Posts Tagged ‘Magna’
Wednesday, November 26th, 2008
By Ray Paulick
Halsey Minor thought he would be meeting with MI Developments (MID) chief executive officer Dennis Mills in Baltimore, Md., on Wednesday morning to discuss Minor’s proposed buyout of the company’s $100-million loan to Magna Entertainment (MECA), the financially beleaguered racetrack company that operates Santa Anita Park and Golden Gate Fields in California, Gulfstream Park in Florida, and Pimlico and Laurel Park in Maryland, among other facilities.
When Mills failed to show, Minor called him, only to discover that Mills was still at Magna’s corporate headquarters in Canada putting out a press release outlining new loans from MI Developments to Magna Entertainment, further extensions of existing loans, and a proposed reorganization that could put the racetrack company more firmly under the control of Frank Stronach. The proposed reorganization, subject to MI Developments shareholder approval, is “an egregious attempt to hijack shareholder value and will never pass,” Minor told the Paulick Report.
Minor, a technology entrepreneur who created CNET.com among other Internet companies, is a horse owner and breeder who has also expressed interest in buying and restoring the dormant Hialeah Park in South Florida.
“He stood me up to put out this press release?” Minor said of Mills. “It might have been good to have met with me before the press release, because we have a better offer, by far, that will be far more acceptable to MID shareholders. It was a good faith attempt on my part to sit down with him and see if there was something we could do. Instead they put out this preposterous press release and he stands me up the day before Thanksgiving after I traveled all the way here to meet with him.
“I could have told Mills that what he put out, even though the stock is up a few pennies, has no chance of passing. There is a contingency (among MID shareholders) that is of the mind that says, ‘We’ll do anything to get rid of Frank,’ but this proposal doesn’t really fully get rid of him."
At least two institutional shareholders in MID, Farallon Capital Management and Greenlight Capital, have suggested possible legal action for breach of fiduciary responsibilty by MID’s board of directors over the MECA loans, one of them calling MECA a "financial sinkhole." A previous proposal to hand MECA over to Frank Stronach was voted down by MID shareholders earlier this year.
The proposal calls for a new loan from MID to MECA of $50 million to fund current operations and $75 million to pay for a possible slots license and temporary facility in Maryland, along with extensions of an existing bridge loan and of repayment deadline for another $100-million loan.
A second stage of the proposal, subject to shareholder approval, calls for MID to purchase unsold real estate in Dixon, Calif., and near the Palm Meadows training facility in Florida at what it calls “fair market value.” It also seeks additional extensions on the loans and the option to repay the loans in MECA stock instead of cash. The third and final stage, taking control of MECA away from MID and into the hands of an entity called the “Stronach Group,” is contingent upon MECA retiring its convertible bonds.
Minor insists that even if the proposal somehow gets shareholder approval, MECA will fail. “Frank doesn’t buy the stock until after the $295 million in convertible bonds are paid off,” he said. “If they are not paid, the company goes bankrupt. The slots deal in Maryland is terrible, and most of the big guys have said they are not even going to try to get the license. It’s only 33% (of revenue), versus close to 50% in Pennsylvania and Delaware. He has to spend $250 million to build his slots parlor, then give 60% of his profits to (Joe) DeFrancis (who sold his family’s interests in the Maryland tracks to Magna with a contingency for a share of any future slots revenue). So his own deal, which sucks all this money away from MID shareholders, would itself have a life of a year or two before it went under. This is Stronach’s way of saying, ‘I have this company (MID) hostage. If you want me to go away, you have to pay up.’
“The shareholders fully intend to have their day with Frank.”
Magna Entertainment (MECA) closed at $2.01 on Wednesday, up $.60, a gain of 42.8% on the day. MI Developments (MIM) gained $1.62 to close at $10.05, up 19.2%.
Copyright © 2008, The Paulick Report
Tags: dennis mills, farallon capital management, Frank Stronach, greenlight capital, gulfstream park, Halsey Minor, Magna, Magna Entertainment, Maryland Jockey Club, maryland slots, mec, meca, mi developments, mid, mid shareholders, mim, Paulick Report, Ray Paulick, santa anita, stronach, stronach group
Posted in Halsey Minor, Magna Entertainment | 13 Comments »
Wednesday, November 5th, 2008
MI Developments, the publicly traded real estate concern that is the largest single shareholder in racetrack operator Magna Entertainment, is under fire again from one of its biggest shareholders, this time for ignoring an offer from technology entrepreneur Halsey Minor to buy the outstanding loans Magna Entertainment has been unable to repay to its parent company.
Minor made an offer last month to buy Magna Entertainment’s debt obligation and went public Oct. 17 after failing to get a response from the MI Developments board.
David Einhorn, the president of the Greenlight Capital investment fund that owns 10% of the Class A shares in MI Developments, is demanding that the MI Developments board of directors give serious consideration to Minor’s offer without interference from Frank Stronach, who controls both MI Developments and Magna Entertainment. Einhorn expressed his demands in a letter to the MI Developments board filed with the Securities Exchange Commission on Tuesday. Greenlight has had a longstanding battle with MI Developments and lost an earlier lawsuit against the company alleging shareholders were oppressed by board of director decisions.
The demands from Einhorn come two weeks after a similar letter was written to the MI Developments board by a managing member of the Farallon Capital Management investment fund, threatening legal action and alleging breach of fiduciary responsibility.
Einhorn’s letter accuses the MI Developments board and CEO Dennis Mills of making “false and misleading” promises and says that ignoring Minor’s offer was a “clear violation of the board’s fiduciary duty and duty of care to its shareholders.”
The letter says MI Developments board members “continue to abandon ship,” and accuses Stronach of stacking the board with “cronies” and “childhood friends.”
