MINOR TAKES ON MAGNA
While CNET founder Halsey Minor continues his efforts to purchase Hialeah Park from current owner John Brunetti, he also has contacted financially troubled Magna Entertainment about the possible sale of Santa Anita Park near Los Angeles and the company’s two Maryland Jockey Club tracks, Pimlico and Laurel. But after speaking with Magna’s chief financial officer, Blake Tohana, Minor doesn’t think Magna is a serious seller, despite recent comments by company chairman Frank Stronach during a conference call to discuss second quarter financial results.
“I had the most baffling conversation in my life with a CFO, particularly one whose job depends on asset sales,” Minor said in an email to the Paulick Report, which he also copied to Tohana. “Basically, nothing is for sale. Maybe they have some time shares for you. (Tohana) said Frank misspoke when he said he was considering selling a majority interest in Santa Anita. Now it is back to a minority interest.
“You can only buy (the Maryland tracks) if you have a gaming license. (Tohana) did not specify what that meant or why it was important. … This is despite the fact that Magna is not guaranteed any slot franchises in the current legislation, and they would need to post a $50-million bond which they don’t have to get one. At the very least if he had been on his toes he should have asked to borrow the money.
“You need to call him and hear this for yourself,” Minor suggested. “You would think you were talking to the CFO of Microsoft sitting on a pile of cash, given the attitude. Self-effacing, Blake is not. Not a good quality in a salesman. Without an investment bank, nothing sells if my experience is any guide.”
Minor said Tohana had no idea who he was when he called (“which is odd because I am the only person in America acquiring tracks right now and they claim they are selling them”) and eventually hung up on him. “I will go on record as saying these assets are going to be sold by banks,” Minor continued. “Banks don’t necessarily have good bedside manners, either, but they have good prices.”
Tohana responded to Minor with a terse email of his own, which he also copied to the Paulick Report, saying that Minor had “misrepresented” their telephone conversation. “Further, your manner of communicating to me via email and telephone was inconsiderate, rude and misinformed,” Tohana wrote. “In doing my job, I have always carried myself with dignity and professionalism. I think that view would be shared by anyone who has dealt with me during my career.”
Tohana went on to say that MEC has sold more than $400 million in assets “without investment bankers,” adding, “We will continue to pursue other asset sales and joint venture transactions as we have previously publicly disclosed. However, I do not have to take your personal insults just because you purport to have an interest in Santa Anita Park and the Maryland Jockey Club.”
Tohana also seemed irritated that Minor had called him to discuss the possible sale of the tracks during a family vacation, a comment that seemed to heighten Minor’s disdain for Magna’s CFO.
“I find interesting that you are on vacation at all and that you feel so offended I have bothered you on your vacation,” Minor wrote Tohana in a follow-up email. “My company is not imploding and yet I am fully engaged working to clean up some of your mess while here in Hawaii (on a vacation) with my family.
“Blake, you are condescending and that is no way to be with a company whose market value is less than many of our farms, whose massive debt is unserviceable and where you work in the service of the company that has literally blighted our industry.
“Enjoy your vacation, Blake, because when you get back things will only have gotten worse, not better, and you pissed off a potentially valuable ally royally. And if you haven’t noticed, you didn’t have many to start with.
“I believe results in life speak volumes, and I believe this applies equally to my career as it does to your company. Neither failure or success is an accident. A quick check would reveal that I have created billions in value, even exceeding your leader’s car parts business, while your outfit has not only destroyed massive amounts of shareholder value, but possibly the Thoroughbred business with it.”
When reached by the Paulick Report, Tohana said Minor was not “respectful” during their conversation. Tohana said he was fully aware of who Minor was when he received a call from him. “I had heard of the guy,” Tohana said, “but I wasn’t happy with some of the things he has said about our chairman (Stronach).”
Tohana has been Magna Entertainment’s CFO for more than five years, outlasting many of the executives who have come and gone in a revolving door atmosphere. He joined the company in July 2003 after serving in a number of executive positions at Fireworks Entertainment, a Toronto, Canada-based concern that produces and distributes television programs and movies.
“I’m quite a reasonable person,” Tohana told the Paulick Report. “I’m pretty straight up. Look, it’s not a secret (that we’ve had a great deal of executive turnover). This company hasn’t performed very well.”
