Racing in Northern California, scrambling to recover from the loss of Bay Meadows racetrack, which was closed in 2008 for planned development, also faces the bulldozing of Golden Gate Fields, the parent company of bankrupt owner Magna Entertainment stated in a Securities and Exchange Commission filing on Tuesday.
MI Developments (MID, stock symbol MIM) is the majority shareholder in Magna Entertainment (MEC, stock symbol MECA). When Magna Entertainment filed for chapter 11 bankruptcy March 5, it revealed a $195-million stalking horse bid from MI Developments for several of the racetrack properties, including Golden Gate Fields. In an amendment to a Form 13D filing on Tuesday, MI Developments said, if successful in acquiring Golden Gate, it will “immediately commence seeking all required approvals to develop the property for commercial real estate uses.” The filing goes on to say, “Racing at Golden Gate Fields would cease prior to commencement of construction on the rezoned property.”
MI Developments and Magna Entertainment are both spinoffs from the auto parts giant, Magna International. All three companies are controlled by Thoroughbred owner and breeder Frank Stronach.
Click here to access the filing; the reference to development of Golden Gate Fields is on page two.
Drew Couto, president of Thoroughbred Owners of California, told the Paulick Report Tuesday night he had assurances as recently as last weekend that MI Developments was only pursuing development of excess property at Golden Gate, and that it would not affect horse racing. Couto said he was told the commercial development would be along the lines of developer Rick Caruso's “Shops at Santa Anita,” slated for the Arcadia track's north parking lot.
“If this is true, this represents a serious change of position of what was expressed to me and TOC last week,” Couto said. “We'll be following up with MEC and MID to see if this is accurate.”
Magna Entertainment had previously sought zoning approvals for a portion of the Golden Gate Fields property, filing plans for a retail, entertainment and lodging development in 2002 in partnership with Caruso. After a few years and a groundswell of community opposition, the push for rezoning was dropped. Many local citizens and environmental groups want the the track property, located on the eastern shoreline of the San Francisco Bay, to be turned into public parklands.
Complicating matters for potential rezoning and development is the fact Golden Gate Fields is located in two cities: the majority of the property, including the section Magna previously sought to develop, is in Albany. A smaller portion, including the stable area, is in Berkeley. Both cities are conservative when it comes to commercial development, particularly on wetlands and shoreline property.
So why would MI Developments say it will seek rezoning of the track with two municipalities that have shown limited interest in commercial development? There is some speculation MI Developments and its board are reacting to institutional shareholders who have threatened possible legal action against MI Developments directors for potential breach of fiduciary responsibility. Those shareholders have expressed previous disagreement with the company's decision to extend credit to Magna Entertainment and pump millions of dollars into the racing operations. Golden Gate Fields would be worth much more as commercial real estate than it is as a racetrack, and its sale or development might help alleviate some of the criticism from those shareholders.
Bay Meadows, located in San Mateo, opened in 1934 and had been California's oldest continually operating racetrack. Since being closed and meeting the wrecking ball last year, there's been no progress on development, and a pile of rubble sits as a reminder of what once was a thriving racetrack.
Golden Gate Fields, which this year inherited most of the dates Bay Meadows ran, held its inaugural race meeting in 1941. It's anyone's guess when Northern California's last major track will hold its final race.
Copyright © 2009, The Paulick Report
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