“The MID board has a long history of ignoring our letters, and those of other large MID shareholders,” Einhorn writes. “The MID board can not continue to stick its head in the sand and ignore the wishes of an overwhelming majority of the MID shareholders.
“Since ignoring the Minor Offer is clearly a violation of the MID board’s duties, we expect, and demand as shareholders of MID, that the MID board immediately take up serious consideration of the Minor Offer without Mr. Stronach’s interference. Any transaction in which MID can be rid of its unlimited and never-ending exposure to MEC must be taken seriously. We minority shareholders rely on you to protect our interests from Mr. Stronach’s uneconomic and self-serving support of MEC and remind you that you will be held accountable if you fail to fulfill your fiduciary duty to the MID shareholders.”
Click here to read the Einhorn letter.
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Tags: david einhorn, dennis mills, farallon, farallon capital management, Frank Stronach, greenlight capital, Halsey Minor, Magna, Magna Entertainment, meca, mi developments, mid
Posted in Halsey Minor, Magna Entertainment | 1 Comment »
Tuesday, November 4th, 2008
By Ray Paulick
UPDATED TUESDAY EVENING:
Stock prices soared Monday in Magna Entertainment, the racetrack company that operates Laurel Park and Pimlico in Maryland, where voters are deciding today on an amendment to allow 15,000 slot machines at five locations in the state.
The share price jumped by 92%, from $1.82 at the opening bell to $3.50 by the day’s close. Magna Entertainment, which also operates Santa Anita Park, Golden Gate Fields, Lone Star Park, and Gulfstream Park, among other tracks, trades on the NASDAQ under the symbol MECA. One-day trading was the heaviest that it’s been since Sept. 30, when the stock plummeted from $4.00 to $1.75. Earlier this year, Magna exercised a 20-for-1 reverse stock split to maintain its position on the NASDAQ.
UPDATE: Tuesday afternoon, Magna Entertainment sent out a press release saying the company "is not aware of any specific developments" connected with the sudden increase in share prices. MECA closed at $3.97 Tuesday afternoon, an increase of another $.47 (13.4%).
Even with Monday’s gains, adjusted share prices are down 95% from what they were when MECA went public in 2000. The company is saddled with hundreds of millions of dollars of debt.
Polls indicate the Maryland constitutional amendment permitting slots will pass, though there is no guarantee that Magna Entertainment will be one of the operators of the slots parlors. Approximately 7% of revenue from the machines will subsidize horse racing purses, with 2.5% going to racetrack renewal.
When Magna Entertainment purchased the two Maryland Jockey Club tracks from the family of Joe and Karin De Francis, the agreement gave the former owners 18% of any future profits MECA earned from slot machines.
The company announced Monday that a previously announced deal fell through to sell excess property near Ocala, Fla., where company chairman Frank Stronach had once hoped to build a racetrack.
Tags: Frank Stronach, gulfstream park, joe de francis, karin de francis, laurel park, Magna, Magna Entertainment, Maryland Jockey Club, meca, pimlico, racino, santa anita, Slot machines, slots, stronach
Posted in Magna Entertainment, Maryland Jockey Club, Slot machines | 1 Comment »
Saturday, October 18th, 2008
By Ray Paulick
A major institutional investor in MI Developments, the Frank Stronach-controlled real estate company that has kept Stronach’s failing racetrack entity Magna Entertainment afloat with bridge loans, has threatened legal action against the MI Developments board of directors, alleging they have “flagrantly breached their fiduciary duties to shareholders.”
Richard Fried, a managing member of the San Francisco-based Farallon Capital Management that owns 8.5% of the Class A shares in MI Developments, protested the board’s most recent extension and expansion of a now $125-million bridge loan and delay of a due date of a separate $100 million loan payment. Fried wrote that Magna Entertainment “has been, is, and will remain a financial sinkhole. Continuing to finance it offers no conceivable benefit to MID’s shareholders.”
“There is no possible justification for the Board to approve loans to a near bankrupt horseracing concern, especially one that is hopelessly entangled with irrational, non-economic, and conflicted parties and has a track record of massive value destruction,” Fried wrote. The letter was filed with the Securities Exchange Commission on Friday, the same day that technology entrepreneur and Thoroughbred owner and breeder Halsey Minor went public with an offer to buy out MI Developments’ loans to Magna Entertainment.
The letter said Farallon concludes that “the (MI Developments) Board is pursuing a value-destroying investment instead of a relatively safe and accretive investment because the Board is ignoring common shareholders’ interests and is only interested in pleasing Frank Stronach, even if his desires conflict with the best interests of MID’s shareholders.”
Farallon also went on record as opposing what it called “an ill-conceived transaction” that would have MI Developments buying out Magna Entertainment, whose stock has lost more than 95% of its equity value. MI Developments already owns a controlling interest in Magna Entertainment, which operates Santa Anita Park (host of the Breeders’ Cup world championships in 2008 and 2009), Gulfstream Park, Lone Star Park, the Maryland Jockey Club tracks Pimlico and Laurel, and Golden Gate Fields.
“We believe the Board’s duties require it to end MID’s support of MEC and focus urgently with management on developing a coherent and fair reorganization plan. You must tell Mr. Stronach that his time for self-serving maneuvers is over. It is time for you to meet your fiduciary duties as directors. If you do not, Farallon will consider all legal tools available to it as a shareholder.”
Magna successfully defended a previous lawsuit by Greenlight Financial alleging that Greenlight and other investors were oppressed by Stronach and the MI Developments board.
Click here for the complete text of the Farallon Capital Management letter.
