybe Stronach cares about racing, but i doubt he really gives two ticks about the RACING FAN.

In my opinion, just another arrogant rich person who made it big in one field and thinks he can replicate it in another. I will change my mind somewhat about him if a number of people who have worked for him -- the rank and file workers as well as top management -- tell me he's a generous, compassionate employer.

Considering how often he changes much of his top management i have my skepticism on that regard.

[tomcat]

Mike, that report seems pretty accurate. I will not go back to Gulfstream after
seeing what they did to it.

Let's not forget Stronach's first goal is to make money, and he has screwed it up with Gulfstream. It will be interesting to see what he does with it. Sell it? Re-do it?
Ken is correct in that he does not care about racing....he cares about making money first.

I cannot believe he will continue to bleed.

I wish they would bring back Hialeah.

[MVM]

I recently returned from a trip to the Canadian Rockies. Used to be a great vacation bargain, but with the Canadian Dollar now worth as much or more than the American Dollar, such a trip is a spendy proposition.

[km]

Thanks for posting that interesting blog Mike; and i agree with the follow up comments by Hug and Tomcat. Greed is a destructive impulse and it's surprising that a man of great experience and assumed wisdom like Stronach would not have been more cautious with his investments.

Now it's decision time for the powerful NY stables. Will they continue the usual winter migration to south Florida and stay aboard the sinking ship that is GP? The irony is that SA, which took a backseat to GP development with Magna funds, is now the beneficiary and glowing with success, because the community and Santa Anita management made a "no turning back" decision to make horse racing the #1 and only priority for their track.

[OPM]

As I've said before slots are not the answer for horseracing, as a matter of fact is will be the downfall for racing. Just like at Prairie Meadows where the politician are already asking why they should subsidize horse racing to the tune of $25 million/yr. Tracks, ADW, etc need to have better customer service and treat their players with respect and dignity not some degenerate who would continue to come to the track regardless of what they offer.
Everyone needs to think of ways to improve the game, not ways to subsidize the game.

[TEJASKIDD]

I've always been concerned that the politicians would try to oust the racetracks and horsemen. Eventually it will happen somewhere and we'll all be doomed. I need to start learning how to handicap Australian and Hong Kong races.

[km]

Recent article about the GP slot losses.

http://www.thoroughbredtimes.com/national-news/2007/November/02/Gulfstream-slots-continue-to-lose-money-for-Magna.aspx

[MikeDee]

another interesting article about slot losses and GP. Maybe stealing is the problem

a quote from the article
Gulfstream reported that it gave out a whopping $1,051,000 in nonredeemable credits during July and August.

to read More
http://www.browardpalmbeach.com/2007-11-08/news/cripple-the-presses/

[km]

Interesting Mike; while the theft might have hurt the bottom line, it does not affect the action on the slots themselves, maybe the real "stealing" is the slot returns.

Article mentions: "effective 62% tax rate" on the slots.

OUCH

that has to translate into a huge takeout% for the poor suckers that play those machines.

In Vegas, it is very competitive with so many casinos close together and most slots have 90% or more payback. Some advertise as high as 99%.

But Racinos and Indian casinos are far more greedy as they have a captive audience with less competition. All the seats are filled anyway, why not takeout more?

Florida has always been notorious for high takeouts and taxation anyway, i'm guessing those slot paybacks are in the paltry 70-80% range. Especially with GP desperate for revenue. That much takeout will grind down your customers in no time and they'll look elsewhere for action.