Tohana insists Magna is “continuing to sell” some properties but said Stronach’s comments about possibly selling a majority interest in Santa Anita were “misreported.” He also said there remains the possibility that MI Developments, the real estate operating company that holds a controlling interest in Magna Entertainment, could be reorganized to relieve the debt-ridden racetrack company’s financial pressures. MI Developments recently extended by one month a bridge loan in excess of $100-million owed by Magna Entertainment and due at the end of August. Dennis Mills, a former member of Canada’s parliament and one-time vice chairman of Magna Entertainment, was recently named interim CEO of MI Developments following the departure of John Simonetti.
In the meantime, Minor continues to work on a business and operating plan for Hialeah. He has had a second meeting with Brunetti in Del Mar, Calif., and said Brunetti is working with his team on developing a business plan. “That’s a tremendous benefit,” Minor said, “and it shows that John really wants to help get Hialeah reopened.” Minor said the architects he would use to renovate Hialeah Park have inspected the long-shuttered track to get a better estimate of what the price tag would be to return it to its former condition.
Copyright © 2008, The Paulick Report
Support the Paulick Report. Make a donation today.
Visit the Paulick Report for all the latest news throughout the racing world.
Sign up for our Email Flashes to get the latest news, analysis and commentary from Ray Paulick
Tags: blake tohana, cnet, Del Mar, dennis mills, fireworks entertainment, Frank Stronach, Halsey Minor, Hialeah Park, john brunetti, john simonetti, laurel, Magna Entertainment, Maryland Jockey Club, mec, mi developments, Paulick Report, pimlico, Ray Paulick, santa anita
August 25th, 2008 at 8:34 am
Gotta love Minor! A breath of fresh air. The MEC assets are worth far less than the secured debt and common shares, so Minor is correct about some sort of liquidation.
August 25th, 2008 at 9:06 am
Can anyone make Minor a Major!!
August 25th, 2008 at 10:09 am
The Minor-Magna joust may be the best public e-mail exchange I’ve ever read. I read it the first thing this morning and it was like having a second cup of coffee. Can we look forward to further installments? Would the Paulick Report consider promoting a similar e-mail match between Minor and Stronach? Regards, Old Rosebud
August 25th, 2008 at 10:49 am
Hats off to Halsey Minor! He knows how to “Shake, Rattle and Roll” the Horse Racing Industry”! If Magna Entertainment wasn’t serious about selling a majority interest in Santa Anita Park near Los Angeles, they never should have mentioned it was available. Sounds like bad PR to me or they don’t have a clue about their financial woes. Hopefully, Halsey Minor, will aquire Hialeah Racetrack and came breathe New Life back into Horse Racing!
I support Halsey Minor completely!! He stands up for what he believes, much like Joesph Widener did in the 1930’s.
August 25th, 2008 at 11:40 am
I would expect more from a man of Halsey’s Minor’s status. To air his email exchanges knowing that they will be broadcast is highly questionable. While I applaud his desire to shake things up and restore a national treasure, he will quickly find himself on the outside looking in if he continues his vocal and abrasive approach. The powers of racing are watching. It is no secret that Magna is in massive distress. However, Frank Stronach has given much to this sport. It is in poor taste to continue to publicly attack someone who has worked hard to keep half of the tracks in North America in business. Truthfully, many should have been closed. Right or wrong, Stronach has tried. In case Mr. Minor hasn’t noticed, the greatest racing circuit in the country (NYRA) is also in its death rattle, yet I don’t hear any public damnations in that direction…. I wonder why?
August 25th, 2008 at 12:14 pm
That’s awesome!!!!!!! Magna screwed up Santa Anita and Gulfstream and nobody has ever really had the guts to tell them that. Good for you Minor!!!!!!!!
August 25th, 2008 at 12:46 pm
I have to concur with TEM (abbe) in scolding Minor for airing an exchange between he and Magna on email. While I do like the fact that he brings zeal to the business-side of the sport it is antics like this which will do him no favors. At the end of the day he was tire-kicking the Magna operations which have been floated as being on the block. Doing so via an off the cuff phone call then putting objections on email for the media seems unprofessional.