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Tags: Breeders' Cup, cnet, farallon capital management, farfallon, financial sinkhole, Frank Stronach, gulfstream park, Halsey Minor, Horse Racing, laurel, lone star park, Magna, Magna Entertainment, magna entertainment farfallon capital management, Maryland Jockey Club, meca, mi develoments, mi developments, mid, Paulick Report, pimlico, Ray Paulick, richard fried, santa anita park, stronach
Posted in Halsey Minor, Magna Entertainment | 7 Comments »
Friday, October 17th, 2008
By Ray Paulick
Technology entrepreneur Halsey Minor has gone public with a letter sent to the Special Committee of the Board of Directors of MI Developments (MIM) asking the board to consider his proposal to acquire outstanding loans made by MI Developments to the financially beleaguered racetrack company Magna Entertainment (MECA).
Click here to read the letter.
Both MI Developments and Magna Entertainment are controlled by Frank Stronach, though Stronach owns just 2% of MI Developments.Both companies are offshoots of auto parts giant Magna International (MGA), whose stock price has declined by 67% over the last year.
On Thursday, Magna Entertainment received another extension on more than $250 million in outstanding loans, all but $40 million from MI Developments. The new agreement on a bridge loan from MI Developments added $15 million to the amount Magna Entertainment could borrow.
Minor, the founder of CNET and several other technology firms, said his proposal was made several weeks ago but that he has yet to receive a response from the Special Committee, necessitating the need to make the offer public so it could receive full consideration from shareholders of MI Developments.
“While it is unfortunate that we have to take the unnecessary step of making our proposal public,” Minor said, “we believe that MI Developments’ shareholders deserve to know about the opportunity to relieve the company of what has become an increasingly burdensome debt obligation. Magna Entertainment owns some of the world’s premier racetracks, but many of them have fallen into disrepair and are in desperate need of capital to both improve the facilities and attract fans back to the industry. I have long had a passion for the horse racing industry, and believe strongly that this storied, exciting sport can be revitalized. I want to help rebuild this industry, and initiating discussions with MI Developments to explore ways we can solve Magna Entertainment’s liquidity problem and help provide a better strategic direction to these under-capitalized properties is a winning proposition for MI Developments and the horse racing industry overall. I look forward to a response from MI Developments’ Special Committee.”
Minor, who also has made a bid to buy Hialeah Park in South Florida from John Brunetti, told the Paulick Report he is very concerned over the affect a potential bankruptcy by Magna Entertainment could have on the horse racing industry. “The goal would be to take control of the Magna tracks away from MI Developments and begin the process of rebuilding much of what has been harmed over the previous five years," he said. "Magna Entertainment, as a company, clearly has little chance of survival. The idea is to prevent a bankruptcy which would be disastrous for the industry and to begin to rebuild the company. The goal, first and foremost, is to stop the uncontrolled bankruptcy, which is almost inevitable. You can’t lose $120 million a year in this environment and continue.
“Frank Stronach only owns 2% of MI Development but has been using that company to prop up Magna Entertainment, which has basically been a bankrupt company for three years. It only exists because MI Developments continues to put money into a company whose losses are in excess of $100 million a year.
“We have made a proposal, but the Special Committee of MI Developments hasn’t allowed us to have any access to any of the information, which is really crazy. They are depriving their shareholders of even knowing what our final offer will be. This will let the hedge funds who own the stock realize the company has been offered the opportunity to exit the Magna Entertainment funding business and so far has declined to even talk.”
Members of the Special Committee are Jerry D. Campbell (Chairman), Anthony J. Campbell and William J. Menear.
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Tags: cnet, Frank Stronach, Halsey Minor, Magna, magna bridge loan, Magna Entertainment, magna international, meca, mi developments, mim, Paulick Report, Ray Paulick, stronach
Posted in Halsey Minor, Magna Entertainment | 9 Comments »
Tuesday, September 30th, 2008
By Ray Paulick
Shares in Magna Entertainment (MECA), the debt-ridden racetrack operating company controlled by Frank Stronach, plunged by 56% in Tuesday’s trading on the NASDAQ exchange. Closing at $1.75 per share (down from $4.00) under extremely heavy trading (more than 30 times higher than the daily average), MECA was NASDAQ’s biggest percentage loser on a day when the Dow and NASDAQ each gained between 5%-6%.
MECA stock has plummeted by 91% in the last 52 weeks, and its market capitalization has shriveled to less than $10 million.
Magna Entertainment has listed debt of $571 million. The company recently announced 30-day extensions on a loan maturity date from a Canadian bank and an $80-million bridge loan from its affiliated real estate company, MI Developments, that will be due Oct. 15 and Oct. 31, respectively, along with a $100-million payment due MI Developments Oct. 31. Major shareholders in MI Developments have fought extensions of the bridge loan and repayment. On Monday, John Barnett resigned from the board of MI Developments. The company’s CEO, John Simonetti, stepped down in August and was replaced by Dennis Mills, a longtime Stronach ally.
The current bank and credit crisis only heightens the gravity of Magna’s poor financial health.
Magna Entertainment operates, among other tracks, Santa Anita Park in Southern California, the site of the 2008 and ’09 Breeders’ Cup world championships. The Oak Tree Racing Association, a separate non-profit entity that leases the Santa Anita racetrack from Magna, is the organization with which Breeders’ Cup has contracted to host the championships. Any financial failings or potential bankruptcy by Magna Entertainment will not affect the Breeders’ Cup, according to Greg Avioli, president and CEO of Breeders’ Cup Ltd.
“Because of Oak Tree’s contractual structure, they are fully protected from any possible Magna bankruptcy in terms of their ability to operate the meet in their standard fashion,” Avioli said. “(Oak Tree Racing Association) is a separate legal entity. They have a lease on the facility, and that lease would be maintained.”
Avioli did say that the Breeders’ Cup developed contingency plans to move the championships to Hollywood Park, but not because of Magna’s financial situation. “We had contingencies in place in the event that there might be problems with the new track,” he said, in reference to the new Pro-Ride synthetic surface recently installed at Santa Anita. According to published reports, horsemen and jockeys generally seem satisfied that the new surface is safe and formful after one week of racing during the Oak Tree meeting.
