Tuesday, May 18, 2010

There He Goes Again

Frank Stronach just can't help himself. Fresh from his bankruptcy court success at the end of April reneging on his promise to sell the Maryland Jockey Club, he's now managed to throw the Santa Anita fall meet in doubt, to bring in a partner in Maryland that's not exactly known for its commitment to racing, and to have waved goodbye to yet another experienced industry executive passing through the Magna revolving door.

Beginning with the latest news, Santa Anita track president Ron Charles abruptly resigned, announcing his departure on Tuesday and clearing out his desk on Wednesday. As Brad Free pointed out in The Daily Racing Form, Charles is the sixth chief executive at Santa Anita in the 12 years that Stronach has owned the track. He was preceded through the revolving door by Bill Baker, Cliff Goodrich, Lonny Powell, Jack Liebau and Jim McAlpine.

After four years on the job, Charles had probably had more than enough of trying to deal with the Stronach ego, not to mention being tired of trying to figure out why none of the synthetic surfaces installed at the Arcadia track seemed to work. Still, the lack of continuity, a common feature at all Stronach tracks, is troubling.

Even more troubling is Stronach's decision to use the Magna bankruptcy as a pretext for voiding the contract between Santa Anita and the not-for-profit Oak Tree Racing Association. Oak Tree has run the fall meet at Santa Anita since 1969, and had a contract with Santa Anita that was supposed to run through 2016; any profits from the meet are poured back into the thoroughbred industry. But Stronach apparently thinks he has a better idea, although, typically, he hasn't yet told us what that idea might be. (Good coverage of the Oak Tree story here and here.) While Oak Tree is still saying that it hopes to negotiate a new deal with Stronach, Del Mar and Hollywood would both be delighted to play host to the fall meet.

Meanwhile, the cancellation of the Oak Tree agreement may have rudely awakened the Breeders Cup board from its wet dreams of a perpetual West Coast BC festival. Before the latest Stronach salvo, the BC Board was reportedly very close to deciding that, after this year's event at Churchill, the BC would return to Southern California for the next five years, coinciding with the final years of the Oak Tree lease. That would have peopled the big day(s) with B-list celebrities, many of whom, it turns out, are paid for out of BC promotional funds, but who, we're told, juice the event's TV ratings. Now that October racing in California may be happening somewhere other than Santa Anita, it'd be pretty hard for the Breeders Cup board to stick to that unpopular plan. In a way that's a shame; I was really looking forward to an anti-BC fall dirt-racing championship day at Belmont.

Earlier this month, Stronach announced a "partnership" with Penn National Gaming, Inc. to operate the Maryland tracks. Details of the partnership are as yet unknown, if they've even been agreed between the parties, but the deal suggests a shift of focus away from horse racing and toward greater emphasis on slot machines. Penn National does operate three thoroughbred tracks (Zia Park in New Mexico, Charles Town, and the company's eponymous track in Grantville, PA) as well as three harness tracks (in Bangor, ME, Freehold NJ, and Toledo, OH). But its principal business is running low-end casinos. In addition to the slots at four of its six tracks, the company also owns 14 stand-alone casinos, almost all of which are in the South and Midwest. I've been in one of the company's casinos, in Biloxi, MS, and even by the undemanding standards of that town, it is, to say the least, an inelegant operation. Hard to imagine that Penn National will do much to help improve the tone of Maryland racing. (For details of the company's operations, look here and here.)

The latest bit of bad news for Stronach is the lawsuit filed by some disgruntled shareholders in Magna Entertainment, who quite rightly believe that Stronach lied to the bankruptcy court in order to avoid having outsiders bid on the Maryland Jockey Club and other properties. As extensively outlined in The Paulick Report, Magna Entertainment shareholder Willam Bayne Jr. and his co-plaintiffs allege that Stronach deliberately ignored bids that would have provided more money for creditors, and maybe even some for the shareholders than did the inside-the-company bid from Stronach puppet MI Developments. It's tough to win that sort of challenge to a bankruptcy judge's decision, especially, as here, where the creditors announce themselves satisfied, but the depositions should be fun.

Broken contracts, broken promises, unsavory partners, a revolving door for executives. Funny, the new Magna sure looks a lot like the old one.

1 comment:

graeme said...

Steve, I did not know Ron Charles, but what I read of him, he appeared sensible and sane, not something one usually associates with the Stronach camp or the racing establishment at large for that matter.

How Stronach first milked then hood-winked his investors and then the bankruptcy court to maintain control of Magna's major assets defies belief. But then much of what he does and says falls into that category.