I think Minor could be a good track owner, however flirting with Hialeah then Santa Anita and then the MJC operations does give one pause. Is this a quest for owning any track or is there a true business plan behind it? Each respective track location has its own significant challenges which the realist in me says may not ultimately be overcome.
Just because someone has money and grand plans doesn’t mean it will succeed. Magna never intended to bankrupt themselves with vast sums poured into Gulfstream only to ruin what was attractive about the place to begin with. I agree that Frank Stronach wanted to do things ‘right’ for racing but as the old saying goes: the road to hell is paved with good intentions.
August 25th, 2008 at 1:15 pm
Blake Tohana will tell you what ever frank wants him to say.
he is a total yes man, and does not want to lose his job.
just like the board members. what ever frank wants, frank gets
look at the results of the board decisions. If those decisions were
their best effort, they need a new board.
August 25th, 2008 at 1:26 pm
I absolutely LOVE Mr Minor. Amazing stuff.
I have to disagree with the magna supporters here. Minor just inquired about purchasing the track and he got an ‘attitude’ from the CFO.
No reason for that. It probably had to do with this CHO knowing that if Magna DID sell the track, that he would no longer have a job (or, might not). What incentive would Tohana have to be nice knowing he was getting a call from Gordon Gekko?
August 25th, 2008 at 1:46 pm
In responding to Kellsboro Jack: there is nothing wrong with working on Hialeah and also developing a plan should Santa Anita get transferred to the banks, a very real possibility. The banks don’t care the land is now a race track. Their job will be to maximize value. I am moving forward with Hialeah as fast as possible, but I am also concerned that so many tracks may get turned over to banks at one time. While it may be a huge concern of mine it is hardly a problem of my making.
After talking with Tohana, and i use the word “talking” very loosely, I feel pretty certain Frank is publicly saying he wants to sell the tracks simply to keep the banks at bay but his real plan is to reorganize MID and MECA so that he ends up with personal control of all the tracks. I am sure you are aware that this plan was already shot down once before by shareholders.
Kellsboro Jack he is playing a game of high stakes chicken with his investors using many of the best (or former best like Gulfstream) tracks in the industry. Apparently, he has already rejected very attractive offers for Santa Anita and Maryland that would have paid down substantial amounts of debt. Just so you know he truly has a gun pointed at the industry that may go off if his “reorganization” does not occur and the banks drive the company into default. The stock didn’t get to $.40 prior to the reverse split because things are going well. Go to the MID website and read the reorganization plan. Don’t take my word for it.
Kellsboro Jack just watch what happens when one of those banks doesn’t push out there loan another month. When the Dominoes start to fall you are going to be happy that some of us in the industry are thinking about how to keep our tracks from being sold off as shopping malls. Hialeah is unique in its its historical and Audubon designation and the will of the citizens and Brunetti to preserve it. That is certainly not they case everywhere else.
If Frank would like to explain his vision for the industry here (no PR people please) and point out where I am incorrect please feel free.
August 25th, 2008 at 2:04 pm
Take it slow and one track at a time Mr. Minor, wouldn’t want you to end up like Stronach or CDI when they expanded too fast. Both of these may have started out with good intentions too, but one track led to another to another and soon things were pretty much out of control. If you could restore Hialeah to it’s days of grandeur, yet with today’s modern necessities maybe that would be enough to inspire others that it can be done and horse racing is worth saving.
August 25th, 2008 at 2:17 pm
Vicki, I have no choice but to take it slow. Its the nature of the process. And I am far from expanding too fast. I need one track first!
Your point however is a very valid one. Thanks.
August 25th, 2008 at 4:02 pm
What irritates many of the dinosaurs in the industry is Mr. Minor has a vision and the wealth to back it up. He would be a breath of fresh air from the stale cigar smoke that continues to drive the sport into irrelevance.
August 25th, 2008 at 5:37 pm
It’s all about keeping desperate control of empires crumbling beneath their feet. These once invincible characters may now face the mortality of their businesses and their own. During an interview with David Frost, Ted Turner remarquably admitted that he has amassed wealth and security because he is so very insecure.
Megalomaniacs are feared but weak, and often tumble due to unchecked arrogance. The old oak may not bend like the willow but crashes down for good one day.