The pending due dates on loans are not the only question marks concerning Magna Entertainment. A California judge ruled this week that a shopping mall development planned for a section of Santa Anita’s parking lot cannot go forward. In Maryland, where Magna owns Laurel and Pimlico racetracks, a referendum is coming up in November on slot machines.
“The stock only trades on option values,” one market analyst observed, “and the option value is declining because the potential options for the company are quickly disappearing.”
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Tags: bank crisis, Breeders' Cup, bridge loan, credit crisis, Frank Stronach, Greg Avioli, Hollywood Park, laurel, Magna, Magna Entertainment, meca, mi developments, oak tree, oak tree racing association, Paulick Report, pimlico, Ray Paulick, santa anita, santa anita park, Slot machines, stronach
Posted in Breeders' Cup, Magna Entertainment, Synthetic surfaces | 7 Comments »
Monday, September 22nd, 2008
By Ray Paulick
Best unintentionally funny line of the week came from John Brunetti, the owner of Hialeah Park. Discussing a conversation he had with Halsey Minor about the technology wizard’s interest in buying and reviving the shuttered South Florida racetrack, Brunetti was quoted in a trade publication as saying: “I have told him that in some ways I don’t think he understands this business.”
Does Brunetti think he understands this business? How could he? If he did, how did he let Doug Donn outsmart him on every move and get control of the best winter racing dates for Gulfstream Park? Why did state legislators and regulators turn their back on him? How did Calder crush Hialeah in head-to-head competition? Why did Brunetti raise take out to the point that he chased away any remaining horseplayers Hialeah had? Why has the track sat empty for more than seven years?
It’s a mortal lock that Hialeah will never reopen successfully with Brunetti as the owner and operator. I happen to think John Brunetti is a nice guy who loves racing, but I have zero confidence that he can revive Hialeah Park on his own (and I may be more optimistic than state officials or Florida horsemen).
Does Halsey Minor know everything there is to know about Thoroughbred racing? Of course not. But he comes to the game with passion, enthusiasm, capital and confidence that he can return Hialeah to some semblance of its past glory.
Brunetti isn’t the only industry veteran who thinks Minor may be nothing but a dreamer if he thinks he can revive horse racing as a sport. I’ve heard from a number of racetrack executives and horse owners who said they’ve heard it all before. But what is the alternative for Hialeah Park or operating tracks that are hanging on by a thread? Lobby to get slot machines, turn the facility over to a casino company and hope it will subsidize the money-losing portion of the business indefinitely?
Should Brunetti and others in the industry just blow off this opportunity that Minor presents to give horse racing in the Miami area one last chance to stand on its own as a sport?
I remember when Frank Stronach came into racetrack ownership and said he would try to make the sport more compelling and entertaining. In the beginning, Stronach said he had no interest in getting slot machines at his tracks. But Stronach became a victim of his ego, forcing in too many of his own bad ideas and forcing out too many executives who dared to disagree with him. He almost seemed obsessed with getting control of as many tracks as possible without having any idea what he was going to do with them all.
Gulfstream Park was the first Florida racetrack to get slot machines. Under Stronach’s vision, Gulfstream became the least successful slot machine operation in North America, based on the benchmark of dollars won per machine per day. Calder will be adding slots as early as 2009 after getting approval in a local referendum in January of this year. The rebuilt Gulfstream Park is more slots parlor and simulcast theater than it is a facility to host live racing. In short, it’s a disaster.
Calder, built to host hot-weather summer racing, has always struck me as a cold and impersonal track, but it’s never seemed colder or more impersonal than it is today. In a recent weekday visit there I stumbled across what seemed like no more than several hundred fans scattered throughout the first two floors (most of the third floor is closed).
 Count on Churchill Downs management to pigeonhole those fans in as small an area as possible once the slot machines are installed and plugged in. Racing at Calder will become secondary, though its purses will be healthier than they are today because of the slot subsidies. But what will Churchill Downs management’s long-term vision be for racing at Calder?
Minor said he has no interest in bringing slot machines to Hialeah Park. The competition for slots players is intense, with the Seminole Native American tribe holding the market share advantage at their Hard Rock Casino in Hollywood, Fla. Minor wants to focus on the excitement of racing and the fact that it’s the only sport you can legally bet on.
Racing needs people like Halsey Minor, and people in the industry should be doing everything possible to help him succeed.
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Tags: calder, CDI, churchill downs, doug donn, Frank Stronach, gulfstream park, Halsey Minor, hard rock, Hialeah Park, Horse Racing, john brunetti, Magna, Magna Entertainment, Paulick Report, racino, Ray Paulick, seminoles, Slot machines, thoroughbred racing
Posted in Churchill Downs Inc., Florida, Halsey Minor, Hialeah Park, Horse Racing, Magna Entertainment, Slot machines | 10 Comments »
Monday, September 15th, 2008
Ray Paulick
What in the world is going on inside the Churchill Downs Inc. executive offices? It’s slashed purses at Calder Race Course in South Florida by 17% and whacked almost $1 million from the fall stakes program at its home track in Louisville, Ky. Key management changes have been made at Calder and Fair Grounds in New Orleans, La., and press releases seem to be blaming horsemen for most of the problems.
Investors haven’t been wild about Churchill Downs stock ( CHDN), which closed at $46.45 Friday and hasn’t seen $50 a share since May 1. It’s 52-week high, $57.55, was achieved last December.
CEO Bob Evans and the TrackNet Media Group that was formed with Magna Entertainment to broker simulcast deals has refused to talk seriously with the Thoroughbred Horsemen’s Group, which is negotiating account wagering contracts with racetracks on behalf of local horsemen’s groups such as the Kentucky or Florida Horsemen’s Benevolent and Protective Associations. In fact, Churchill has filed anti-trust lawsuits against the organizations. Evans may be hoping that the longer he puts off dealing with the THG, the less resolve the horsemen will have to stick together in attempting to forge a better contract on account wagering.
That strategy doesn’t appear to be working. To the contrary, it looks more like Churchill Downs’ partner in TrackNet Media is bailing. Frank Stronach, the chairman and acting CEO of Magna Entertainment, sent out a press release a couple of weeks ago saying that Magna recognizes the THG as a beneficial national organization and is negotiating with THG.
For too long, horsemen have been losing ground and losing revenue as the percentage of dollars wagered that goes to purses has declined. The growth of simulcasting to non-pari-mutuel entities such as off-shore rebaters and account wagering companies has been at the expense of horsemen. It’s important horsemen understand why the status quo isn’t good enough and why they need to change the simulcast model, something the THG is trying to do.
SPEAKING OF WAGERING, hats off to Bloodhorse editor Dan Liebman for calling out the Jockey Club after it capitulated to Evans and to Churchill Downs’ biggest shareholder, Dick Duchossois, and decided to no longer provide the trade magazine with meet ending pari-mutuel handle figures. Churchill tracks under Evans and Duchossois have said that handle is no longer a meaningful statistic. Oh, really?
The decision by the Jockey Club to no longer provide this key economic indicator was disgraceful, but I wouldn’t hold out any hope the poobahs there will change their mind.
NO ONE PREDICTED KEENELAND’S SEPTEMBER YEARLING SALE WOULD BE UP, so it’s not that surprising to see a 13% drop in the gross receipts through the first six sessions of the 15-day marathon. That 13% equates to a $41-million decline in revenue that will not go into the pockets of breeders this year, and that red number only figures to increase as the sale reaches the second half. The drop in revenue will ripple throughout all kinds of Thoroughbred-related businesses.
The good news from the first four days (Books 1 and 2) was that the median held up fairly well, declining only 10% from $200,000 to $180,000. The home run horses, those selling for a million dollars and up, didn’t materialize as often as they have in recent years, but the middle market was relatively steady. “Most of us survive off the middle,” one breeder told the Paulick Report. “Getting one of the big horses is like hitting the lottery, but it’s not something you really plan on.”
Smart gamblers don’t play the lottery, and intelligent breeders know there are far more people playing in the middle market than at the top. As long as the middle is healthy, so are the breeders. There is just a lot less icing on the cake this year.
Others who are selling throughout the September sale breathed a sigh of relief if their best horses sold well during the first two books out of fear that the bottom of the market may collapse once the sale reaches books five and beyond.
WHO HAS BOUGHT THE MOST HORSES SO FAR IN THE MONTH OF SEPTEMBER? It wasn’t John Ferguson, or Shadwell Estate or the newly formed Legends Racing. Hint: It wasn’t at the Keeneland September yearling sale.
September’s busiest buyer so far (though not biggest spender) is a fellow named Mike Gill, the 2005 Eclipse Award-winning owner who has been on a claiming binge this month at Philadelphia Park. By our count Gill has claimed at least 30 horses in September at Philadelphia Park alone after similar buying sprees in Maryland and Massachusetts earlier in the year.
You remember Gill, don’t you? He’s the fellow who built a huge claiming operation earlier this decade, bought a training center, won a bunch of claiming races and then publicly complained when he led the nation in wins and earnings in 2003 and 2004 but didn’t get voted an Eclipse Award as outstanding owner.
The whining did him some good. When balloting was conducted for the 2005 racing season, Gill was once again the owner with the most wins and purse money won. This time, in what may be the worst decision in the history of the Eclipse Awards, voters representing the National Turf Writers Association, National Thoroughbred Racing Association and Daily Racing Form gave Gill the award as “outstanding owner.”
Why do I say that it was the worst Eclipse Award decision in history? I’ve got nothing against claiming operations and recognize it is the bread and butter portion of nearly every racing program in the country. However, in my mind, the Eclipse Awards are about excellence, whether it’s horses or people. Sheer numbers, especially at the claiming level, should not be misconstrued as excellence. In the category of outstanding owner, breeder, trainer and jockey, the leading candidates should be judged by how they performed at the top level of the sport, not the bottom level.
Gill, who was recently in the news because of some regulatory problems at his mortgage company, said he was getting out of the horse industry in 2006 when he accepted his Eclipse Award as outstanding owner. Many people had two words for him: good riddance.
“I’m going to miss racing, and I think racing is going to miss me, too,” Gill told Bloodhorse magazine.
Actually, Mike, we didn’t.
THE PHILADELPHIA INQUIRER WON’T BE COVERING GILL’S EXPLOITS since it accepted the early retirement of Turf writer Craig Donnelly only a month after the paper, the nation’s eighth largest, dramatically reduced the space allotted racing in its sports section. At that time, Inquirer editors told the Paulick Report it was keeping Donnelly but obviously they had a change of heart.
Newspapers may be an endangered species in the near future. Turf writers at daily newspapers already are.
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Tags: bob evans, calder, CDI, chdn, churchill downs, claiming, craig donnelly, daily racing form, dick duchossois, eclipse award, Frank Stronach, john ferguson, Keeneland, keeneland september yearling sale, Magna, Magna Entertainment, mike gill, National Thoroughbred Racing Association, national turf writers association, NTRA, ntwa, Paulick Report, philadelphia inquirer, Philadelphia park, Ray Paulick, shadwell, thg, Thoroughbred Auctions, Thoroughbred Horsemen's Group, tracknet media
Posted in Account Wagering, Churchill Downs Inc., Industry Organizations, Jockey Club, Keeneland, Magna Entertainment, Racing Media, Simulcasting, Wagering | 9 Comments »
Wednesday, July 23rd, 2008
It’s almost impossible to keep track of the comings and goings of executives at Magna Entertainment, the racetrack spinoff created in 2000 from Frank Stronach’s highly successful auto parts company, Magna International.