Young, dynamic, visionary, prancing studs can cut through the rancid lard and cigar smoke with positive energy, oxygen, clarity and with the precision of a laser beam, do great things because as outsiders they can objectively assess the condition of the entire forest and make radical changes to assure not only its survival but its future health, instead of the old guard chocking its rotting trees to death… That is as long as young studs remain humble. Best wishes to you, Mr. Minor.
August 25th, 2008 at 7:41 pm
Mr. Minor,
While I hope your efforts to revive Hialeah match your expectations, I can’t help wondering why you would be willing to restore it — and continually risk repeated tropical storm damage — only to then have to operate it within a dysfunctional industry that currently lacks a centralized authority?
Even if you are unable to realize your vision for Hialeah, what could you do to influence racing to accept true self-regulation with teeth that would make any track(s) you acquire or build part of a network of racing operations subject to uniform rules, regulation, enforcement, penalties, takeout, and cooperative scheduling that would also commit to improved customer service on and off-track as well as providing a level playing field for all participants?
Is Miami the only possible setting for your vision? Why couldn’t the Tampa Bay area, for example, support a major league venue built or rebuilt in Hialeah’s image or at least influenced by its beauty?
You appear to be one of the few individuals willing and able to revitalize the sport of racing and enable it to realize its entertainment potential which currently seems sacrificed to the interest of commercial breeders, veterinarian-dependent stables, professional bettors, and training factories that stifle competition between separately-owned horses.
Good Luck!
August 25th, 2008 at 7:44 pm
BIG words, Litle Fan. Seems I know you from somewhere, or have met you recently? Today, I spoke to one with vision fueled by passion. As a result, what a wonderful feeling I have about this Halsey Minor. It’s all good.
August 25th, 2008 at 9:12 pm
This is just truly amazing stuff. The fact that Mr. Paulick could post a story this a.m. on the internet and have 17 responses (and counting) including a lengthy response from the main protagonist himself, Halsey Minor, is astonishing. The thbd. industry has finally entered the 21st century (after having missed the entire 20th) all because of a guy w/ a provocative website and a blog. It’s incredible to witness this history/progress in the making.
August 26th, 2008 at 12:28 am
At last, someone with the guts to tell the truth about Magna, a company that is major league in just one thing–incompetence. Magna has done more to damage the sport than any company or individual in the history of the game. At a time at which the sport needs leadership with a vision and a goal, Magna has specialized in enthusiastic buffoonry.
August 26th, 2008 at 2:03 am
Great stuff Ray.
I wonder about Mr. Minor. He is an internet businessman where tomorrow happens today and he is entering racing where tomorrow tends to happen a decade from now. The frustration meter must be very high.
I sincerely hope he succeeds. We sure as hell need it.
Dean
August 26th, 2008 at 3:44 am
I am impressed with what seems to be a real effort to do something for the industry that isn’t motivated by greed and exclusivity. Here is someone willing to reach into his pocket to restore some glory to what has become a cut throat,” who has the biggest slice of pie” game for shareholders and chairmen, not horsemen. If the pie is rotten, the big slice is no longer worth having. Why Mr.Minor wasn’t welcomed with open arms is way beyond me. In my rose colored, Pollyanna world I see no reason why everyone can’t band together for the good of the game, do whatever it takes to restore some faith, fun,and integrity to the sport
August 26th, 2008 at 12:33 pm
unfortunately, the brush-off given mr. minor is only the latest manifestation of the arrogance and incompetence displayed by magna entertainment management, beginning at the very top. stronach’s attitude toward racegoers and shareholders alike has been one of consistent contempt. it is difficult to believe that the very people who have brought this industry to its knees - the phipps’, the stronachs’, the kenturkeys etc. - still believe that they can stonewall forces of change to hang on to their fiefdoms (and the behavior of one of frank’s sycophants is but another supporting piece of evidence). one would hope we are close to a revolution in racing brought about by the energy, fresh ideas and initative coming from the likes of mr. minor - and, for this horse lover, owner and breeder - the overthrow of the old guard cannot come soon enough.
August 26th, 2008 at 8:33 pm
Restoring Hialeah is the best first step that could be made in bringing the industry into the 21st century and restoring it as a premier sport in America. There is no better place to build this model. I believe that Halsey Minor has the vision to do this well, long may he run.