Magna Entertainment owns numerous racetracks, including Santa Anita Park and Golden Gate Fields in California, Gulfstream Park in Florida, Pimlico and Laurel Park in Texas, and Lone Star Park in Texas; it co-owns HRTV with Churchill Downs and operates the Xpressbet account wagering company.
When the public company’s stock price fell below $1 per share earlier this year, the MEC board of directors enacted a 1-for-20 stock split, giving shareholders one share for each 20 they own. A $1,000 investment in MEC (symbol MECAD on NASDAQ) one year ago would be worth just $121 today. A $1,000 investment in MEC when it was created in 2000 would be worth less than $64 today. 
As a sidenote, during the time the stock price was plummeting, Stronach lent his name to a product called Frank’s Energy Drink, complete with "energy girls" and special events, a move that further fueled critics who said Stronach was no longer in touch with what was going on at his racetracks.
The latest departure, Scott Borgemenke, from the position of executive VP of racing, led the Paulick Report on a search of other departures from the executive offices of MEC’s headquarters in Aurora, Ontario, Can., and at various racetracks.
Here are just a few, including statements made by the executives and by Stronach upon their hiring and their leaving:
SCOTT BORGEMENKE
Jan. 28, 2008 - Appointed to the position of Executive Vice-President, Racing.
Said Borgemenke: "I am very excited to be taking on this new position. MEC’s commitment to the racing industry is unmatched. I feel fortunate to be joining a great team and look forward to putting my experience to work on the company’s behalf."
Frank Stronach, MEC’s Chairman and Interim Chief Executive Officer, stated: "I am very pleased to have Scott join our team. I first met Scott a number of years ago and am confident that he will make a positive contribution to MEC."
July 21, 2008 - Borgemenke to leave his position as Executive Vice President, Racing effective July 18.
Stronach stated: "Scott has helped MEC move forward on a number of important operational initiatives. We very much appreciate his efforts, and we wish him well."
Said Borgemenke: "MEC is a company with enormous growth opportunities. I wish my friends there nothing but success, and will continue to provide any counsel I can. I will watch intently as the MEC team implements its strategic plan. Unfortunately, at this point in my life, my corporate and family responsibilities conflict."
CHRIS DRAGONE
Nov. 28, 2007 - Named president of Magna Entertainment’s Maryland Jockey Club tracks.
Said Dragone: "I look forward to working toward improving the racing and entertainment experience for Maryland horsemen and our customers. Working with the other key stakeholders I hope to build upon the platform established by Lou Raffetto and the De Francis family."
Stronach stated: "MEC remains strongly committed to the future success of Thoroughbred racing in Maryland. To this end we will put the full support of MEC behind Chris and the MJC management team."
May 13, 2008 - Dragone to be released as MJC president after Preakness.
Frank Stronach told Washington Post: "Chris is a nice fellow, but we thought (Tom Chuckas) had more experience."
LOU RAFFETTO
Feb. 10, 2006 - Lou Raffetto named president of the Maryland Jockey Club, replacing Joe De Francis.
Nov. 28, 2007 - Raffetto replaced by Chris Dragone as president of Maryland Jockey Club.
Stronach stated: "Lou worked very hard during his tenure with MJC to manage the day-to-day operations and improve the future of Thoroughbred racing in the state of Maryland. We wish him well in his future endeavors."
Said Raffetto: "I wish my colleagues at MJC well going forward and hope that the company will be successful in implementing its long-term plans."
MICHAEL NEUMAN
Feb. 27, 2007 - Michael Neuman named CEO. (Neuman succeeds Stronach, who has been Interim CEO since March 2006.)
Stronach stated, "The Board of Directors conducted an extensive search for candidates who understood the role of horse racing operations, gaming and entertainment to MEC’s business, while also demonstrating a proven track record to execute in the important new areas of opportunity. The Board of Directors is pleased to have attracted a candidate for CEO so uniquely qualified as Michael to lead MEC at this exciting time. We were also impressed with Michael’s understanding of the continued importance of debt reduction and improved operational effectiveness to MEC."
June 22, 2007 - Neuman leaves the company "effective immediately to pursue other opportunities.
Stronach stated: "Michael worked very hard during his time at MEC and we wish him well in his future endeavors."
Said Neuman: "I wish my colleagues at MEC well going forward and hope that the company will be successful in implementing its long-term plans."
JOE DE FRANCIS
July 20, 2006 - Joe De Francis named a Magna Entertainment Director, member of Executive Management Committee and Stronach’s "principal advisor on all technology and distribution initiatives."
Stronach stated: "Over the years, Joe has made an enormous contribution to the horse racing industry and to Magna Entertainment, in particular, and we are delighted that he has taken on this new role. Given Joe’s vast knowledge of both Magna Entertainment and the racing industry, we feel he is the perfect fit for our Board. On behalf of the directors of Magna Entertainment, I welcome Joe to the Board."
Said De Francis: "It has been a pleasure working with everyone at Magna Entertainment and watching the company evolve. I am thrilled about the direction in which Magna Entertainment is headed and look forward to being a part of this exciting time."
March 3, 2008 - De Francis resigns as a Director.
Stronach stated: "I want to thank Joe for all of his hard work on behalf of MEC over the years and we wish him well in his future endeavors."
PAUL CELLUCCI
March 18, 2005 - Former Massachusetts governor and U.S. ambassador to Canada Paul Cellucci named Executive Vice-President of Corporate Development for Magna.
Said Cellucci: "It has been an honor to serve the people of the Commonwealth of Massachusetts and the President of the United States, but it is time for me to step away from public life. I am very excited about the prospects for MEC and working with Frank Stronach and MEC’s management team to build MEC into a global entertainment company and improve stockholder value.
Stronach stated: "Mr. Cellucci has an outstanding record of public service and will make an enormous contribution to (Magna Entertainment) and he will play a leadership role in our efforts to bring about regulatory reform at the state level aimed at modernizing the horse racing and pari- mutuel industry."
June 30, 2006 - Cellucci resigns.
Stronach stated: "Paul has helped MEC move forward on a number of important initiatives and we are pleased that we will continue to benefit from his counsel as he builds his new consulting practice", said Frank Stronach, MEC Chairman.
Said Cellucci: "MEC is a young company with a great future and I have enjoyed my full-time association with Frank and the other members of management. As I move into this new phase of my career, I look forward to continuing to advise MEC as it successfully implements its strategic plan".
TOM HODGSON
March 8, 2005 - Hodgson named President and CEO of Magna, replacing Jim McAlpine.
Said Hodgson: "Over the past several years, MEC acquired and developed the racing content and technology necessary to become a truly global player in the pari-mutuel industry," Hogdson said. "In order to ensure that MEC remains well-positioned to capitalize on industry opportunities, including alternative gaming and international opportunities, we need to operate with financial discipline."
Stronach stated: "MEC remains committed to its strong vision and leadership position within the horseracing industry. However, at this point in our development, we need to focus on financial and operating discipline at many of our operations. Our entire board, including Jim McAlpine, strongly supports Tom’s appointment as well as the need for improved financial discipline throughout the company. Tom brings a very strong financial background to MEC and he, together with the other members of the MEC executive management committee, will ensure that MEC maintains that focus."
March 14, 2006 - Hodgson resigns, effective March 31. Stronach named interim CEO while search for a new CEO is launched. Hodgson remains a consultant.
Stronach stated: " The Board has decided that, going forward, MEC should seek a CEO with in-depth knowledge and experience in the horseracing and gaming industry who can lead the Company in fully exploiting its opportunities in
this sector….Tom Hodgson has more than achieved our recapitalization plan goals, and we are grateful for his contributions to the Company."
JAMES MCALPINE
Jan. 10, 2001 -James McAlpine named president/CEO.
Stronach stated: "We are delighted to be able to confirm the appointment of Jim McAlpine as President and Chief Executive Officer of MEC. Having worked with Jim for many years while he was a senior executive officer of Magna International Inc., I have complete confidence in his talents and abilities. I believe that this appointment provides MEC with strong, experienced leadership for its new management team."
March 8, 2005 - McAlpine retires as CEO. He remains as a consultant to the company.
Stronach stated: "On behalf of the board of directors of MEC, I would like to thank Jim for his hard work over the past several years in launching MEC and helping to position it for the next stage in its development. We look forward to Jim continuing to contribute to MEC in his new role."
Said McAlpine: "Over the past five years, MEC people have worked diligently to make MEC the company that it is today, a company filled with opportunity. I have enjoyed leading this dynamic group and look forward to making a continuing contribution by supporting Frank, Tom and the executive management committee to see MEC achieve its full potential."
BRIAN TOBIN
March 24, 2004 - Former Canadian governmental official Brian Tobin elected Vice-Chairman of the MEC Board. Tobin is CEO of Magna Development, the majority shareholder of MEC.
Stated Stronach: "Brian will be an excellent director and I look forward to his contributions to our Board’s deliberations."
Aug. 20, 2004 - Tobin resigns.
Stronach stated: "Brian Tobin has been a great team leader and a great team player. The Board of Directors and I wish him well in his future business endeavours."
Said Tobin: "I have great respect for the MEC team and for Frank Stronach."
MARK FELDMAN and JERRY CAMPBELL
July 14, 2000 - Mark Feldman, named CEO (replacing Jerry Campbell, who was named vice chairman of the board).
Said Feldman: "I am thrilled to have the opportunity to work with Jerry Campbell, the other members of the MEC Board of Directors and the talented MEC management team. I am anxious to get started implementing the Company’s multi-faceted growth strategy, including maximizing opportunities to utilize interactive media in sports wagering, development of the Company’s real estate assets with location based entertainment and retail operations and improving cash flow by taking advantage of scale efficiencies in track operations. All of these initiatives will be supported and enhanced by our commitment to developing a strong global brand."
Said Campbell: "I am pleased to continue to serve as Vice-Chairman and to remain a director of the Company. MEC has a strong balance sheet, has assembled some of the finest and strategically located thoroughbred racetracks in the United States and has the ability to expand, particularly pari-mutuel wagering via off-track betting centers (OTB’s) and telephone account wagering systems, within currently existing regulations."
Stated Stronach: "I would like to thank Jerry for his contributions in establishing the Company and am delighted that he will continue to provide guidance and assistance to the management team as Vice-Chairman. I believe that the management changes…will facilitate our pursuit of the opportunities in media distribution of racing and sports wagering."
Dec. 11, 2000 - Feldman resigns.
Stronach stated: "As was previously announced, Don Amos has been appointed Chief Operating Officer and Graham Orr has been appointed Chief Financial Officer of the Company. Mr. Amos and Mr. Orr are based in Toronto, where they were both previously senior officers of Magna International. Their appointment reflects my desire to remain closely involved with the Company during its formative years. As a result, Mark agreed that it would be more effective to consolidate operations in Toronto, but was not prepared to relocate his family to Toronto. I am pleased that Mark has agreed to continue to provide his services to the Company as a consultant, as he is an outstanding media executive."
Said Feldman: "I continue to be enthusiastic about the growth potential for the Company and its prospects to become a leader in the horse racing account wagering business. It is clear that Mr. Stronach should work closely with the executive team during these early years of developing the Company’s operations. In this regard it makes sense to operate the business from Toronto. I look forward to continuing to assist MEC in its key initiatives in the electronic media fields."