August 27th, 2008 at 3:52 pm
I thoroughly agree with Mr. Minor, that Mr. Stronach has just about ruined horse racing in this country. Especially in Maryland where he has shut down Pimlico racetrack for training and they will only run one month a year at this famous old track. Laurel borrows money from Pimlico and yet they leave it open.
August 27th, 2008 at 8:38 pm
Let’s not forget that not too long ago Mr. Stronach was considered “new guy” and the OJC (Ontario Jockey Club) were the “old guards”. I admire Mr. Minor’s will to return Hialeah to it’s rightful place in racing. Such a fabulous racetrack should be brought back to life without question. It has the potential to be full of glamour, elegance, excitement…basically everything 99% of current racetracks now lack. Stronach if a victim of his own ego and lack of any “checks and balances”.
August 27th, 2008 at 10:19 pm
Okay everyone, Frank rolled the dice and lost. Let’s stop ripping him. I’m terribly disgusted with Gulfstream not being fan friendly but he tried and failed. Had he not tried, things could even be worse off. For example, Laurel and Pimlico could be ashes. Remington was on the verge of closing it’s doors. There’d have been no racing in Michigan for the last several years had they not acquired GLD. He elevated the excitement then now it’s in decline…so what. He bought the time! Let’s give MEC some credit! He bought time (and screwed up GP). No one has the Crystal Ball.
If it wasn’t for Frank’s FU with GP, this possibility wouldn’t exist for Minor.
I will say I’m excited for Halsey’s passion. He too rolled the dice and won. Go get ‘em Minor!
August 28th, 2008 at 9:02 pm
Mr.. Minor,
Do you plan to retain a true dirt track at Hialeah or install a synthetic surface (perhaps in addition to dirt and turf)? Would you offer to host the Breeders’ Cup in some permanent or semi-permanent fashion? Do you have any thoughts on the expansion of the Breeders’ Cup to two consecutive days as opposed to multiple days throughout the year or some other variation?
September 2nd, 2008 at 2:05 pm
I think its too early to make a determination about the surface. On the hand the park is famed for its forgiving surface, yet on the other hand i don’t want to see the industry further fragmented (dirt, poly, grass). What I am hearing about poly is that it is living up to its reputation with regards to injuries but that it is degrading so quickly that it may be cost prohibitive to redo the surface every 4 years. Anyway we will have more data in time and its good to know that if we stay dirt, we got the best.
As for the Breeders Cup I would prefer a 1 day meet. The most successful days in racing are really the most concentrated (Triple Crown). Not one race other than the triple crown events are shown on network tv. There is a reason for that. I personally think things need to be fast and concentrated. The days of the 2 martini lunch are unfortunately gone. Instead we are all busy as hell keeping the balls in the air. The sport has to understand the lives of fans and not the other way around.
September 11th, 2008 at 7:42 pm
[...] In a recent interview in the Paulick Report, I found out that I really like Halsey Minor. Minor is a founder of CNET, a very successful internet firm which sold for almost $2.0B and he wants to buy and restore Hialeah in Florida. Why does a guy who worked in the Internet where tomorrow happens today want a piece of the racing business where tomorrow happens a decade from now? I don’t know, but he appears to like racing. And he handles things like many I know in the Internet business - with common sense and no nonsense. The prose between him and a Magna Executive when discussing buying some Magna interests is pretty priceless, as reported by Ray Paulick, check it out if you are interested. [...]
September 11th, 2008 at 7:42 pm
[...] In a recent interview in the Paulick Report, I found out that I really like Halsey Minor. Minor is a founder of CNET, a very successful internet firm which sold for almost $2.0B and he wants to buy and restore Hialeah in Florida. Why does a guy who worked in the Internet where tomorrow happens today want a piece of the racing business where tomorrow happens a decade from now? I don’t know, but he appears to like racing. And he handles things like many I know in the Internet business - with common sense and no nonsense. The prose between him and a Magna Executive when discussing buying some Magna interests is pretty priceless, as reported by Ray Paulick, check it out if you are interested. [...]
September 25th, 2008 at 8:42 am
[...] and has since profited to the tune of hundreds of millions of dollars. 9. Internet entrepreneur Halsey Minor inquired about purchasing Magna Entertainment racetracks in California and Maryland but was [...]