A partial list of other executives who have left the company in the decade since Frank Stronach made his first racetrack purchase (Santa Anita Park) in December 1999:
Bill Baker, Peter Beresford, Rick Cowan, Doug Donn, Roman Doroniuk, Andrew Gaughn, Michael Gilligan, Clifford Goodrich, Ed Hannah, Corey Johnsen, Brant Latta, Jack Liebau, Chris McCarron, Jack McDaniel, Graham Orr, John Perrotta, Lonny Powell, David Romanik, Scott Savin.
By Ray Paulick
Copyright ©2008, The Paulick Report
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Tags: andrew gaughn, bill baker, Brant Latta, brian tobin, chris dragone, chris mccarron, clifford goodrich, corey johnsen, david romanik, don amos, doug donn, ed hannah, Frank Stronach, graham orr, jack liebau, jack mcdaniel, James McAlpine, jerry campbell, joe de francis, john perrotta, lonny powell, lou raffetto, Magna, Magna Entertainment, mark feldman, mec, michael gilligan, michael neuman, paul cellucci, Paulick Report, peter beresford, Ray Paulick, rick cowan, roman doroniuk, scott borgemenke, scott savin, tom hodgson
Posted in Magna Entertainment | 9 Comments »
Tuesday, June 24th, 2008
After all the problems Santa Anita experienced with its Cushion Track synthetic surface this past season, why did track management decide not to go back to a conventional dirt track and instead commit to installing a synthetic surface manufactured by the Australian company Pro-Ride? Aside from the fact the California Horse Racing Board has mandated all major California racetracks use synthetics instead of dirt for their main surface, Santa Anita was merely following the wishes of horsemen who were asked which type of surface they preferred.
The decision by Santa Anita management took on added significance because the Breeders’ Cup world championships will be contested there in both 2008 and 2009, marking the first time the former dirt races will be held over a synthetic racetrack.
In March of this year, Ed Halpern, the executive director of the California Thoroughbred Trainers, sent a letter to Magna executive Frank Stronach and Ron Charles detailing the results of a survey conducted among Santa Anita-based trainers. The Paulick Report obtained a copy of that letter.
The letter begins: “The board of directors of the California Thoroughbred Trainers has asked that I write to request that you take whatever action may be necessary to retain a synthetic surface at Santa Anita. One only needs to look at the facts to support this conclusion. Since the introduction of synthetic surfaces in California, barn areas are now filled, trainers have moved to California from across the country, field size has grown dramatically, injuries are down, and horses are racing more often. Those facts speak loudly and are irrefutable.”
Halpern then outlined the survey, which asked trainers to rate their surface preference five different ways:
-Strongly favor dirt
-Favor dirt
-Neutral
-Favor synthetics
-Strongly favor synthetics
Trainers were contacted personally and could sign their name or respond anonymously. Ninety-two of 115 trainers with horses in training at Santa Anita responded.
To quote further from Halpern’s letter:
“Of all those responding who strongly favored dirt or strongly favored synthetics, 70% strongly favored synthetics.
“Of all those responding who indicated that they either strong favored or just favored dirt or synthetics, 70% favored synthetics.”
Eleven trainers were neutral.
Trainers representing 90% of the horses in training at Santa Anita favor synthetics, according to Halpern. “Hence, there is is overwhelming support for synthetics from trainers who have trained at Santa Anita,” Halpern wrote. “That support exists in spite of the problems that were encountered due to the failure of the Cushion Track product. Trainers favoring synthetics cited numerous reasons for their support. They indicated that their support was based on a significant decrease in injuries, the ability to continue to train and run on a safe and non-sealed surface, even during periods of rain, and the ability to train horses through minor injuries. The latter benefit means significant and substantial savings for owners who no longer need to turn out horses for months before resuming training.”
One month later, the CTT sent a second letter to Stronach and Charles with the results of a survey of trainers based at the Northern California racetrack, Golden Gate Fields, also owned by Magna Entertainment. Golden Gate has a Tapeta Footings synthetic surface.
Here is how those 53 trainers responded:
-Strongly prefer dirt…2
-Prefer dirt…3
-No preference…3
-Favor synthetic…17
-Strongly favor synthetic…28
The opinions of California trainers seem to be supported by statistics obtained by the Paulick Report. At every California track where synthetic surfaces have been installed, the number of fatalities per 1,000 has declined, as follows:
Hollywood Park
Before synthetics, 2.87 per 1,000; after synthetics, 0.97 per 1,000
Del Mar
Before synthetics, 2.47 per 1,000; after synthetics, 0.81
Santa Anita
Before synthetics, 2.81; after synthetics, 1.71
Golden Gate Fields
Before synthetics, 3.90; after synthetics, 2.50
Bay Meadows (did not convert to synthetics)
Conventional dirt, 3.19
Aggregate
Before synthetics, 3.19; after synthetics, 1.37
A national survey of races charting horses that did not finish (DNF) a race due to various factors shows the following percentages on different surfaces:
-Dirt DNFs, 1.10%
-Turf DNFs, 0.94%
-Synthetic DNFs, 0.61%
Numerous training centers have now added synthetic surfaces, as has the OBS sale company in Ocala, Fla.
By Ray Paulick
Copyright ©2008, The Paulick Report
Tags: Breeders' Cup, California Horse Racing Board, california thoroughbred trainers, ed halpern, Frank Stronach, Horse Racing, Magna, Magna Entertainment, obs, Paulick Report, racehorse safety, racing injuries, Ray Paulick, ron charles, Synthetic surfaces
Posted in Breeders' Cup, Horse Welfare, Magna Entertainment, Synthetic surfaces | 1 Comment »
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